Haros v Linfox [2011] FCA 699 (22 June 2011)

Last Updated: 23 June 2011

FEDERAL COURT OF AUSTRALIA

Haros v Linfox [2011] FCA 699

Citation:		Haros v Linfox [2011] FCA 699
Parties:		GEORGE GABRIEL HAROS v LINFOX AUSTRALIA PTY LTD (ACN 004 718 647) and TIMOTHY ANDERSON
File number:		VID 868 of 2009
Judge:		TRACEY J
Date of judgment:		22 June 2011
Catchwords:		TRADE PRACTICES – representations alleged to be made during the course of negotiations between employer and prospective employee – explicitly and by omission - whether representations were misleading or deceptive or likely to mislead or deceive – representations not considered to be made – causes of action not made out
Legislation:		Fair Trading Act 1999 (Vic) ss 9, 13 Trade Practices Act 1974 (Cth) ss 51A, 52, 53B
Cases cited:		Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 referred to Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 referred to Demagogue Pty Ltd v Ramensky [1992] FCA 557; (1992) 39 FCR 31 cited, applied Fraser v NRMA Holdings Limited (1995) 55 FCR 452 cited Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre [1978] HCA 11; (1978) 140 CLR 216 referred to Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572; (2000) 104 FCR 564 referred to Kimberley NZI Finance Limited v Torero Pty Ltd [1989] ATPR 46-054 cited, applied McGrath v Australian Naturalcare Products Pty Ltd [2008] FCAFC 2; (2008) 165 FCR 230 cited Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 referred to Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 cited, applied
Dates of hearing:	10-14 May, 9-13 August, 16-17 August 2010 & 1 September 2010
Date of last submissions:	25 August 2010
Place:	Melbourne
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	107
Counsel for the Applicant:	Mr S Wood & Mr J Snaden
Solicitor for the Applicant:	Holding Redlich
Counsel for the Respondents:	Mr J Bourke SC & Mr A Weinstock
Solicitor for the Respondents:	Lander & Rogers

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 868 of 2009

BETWEEN:	GEORGE GABRIEL HAROS Applicant
AND:	LINFOX AUSTRALIA PTY LTD (ACN 004 718 647) First Respondent TIMOTHY ANDERSON Second Respondent

JUDGE:	TRACEY J
DATE OF ORDER:	22 JUNE 2011
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The application be dismissed with costs.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 868 of 2009

BETWEEN:	GEORGE GABRIEL HAROS Applicant
AND:	LINFOX AUSTRALIA PTY LTD (ACN 004 718 647) First Respondent TIMOTHY ANDERSON Second Respondent

JUDGE:	TRACEY J
DATE:	22 JUNE 2011
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

INTRODUCTION

1. Towards the end of 2008 the Applicant, Mr George Haros was recruited by the First Respondent (“Linfox”) as business manager of Avalon Airport (“Avalon”). He commenced employment in that role on 24 November 2008.
2. Mr Haros is a lawyer who has also obtained a good deal of commercial experience. Following employment in a solicitor’s office he obtained the position of general legal counsel of the Schiavello Group of Companies (“Schiavello”) in 2005. In 2007 he was appointed as the general manager of a subsidiary Schiavello company.
3. His employment with Linfox was short lived. On 5 March 2009 his services were terminated for the stated reason that his position had been made redundant.
4. Mr Haros complains that Linfox and the Second Respondent (its former general manager at Avalon) (“Mr Anderson”) had, in the course of negotiating his contract of employment, contravened ss 52 and 53B of the Trade Practices Act 1974 (Cth) (“the TP Act”) and ss 9 and 13 of the Fair Trading Act 1999 (Vic) (“the FT Act”). That is, that the Respondents engaged in conduct which was misleading or deceptive or likely to be misleading or deceptive, or was liable to mislead Mr Haros about aspects of his employment with Linfox.
5. Mr Haros claims damages under various heads. The most significant claim is for losses he sustained by resigning from Schiavello, a step he contends he would not have taken but for the representations allegedly made to him.

BACKGROUND

6. Following a period as as solicitor in a major law firm, where he practised employment law, Mr Haros commenced employment in July 2005 with Schiavello as general legal counsel. In 2007 he was offered and accepted employment as the general manager of Mobi Living Pty Ltd, one of the companies within the group. He held this position until he resigned to take up employment with Linfox.

