Medical Benefits Fund of Australia Limited v Cassidy; John Bevins Pty Limited v Cassidy [2003] FCAFC 289 (16 December 2003)

Last Updated: 16 December 2003

FEDERAL COURT OF AUSTRALIA

Medical Benefits Fund of Australia Limited v Cassidy

John Bevins Pty Limited v Cassidy

[2003] FCAFC 289

TRADE PRACTICES - misleading and deceptive conduct - television, newspaper and billboard advertisements for private health insurance - where an insurer represented it would waive waiting periods - where fine print qualified primary representations - purpose of corrective advertising - whether appropriate to order a party to undertake corrective advertising for the purpose of the general education of the public - injunctive relief, including corrective advertising, must bear a sufficient nexus to the contravening conduct - accessorial liability - whether the advertising agency that developed the infringing advertisements was liable as an accessory - `knowingly concerned in, or party to, the contravention' - whether intent a necessary component for accessorial liability

PRACTICE AND PROCEDURE - whether the Full Court should interfere with an exercise of discretion by the primary judge

Australian Securities and Investments Commission Act 1989 (Cth) ss 12DA, 12DB, 12DF, 12GE, 12GD(1)

Australian Securities and Investments Commission Act 2001 (Cth) ss 12DA, 12DB, 12DF, 12GLA, 12GLB, 268

Crimes Act 1900 (NSW) ss 52A, 351

Trade Practices Act 1974 (Cth), Pt V, ss 45(2), 52, 53(c), 53(g), 55A, 75B, 80, 80A, 86C, 86D

Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 46 ACSR 504 discussed

Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (No 2) [1999] FCA 1161; (1999) 95 FCR 302 referred to

Australian Competition and Consumer Commission v Hungry Jack's Pty Ltd [1996] FCA 955 referred to

Australian Competition and Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 referred to

Australian Competition and Consumer Commission v Nissan Motor Company (Australia) Pty Ltd and Anor (1998) ATPR 41-660 discussed

Australian Competition and Consumer Commission v On Clinic Australia Pty Ltd (1996) 35 IPR 635 referred to

Australian Competition and Consumer Commission v Purple Harmony Plates Pty Ltd [2001] FCA 1062 referred to

Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 1387; (1999) 95 FCR 114 discussed

Australian Competition and Consumer Commission v Signature Security Group Pty Limited [2003] FCA 3; (2003) ATPR 41-908 referred to

Australian Competition and Consumer Commission v Target Australia Pty Ltd [2001] FCA 1326; (2001) ATPR 41-840 referred to

Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 discussed

Australian Competition and Consumer Commission v Wizard Mortgage Corporation Limited (2002) ATPR 41-903 referred to

Australian Competition and Consumer Commission v Woolworths Limited (No 2) (2002) ATPR 41-890 referred to

Brown v Jam Factory Pty Ltd [1981] FCA 35; (1981) 53 FLR 340 referred to

Butt v Tingey (unreported, Davies, Neaves, Beazley JJ, 5 August 1993) referred to

Campomar Sociedad, Limitada v Nike International Limited [2000] HCA 12; (2000) 202 CLR 45 referred to

Cassidy v NRMA Health Pty Ltd [2002] FCA 1228 referred to

Chan Cuong Su t/a Ausviet Travel v Direct Flights International (No 2) (1999) ATPR 41-677 referred to

Chan Cuong Su v Direct Flights International Pty Ltd [1999] ATPR 41-677 referred to

Crocodile Marketing v Griffith Vintners (1989) 28 NSWLR 539 referred to

Dimension Data Australia Pty Ltd v Kepper [1999] FCA 1446 discussed

Equity Access Pty Ltd v Westpac Banking Corporation [1989] FCA 506; (1989) 16 IPR 431 referred to

Fernandez v Glev Pty Ltd [2000] FCA 1859 discussed

George Weston Foods Ltd v Goodman Fielder Ltd (2001) 49 IPR 553 discussed

Georgianni v The Queen [1985] HCA 29; (1985) 156 CLR 473 discussed

Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1 discussed

Hospital Contribution Fund Australia Ltd v Switzerland Australia Health Fund Pty Ltd (1988) ATPR 40-846 referred to

House v The King [1936] HCA 40; (1936) 55 CLR 499 referred to

Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599 referred to

Janssen Pharmaceutical Pty Ltd v Pfizer Pty Ltd (1986) ATPR 40-654 referred to

King v GIO Australia Holdings Ltd [2001] FCA 308; (2001) 184 ALR 98 referred to

Makita (Australia) Pty Ltd v Black & Decker (Australasia) Pty Ltd (1990) ATPR 41-030 referred to

Minister for Health and Aged Care v Harrington Associates Ltd [2000] FCA 1723 referred to

Paper Products Pty Ltd v Tomlinsons (Rochdale) Pty Ltd [1994] ATPR 41-315 referred to

Parkdale Custom Built Furniture Proprietary Limited v Puxu Proprietary Limited [1982] HCA 44; (1982) 149 CLR 191 referred to

Richardson & Wrench (Holdings) Pty Ltd v Ligon No. 174 Pty Ltd [1994] FCA 1222; (1994) 123 ALR 681 referred to

Ridgway v Consolidated Energy Corporation Pty Ltd (1987) ATPR 40-754 discussed

Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213 discussed

St Luke's Health Insurance v Medical Benefits Fund of Australia Limited [1995] FCA 1314; (1995) ATPR 41-428 referred to

Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 referred to

Telstra Corporation v Optus Communications Pty Limited (1997) ATPR 41-541 referred to

Trade Practices Commission v Optus Communications Pty Ltd (1996) 34 IPR 176 referred to

Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Pty Ltd (2000) 34 ACSR 673 referred to

Wheeler Grace & Pierucci Pty Ltd v Wright (1989) 16 IPR 189 discussed

Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 discussed

MEDICAL BENEFITS FUND OF AUSTRALIA PTY LIMITED (ACN 000 057 590) v BRIAN CASSIDY, CHIEF EXECUTIVE OFFICER OF AUSTRALIAN COMPETITION AND CONSUMER COMMISSION AND AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

N 1090 OF 2002

JOHN BEVINS PTY LIMITED (ACN 002 003 572) v BRIAN CASSIDY, CHIEF EXECUTIVE OFFICER OF AUSTRALIAN COMPETITION AND CONSUMER COMMISSION AND AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

N 1117 OF 2002

MOORE, MANSFIELD AND STONE JJ

16 DECEMBER 2003

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1090 OF 2002

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	MEDICAL BENEFITS FUND OF AUSTRALIA LIMITED (ACN 000 057 590) APPELLANT
AND:	BRIAN CASSIDY, CHIEF EXECUTIVE OFFICER OF AUSTRALIAN COMPETITION AND CONSUMER COMMISSION AND AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION FIRST RESPONDENT AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION SECOND RESPONDENT
JUDGES:	MOORE, MANSFIELD AND STONE JJ
DATE OF ORDER:	16 DECEMBER 2003
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Subject to order 2 the appeal be dismissed.

2. Order 4 of the orders made by the primary judge on 2 October 2002 and order 1 made by the primary judge on 15 October 2002 be set aside.

3. The parties provide to the Associate of Stone J by 22 December 2003 an agreed minute of the orders to be made as to costs and if agreement has not been reached by then the minutes of orders for which they respectively contend and brief outlines of submissions in support of the orders.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1117 OF 2002

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	JOHN BEVINS PTY LIMITED (ACN 002 003 572) APPELLANT
AND:	BRIAN CASSIDY, CHIEF EXECUTIVE OFFICER OF AUSTRALIAN COMPETITION AND CONSUMER COMMISSION AND AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION FIRST RESPONDENT AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION SECOND RESPONDENT
JUDGES:	MOORE, MANSFIELD AND STONE JJ
DATE OF ORDER:	16 DECEMBER 2003
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The orders and declarations made by the primary judge on 2 October 2002 be set aside in so far as they relate to the Appellant.

3. The application of the First and Second Respondents be dismissed in so far as it relates to the Appellant.

4. The First and Second Respondents pay the Appellant's costs of this appeal and of the proceedings before the primary judge.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY

N 1090 OF 2002 N 1117 OF 2002

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

	N 1090 OF 2002
BETWEEN:	MEDICAL BENEFITS FUND OF AUSTRALIA LIMITED (ACN 000 057 590) APPELLANT
AND:	BRIAN CASSIDY CHIEF EXECUTIVE OFFICER OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION FIRST RESPONDENT AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION SECOND RESPONDENT
	N 1117 OF 2002
BETWEEN:	JOHN BEVINS PTY LIMITED (ACN 002 003 572) APPELLANT
AND:	BRIAN CASSIDY CHIEF EXECUTIVE OFFICER OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION FIRST RESPONDENT AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION SECOND RESPONDENT

JUDGES:	MOORE, MANSFIELD AND STONE JJ
DATE:	16 DECEMBER 2003
PLACE:	SYDNEY

REASONS FOR JUDGMENT

MOORE J

1 I have read the reasons for judgment of Stone J in a draft form. I gratefully adopt her Honour's account of the facts, the relevant legislation and the issues that have arisen in these appeals. I agree with her Honour's conclusions but, on one issue, I approach the matter a little differently. The issue concerns whether John Bevins Pty Ltd ("Bevins") could be liable under subs 12GD(1) of the Australian Securities and Investments Commission Act 1989 (Cth) ("the ASIC Act") in the face of findings that no officer or employee of Bevins (who gave evidence) formed the view the advertisements were misleading and that none intended to mislead or deceive. The subsection provides:

12GD. Injunctions

(1) If, on the application of the Minister, the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:

(a) a contravention of a provision of this Division; or

...

(e) being in any way, directly or indirectly, knowingly concerned in, or a party to, the contravention by a person of such a provision;...

...

the Court may grant an injunction in such terms as the Court determines to be appropriate.

2 There is no material difference between the terms of par 12GD(1)(e) and the terms of par 75B(c) of the Trade Practices Act 1974 (Cth) and many of the relevant authorities have considered that latter provision. There is fairly clearly a division of judicial opinion about whether an accessory, to be liable under such a provision, must be aware that the proscribed conduct of the principal was either misleading or deceptive conduct or conduct likely to mislead or deceive.

3 In King v GIO Australia Holdings Ltd [2001] FCA 308; (2001) 184 ALR 98 at [15] and following I briefly surveyed some, though not all, of the authorities which reflect that division of opinion. A starting point is the observations of Hely J in Fernandez v Glev Pty Ltd [2000] FCA 1859 which suggest it is necessary, when establishing accessorial liability of a person concerning a false representation made by a principal, to demonstrate that the person knew of the falsity of the representation. His Honour said at [18] in relation to the way accessorial liability should be pleaded:

The facts necessary to sustain a conclusion that the individuals were involved in the contravention of s 52 should be pleaded. That includes whatever involvement in, or knowledge of, the making of the representations is relied upon and knowledge of the falsity of the representations in question.

4 To similar effect are the following observations of Lehane J in Chan Cuong Su t/as Ausviet Travel v Direct Flights International Pty Limited [1999] ATPR 41-677 at 42,666:

In Yorke v Lucas [1985] HCA 65; (1985) ATPR¶ 40-622; (1985) 158 CLR 661, Mason ACJ and Wilson, Deane and Dawson JJ said at 669:

Notwithstanding that s. 75B operates as an adjunct to the imposition of civil liability, its derivation is to be found in the criminal law and there is nothing to support the view that the concepts which it introduces should be given a new or special meaning.

As to those concepts, their Honours said at ATPR 47,055; CLR 667:

Both in the case of felonies where the principal offender and the secondary participant commit separate offences, and in the case of misdemeanours where no distinction is drawn between the two, a person will be guilty of the offences of aiding and abetting or counselling and procuring the commission of an offence only if he intentionally participates in it. To form the requisite intent he must have knowledge of the essential matters which go to make up the offence whether or not he knows that those matters amount to a crime.

Thus, in the case of a contravention of s 52, the mere making of representations on behalf of a corporation, without knowledge of their falsity, could not constitute "involvement" in misleading or deceptive conduct contravening s 52.

The last part of this passage was quoted with approval by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599. This approach is also reflected in the following judgments: Crocodile Marketing v Griffith Vintners (1989) 28 NSWLR 539; Richardson & Wrench (Holdings) Pty Ltd v Ligon No. 174 Pty Ltd [1994] FCA 1222; (1994) 123 ALR 681; Butt v Tingey (unreported, Davies, Neaves, Beazley JJ, 5 August 1993); Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (No.2) [1999] FCA 1161; (1999) 95 FCR 302; Chan Cuong Su v Direct Flights International Pty Ltd [1999] ATPR 41-677; Cassidy v NRMA Health Pty Ltd [2002] FCA 1228, [2002] ATPR 41-891; Fernandez v Glev Pty Ltd [2000] FCA 1859.

5 A not dissimilar issue arose in Dimension Data Australia Pty Ltd v Kepper [1999] FCA 1446. In that matter there was an issue about whether conduct of directors of a corporation caught by s 75B would be conduct involving a lack of good faith for the purposes of s 241 of the Corporations Law. In the matter I said at [7] - [8]:

The nature of the conduct which attracts s 75B was discussed by French J in Paper Products Pty Ltd v Tomlinsons (Rochdale) Ltd (1994) ATPR 41-315. His Honour said at 42,204:

`The application of that section [s 84(2) of the TPA] and the common law to the relationship between the conduct of the officers of a corporation and that conduct which is attributed to the corporation was discussed by the Full Court in Wheeler Grace and Pierucci Pty Ltd v Wright (1989) ATPR 40-940 at 50,255-50,257 [16 IPR 189 at 208-209] (per Lee J with whom Neaves and Burchett JJ agreed). And as is apparent from that decision, the officers of a corporation whose conduct is attributed to the corporation and in respect of which the corporation is in contravention of s. 52 may, by that conduct, be themselves "involved in the contravention" within the meaning of s. 75B. Such an involvement does require knowledge of the essential elements of the contravention - Yorke v. Lucas [1985] HCA 65; (1984) ATPR 40-622 at 47,056-47,057 and 47,060-47,061; [1985] HCA 65; (1984) 158 CLR 661 at 670 and 677. That knowledge does not require knowledge or awareness that the conduct has the capacity to mislead nor knowledge that it may be a contravention of s. 52. What must be shown to be possessed is knowledge of the elements of a contravention: Wheeler Grace and Pierucci Pty Ltd v Wright (supra) at p. 50,257.'

In Wheeler Grace & Pierucci Pty Ltd v Wright (1989) 16 IPR 189, the [Full] Court considered the accessorial liability of an employee of a company which was a financial consultant and investment advisor. That company had held a meeting of potential investors, conducted by the employee, at which statements had been made about a trust which was to operate a gold mine. As to the accessorial liability of the employee, Lee J said at 209:

According to his Honour's findings, the acts which constituted the contravention of s 52 were the appellant's [the company's] statement to potential investors in the course of inviting such persons to invest in the special units of the trust that such investors would receive a return of the premiums paid on their investment within a few months without informing those potential investors of any qualifications on the prospect of repayment of the premiums. Obviously Collins [the employee] was fully aware of those elements being the person conducting the meeting on behalf of the appellant and the person who made the statement for the appellant without qualification.

His Honour found that Collins was aware, prior to the meeting, that such a statement would require qualification because Collins had participated in a resolution of the board of directors of Carbon Gold on 26 April 1985 that the speculative nature of the investment should be continually stressed to prospective unit holders. It followed from that finding that Collins possessed knowledge of the circumstances that gave the conduct of the appellant a misleading character. It is immaterial whether Collins understood the import of those circumstances or held a positive belief as to the truth of the assertion he had made for the appellant. [Emphasis added]

See also Richardson & Wrench (Holdings) Pty Ltd v Ligon No. 174 Pty Ltd [1994] FCA 1222; (1994) 123 ALR 681 and Westbay Seafoods (Aust) Pty Ltd v Transpacific Standardbred Agency Pty Ltd [1996] FCA 630.

[Emphasis in original]

6 Similarly, observations of McPherson AJA in Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1 would suggest that a person can be liable by operation of s 75B, even if they did not know or believe that the published statements were misleading. The issue arose in that matter in the following context. A prospectus was issued during the course of the proposed restructuring of a group of companies including NRMA Ltd ("NRMA"). The prospectus contained statements which, as found in proceedings in this Court, resulted in it being misleading. Legal advice had been given about the contents of the prospectus. Several issues arose about the role of the legal advisers in advising about the prospectus. One was whether, in publishing the prospectus, NRMA engaged in misleading and deceptive conduct and, if so, whether the legal advisers had been involved in the conduct and were liable by reference to provisions such as s 75B. Each member of the Court of Appeal concluded that the publication of the prospectus was not misleading and deceptive conduct. Nonetheless, the question of the accessorial liability of the legal advisers was addressed by the Court. McPherson AJA said at [436]:

If that conclusion is wrong [that the publication of the prospectus was not misleading conduct], then I find it difficult to see how the [legal advisers] could avoid being "involved" in a contravention of the Trade Practices Act 1974 (Cth). To state the matter in a more positive and direct form, it seems to me that, knowing as they would then have done that those expressions were used in a prospectus which would, and did in fact, issue to a vast number of people some of whom were not well educated or versed in the ways of business, they would be found to have intentionally counselled a contravention of s 52; or, alternatively, being aware of the essential facts which on this assumption made it misleading, to have been knowingly concerned in or party to that contravention...It is true that they did not intend to mislead, and that they did not believe that the prospectus or those expressions in it would mislead anyone; but if they knew what was in the prospectus and that it was going to be published, they satisfied the provisions of s 75B.

[Emphasis added]

Ormiston AJA agreed with McPherson AJA on this issue: see also the observations of Lindgren J in Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd [1999] FCA 1161; (1999) 95 FCR 302 at 346. A very recent judgment of the Court of Appeal of New South Wales to similar effect is Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 46 ACSR 504. Giles JA gave the leading judgment (Mason P and Beazley JA agreeing) and said (at [333-342] after briefly discussing the facts and legal issues arising in Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661):

Attention is thus directed to the essential facts constituting the contravention. Section 52 proscribed engaging in misleading or deceptive conduct, and in Yorke v Lucas making the representations as to the average weekly turnover of the business was misleading or deceptive conduct because the turnover information was incorrect. The relevant fact was that the turnover information was incorrect. It was not necessary that Lucas knew that the making of false representations as to the average weekly turnover of the business was engaging in misleading or deceptive conduct as referred to in s 52, and if Lucas had known that the turnover information was incorrect a finding of involvement would have followed.

Many cases have considered the Yorke v Lucas requirement of knowledge in the context of misleading or deceptive conduct, applying the principle that there must be knowledge of the essential facts making out the contravention but there need not be knowledge that the facts amounted to misleading or deceptive conduct and constituted a contravention.

[Emphasis added]

7 His Honour then referred to Wheeler Grace & Pierucci Pty Ltd v Wright (1989) 16 IPR 189 and Paper Products Pty Ltd v Tomlinsons (Rochdale) Pty Ltd [1994] ATPR 41-315 in which it was said (at 42,204) that knowledge of the essential elements of the contravention "does not require knowledge or awareness that the conduct has the capacity to mislead nor knowledge that it may be a contravention of s 52". His Honour also referred to Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213; (2002) 118 FCR 236 which he viewed as applying that principle in a different context.

8 These approaches are all based on the judgment of the High Court in Yorke v Lucas. The reasons of four of the members of the Court, Mason ACJ and Wilson, Deane, and Dawson JJ (for convenience only I will refer to them as the majority) can be read in a number of ways. The case concerned the liability of Mr Lucas. He had been the managing director of a company (which was a licensed land agent) which had acted as agent for the vendor of a business. The purchaser had been told by Lucas that the weekly turnover of the business during a period preceding the sale was $3500 whereas, in fact, it was not this amount. Lucas had obtained this information from the vendor. The trial judge had found that Lucas was not aware and had no reason to suspect that the information concerning the turnover was incorrect. Ultimately the trial judge had found that Lucas was not, by operation of s 75B, to be treated as having engaged in conduct in contravention of s 52. These findings were made in the context of the trial judge having found that Lucas' company and the vendor company had both engaged in conduct in contravention of s 52.

9 The approaches in the cases referred to, concerning what the majority viewed as necessary to establish liability under s 75B are primarily based on the following passages from the joint judgment. At 667 their Honours noted that the language used in par 75B(a) was taken from the criminal law. In the criminal law a person aids and abets or counsels and procures only if he or she intentionally participates in the commission of an offence. Their Honours then said:

To form the requisite intent he must have knowledge of the essential matters which go to make up the offence whether or not he knows that those matters amount to a crime. So much was affirmed recently in Giorgianni v The Queen (15) where the relevant authorities were examined. That was a case in which the appellant had been convicted of culpable driving under s 52A of the Crimes Act 1900 (NSW) in reliance upon s 351 of that Act. The latter section provides that a person who aids, abets, counsels or procures the commission of any misdemeanour may be proceeded against as a principal offender and was held to be declaratory of the position at common law. The offence of culpable driving under s 52A is an offence of strict liability which, putting the defence of honest and reasonable mistake to one side, requires no proof by the prosecutor of any mental state on the part of the accused. Nevertheless it was held that to have aided and abetted or counselled and procured the offence of culpable driving the appellant must have intentionally participated in that offence and to have done so must have had knowledge of the essential matters which went to make up the offence on the occasion in question. Those matters included the defective condition of the brakes upon the vehicle being driven, because the culpable driving alleged consisted of the driving of that vehicle with defective brakes. Proof of such knowledge on the part of the principal offender was, however, not part of the prosecution case because the principal offence was one of strict liability.