THE RECRUITMENT OF MR HAROS

7. The alleged representations on which Mr Haros relies were said to have been made to him in the period between late June 2008 when he commenced discussions with an agency, engaged by Linfox to find a commercial manager for Avalon, and 29 September 2008 when, having agreed on contractual terms with Linfox, he tendered his resignation to Schiavello. During that period Mr Haros dealt with a number of agency personnel and senior managers at Linfox.
8. Much of what passed between them appears from contemporaneous records such as advertisements, e-mail exchanges, contractual documents and press statements. There were differences in accounts of some of the verbal communications which Mr Haros had with those representing Linfox. These differences will be outlined in the following account of the process by which Mr Haros was recruited to Linfox. Ultimately, nothing turns on them.
9. Towards the middle of 2008 Linfox determined that it required the services of a business manager at Avalon. It engaged a recruitment agency (Mahlab) to assist it to obtain a suitable person.
10. On 19 June 2008 a press advertisement appeared for the position of business manager at Avalon. Mr Haros saw the advertisement and, shortly afterwards, contacted Mahlab and expressed interest in being considered for the position.
11. On 30 June 2008 Mr Haros attended a meeting with an employee of Mahlab, Ms Vivienne Rekas. In the course of that meeting Ms Rekas explained the nature of Linfox’s business at Avalon Airport. She said that the business was in the process of expanding. She outlined the business structure under which three operational managers reported to Mr Anderson. The new business manager would start at the same level as the operational managers but, once he or she gained a greater understanding of the business, it was intended that he or she would move into a more senior management role. According to Mr Haros she also said that “Mr Anderson had been employed at Avalon for a considerable amount of time and [there would be] the opportunity for this role, the successful person in the business manager role, to one day possibly be a candidate for Mr Anderson’s current general manager role ...”
12. Either at the meeting on 30 June 2008 or shortly before it took place Ms Rekas gave Mr Haros a document which described the role of the business manager as follows:

“The role involves working closely with the General Manager to manage and expand all aspects of Avalon Airport’s commercial interests. The role will form part of a team that is to take Avalon Airport into its next exciting growth phase and become recognised as one of Australia’s top ten airports”.

The document also recorded that “[i]n the medium to long term, the successful candidate will have actively assisted the General Manager in managing Avalon airport, and have secured and implemented business opportunities for Avalon airport.”

13. Mahlab reported favourably to Linfox on its discussions with Mr Haros. As a result Mr Anderson arranged to meet Mr Haros. That meeting took place on 10 July 2008. In the course of their discussions Mr Anderson spoke positively of Linfox’s plans for the development of Avalon. It was a growing business and a number of significant commercial opportunities were anticipated. The business manager was to play a key role in the development. According to Mr Haros Mr Anderson also said that, at some stage (but not immediately), he proposed to move on and that his intention was that, when that occurred, the business manager might succeed him.
14. On 15 July 2008 Mr Anderson and Mr Haros met at Avalon Airport. In the course of their discussions Mr Anderson explained the infrastructure of the airport. He referred to a number of potential commercial opportunities in the passenger terminal and with the car park.
15. On 3 September 2008 Mr Haros had a meeting with Mr David Fox, the chairman of the board of directors of Linfox Airports Pty Ltd, a subsidiary of Linfox. Mr Fox was responsible for Linfox’s business at Avalon. The meeting was also attended by another Linfox director Mr Leonard Vary.
16. Mr Haros claimed (and Messrs Fox and Vary denied) that, in the course of the meeting, Mr Fox told Mr Haros that Linfox was proposing to invest a good deal of money in developing Avalon and required the services of a business manager to oversee the development. According to Mr Haros Mr Fox also said that Mr Anderson had been at Avalon for some time and was expected to leave at some point. At that time Mr Fox anticipated that there would be an opportunity for a person who had been successful in the business manager’s role to “step in” to the general manager’s position. Mr Vary made comments to like effect and added that it was important that the business manager would be able to provide continuity when Mr Anderson ultimately moved on.
17. A further meeting occurred between Mr Haros and Mr Anderson on 8 September 2008. In the meantime Mr Anderson’s title had been changed from general manager to managing director. Mr Haros said that he was aware of this change and asked Mr Anderson whether the title “business manager” could be changed to “general manager”. Mr Anderson allegedly responded that he intended that Mr Haros would, in time, progress to the level of general manager but that he considered that Mr Haros needed first to acquire sufficient knowledge about the Avalon business and that Mr Haros would “be the future” of that business. Mr Haros asked Mr Anderson about his (Mr Anderson’s) future intentions and Mr Anderson told him that he “might be here for six months, 12 months or 3 years. This position needs to carry the Airport forward and be the future of the business.”
18. During the meeting Mr Anderson gave Mr Haros a Linfox document entitled “Business Objectives Report.” Mr Anderson said that he had talked this document through “page by page” with Mr Haros. Mr Haros denied that it had been discussed in such detail. He agreed, however, that he had taken a copy away from the meeting and had read it before he signed his contract of employment. The report canvassed future commercial developments at the airport.
19. Mr Anderson summarised his understanding of the discussions in an e-mail which he sent to Mr Haros on 16 September 2008. In that e-mail Mr Anderson said that:

“...[t]he title of this position is Business Manager and will remain as such, probably for at least 2 – 3 years or longer ... this role will report directly into myself [sic], along with the other managers. Having said that, I am hopeful this role will rise in importance above the others and that it will definitely be the second in charge ... this role will be the stepping stone into that [general manager’s] position.”

In that e-mail Mr Anderson also said, speaking of the business manager’s role:

“This role, like what I do, covers all aspects of the business, operational and commercial – from dealing with the vending machine man to the CEO of Qantas and everything in between. Air-shows, freight, passengers, property leases, community and government liaison, town planning and a heavy emphasis on business development, are some of the matters we regularly pursue and what this role comprises.”

Mr Anderson proposed that Mr Haros commence his employment with Linfox on 19 January 2009.

20. On 25 September 2008 Mr Anderson sent Mr Haros an “offer of employment” on proposed terms. Those terms were set out in a draft employment contract. The contract provided for a salary of $208,000. It also provided for a three month probationary period.
21. The draft contract contained what was referred to in argument as an “entire understanding” clause and a “no reliance” clause. Those clauses read:

“This letter sets out the entire understanding and agreement between the parties with respect to the terms and conditions of the employment offered with Linfox.”

and:

“All negotiations, representations, warranties or commitments in relation to your employment are superseded by this document and will be of no force or effect whatever.”

22. Having received the offer Mr Haros advised Mr Anderson that he would “review [the proposed terms] tonight and come back to you with any queries.”
23. Mr Anderson gave evidence that, shortly afterwards, he and Mr Haros had a meeting at which Mr Haros made suggestions about extending the notice period and making provision for a redundancy payment. Mr Haros denied that such a meeting took place. Whether it did or not, there was no dispute that Mr Haros and Mr Anderson had a telephone conversation about 1:30 pm on 26 September 2008. Proposed amendments relating to notice and redundancy were discussed. Specifically, Mr Haros suggested that provision should be made for three months notice of termination and that a redundancy clause should be inserted in the contract to provide for a payment of three months salary should his position be declared redundant. About 15 minutes later Mr Anderson returned Mr Haros’s call and said that he would approve those changes. When so advised Mr Haros told Mr Anderson that an agreement in principle had been reached.
24. Later that afternoon Mr Haros sent an e-mail to Mr Anderson which read:

“Hi Tim,

Thank you for your time on the phone today.

As agreed, if you are happy with the proposed wording, I will amend the contract by:

• increasing the notice period to three months; and

• inserting the following REDUNDANCY clause after the clause titled “LEAVING LINFOX”:
  

“In the event that your position is made redundant, you will be entitled to a redundancy payment of 3 months salary plus any amount payable under the Incentive package.”

Let me know if acceptable to you and I will hand write the amendments into the contract, initial and sign where relevant ...

...

I’m very pleased that we have pretty much reached agreement ...” [emphasis added]

25. On 28 September 2008 Mr Anderson advised Mr Haros that the proposed changes were acceptable to him and invited Mr Haros to contact him during the week “if there are any issues you need to discuss.”
26. Mr Haros did not raise any further issues with Mr Anderson before resigning from Schiavello on 29 September 2008. Mr Haros incorporated the agreed amendments in the contract and signed it on 1 October 2008. In doing so he acknowledged that he had “read and understood [the] letter and accepted this offer of employment.”
27. At no point, during his discussions with Mr Anderson between 25 September and 1 October 2008 (or, indeed, thereafter) did Mr Haros seek the removal or amendment of the stipulations set out above at [21].
28. On 30 September 2008 Mr Fox spoke to Mr Haros and told him that he had approved the contract and that he wanted Mr Haros to commence work at Avalon as soon as possible. On the following day Mr Haros signed a written contract of employment. He agreed to commence at Avalon on 24 November 2008.
29. On 31 October 2008 Mr Anderson sent an e-mail to Mr Haros and Linfox staff at Avalon in which he announced Mr Haros’ pending arrival. In the course of that e-mail he said that a business manager was needed because of insufficient “commercial depth in our business”.
30. Unbeknown to Mr Haros, Mr Anderson had, over the period during which Mr Haros’ employment was being negotiated, himself been engaged in discussions with another potential employer. Between July and November 2008 Mr Anderson held a series of discussions with a Sydney company which led eventually to his employment by it as general manager and his resignation from Linfox. On 19 November 2008 Mr Anderson gave Linfox one month’s notice of his resignation. On the following day Mr Fox telephoned Mr Haros and advised him of Mr Anderson’s resignation. In the course of their conversation Mr Haros alleged that Mr Fox said that Mr Anderson’s departure would result in Mr Haros being provided with “more opportunities” in the short term.