[Emphasis added]

Of significance is that immediately after their Honours spoke of the required "knowledge of the essential matters" they added the qualification "whether or not he knows that those matters amount to a crime". This would suggest that, in the context of conduct proscribed by s 52, a person might aid and abet or counsel and procure even if the person did not know that the conduct was proscribed by s 52, that is it was unlawful or could be characterised in a way that rendered it unlawful.

10 Their Honours went on to say:

If par. (a) of s 75B imports the requirements of the criminal law, it is clear in the light of Giorgianni v The Queen that Lucas could only be brought within that paragraph if he intentionally aided, abetted, counselled or procured a contravention by the Lucas company of s 52 of the Trade Practices Act. Upon the findings of the trial judge, however, Lucas lacked the knowledge necessary to form the required intent. A contravention of s 52 involves conduct which is misleading or deceptive or likely to mislead or deceive and the conduct relied upon in this case consisted of the making of false representations. Whilst Lucas was aware of the representations - indeed they were made by him - he had no knowledge of their falsity and could not for that reason be said to have intentionally participated din the contravention.

[Emphasis added]

It might be concluded from this passage that the majority were saying that knowledge of the falsity of the representations is a precondition to liability as an accessory. However, it must be borne in mind that these remarks were made against the factual background where Lucas did not know one essential matter of fact, namely the actual turnover and therefore could not have known that the representations were false or misleading.

11 A little later in their judgment, the majority explained that the basis on which a person was liable as a person knowingly concerned in or party to a contravention was, as a matter of construction, the same as for an accessory. Paragraph (c) of s 75B is the direct analogue of the provision under consideration in this appeal, subs 12GD(1). Of par (c) their Honours said (at 669-670):

So far we have dealt only with par. (a) of s 75B which refers to involvement of persons who are accessories. The appellants also rely upon par. (c) of the same section which extends the definition of a person involved to a person who has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention. There can be no question that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention. It cannot, therefore, be suggested that Lucas falls within the first limb of par. (c). It might be thought possible to construe the express requirement of knowledge as extending not only to being "concerned in" but also to being "party to" a contravention. However, there are two reasons, in our view, why it is inappropriate to do so.

...

In our view, the proper construction of par. (c) requires a party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention.

12 The majority used two expressions in these passages. One is "essential matters" making up the offence and the other is "essential elements" of the contravention. It is relatively clear from the example used in the first passage, that the expression "essential matters" comprehends matters of fact which must be known to the alleged accessory before liability arises. The example given (from the facts in Giorgianni v The Queen [1985] HCA 29; (1985) 156 CLR 473) was knowledge of the condition of the brakes. On any view of what was held by the High Court, accessorial liability only arises in the present matter if it is at least demonstrated that the alleged accessory knew of the facts which constituted the conduct of MBF which contravened the ASIC Act.

13 In relation to the television advertisements, the conduct of MBF was (firstly) the publication of the advertisements in the context where (secondly) the content of the advertisements (being the visual images, the sound and the way they were formatted and sequenced) might lead members of the public to believe that certain benefits would be enjoyed or rights conferred by taking out insurance with MBF where (thirdly), in fact, they would not be. In my opinion, these three matters constitute, as a minimum, "essential matters" for the purposes of applying the principle established in Yorke v Lucas. I have included the contents of the advertisements and what they might convey as a second essential element because it is the probable impact of their content which transforms what otherwise would be unexceptionable commercial conduct into unlawful conduct.

14 Plainly Bevins knew the advertisements were being prepared for publication and were published. His Honour (at [74] and [75]) appears to have found that Bevins knew (through its officers and employees) that waiting periods did apply in the case of pregnancy and thus the contentious rights and benefits would not accrue. No express finding was made by the primary judge about whether Bevins understood that members of the public might be led to believe, having regard to the content of the advertisements, that certain benefits would be enjoyed or rights conferred by taking out insurance with MBF. However, it appears to follow from one passage in his reasons that his Honour found that Bevins did not understand that this was a consequence of the contents and format of the advertisements. The primary judge said at [73]:

The question is not whether the agency, or those employed by it subjectively appreciated that the advertisements were false or misleading. If it were, I would find that they had no liability. I accept the evidence led that none of those who gave evidence formed the view that the advertisements were misleading. None intended to mislead or deceive the public.

This observation was followed by the passage (at pars [74] and [75]) in which his Honour appears to have found that Bevins (through its officers and employees) knew that the waiting periods did apply in the case of pregnancy. It seems to follow that his Honour accepted that Bevins (through its officers and employees), knowing that waiting periods did apply, did not appreciate that the advertisements might be understood as indicating the waiting periods did not apply. It follows, on his Honour's findings, that Bevins (through its officers and employees) was not aware of the second of the matters, as I earlier described them, constituting the contravening conduct of MBF. That is, while Bevins was aware of what the advertisements contained (necessarily so given that it created them) it was not aware that the advertisements might lead members of the public to believe that certain benefits would be enjoyed or rights conferred by taking out insurance with MBF. Accordingly, in my opinion, his Honour erred in concluding that the Bevins was liable as an accessory under subs 12GD(1).

15 I should add that, in my opinion, liability as an accessory (in circumstances where the contravening conduct of the principal was making false or misleading representations) does not depend on an affirmative answer to the question whether the alleged accessory knew the representations were false or misleading. All that would be necessary would be for the accessory to know of the matters that enabled the representations to be characterised in that way. In a comparatively simple situation, such as the situation considered in Yorke v Lucas, where particular representations were being made to individuals or groups of individuals, knowledge of those matters would almost inevitably result in the alleged accessory also knowing the representations were false or misleading. Had Lucas known of the real turnover figures, then it is difficult to imagine that he would not have appreciated, additionally, that what he was saying about the business was false and misleading.

16 However in a situation where representations are made to the public and whether they are misleading or deceptive is to be approached at a level of abstraction (to use the language of the High Court in Campomar Sociedad, Limitata v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 (at [101]) it seems inapt to explore the question of whether the alleged accessory knew the representations were false or misleading in some subjective sense. As illustrated by the preceding consideration of the facts of this case, it is probably appropriate to consider, and only consider, the question of whether the alleged accessory knew that the conduct of the principal might lead members of the public to assume a state of affairs which was not the true state of affairs. If this analysis is correct, then the division of judicial opinion referred to at the beginning of those reasons may, at least in many instances, be illusory rather than real. It is not a large step to say knowledge that a representation may convey a meaning contrary to the facts is also knowledge that the representation is false and the making of the representation is misleading and deceptive conduct.

I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.

Associate:

Dated: 16 December 2003

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1090 OF 2002 N 1117 OF 2002

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	MEDICAL BENEFITS FUND OF AUSTRALIA PTY LIMITED (ACN 000 057 590) APPELLANT
AND:	BRIAN CASSIDY, CHIEF EXECUTIVE OFFICER OF AUSTRALIAN COMPETITION AND CONSUMER COMMISSION FIRST RESPONDENT AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION SECOND RESPONDENT

BETWEEN:	JOHN BEVINS PTY LIMITED (ACN 002 003 572) APPELLANT
AND:	BRIAN CASSIDY, CHIEF EXECUTIVE OFFICER OF AUSTRALIAN COMPETITION AND CONSUMER COMMISSION FIRST RESPONDENT AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION SECOND RESPONDENT

JUDGES:	MOORE, MANSFIELD AND STONE JJ
DATE:	16 DECEMBER 2003
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

MANSFIELD J

17 I have had the benefit of reading in draft the reasons for decision of Moore J and of Stone J. I too agree with the reasons for decision of Stone J concerning the appeal by Medical Benefits Fund of Australia Ltd and the orders which she proposes. In respect of the appeal by John Bevins Pty Ltd, I also agree with the reasons for decision of Stone J, save for the matter which Moore J has separately addressed. I agree with the reasons of Moore J on that one issue. It follows that I agree with the orders which Stone J proposes for the disposition of that appeal.

I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.

Associate:

Dated: 16 December 2003

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY

N 1090 OF 2002 N 1117 OF 2002

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

	N 1090 OF 2002
BETWEEN:	MEDICAL BENEFITS FUND OF AUSTRALIA LIMITED (ACN 000 057 590) APPELLANT
AND:	BRIAN CASSIDY CHIEF EXECUTIVE OFFICER OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION FIRST RESPONDENT AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION SECOND RESPONDENT
	N 1117 OF 2002
BETWEEN:	JOHN BEVINS PTY LIMITED (ACN 002 003 572) APPELLANT
AND:	BRIAN CASSIDY CHIEF EXECUTIVE OFFICER OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION FIRST RESPONDENT AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION SECOND RESPONDENT

JUDGES:	MOORE, MANSFIELD AND STONE JJ
DATE:	16 DECEMBER 2003
PLACE:	SYDNEY

REASONS FOR JUDGMENT

STONE J

18 On 9 September 2002 a judge of this Court held that Medical Benefits Fund of Australia Limited (ACN 000 057 590) (`MBF'), by certain television and billboard advertisements, had engaged in conduct that was, inter alia, misleading and deceptive or likely to mislead or deceive in contravention of s 12DA(1) of the Australian Securities and Investments Commission Act 1989 (Cth). His Honour rejected a similar allegation in respect of MBF's newspaper advertisements.

19 At the same time his Honour held that John Bevins Pty Limited (ACN 002 003 572) (`Bevins'), by creating the television and billboard advertisements and arranging for them to be published, was knowingly concerned with MBF's contraventions. MBF and Bevins have both filed appeals from the primary decision in respect of the television and billboard advertisements (proceedings numbers N 1090 of 2002 and N 1117 of 2002 respectively) and those appeals have been heard together.

BACKGROUND TO THE APPEALS

20 The advertisements that are the subject of these appeals were prompted by the Federal Government `Lifetime Health Cover' initiative, which was announced on 11 May 1999 and scheduled to commence on 1 July 2000. As the primary judge stated, at pars [1] to [2]:

`By this initiative the Federal Government sought to reduce the strain on the public health system by encouraging Australians to take out private hospital cover. In effect the initiative meant that Australians aged between 31 and 65 who took out private hospital cover on or before 30 June 2000 were not required to pay a graduated system of premiums which increased with age. Those who joined after that date and were over the age of 30 became subject to the graduated system of premiums.

The 30 June deadline received widespread publicity. Members of the public were encouraged to purchase private health cover before that date. The private health funds including the first respondent ... [MBF], not surprisingly embarked on aggressive advertising campaigns to encourage prospective customers to purchase their particular health insurance products. To this end MBF employed ... Bevins ... to design television and print advertisements.'

21 The applicants below alleged that by television commercials screened between May 2000 and July 2000, MBF made misleading or deceptive representations that it would waive all waiting periods applying in respect of pregnancy and obstetrics for customers who purchased health insurance before the deadline of 30 June 2000 (`the waiver representation') and that consumers who purchased health insurance could claim expenses related to pregnancy the day after joining (`the claim tomorrow representation'). Further, it was alleged that by printed advertisements, displayed in newspapers and on billboards at railway stations between August 2000 and September 2000, MBF made the misleading and or deceptive representation that if a pregnant woman transferred to MBF from another health fund she would forthwith be covered for expenses related to the pregnancy (`the transfer representation'). Bevins was said to have been knowingly concerned in, or a party to, the allegedly misleading and deceptive conduct of MBF through its involvement in the creation of the advertisements.