SUBSEQUENT EVENTS

31. Mr Haros commenced his employment with Linfox on 24 November 2008. On that day he met Mr Fox at Avalon. Also present was Mr Justin Giddings who had previously worked for Linfox at Essendon airport. Mr Fox told Mr Haros that Mr Giddings was to be appointed as acting general manager of the Avalon business in place of Mr Anderson and that two other employees, Mr Marc Grant and Mr Henry Polk, would henceforth be “spending more time at Avalon.” On the same day Mr Fox made a public announcement that Mr Giddings was to succeed Mr Anderson as acting general manager at Avalon. In the course of the announcement Mr Fox said that Mr Giddings had been the commercial and operations manager of Avalon airport.
32. Later in the day Mr Haros was introduced to Mr Grant. Mr Grant handed him a business card on which Mr Grant’s position was described as “Commercial Manager, Avalon Airport.” This was the first that Mr Haros had heard of there being any such position in the Linfox business at Avalon.
33. There was no dispute that, prior to his engagement by Linfox, Mr Haros was told very little about work being done on a range of commercial projects at Avalon or who was undertaking this work. Linfox sought to explain this omission by suggesting that only minor developments were being explored and that any commercial work was being done on an ad hoc basis by people employed in other parts of the Linfox business.
34. Specifically, Mr Haros complained that he had not been told about the commercial work being undertaken at Avalon by Mr Giddings, Mr Grant and Mr Polk.
35. Mr Giddings worked at Essendon Airport and reported to Mr Anderson. Mr Anderson held a high opinion of Mr Giddings. In 2006 Mr Anderson proposed that he should draw Mr Giddings more into the “general management of the [Essendon and Avalon] airports.” He suggested that Mr Giddings should undertake further study and Linfox paid for Mr Giddings to pursue the degree of Master of Business Administration. Mr Giddings was successful in his studies.
36. Various company documents recorded Mr Giddings’ position as “Commercial and Operations Manager of Avalon and Essendon airports.” Despite this, between 2006 and 2008, Mr Giddings spent most of his time at Essendon airport. Varying estimates were given of the amount of time which he devoted, during this period, to commercial projects at Avalon. These estimates varied from nothing (Mr Fox) to Mr Giddings’ own estimate “about 20%”.
37. The Avalon-related work which was undertaken by Mr Giddings included negotiations for the lease of a tower by Telstra, the sale of the Avalon control tower, the lease of two large hangars to Qantas, discussions with Air Asia X about a proposal that the airline might fly into Avalon, the leasing of commercial outlets in the passenger terminal and negotiations with the Commonwealth government over the approval of Avalon as an international airport.
38. Although Mr Giddings was involved in these projects, it does not appear that he played the leading role in any of them. There was no evidence before the Court of Mr Giddings having signed any correspondence (including e-mails) relating to any of these projects. Others involved said that their work was supervised by Mr Anderson.
39. At relevant times Mr Grant was the Commercial Manager – Investments in the Linfox property group. His principal responsibility was obtaining tenants for various properties owned and controlled by Linfox. He reported to Mr Andrew Nicholls and was based at the Linfox offices in St Kilda Road, Melbourne.
40. In the latter part of 2008 Mr Grant was actively involved in pursuing commercial opportunities at Avalon. He devoted about 50% of his time to this work. His work included the redevelopment of the retail areas within the passenger terminal and attracting tenants, including caterers, internet operators and vending and amusement machine operators. He was involved in the renegotiation of a license to graze livestock on land adjacent to the airport and seeking to establish a bus link between the Lara railway station and the airport. He sought to obtain tenants for some of the airport’s hangars. He attempted to persuade airlines to nominate Avalon as an alternate airport to Tullamarine. He was also involved in attempts to have automatic teller machines installed in the terminal, in increasing revenue from car rental companies based at the airport and in attracting advertisers.
41. In about August 2008 Mr Grant had the business card printed which described him as being the “Commercial Manager - Avalon Airport”. He said that he had done this because, although his actual position in the Linfox property group had not changed, he was dealing with many people about business matters at Avalon and he thought that an Avalon-specific business card was appropriate. Mr Grant said that the printing and usage of the business card had been approved by Mr Anderson. Mr Anderson denied this. In his evidence Mr Anderson appeared to have but the vaguest appreciation of the work being undertaken by Mr Grant in relation to Avalon at this time.
42. Whatever may have been the position relating to Mr Grant’s designation, there can be no doubt that Mr Grant had, as Mr Anderson was to write in November 2008, been “brought ... significantly into the [Avalon] business” during the immediately preceding months.
43. Mr Henry Polk was employed by Linfox as an “Airport Operations Assistant.” Until the end of 2008 he was based at Essendon airport.
44. In the latter part of 2008 he was called on to participate in a number of Avalon-related projects. Typically, he assisted those who were taking the lead role or by carrying out the investigation of aspects of business proposals. His work included the preparation of draft correspondence for Mr Anderson’s signature and assisting Mr Anderson in revising parking fees at the airport. He investigated the likely cost of installing flight information display screens in the passenger terminal. He made some of the arrangements for corporate hospitality during the Avalon Air Show. He also performed some functions in relation to the leasing of one of the hangars.
45. When Mr Haros took up his position at Avalon, Linfox was in the process of seeking to persuade the Commonwealth government that Avalon should be approved as an international airport. This required the production of a major development plan. An earlier plan, which had been submitted by Linfox in 2008, had been rejected by the government because it lacked necessary detail.
46. In late November Mr Giddings directed Mr Haros to give priority to the preparation of a new version of the plan. He advised Mr Haros that a plan, submitted by the operators of Brisbane airport, had been successful and that Mr Haros should obtain a copy of it and use it as a model for developing a new Linfox submission. Mr Haros was initially given the wrong Brisbane business plan. The error was ultimately detected and the correct version was provided. The error led to Mr Haros engaging in unproductive work for some weeks until it was discovered. He then prepared a series of drafts of a revised plan. These drafts were submitted to Mr Giddings and other Linfox managers. A final version of the plan had not been prepared by 5 March 2009 when Mr Haros’ employment was terminated. This meant that pre-arranged talks with an official from the Minister’s office in February 2009, relating to the international terminal issue, were unproductive. This displeased Mr Andrew Nicholls, the senior manager in Linfox’s property division responsible for the negotiations. Mr Haros’ latest draft had been provided to Mr Giddings and Mr Nicholls shortly before 5 March 2009 but had not been read by Mr Nicholls before that date.
47. Mr Haros also devoted a good deal of time to the development of a business plan for Linfox’s Avalon business. As part of that work he prepared an amended organisational structure for the Linfox business at Avalon. Under this proposal Mr Haros would have taken responsibility for managing the commercial aspects of the business and Mr Giddings would have been responsible for operational matters. Mr Haros and Mr Giddings would have been on the same hierarchical level and would have reported directly to Mr Fox. Mr Haros forwarded his proposals to Mr Fox and discussed them with Mr Fox without notice to Mr Giddings. When Mr Giddings subsequently became aware that Mr Haros had approached Mr Fox “behind his back” he was much displeased. Mr Haros’ proposed restructuring was not accepted by Mr Giddings and Mr Fox and, in February 2009, Mr Giddings, having consulted Mr Fox, made his own proposal for amending the organisational arrangements. Under Mr Giddings’ proposal Mr Haros would have become the Chief Commercial Officer at Avalon. He would have reported to Mr Giddings and Mr Grant, and Mr Polk would have reported to Mr Haros.
48. Mr Giddings strongly objected to the initiatives proposed by Mr Haros and the manner in which Mr Haros had gone about promoting them with Mr Fox. Towards the end of February he advised Mr Fox that, if Mr Haros was not dismissed, he (Mr Giddings) would leave.
49. In the course of a conversation between Mr Haros and Mr Giddings on 3 March 2009 Mr Giddings told Mr Haros that he (Mr Giddings) intended to exercise more oversight of the commercial activities of the business and was intending to employ a new manager to deal with operational matters. Mr Giddings expressed the opinion that the business was “too top heavy” and had “too many managers”. Mr Haros also attributed to Mr Giddings the observation that “things were totally different to what [Mr Haros] signed up for”.
50. On 5 March 2009 Mr Haros was called to a meeting with Mr Giddings and Mr Nicholls. Mr Nicholls told Mr Haros that Mr Haros’ position had been made redundant with immediate effect. Mr Haros said that Mr Giddings had also said that the Commercial Manager’s position was significantly different from the one which had been advertised and accepted by Mr Haros. Linfox contended that it was not true that Mr Haros’ position was redundant. It had simply fixed on this reason as being an easier option than termination for unsatisfactory performance. The true position, according to Linfox, was that it continued to have work for a business manager and it wanted someone to perform those duties. In the short term it used existing employees to do the work but, after some months, it engaged a consultant from Sydney.
51. On 18 March 2009 Mr Haros was paid an amount equivalent to six months’ salary as a severance payment and payment in lieu of notice.