22 The advertisements focussed on the lives of three characters whose stories were told in chronologically progressive chapters. Each character was said to be an existing member of MBF. Relevantly, one of the characters, `Steve', was an expectant father whose wife, `Judy', had fallen pregnant in late 1999. Steve and Judy's story contained four chapters. The first two chapters showed the couple shopping for, and viewing ultrasound images of, their unborn child; Steve, at work as a police officer, expressing concern over the pregnancy; and Steve and Judy attending an antenatal class. Text appearing on the screen in the second chapter said that Steve's MBF health cover helped to pay for antenatal classes. The final two chapters of Steve and Judy's story were said to contain the waiver representation and the claim tomorrow representation.

23 The primary judge dealt with the representations at pars [10] to [14] of his reasons for judgment:

`The Waiver Representation

[10] The third chapter in Steve and Judy's story depicted the day on which their baby was born. It began with the text on the screen stating "Steve and Judy's big day didn't go as planned." Judy, in a hospital bed is shown looking anxious and in pain, explains that "the artificial induction hasn't worked ... and so we're off to have a caesarean". This was followed by images of Steve hugging Judy, an anaesthetist putting a needle into Judy for an epidural and Judy being wheeled into surgery with Steve following. The text "Fortunately, they had MBF FamilyFirst with their doctor of choice" appears on screen. This was followed by Steve coming into the waiting room and announcing that "It's a girl". He is then shown holding his newborn baby in a carry box with a close up of the baby. Judy is then shown in a hospital bed waving and smiling - she announces happily "I'm a mum". The final scenes are of Steve and Judy saying that their daughter was "just beautiful" and kissing. The text "Congratulations Steve and Judy and Georgia Madison" appears on the screen with the voice over "Join any MBF hospital cover before 30 June and they'll waive the two and six month waiting periods [phone number given]" (emphasis added). The final screen shows the MBF logo with a phone number displayed and the words "or visit a Member Centre" in small text underneath. Below that, at the bottom of the screen, text approximately half the size appears, for under 5 seconds. The text reads "12 month waiting periods such as pre existing conditions and obstetrics will apply."

The Join Today, Claim Tomorrow Representation

[11] The finale of Steve and Judy's story depicted them getting used to taking care of their baby at home. It began with the text "Congratulations to MBF Members Steve and Judy (and Georgia)" while Judy talks about the questions they have to ask themselves about their baby to take care of her such as "Is she hungry or is she wet?". The images shown are of the couple bathing their baby and holding her outside their home. These were followed by a time-lapse sequence of Steve and Judy decorating the nursery. The text "Your big day is July 1" then appears on the screen with a "Lifetime Health Cover" umbrella logo. A montage of images of Steve and Judy from the other commercials and including an underwater image of Judy swimming whilst pregnant is then shown while the voice over states:

"Steve and Judy's MBF Family First is a unique type of health cover, because it's the only cover for families that gives them extra benefits for having simple health checks. They can also claim on things like sports gear and natural therapies, and of course, quality hospital cover with their doctor of choice. And if you join by July 1, MBF will waive the 2 and 6 month waiting periods."

Following an image of the newborn baby clasping an adult finger, and during the voice over, the text "Join today. Claim tomorrow" (emphasis added) appeared on the screen with the words "12 month waiting periods such as pre existing conditions and obstetrics still apply" appearing at the bottom of the screen, approximately half the size of the emphasised text above. This screen appears for under 5 seconds. The commercial concluded with an image of Steve and Judy holding their baby in front of their home "rocking" the baby and laughing. This fades to the MBF logo with a phone number and the text "or visit a Member Centre".

...

The Billboard Advertising in New South Wales and Queensland

[14] It was not in issue that in September 2000 MBF displayed on outdoor railway billboard advertisements that had been prepared by the John Bevins agency. These also depicted a heavily pregnant semi naked woman and had the words "Are you sure your health cover is going to deliver?" printed adjacent to the image. In significantly smaller print at the bottom of the poster appeared the words "Does your health insurance cover you for things like pregnancy, a knee replacement or major heart surgery? If not you'll find that switching to MBF pays - once you've served your waiting period you're covered*." In print approximately one half the size directly below appeared the words "*Conditions apply, including a 12 month waiting period." There was no evidence as to the exact size of the railway billboards. Suffice to say that each billboard was large enough that if a person of average eyesight stopped to examine one, where it was displayed with good lighting, the text would have been large enough to read without difficulty.'

LEGISLATIVE BACKGROUND

24 The first instance application, filed on 5 February 2001, was brought under the Australian Securities and Investments Commission Act 1989 (Cth) (`ASIC Act 1989'). That legislation was superseded by the Australian Securities and Investments Commission Act 2001 (Cth) (`ASIC Act') which commenced on 15 July 2001. Section 268 of the ASIC Act provides that:

`(1) This section applies to a proceeding in relation to which the following paragraphs are satisfied:

(a) the proceeding was started in a court before the commencement; and

(b) the proceeding was a federal ASIC proceeding that related to a matter to which a provision of the old ASIC legislation of the Commonwealth ... applied; and

(c) the proceeding had not been concluded or terminated before the commencement.

(2) In this section:

(a) the proceeding to which this section applies is called the "continued proceeding"; and

(b) the provision of the old ASIC legislation referred to in paragraph (1)(b) is called the "relevant old provision".

(3) Subject to subsection (4):

(a) the continued proceeding continues after the commencement in the same court as if it were, and always had been, a proceeding in relation to a matter to which the provision of the new ASIC legislation that corresponds to the relevant old provision applies; and

(b) to the extent that the proceeding, before the commencement, related to pre-commencement rights or liabilities, the proceeding, as continued, relates, and is taken always to have related, to the substituted rights and liabilities in relation to those pre-commencement rights and liabilities.

(4) Subject to any order to the contrary made by the court, the court must deal with the continued proceeding as if:

(a) the steps that had been taken for the purposes of the proceeding before the commencement had been taken for the purpose of the proceeding as continued by this section; and

(b) any orders made in relation to the proceeding before the commencement had been made in relation to the proceeding as continued by this section.' (original emphasis)

25 The present proceeding satisfies the criteria at ss 268(1)(a), (b) and (c) and is therefore, since 15 July 2001, a `continued proceeding'. As such, pursuant to s 268(3)(a), the continued proceeding continues `as if it were, and always had been' a proceeding to which the provisions of the ASIC Act apply.

26 The relevant provisions are of the ASIC Act are:

`12DA (1) [Prohibition] A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive.

...

12DB (1) [Prohibition] A person must not, in trade or commerce, in connection with the supply or possible supply of financial services, or in connection with the promotion by any means of the supply or use of financial services:

...

(c) represent that services have sponsorship, approval, performance characteristics, uses or benefits they do not have;

...

(g) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.

...

12DF (1) [Offence] A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any financial services.'

27 Sections 12DA, 12DB and 12DF of the ASIC Act are analogous to ss 52, 53(c), 53(g) and 55A of the Trade Practices Act 1974 (Cth) (`TPA'). There is no relevant material difference between these provisions of the ASIC Act and the TPA and it was not in contention that the principles (and case law) applicable to contraventions of Part V of the TPA are also applicable to determining whether there has been a contravention of the above provisions of the ASIC Act.

MBF APPEAL (N 1090 OF 2002)

28 MBF submits that the primary judge erred in law in finding that its television and billboard advertisements breached the ASIC Act and that, even if his Honour's finding was correct, the relief ordered was not appropriate. Those orders include that MBF publish corrective advertising in a form approved by the Court. That order was stayed pending the determination of MBF's appeal.

29 The central thrust of the MBF appeal is that the advertisements it published were not misleading and deceptive or likely to mislead or deceive. Section 52 `is a comprehensive provision of wide impact'; Brown v Jam Factory Pty Ltd [1981] FCA 35; (1981) 53 FLR 340 at 348. Whether conduct is misleading or deceptive or likely to mislead or deceive is a question of fact which the court must determine for itself.

30 MBF's submissions, both written and oral, referred variously to what a `reasonable member of the public' or an `ordinary normal person acting reasonably' might do or think. In Parkdale Custom Built Furniture Proprietary Limited v Puxu Proprietary Limited [1982] HCA 44; (1982) 149 CLR 191 at 199, Gibbs CJ commented that:

`Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and the gullible as well as the astute, the section must in my opinion by [sic] regarded as contemplating the effect of the conduct on reasonable members of the class. The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests.'

The Chief Justice added that what is reasonable will depend on all the circumstances.

31 The proposition that in assessing whether a representation contravenes s 52 of the TPA (and its analogues) the court should examine the effect of that conduct on a reasonable person in the class of persons to whom the representation was made is supported by the High Court's decision in Campomar Sociedad, Limitada v Nike International Limited [2000] HCA 12; (2000) 202 CLR 45 at 85 where the High Court (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ) stated:

`Where the persons in question are not identified individuals to whom a particular misrepresentation has been made or from whom a relevant fact, circumstance or proposal was withheld, but are members of a class to which the conduct in question was directed in a general sense, it is necessary to isolate by some criterion a representative member of that class. The inquiry thus is to be made with respect to this hypothetical individual why the misconception complained has arisen or is likely to arise if no injunctive relief be granted. In formulating this inquiry, the courts have had regard to what appears to be the outer limits of the purpose and scope of the statutory norm of conduct fixed by s 52. Thus, in Puxu, Gibbs CJ observed that conduct not intended to mislead or deceive and which was engaged in "honestly and reasonably" might nevertheless contravene s 52. Having regard to these "heavy burdens" which the statute created, his Honour concluded that, where the effect of conduct on a class of persons, such as consumers, was in issue, the section must be "regarded as contemplating the effect of the conduct on reasonable members of the class." '

32 The class of persons to whom the advertisements for health insurance were addressed was extremely large, particularly because the Federal Government was vigorously encouraging the Australian public to purchase health insurance. MBF submitted that any reasonable person whose decision-making processes were initiated by the advertisements would have checked that their assumptions in relation to the waiver of waiting periods were correct. However, the extraordinary width of the class in question suggests that it would have included many people whose decision making processes lacked the level of sophistication that MBF suggests a `reasonable' person would have exercised.

The alleged errors in the primary judge's reasoning

33 MBF submits that the primary judge was in error in finding that the television commercials conveyed a representation that MBF was waiving the applicable waiting periods for pregnancy related expenses and that a person could claim on their insurance the day after they joined. MBF makes the following points:

(i) each television commercial contained a disclaimer, albeit in fine print, stating that the 12 month waiting period for obstetrics continued to apply;

(ii) no statement was explicitly made that the 12 month waiting period would be waived;

(iii) the persons depicted in the advertisements were said to be existing MBF members rather than people who had just joined and therefore a viewer would assume they were enjoying the benefits of obstetrics cover because their waiting period had already expired; and

(iv) even if the primary judge's findings regarding the impression conveyed by the television commercials are correct (which MBF denies), his Honour failed to consider the nature of the relevant services, the circumstances in which those services are acquired and the disclosures which are inevitably made to persons seeking to acquire MBF's insurance services.