MR HAROS’ CASE

52. Mr Haros, in his Amended Fast Track Statement, identified four representations which he claimed had been made to him in the course of his negotiations with Linfox.
53. The first was described as the “security representation”. The terms of this representation were said to be that Linfox “wanted to employ somebody to assist its Managing Director with the management of Avalon Airport’s commercial interests for at least approximately three years” and that it wanted Mr Haros to perform that role.
54. The second representation was described as “the exclusivity representation”. This was said to be an implicit representation that Linfox “did not then employ anybody other than [Mr] Anderson in the management or performance of the activities comprehended by the Business Manager Role.”
55. The next representation was described as “the longevity omission”. Mr Haros complained that he had not been informed, before accepting the position of business manager, “that Linfox would or might resile from the Security Representation in the event that [Mr] Anderson resigned his employment with Linfox.”
56. The final representation was described as “the exclusivity omission”. This omission involved not informing Mr Haros, before he accepted the position of business manager, that Linfox “already employed people in the management or performance” of the activities comprehended by the business manager role.
57. Mr Haros’ case, as argued in final submissions, departed in some significant respects from these pleadings. There were, in particular, material variations in the terms in which the alleged representations were framed. For reasons which will become apparent, these variations have no bearing on the outcome of Mr Haros’ application.

THE RESPONDENTS’ DEFENCES

58. Linfox and Mr Anderson both disputed that any of the alleged representations had been made. They further submitted that, even had any or all of the representations been made, the terms of the contract into which he entered on 1 October 2008 precluded any reliance on any such representations. They also denied that the purported misrepresentations had been in made in trade or commerce. They denied that any contravention of s 53B of the TP Act or s 13 of the FT Act had occurred. They pleaded a defence by way of set-off based on alleged representations by Mr Haros that he was treating his employment contract as evidencing the entire understanding of the arrangements between him and Linfox and that he was not relying on any external representations that pre-dated the contract. It was submitted that Mr Anderson had no liability independently of Linfox.

THE LEGISLATION

59. The terms of s 52(1) of the TP Act are well known. They simply stated that:

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

The equivalent provision in the FT Act is s 9.

60. Section 53B of the TP Act provided:

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

The equivalent provision of the FT Act is s 13.

61. Section 51A of the TP Act affected both ss 52 and 53B. Relevantly, it provided that:

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

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

(3) ...”

CONSIDERATION

The competing cases

62. The gist of Mr Haros’ case under s 52 of the TP Act was that his discussions with Messrs Anderson, Fox and Vary and the terms in which the position was advertised had led him to conclude that the Business Manager’s position was an attractive one for a number of reasons: Linfox conducted a high profile business; he would be responsible for managing its commercial operations at Avalon airport; and, in due course, he would assume a more senior role as ‘the future of the business.’ None of this was true: Mr Anderson was actively engaged in negotiating alternative employment and would not, as a result, be in a position to influence Mr Haros’ later promotion within the business; and Mr Haros was not to have control (subject to Mr Anderson’s supervision) of the commercial activities at Avalon airport because others (including Mr Giddings and Mr Grant) were already involved in such activities.
63. Mr Haros’ case under s 53B of the TP Act was founded on the allegation that he had been misled as to the nature of the Business Manager’s position. By reason of the pleaded misrepresentations (including the omissions) the position which he took up in November 2008 was “profoundly different” from the position which had been described to him during the recruitment process. On one analysis, there was no position at all because the other employees of Linfox who were performing commercial work were doing the work which would otherwise have fallen to be performed by the business manager.
64. The substance of Linfox’s case was that it did want a business manager to work at Avalon. The incumbent had to be flexible and prepared to perform a wide range of commercial work. There was plenty of such work available. Mr Haros’ services were terminated, not because Linfox did not want anyone to perform the role of business manager, but rather because he had fallen out with Mr Giddings as a result of his attempts to ingratiate himself with Mr Fox and to elevate his status within the organisation to a level equivalent to that accorded to Mr Giddings. Faced with a choice of retaining Mr Giddings or Mr Haros, it opted to terminate Mr Haros’ services. In doing so it assigned a false reason for the termination because redundancy was perceived as an easier option.

The legislative requirements

65. The phrase “misleading and deceptive” has been examined in many cases. Collectively the words “mislead” and “deceive” mean “to lead into error”: see Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 at 198; Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572; (2000) 104 FCR 564 at 589-90. It may be, as Gibbs CJ observed in the Parkdale case, that the word “deceptive” is, as a result, redundant.
66. Conduct may be misleading or deceptive for the purposes of ss 52 and 53B of the TP Act even if the actor does not intend to mislead or deceive: see Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre [1978] HCA 11; (1978) 140 CLR 216 at 223, 234.
67. In certain circumstances silence can constitute conduct that is misleading or deceptive. In Demagogue Pty Ltd v Ramensky [1992] FCA 557; (1992) 39 FCR 31 at 32. Black CJ (with whom Gummow and Cooper JJ agreed), said that:

“Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct which is misleading or deceptive or that it is likely to mislead or deceive. To speak of ‘mere silence’ or of a duty of disclosure can divert attention from that primary question. Although ‘mere silence’ is a convenient way of describing some fact situations, there is in truth no such thing as ‘mere silence’ because the significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case, that if particular matters exist they will be disclosed.”

68. In Fraser v NRMA Holdings Limited (1995) 55 FCR 452 at 467-468 the Full Court considered what must be established by an applicant who advances a non-disclosure case under s 52. The Court said that:

“Where the contravention of s 52 alleged involves a failure to make a full and fair disclosure of information, the applicant carries the onus of establishing how or in what manner that which was said involved error or how that which was left unsaid had the potential to mislead or deceive. Errors and omissions to have that potential must be relevant to the topic about which it is said that the respondents’ conduct is likely to mislead or deceive. The need for an applicant to establish materiality is of particular importance ... where the proposal is complex, and involves difficult questions of commercial judgment and matters of degree and conjecture as to the future about which there is room for a range of honestly and reasonably held opinions.”

The Court went on to observe that, where complex issues are involved, the question about whether non-disclosure is misleading or deceptive must be approached in a “practical, realistic way.”

69. It is, therefore, necessary for the Court to have regard to all of the relevant circumstances, with a view to determining whether a reasonable expectation existed that certain material facts, known to one party, would be disclosed to the other in the course of their discussions or negotiations.
70. In applying ss 52 and 53B it is necessary to notice the requirements of s 51A. Its effect was explained by Emmett J in McGrath v Australian Naturalcare Products Pty Ltd [2008] FCAFC 2; (2008) 165 FCR 230 at 242 [44]. His Honour there said:

“Under s 51A(1) of the Trade Practices Act, a representation is to be taken to be misleading if it is a representation with respect to any future matter and the maker of the representation does not have reasonable grounds for making the representation. Under s 51A(2), the maker of the representation with respect to any future matter is to be deemed not to have had reasonable grounds for making the representation unless it adduces evidence to the contrary. However, if evidence is adduced by a representor to the effect that the representor had reasonable grounds for making the representation, the deeming provision will not operate. Where the representor adduces such evidence, it is then a matter for the Court to determine, on the balance of probabilities in the ordinary way, whether or not the representor had reasonable grounds for making the representation.”

See also at 283 [192] (per Allsop J).

71. If, therefore, and, contrary to Linfox’s primary submission, representations of the kind alleged were made to Mr Haros, a statutory presumption arose, in the absence of any evidence from Linfox and Mr Anderson, that there were reasonable grounds for making the particular representation, that reasonable grounds for making the representation did not exist and the representation was, as a result, misleading.
72. It will be convenient to deal first with the issue of whether the pleaded representations were made.

Were the representations made?

73. Two of the pleaded representations were framed in positive terms. The other two were said to have arisen by reason of Linfox’s failure to provide Mr Haros with certain information.