34 In respect of the billboard advertisements, the primary judge accepted that people who viewed them would most likely be told of the waiting periods by MBF staff or read about them in MBF literature. His Honour held, however, that this later disclosure was not effective to change the misleading character of the advertisements. MBF submits that in reaching this conclusion his Honour failed to assess the practical effect of the impugned conduct. MBF says that in determining whether conduct contravenes the relevant legislation, `the court must have regard to any conduct which might render any error on the part of a consumer temporary and commercially irrelevant' and that the subsequent conduct of both the representee and MBF will have a bearing on both relief and liability.

35 MBF submits that irrespective of the impression conveyed by the main part of the advertisements the written disclaimers were sufficiently prominent to bring the obstetrics waiting period to the attention of a person viewing the advertisements.

36 In support of its submissions MBF points to the decision of Moore J in George Weston Foods Ltd v Goodman Fielder Ltd (2000) 49 IPR 553 (`Wonder White Case'). In that case Moore J held that an asterisk can be sufficient to draw the attention of a consumer to a qualification of a representation. That case concerned, inter alia, the packaging of bread which declared in large typeface `Now Twice the Fibre*'. Moore J observed, at 572, that:

`the asterisk is prominent and would be taken to signify some qualification or explanation of the words used. One could expect a consumer interested in the fibre content to seek out the qualification or explanation. Not only is the explanation within 2 cm of the words used on the package (albeit in much smaller type) but it is repeated elsewhere on the packaging.'

37 While the Wonder White Case is authority that an asterisk leading to a qualification of a representation may be effective to neutralise an otherwise misleading or deceptive advertisement, whether this is so is a matter for determination in the specific circumstances of any particular case. The qualifying material must be sufficiently prominent to prevent the primary statement being misleading and deceptive or likely to mislead or deceive; Australian Competition and Consumer Commission v Signature Security Group Pty Limited [2003] FCA 3 at [26] - [27]; [2003] FCA 3; (2003) ATPR 41-908.

38 Signature Security involved, inter alia, the advertising of security systems for a price exclusive of any goods and services tax component. In that case, at [27], I commented:

`The degree of prominence required may well vary with the potential of the primary statement to be misleading and deceptive. It seems to me that a representation that the price of goods is $295 is seriously misleading if the truth is that they are never available at that price. Even an astute observer noticing the asterisk and realising that it directs the reader to additional information might be led to believe that the goods were available for $295 at least in some circumstances. It is unlikely that such an observer would immediately conclude that they were never available at that price. In those circumstances it would take an extremely prominent reference to the additional information to prevent such a representation from being misleading.'

39 This reasoning is pertinent to the MBF advertisements in question, which presented the striking image of a pregnant woman with the waiver and claim tomorrow representations (primary statements). The disclaimer qualified these representations. The impact of the fine print qualification is, however, disproportionate to the impact of the pregnancy image and the primary statements. The potential for the overall effect to be misleading and deceptive is immense.

40 In the billboard advertisements the disclaimer was flagged by an asterisk. In the television advertisements it was not. Rather the text, `12 month waiting periods such as pre-existing conditions and obstetrics still apply', appeared at the bottom of the screen, in small font, for less than five seconds. Even an astute and observant viewer may not have had sufficient time to peruse the fine print with sufficient care to notice the qualification and it is not unlikely that even a reasonably careful viewer might have been misled.

41 Asterisk or not, the disproportion in both the television and billboard advertisements between the dominant representations and the qualification of those representations was such that the qualification was insufficient to draw the attention of prospective customers to the fact that a waiting period applied for obstetrics claims. It is the entire effect, particularly the first impression, that makes the advertisements misleading. Moreover, the fact that the advertisements were part of a campaign to attract new members pursuant to the `Lifetime Health Cover' initiative was relevant for, as the primary judge observed, at [47]:

`The fact that consumers were forced to make a decision on whether to purchase private health insurance in what was a quite short period of time leading up to the 30 June deadline explains why this first impression was so significant.'

The subsequent disclosures

42 MBF submits that, even if a prospective customer was misled by the television or billboard advertisements, later disclosures made to the prospective customer would dispel any misapprehension as to the cover offered by MBF, including relevant waiting periods. When prospective customers made further enquiries, or contacted MBF to obtain insurance, appropriate disclosures would have been made in booklets titled `Your Choice!' or `Quickjoin'; on the internet where prospective customers could follow hyperlinks to the terms and conditions; or in many cases, orally by MBF staff. In any event, MBF submits, new members were provided with a `Welcome Pack' which disclosed the fact that certain waiting periods apply. MBF also submitted that any reasonable person would take steps to ensure that their assumptions arising from the advertisements (correct or otherwise) were accurate.

43 It is not to the point that the ACCC only identified two instances of people who had actually been misled. Although evidence of the public being misled or deceived may be persuasive, it is not necessary for there to be any such evidence; Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177. The submission that there is room under the TPA or its analogues for publication of misleading or deceptive advertising so long as it is corrected by later material is not sustainable. Section 12DA(1) of the ASIC Act prohibits conduct that is `misleading or deceptive or is likely to mislead or deceive' and neither intent nor effect is determinative of whether conduct is in breach of this provision; Yorke v Lucas [1985] HCA 65; (1985) 61 ALR 307 (`Yorke v Lucas') at 666 and Equity Access Pty Ltd v Westpac Banking Corporation [1989] FCA 506; (1989) 16 IPR 431 at 441. Nor is it to the point that the misleading or deceptive impression may or will be corrected before or after any contract is made. Whether a representation is misleading or deceptive (or likely to be so) depends on the circumstances in which it is made and not on what might happen in the future; St Luke's Health Insurance v Medical Benefits Fund of Australia Limited [1995] FCA 1314; (1995) ATPR 41-428; Minister for Health and Aged Care v Harrington Associates Ltd [2000] FCA 1723; (2000) 107 FCR 212.

44 In my view the primary judge's conclusion that the television and billboard advertisements were misleading was correct for the reasons his Honour gave. Consequently the declarations made by his Honour on 2 October 2002 in relation to contraventions of ss 12DA, 12DB and 12DF were correct.

Relief

45 In their amended application filed on 25 June 2001, the respondents to the MBF appeal sought, inter alia, orders under ss 12GD and 12GE of the ASIC Act 1989 directing MBF to publish corrective advertising on television and in newspapers. Section 12GE, which specifically provided for the Court to make such orders, was repealed effective from 11 July 2001 when the ASIC Act came into force. It was replaced by ss 12GLA and 12GLB, dealing with non-punitive and punitive orders respectively. This amendment mirrors the repeal of s 80A of the TPA and its replacement by ss 86C and 86D. The circumstances in which s 12GLB of the ASIC Act and s 86D of the TPA allow the Court to make punitive orders do not apply here. Section 12GLA of the ASIC Act is relevant and provides:

`Non-Punitive Orders

12GLA (1) [Court may make orders in subs (2)] The Court may, on application by ASIC, make one or more of the orders mentioned in subsection (2) in relation to a person who has engaged in contravening conduct.

12GLA (2) [Court orders] The orders that the Court may make in relation to the person are:

(a) a community service order; and

(b) a probation order for a period of no longer than 3 years; and

(c) an order requiring the person to disclose, in the way and to the persons specified in the order, such information as is so specified, being information that the person has possession of or access to; and

(d) an order requiring the person to publish, at the person's expense and in the way specified in the order, an advertisement in the terms specified in, or determined in accordance with, the order.

12GLA (3) [Court's powers not limited] This section does not limit the Court's powers under any other provision of this Act.'

Subsection (4) includes a definition of `contravening conduct' that includes conduct that contravenes s 12DA.

46 The primary judge, having found that MBF's conduct in relation to the television and billboard advertising was misleading and deceptive (and thereby contravened s 12DA of the ASIC Act) ordered MBF to publish corrective advertising by television and in various newspapers, however this order was stayed pending the hearing of this appeal. In making those orders his Honour referred to s 12GE of the ASIC Act 1989, noting that it had been repealed. Although the primary judge did not refer to s 12GLA, it would seem (for reasons outlined in [25] above) that this was the relevant section at the time of those orders and therefore his Honour had jurisdiction, in the exercise of his discretion, to order corrective advertising. Unlike ss 86C and 86D of the TPA, ss 12GLA and 12GLB are not restricted to conduct that occurred after their commencement. Consequently, Lindgren J's concern as to the availability of power to make orders for corrective advertising after the date on which s 80A was replaced by s 86C, in relation to conduct that occurred before that date, is not relevant in this case; Australian Competition and Consumer Commission v Woolworths Limited (No 2) [2002] FCA 1046 at [23]; (2002) ATPR 41-890.

47 The primary judge expressed the opinion that there would be few, if any, people now labouring under any misconception as a result of the MBF advertisements. Nevertheless, his Honour held that an order for corrective advertising was appropriate as it would draw the attention of anyone who may have been misled to the availability of a remedy as well as generally raising public awareness of waiting periods for health insurance cover and the need to analyse advertisements published by the insurance industry carefully.

48 The principles guiding the exercise of discretion in relation to corrective advertising have developed in the context of orders sought under s 80 and s 80A of the TPA. Those principles have emphasised that the power is to be used protectively and not punitively. The addition of s 86D and s 12GLB to the TPA and the ASIC Act respectively have expanded the Court's power by expressly providing for punitive orders; see Explanatory Memorandum, Trade Practices Amendment Bill (No 1) 2000 Item 24 and Revised Explanatory Memorandum, Financial Services Reform (Consequential Provisions) Bill 2001 3.16-3.18. As s 12GLB does not apply here (see [45] above) there is no question of there being a punitive order under that section. Accordingly the principles developed under s 80 and s 80A of the TPA are applicable.

49 There are numerous authorities for the proposition that the purpose of ordering corrective advertising under s 80 and/or s 80A of the TPA is to protect the public interest and that punitive considerations should not be entertained. In Australian Competition and Consumer Commission v On Clinic Australia Pty Ltd (1996) 35 IPR 635, Tamberlin J observed, at 640:

`The purpose of corrective advertising is to protect the public interest. ... Corrective advertising is intended to dispel incorrect or false impressions which may have been created as a result of deceptive or misleading conduct. It is not intended to be punitive. In any matter concerning corrective advertising the timing of such corrective advertising is of course important, ... There is no principle that any particular period is appropriate as a point beyond which corrective advertising is not warranted. In the context of advertising it is necessary to examine the nature, extent and intensity of the advertising and the media in which it has been released with a view to deciding whether there could reasonably be any current misapprehension as a result of the advertisements.'

See also Janssen Pharmaceutical Pty Ltd v Pfizer Pty Ltd (1986) ATPR 40-654, Makita (Australia) Pty Ltd v Black & Decker (Australasia) Pty Ltd (1990) ATPR 41-030 at 51,477; Hospital Contribution Fund Australia Ltd v Switzerland Australia Health Fund Pty Ltd (1988) ATPR 40-846 at 49,117; Australian Competition and Consumer Commission v Hungry Jack's Pty Ltd [1996] FCA 955; Australian Competition and Consumer Commission v Purple Harmony Plates Pty Ltd [2001] FCA 1062 at [33]; and Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Pty Ltd (2000) 34 ACSR 673 at 677. This approach is peculiarly apt in relation to orders made under s 12GLA of the ASIC Act and s 86C of the TPA now that there is specific provision for `punitive orders' in s 12GLB of the ASIC Act and s 86D of the TPA.

50 Advertising that is directed to dispelling incorrect or false impressions created as a result of deceptive or misleading conduct will generally have, as an ancillary benefit, some public educational effect in relation to the operation of the relevant legislative provisions. In Australian Competition and Consumer Commission v Target Australia Pty Ltd [2001] FCA 1326; (2001) ATPR 41-840 (`ACCC v Target') Lee J commented, at 43,382, that:

`The purpose sought to be achieved by corrective advertising is to raise public awareness - for both consumers and competitors - as to the type of conduct that may contravene the Act, and as to the outcome of the particular litigation.'

51 This benefit had often been recognised including in Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 1387; (1999) 95 FCR 114 (`ACCC v REIWA'). Although French J was there dealing with breaches of Part IV of the TPA, his comments are equally applicable to the conduct under consideration here. French J accepted that under s 80 of the TPA there was power to make orders to bring the outcome of those proceedings to the attention of the members of the Real Estate Institute of Western Australia and to the public as consumers. Nevertheless his Honour observed that it is important that corrective advertisements do more than merely announce a `win' for the ACCC. In relation to the contraventions of Part IV of the TPA French J held, at 133, that s 80 authorised advertisements `directed to informing the relevant markets of the outcome of the litigation so that those in the market have at least a broad understanding of the ways in which the contravenors have had to change their conduct.' Such advertisements `aid in the enforcement of the primary orders and the prevention of the repetition of the contravening conduct.'

52 His Honour expressed similar views in Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 (`Virgin Mobile') where he was prepared to make consent orders for corrective advertising because the proposed advertisement was `consistent with the objectives of consumer protection for which such advertisements should be ordered in respect of contraventions of Pt V'. His Honour noted, at [22], that the advertising would `assist in drawing [the contravention] to the attention of consumers generally who may have acquired Virgin Mobile packages or may be contemplating doing so' and would serve `the positive function of alerting consumers to the obligation imposed on Virgin Mobile to disclose those things', namely the cash price and minimum cost of the phone package.

53 In discussing the question of corrective advertising the primary judge stated that he saw `utility' in ordering MBF to publish corrective advertising in newspapers and on television because it would not only remind the public that MBF had engaged in misleading conduct but would educate both the insurance industry and its customers about the consequences of misleading advertising. His Honour continued, at [91]:

`Such advertising will, also, make consumers aware, if they themselves were induced to purchase insurance on reliance of the advertisements, that they might have some remedy. Further, the general complexity of the health insurance products and particularly waiting periods means that even if consumers had forgotten the actual advertisement, a corrective advertisement will assist them to understand the importance of waiting periods in the future and increase the awareness of consumers accordingly.'

54 It was submitted for MBF that there must be a nexus between any corrective advertising and the conduct that constituted the statutory breach. In the absence of such nexus it was submitted that the Court has no power to make an order directed to the general education of the public about its statutory rights and their enforcement; see the comments of French J in ACCC v REIWA at 113. As Mr Sackar QC, senior counsel for MBF put it, MBF could not `legitimately be ordered to pay for educating consumers generally nor educating the insurance community generally'. I agree with that proposition but do not agree that this was the effect of the primary judge's orders. While his Honour expressed the view that most consumers had not been misled he clearly accepted that there had been some persons who were misled into purchasing MBF products by the advertisements in question. He stated, at [86]:

`If corrective advertisements are placed with television stations the nature of the misleading conduct will be drawn ... to the attention of the public and if they were misled they will be able to take such advice as they may receive in the circumstances of their case.'

In my view there was a sufficient nexus between MBF's conduct and the corrective advertising ordered by the primary judge for it to be within his power, and a matter for his discretion, to make the orders.

55 The primary judge ordered that his orders for corrective advertising be stayed `pending the prosecution of an appeal'. In doing so he noted the undertaking given by MBF that it would file and serve any notice of appeal within 14 days of his Honour's orders, would prosecute any appeal with `due expedition' and would not, on the appeal:

`make any submission that the rights of the First Applicant are affected by any time elapsing between today and the ultimate disposition of the appeal.'

MBF has abided by that undertaking and has confined its submissions concerning the passage of time to the period between the advertising campaign and his Honour's orders.

56 As mentioned above, the orders for corrective advertising were made in the exercise of the primary judge's discretion. In House v The King [1936] HCA 40; (1936) 55 CLR 499, which involved an appeal against sentence, Dixon, Evatt and McTiernan JJ, at 504-5, outlined the principles governing an appeal against an exercise of discretion:

`It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.'

57 MBF submits that the orders for corrective advertising made by the primary judge were so unreasonable as to indicate error on the part of his Honour. It points to the long period that elapsed between the advertising campaign and the orders and to his Honour's findings that it is likely that most customers were not misled. In addition MBF submits that since the advertising campaign was directed to a specific offer that applied during a period that has long since expired, there is no currently operative misrepresentation to dispel. Given these factors, MBF submits, corrective advertising may create confusion where none presently exists.

58 The effluxion of time generally must have a bearing on the utility of orders for corrective advertising; see Trade Practices Commission v Optus Communications Pty Ltd (1996) 34 IPR 176 (`TPC v Optus') at 196 and Australian Competition and Consumer Commission v Wizard Mortgage Corporation Limited (2002) ATPR 41-903. MBF's advertising program ran between January 2000 and September 2000. It is now three years since the program ended. Irrespective of the undertaking by MBF referred to in [55] above, this Court is entitled to take this period into account in considering whether the orders for corrective advertising are, in the present circumstances, so unreasonable or unjust that they should be set aside.

59 I accept MBF's submission that there is no continuing opportunity for the advertisements to mislead the public and therefore it is unnecessary to correct any ongoing misapprehension. I am mindful of the primary judge's view that there will have been some persons who were misled into purchasing MBF's products by the misleading advertisements as well as his qualification that, `it is likely that most consumers were not, if only because they will not have relied upon the advertisements, but rather upon other information and literature given to them by MBF'. I accept that the passage of time (including the time between his Honour's orders and the present) is such that there is a legitimate concern as to whether corrective advertisements would be likely to cause confusion and be of little utility. I also accept that, in principle, there is utility in informing those people who were misled (be the group large or small) of the true position and thus putting them in the position to assess any rights they may have as a result.

60 There is particular cause for concern about whether, in these circumstances, television is an appropriate medium for corrective advertising. In considering the impugned advertisements, the primary judge referred to the views of Merkel J in Telstra Corporation v Optus Communications Pty Limited (1997) ATPR 41-541 where his Honour, reviewing certain comparative television advertisements of Optus, said, at 43,514:

`[The advertisements] will be seen by the casual but not overly attentive viewer viewing a free-to-air program with only marginal interest in the advertisements shown between the segments of the program. In that context it will be the first impressions conveyed to that viewer, rather than an analysis of the cleverly crafted constituent parts of the commercial, which will be determinative. The observations I have referred to above are of particular relevance to television advertising where the message is basically one of the impression conveyed.'

61 This evanescent quality of television advertising is as relevant to the impact of corrective advertisements as it is to those of the original campaign. Reminding viewers of the MBF campaign and correcting any misrepresentation that arose from it would not be simple. In my view it is highly likely that such advertisements would not achieve their purpose and in the circumstances it would be unjust to require MBF to publish them. I would set aside the primary judge's orders as to corrective television advertising.

62 The primary judge also ordered that MBF publish corrective advertising in certain newspapers. In my view advertising in this form is inherently better adapted to convey a complex message than is television advertising. The primary judge recognised this in finding that MBF's newspaper advertisements did not suffer from the same defects as the television and billboard advertising and thus were not misleading. His Honour commented that `Print advertisements give the reader more time to study the content. They have not the character of transience which television commercials have.'

63 As previously noted (see [56] above) an order made in the exercise of the primary judge's discretion should not be set aside on appeal merely because the Court hearing the appeal may have come to a different conclusion. In the circumstances, irrespective of whether I would or would not have made orders for newspaper advertising correcting the potentially misleading television and billboard advertising, I do not believe that it would be appropriate to interfere with the orders for corrective advertising in newspapers made by the primary judge. I would therefore set aside the orders made by the primary judge in so far as they require corrective television advertising. I would otherwise dismiss the appeal by MBF.

THE BEVINS APPEAL (N 1117 OF 2002)

64 Section 12GD(1) of the ASIC Act (echoing s 75B of the TPA) provides:

`If, on the application of the Minister, ASIC or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:

(a) a contravention of a provision of this Division; or

(b) attempting to contravene such a provision; or

(c) aiding, abetting, counselling, or procuring a person to contravene such a provision; or

(d) inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene such a provision; or

(e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or

(f) conspiring with others to contravene such a provision;

the Court may grant an injunction in such terms as the Court determines to be appropriate.'

65 On 2 October 2002 the primary judge declared that Bevins, `in making the advertisements ... and by arranging for them to be published was directly, or indirectly, knowingly concerned in, or party to ... contraventions of the ASIC Act'. It is from this finding of accessorial liability that Bevins appeals.

66 In Cassidy v NRMA Health Pty Ltd [2002] FCA 1228 (`Cassidy v NRMA'), at [71] - [73], Jacobson J provided a succinct summary of the statutory scheme for accessorial liability in the ASIC Act and the TPA:

`It seems to me that the [ASIC] Act and the TPA contain a statutory scheme which, in subdivisions D and G of the Act, and, in particular ss 12DA, 12DB, 12GB, 12GD, 12GF and 12GM, distinguish between principal liability and accessorial liability. The same scheme is to be found in Part V and Part VI of the TPA and, in particular, ss 52, 53, 75B, 79, 80, 82 and 87 of the TPA.

As part of this statutory scheme, s 12DA of the [ASIC] Act and s 52 of the TPA, if contravened, may result in remedies irrespective of the principal's state of mind. By contrast, accessorial liability under s 12GD of the [ASIC] Act and under ss 75B and 80 of the TPA is imposed only upon those who are knowingly concerned in the contravention of the Act.

It has been well established since the decision of the High Court in Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 at 667-669 that accessorial liability under s 75B requires knowledge of the falsity of a representation and intentional participation in a contravention of the provisions of s 52 of the TPA.'

67 The similarity between the provisions concerning accessorial liability in the TPA and the ASIC Act (together the `accessory liability provisions') is such that authorities dealing with the former are clearly applicable to the latter.

68 The accessory liability provisions draw on criminal law notions of culpability. In Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 (`Yorke v Lucas'), the High Court was much influenced in its interpretation of s 75B by this provenance. The Court referred at length to its earlier analysis of accessory liability in the criminal sphere in Georgianni v The Queen [1985] HCA 29; (1985) 156 CLR 473 (`Georgianni'). The appellant in Georgianni had been convicted of a strict liability motor vehicle offence under s 52A of the Crimes Act 1900 (NSW) in reliance on s 351 of that Act, which provided that a person who aids, abets, counsels or procures the commission of any misdemeanour could be proceeded against as a principal offender. At 479 Gibbs CJ said:

`Section 52A prescribes an objective standard and, speaking generally, the reference to a motor vehicle being driven "at speed or in a manner dangerous to the public" refers to the actual behaviour of the driver and does not require any given state of mind as an essential element of the offence: [reference omitted]. That does not mean that a person can aid, abet, counsel or procure the commission of an offence of strict liability without having an intention to do so formed in the light of knowledge of the facts. The very words used in s 351, and the synonyms which express their meanings - e.g. help, encourage, advise, persuade, induce, bring about by effort - indicate that a particular state of mind is essential before a person can become liable as a secondary party for the commission of an offence, even if the offence is one of strict liability.'

69 In relation to s 75B(1)(a) of the TPA, Mason ACJ, Wilson, Deane and Dawson JJ observed in Yorke v Lucas, at 667:

`the words used, "aided, abetted, counselled or procured", are taken from the criminal law where they are used to designate participation in a crime as a principal in the second degree or as an accessory before the fact. Both in the case of felonies where the principal offender and the secondary participant commit separate offences, and in the case of misdemeanour where no distinction is drawn between the two, a person will be guilty of the offences ... only if he intentionally participates in it. To form the requisite intent he must have knowledge of the essential matters which go to make up the offence whether or not he knows that those matters amount to a crime.' (emphasis added)

At 669 their Honours continued:

`Notwithstanding that s 75B operates as an adjunct to the imposition of civil liability, its derivation is to be found in the criminal law and there is nothing to support the view that the concepts which it introduces should be given a new or special meaning.'

70 In Giorgianni the High Court considered what must be established to impose accessory liability under the criminal law. Wilson, Deane and Dawson JJ said, at 504 -505:

`Intent is an ingredient of the offence of aiding and abetting or counselling and procuring and knowledge of the essential facts of the principal offence is necessary before there can be intent ....

Aiding, abetting, counselling or procuring the commission of an offence requires the intentional assistance or encouragement of the doing of those things which go to make up the offence. The necessary intent is absent if the person alleged to be a secondary participant lacks knowledge that the principal offender is doing something or is about to do something which amounts to an offence.'

Their Honours continued, at 506-507:

`For the purposes of many offences it may be true to say that if an act is done with foresight of its probable consequences, there is sufficient intent in law even if such intent may more properly be described as a form of recklessness. There are, however, offences in which it is not possible to speak of recklessness as constituting a sufficient intent. Attempt is one and conspiracy is another. And we think the offences of aiding and abetting and counselling and procuring are others. Those offences require intentional participation in a crime by lending assistance or encouragement. They do not, of course, require knowledge of the law and it is necessary to distinguish between knowledge of or belief in the existence of facts which constitute a criminal offence and knowledge or belief that those facts are made a criminal offence under law. The necessary intent is absent if the person alleged to be a secondary participant does not know or believe that what he is assisting or encouraging is something which goes to make up the facts which constitute the commission of the relevant criminal offence. He need not recognize the criminal offence as such, but his participation must be intentionally aimed at the commission of the acts which constitute it. It is not sufficient if his knowledge or belief extends only to the possibility or even probability that the acts which he is assisting or encouraging are such, whether he realizes it or not, as to constitute the factual ingredients of a crime. If that were sufficient, a person might be guilty of aiding, abetting, counselling or procuring an offence which formed no part of his design. Intent is required and it is an intent which must be based upon knowledge or belief of the necessary facts.'

71 There is, however, at least one qualification (also found in the criminal law) to the principle that a person cannot be found guilty as an accessory unless he had actual knowledge of all the matters that together are necessary and sufficient for the conduct in question to constitute an offence. It was accepted by the High Court in Giorgianni, per Gibbs CJ at 482:

`One qualification that must be accepted is that wilful blindness, the deliberate shutting of one's eyes to what is going on, is equivalent to knowledge.'

Wilful blindness will not easily be imputed and must be something greater than mere negligence or recklessness. Gibbs CJ went on at 487:

`My view of the law may be summed up very shortly. No one may be convicted of aiding, abetting, counselling or procuring the commission of an offence unless, knowing all the essential facts which made what was done a crime, he intentionally aided, abetted, counselled or procured the acts of the principal offender. Wilful blindness, in the sense that I have described, is treated as equivalent to knowledge but neither negligence nor recklessness is sufficient.'

72 Section 75B(1)(c) extends the liability to someone `knowingly concerned' in contravening conduct. However, it is clear from Yorke v Lucas that the reasoning applied to s 75B(a) also applies to s 75B(c). The joint judgment concluded at 670:

`In our view, the proper construction of par (c) requires a party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention.' (emphasis added)

73 In a separate judgment Brennan J, at 677, expressed a similar view stating that the TPA:

`does not extend liability for a s 52 contravention to a person who procures the corporation to engage in contravening conduct if that person is honestly ignorant of the circumstances that give that conduct a contravening character.'

At 673 his Honour said:

`Civil liability is ... imposed only on those who engage in conduct prescribed by s 75B with the state of mind which the criminal law calls mens rea .... A person whose act or omission brings him within the literal terms of the provision is not held liable, however, unless he engaged in the conduct therein specified (aiding, abetting, etc.) with a state of mind that amounts to mens rea.'

This approach has consistently been followed in this Court: see for example Australian Competition and Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 (`IMB Group') at [134]; Fernandez v Glev [2002] FCA 1859 (`Fernandez v Glev') at [18]; Cassidy v NRMA at [73]; and Chan Cuong Su t/a Ausviet Travel v Direct Flights International (No 2) (1999) ATPR 41-677 at 42,666.

74 In Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213; (2002) 118 FCR 236 (`Rural Press') the Full Court considered whether findings of accessory liability, by way of being knowingly concerned in contraventions of ss 45(2)(a)(ii) and 45(2)(b)(ii) of the TPA, should be set aside. The Court, at [155], noted that the primary judge had specifically held that each of the appellants intended to procure a result whereby competition in the area would `come to an end'. Counsel for the appellants submitted that, in order to be guilty as an accessory it was necessary to show that a person actually knew that what they were participating in amounted to a contravention of the TPA. That submission is clearly incorrect in light of Yorke v Lucas; in particular at 667 per Mason ACJ, Wilson, Deane and Dawson JJ. The Full Court undertook a thorough analysis of the relevant authorities in this area, in particular Yorke v Lucas and Georgianni and also referred to the decision of Lindgren J, in Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (No 2) [1999] FCA 1161; (1999) 95 FCR 302 (`Giraffe World') at 346, in which his Honour said: `It is not required that the accessory should have objectively appreciated that the conduct was unlawful.' The Full Court in Rural Press said, at [160]:

`In our opinion, Lindgren J's formulation in Giraffe World, which the primary Judge applied in the present case, accords with the principles relating to accessory liability stated by the High Court ....'

75 I do not quibble with this analysis, which is clearly correct. It is very well established that knowledge that conduct is unlawful is not required to establish accessorial liability. However, it was not in contention that the appellants in Rural Press intended to bring about a lessening of competition in the area (contrary to the TPA). The Full Court said, at [162], that the appellants `intended that the incipient competition in area should be brought to an end.' The issue before the Full Court in Rural Press was a different one to the issue before this Court, which goes directly to what Lindgren J, in Giraffe World at 346, described as,

`the critical issue raised by the authorities of the state of mind of the supposed accessory in relation to the particular pleaded contraventions.'

76 In this case, the primary judge accepted that Bevins did not subjectively appreciate that the advertisements were false misleading or deceptive. At [73] his Honour stated:

`The question, therefore is whether the applicant has shown that the John Bevins Agency knew of the essential elements of the conduct that constituted the relevant offence. The question is not whether the agency, or those employed by it subjectively appreciated that the advertisements were false or misleading. If it were I would find that they had no liability. I accept the evidence led that none of those who gave evidence formed the view that the advertisements were misleading. None intended to mislead or deceive the public.' (emphasis added)

77 His Honour concluded, at [75]:

`It is clear that the Agency had knowledge of the essential facts which constituted the contraventions, even although they were not consciously aware that those facts would give rise to a contravention. It could hardly be said that they were ignorant of the circumstances that gave the advertisements their contravening character. They had created the advertisements, they were aware that the advertisements were to be published and in fact placed these advertisements with the media. The fact that they made a mistake in assuming that the advertisements did not contravene the law is no defence.'

78 With great respect, I have difficulty in reconciling his Honour's view with the High Court's approach in Yorke v Lucas which adopted the approach to accessory liability explained in Giorgianni, where the Wilson, Deane and Dawson JJ said, at 506:

`The necessary intent is absent if the person alleged to be a secondary participant does not know or believe that what he is assisting or encouraging is something which goes to make up the facts which constitute the commission of the relevant ... offence.'

The learned primary judge held that neither Bevins nor its employees believed the advertisements to be misleading or deceptive, or likely to be so. His Honour also held that they did not intend `to mislead or deceive the public'. These findings dictate the outcome of this appeal.

79 Yorke v Lucas shows that knowledge of the actual conduct is not sufficient for accessorial liability. It concerned a sale of business in the course of which the vendors provided misleading information concerning turnover and profit. Mr Lucas was the managing director of the vendor's land agent. The vendor gave the information to Mr Lucas who passed it on to the purchasers. Mr Lucas was aware of the figures given by the vendor but was not aware, and had no reason to suspect, that they were incorrect. In holding that Mr Lucas was not liable as an accessory, the majority of the High Court said, at 667-8:

`Upon the findings of the trial judge ... Lucas lacked the knowledge necessary to form the required intent. A contravention of s 52 involves conduct which is misleading or deceptive or likely to mislead or deceive and the conduct relied upon in this case consisted of the making of false representations. Whilst Lucas was aware of the representations ... he had no knowledge of their falsity and could not for that reason be said to have intentionally participated in the contravention.' (emphasis added)

80 It is well established that neither knowledge nor intention is necessary for there to be a contravention of s 52 of the TPA or of s 12GA of the ASIC Act. It is sufficient (and necessary) that the conduct in question can be accurately described as `misleading or deceptive' or `likely to mislead or deceive'. This misleading or deceptive character is a question of fact that must be decided in the context of all the surrounding circumstances; Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202. That `fact' is an essential element of the contravention. It follows that to be liable as an accessory one must have knowledge of the misleading and deceptive character of the relevant conduct.

81 In Yorke v Lucas Mr Lucas was not liable as an accessory because he did not know that the information he was giving to the prospective purchaser was false. He lacked knowledge of an essential element of the contravention, such knowledge being `necessary to form the required intent'; 667 per Mason ACJ, Wilson, Deane and Dawson JJ. In the words of Brennan J, he was `honestly ignorant of the circumstances that [gave] that conduct a contravening character'; see [71] above. As such and given that, per Gibbs CJ in Georgianni, `a person cannot aid, abet, counsel or procure an offence of strict liability without having an intention to do so formed in light of the knowledge of the facts', Mr Lucas could be not be liable as an accessory.

82 This is not to say that to be liable as an accessory to a strict liability breach of s 52 it is necessary to know that the conduct of the principal is unlawful, or indeed to have any knowledge of the provisions of the TPA or the ASIC Act. But it is necessary to know the essential elements of the contravention, by which I understand that one must know that which makes the conduct a contravention; in this case, its misleading and deceptive character. Only then can one form the intention to participate in conduct of that character.

83 In some cases dealing with s 75B there are suggestions that liability under s 75B does not require the accessory to know that the conduct of the principal has a misleading or deceptive character; see for instance Paper Products Pty Ltd v Tomlinsons (Rockdale) Pty Ltd (1994) AIPR 41-315 at 42,204; Heydon v NRMA (2001) Aust Torts Reports ¶81-588 at 66,390 per McPherson AJA; and Adler v Australian Securities and Investments Commission (2003) 46 ASCR 504 at [331]-[342]. A similar view was expressed in Wheeler Grace & Pierucci v Wright (1989) 16 IPR 189 (`Pierucci') at 209 where Lee J, after referring to the majority judgment in Yorke v Lucas, said:

`The knowledge required is not knowledge or awareness that the conduct has the capacity to mislead nor knowledge that it may be a contravention of s 52 of the Act. What must be shown to be possessed is knowledge of the elements of a contravention.'

His Honour further commented (at 210) that it was `immaterial whether Collins understood the import of those circumstances or held a positive belief as to the truth of the assertion he had made for the [company]'. The other two members of the Full Court, Neaves and Burchett JJ did not address this issue.

84 In Pierucci, Mr Collins, a company employee chairing a meeting of investors made an unqualified prediction as to the return that could be expected on an investment when he was fully aware that the investment was speculative and that the statement required qualification. In fact, prior to the meeting, Mr Collins participated in a resolution of the board of directors `that the speculative nature of the investment should be continually stressed to prospective unit holders'; at 209 per Lee J. It followed that Mr Collins was aware that the statement required qualification and that this knowledge was inconsistent with a claim that he did not intend to participate in the contravening conduct of the company.

85 With respect, Lee J's proposition that an accessory does not need to know that `the conduct has the capacity to mislead' is inconsistent with the Yorke v Lucas. The High Court interpreted the accessory liability provisions not as requiring that the accessory know the essential elements of the contravening conduct but that he or she know the essential elements of the contravention. As stated earlier this involves knowing, in addition to what happened, the fact that the relevant conduct is misleading or deceptive or likely to mislead or deceive. Moreover the proposition, that an accessory does not need to know that the principal's conduct has the capacity to mislead, is not necessary to explain the decision in Pierucci. The fact that Mr Collins made an unqualified statement at the meeting, when he was aware that the statement required qualification, was inconsistent with a claim that he did not know the statement was misleading. In such circumstances I accept that it is not necessary to show that the accessory subjectively intended that someone would actually be misled or deceived. It is sufficient that the accessory intentionally participated in conduct that he or she knew had the capacity to mislead or deceive. It is, however, difficult to conceive of circumstances in which a person intentionally participates in conduct that he or she knows has a misleading or deceptive character without intending to mislead or deceive, or at least wilfully blinding themself to this possibility.

86 In Ridgway v Consolidated Energy Corporation Pty Ltd (1987) ATPR ¶40-754 (`Ridgway') the first respondent made false and misleading representations to the effect that it had the exclusive licence to market and distribute an energy saving computer system and therefore had `title' to enter into licence agreements with the applicants for the use of the system. It was claimed that, under s 75B of the TPA, the second respondent was liable as an accessory in respect of those representations. Referring to Yorke v Lucas Fox J stated,

`to be liable under sec 75B there must be knowledge actual or constructive on the part of those concerned of the essential facts or matters constituting the contravention, although knowledge that they amount to a contravention is not necessary.' (emphasis added)

In the circumstances before him, his Honour said that it was necessary to show that the second respondent had actual or constructive knowledge of the first respondent's lack of `title' to grant a licence to the applicants. Fox J held that there was no direct evidence of the second respondent having actual knowledge and said `I do not think any can be inferred'. Accordingly the case against the second respondent failed.

87 The reference to `actual or constructive knowledge' is consistent with Yorke v Lucas, where the court quoted the primary judge's finding that Mr Lucas had not acted recklessly nor deliberately abstained from asking questions or making enquiries; quoted at 665-6. In that regard the comments of the Full Federal Court in IMB Group Pty Ltd at [135] are pertinent:

`before any accessorial liability will arise, it is necessary to establish the subjective element of knowledge of each of the essential elements of the contravention. That knowledge may be constructive in the sense that it may be possible to show wilful blindness in relation to the elements of a contravention. However, absent a finding of wilful blindness, it is necessary to establish actual knowledge on the part of a person to whom it is sought to sheet home accessorial liability in respect of a contravention of Pt V.'

88 A similar approach was taken in Fernandez v Glev where Hely J, commenting on the adequacy of pleadings before him, said at [18]:

`The facts necessary to sustain a conclusion that the individuals were involved in the contravention of s 52 should be pleaded. That includes whatever involvement in, or knowledge of, the making of the representations is relied upon and knowledge of the falsity of the representations in question'.

89 The primary judge is this case referred to the decision of von Doussa J in Australian Competition and Consumer Commission v Nissan Motor Company (Australia) Pty Ltd and Anor (1998) ATPR 41-660 (`Nissan'). Mr Wrightman, an advertising agent had been charged by the ACCC as an accessory to misleading representations made by the Nissan Motor Company. The misrepresentations arose from newspaper advertisements for a particular model of car at a specific price. The car illustrated in the advertisements was not that which was for sale at the advertised price but a different, more expensive model. The error was discovered shortly before the advertisement appeared and a disclaimer was added, `in small print running vertically up the right hand side of the advertisement' stating `pic for illustration purposes only'. The disclaimer was added at the suggestion of Mr Wrightman, who was aware that such a disclaimer had been approved by the ACCC in connection with illustrations of used cars. His Honour found that Mr Wrightman, genuinely but incorrectly, believed that the disclaimer would have the effect that there would be no breach of the law if used in connection with the illustration of a new car.

90 It is important to note that Mr Wrightman pleaded guilty to the charge of accessorial liability. Consequently von Doussa J was concerned only with whether a conviction should be recorded and the amount of any fine. In this context his Honour commented on the seriousness of the offence and its potential to harm consumers and said, at 41,354:

`I accept Mr Wrightman's evidence that he was under the belief at the time that the disclaimer would have the consequence that no breach of the law occurred. However, that belief was the result of a want of adequate thought or consideration of the circumstances on his part. In the advertising industry, advertising agents are the "gatekeepers" who have a responsibility to consider whether advertising material prepared by them for their clients, complies with consumer protection legislation. I do not think that the basis for Mr Wrightman's belief, that such a disclaimer could be used in the case of a new vehicle, justified his belief. Had he reflected on the situation he should have realised that the disclaimer he inserted in the advertisement would not draw attention to the misleading or deceptive features of the representation of the vehicle. ' (emphasis added)

In these circumstances von Doussa J decided to record a conviction and imposed a fine of $10,000.

91 In referring to the decision in Nissan the primary judge approved and quoted the comment about advertising agents being `gatekeepers' shown above in bold. He continued, at [77]:

`I should add that advertising agents cannot rely upon compliance with CAD guidelines or scrutiny of advertisements by the legal advisors of their clients as a defence to accessorial liability when they are involved in the creating and publication of advertising directed at the public. They are the gatekeepers. No doubt the fact that they relied upon others may operate to mitigate penalty, but it is no defence to a conclusion that they were knowingly concerned in a contravention of the Act.'

92 With respect, there is a significant difference between the position of an advertising agent who actually knows, as did Mr Wrightman in Nissan, that an advertisement is misleading and has to consider what steps should be taken to correct the problem and that of Bevins and its employees who, his Honour found, did not subjectively appreciate that the advertisements were false or misleading. Imposing the role of `gatekeeper' on an advertising agent who knows that an advertisement is misleading and is careless or reckless in ensuring that the problem is corrected before publication is quite different from imposing on advertising agents an obligation to act as gatekeeper in respect of advertisements that they do not believe are misleading or deceptive or likely to be so. In my view, it would be wrong to treat the matters identified by von Doussa J as relevant to determining an appropriate penalty for a person whose intentional participation has been found or conceded as a test for determining liability where the requisite intention is in contention.

93 In this case it was agreed on both sides that Bevins and its employees knew the specific content of the advertisements. However, in formulating the test and reaching the conclusions quoted at [76]-[77] above, the primary judge fell into error as he did not consider it relevant to determine if Bevins or its employees knew whether the conduct was misleading or deceptive or likely to mislead or deceive. This conclusion is supported by the following obiter comment of the Full Court in IMB Group Pty Ltd at [133] to [134]:

`For a person to be involved in a contravention within the meaning of s 75B(1)(c) of the Act, a person must be an intentional participant in the contravention, the necessary intent being based upon knowledge of the essential elements of the contravention: see Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 at 670. Thus, while it is not necessary to establish that the individual Respondents had knowledge that there was a contravention of a provision of Pt V of the Act, it is necessary to demonstrate that each individual Respondent had knowledge of each of the essential elements of the contravention.

In order to establish whether any of the individual Respondents was involved in a contravention, it is necessary to examine the state of mind of each of them separately in relation to each alleged contravention.'

94 I do not dispute that it was open to the learned primary judge, at par [75], to find that that neither Bevins nor its employees appreciated that the advertisements were misleading or deceptive or likely to mislead or deceive. However in my view that finding, in the absence of any finding of wilful blindness, should have led to a conclusion opposite to that reached by his Honour.

95 I would therefore allow the Bevins appeal.

I certify that the preceding seventy-eight (78) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate:

Dated: 16 December 2003

Counsel for the First Appellant:	Mr J Sackar QC with Mr D R Sibtain
Solicitor for the First Appellant:	Blake Dawson Waldron
Counsel for the Second Appellant:	Mr D J Hammerschlag SC with Ms E Frizell
Solicitor for the Second Appellant:	Cowley Hearne
Counsel for the Respondents:	Mr B McClintock SC with Ms M Painter
Solicitor for the Respondents:	Australian Government Solicitor
Date of Hearing:	12 May 2003
Date of Judgment:	16 December 2003