The security representation

74. Mr Haros does not point to any evidence that any person acting on Linfox’s behalf made a statement or statements to him in the terms of the security representation. Rather, it is said that such a representation is to be discerned from various statements, both oral and written, made to him in the course of the recruitment process.
75. There can be no doubt that, when Linfox engaged Mahlab to manage the recruitment process, it “wanted” to employ a commercial manager to work at Avalon. So much is clear from the instructions which Linfox gave to Mahalb which were reflected in the terms of the advertisement and the job description and the willingness of Linfox to incur the not insubstantial cost of engaging a recruitment agency to perform the task.
76. By the end of the process (if not at some point during its course) Linfox had decided that it “wanted” Mr Haros to fill the position.
77. There is, however, nothing in the evidence to support the propositions that Linfox wanted to employ Mr Haros (or anyone else) in the position “for at least approximately three years”. On the contrary, the exchanges, insofar as they dealt with the duration of the engagement of the Business Manager, never suggested a fixed term, much less one of at least three years. This is hardly surprising. Mr Haros was unknown to managers at Linfox. His term of employment necessarily depended on his performance. Even on his account of his discussion with Mr Fox on 3 September 2008, any advancement within the company (and, hence, longevity of service) would depend on the successful performance of the Business Manager’s role.
78. It is necessary to pay careful attention to the language used by those who dealt with Mr Haros and the context in which it was used. The words “opportunity” and “potential” were used repeatedly. They were used, for example, on Mr Haros’ account of his conversations with Ms Rekas on 30 June 2008 and with Mr Fox on 3 September 2008. There was nothing in the language employed which could reasonably have been interpreted as an assurance or a representation that Linfox wanted to employ Mr Haros as a Business Manager at Avalon “for at least approximately three years.”
79. Mr Anderson told Mr Haros that it was his (Mr Anderson’s) intention that Mr Haros would “in time” progress to the General Manager level. The time was left unspecified and Mr Anderson qualified his statement by emphasising that it would first be necessary for Mr Haros to acquire experience in the business.
80. The employment contract which was proposed by Linfox and was agreed to, subject to two variations suggested by Mr Haros, did not contain a three year term or any other minimum term. On the contrary, it prescribed a three month probationary period under which Linfox could have terminated Mr Haros’ services without cause and without the need for it to give him any notice. After the probationary period had passed the contract provided, at Mr Haros’ suggestion, for termination on three months’ notice or payment in lieu thereof. Compensation equivalent to three months’ payment was to be made in the event that the position became redundant. None of these provisions is consistent with an unqualified representation that Linfox wanted to employ Mr Haros at Avalon for at least approximately three years.
81. I conclude, therefore, that the security representation, in the terms alleged, was not made.

The exclusivity representation

82. This representation is said to have been made implicitly. It is framed in negative terms: Linfox “did not then employ anybody other than Anderson in the management or performance of the activities comprehended by the Business Manager Role.” [emphasis added]
83. As was the case with the security representation, no explicit statement to this effect is attributed by Mr Haros to any Linfox representative. The representation must, therefore, be gleaned from some or all of the exchanges that occurred during the recruitment process – a period covering some three months. The word “then” suggests that the representation could have been made at any time or times during that period. If it was made it was made by the failure to disclose to Mr Haros that Messrs Giddings and Grant and, to a lesser extent, Mr Polk, were, from time to time, performing commercial work at or relating to the Avalon airport.
84. An understanding of the exclusivity representation also depends on what is meant by “the Business Manager Role”. Whatever this phrase means it cannot be understood as comprehending all commercial work at Avalon in the three month period or the period up until Mr Haros commenced duties on 24 November 2008. It was explained to Mr Haros by Mr Anderson (and by Mr Fox if Mr Haros’ account of their discussion on 3 September 2008 is correct) that Linfox was proposing to embark on a significant expansion of its activities at Avalon airport. A large number of commercial developments were under consideration and a Business Manager was needed to ensure that any projects, determined by senior management, would proceed successfully. The duties to be performed by the Business Manager could not be determined with precision at the time that negotiations between Mr Haros and Mr Anderson were taking place. Mr Anderson stressed that flexibility would be required with the Business Manager performing a range of duties as and when required. In his e-mail on 16 September 2008, for example, Mr Anderson told Mr Haros that, as Business Manager he (Mr Haros) could find himself “dealing with the vending machine man to the CEO of Qantas and everything in between.”
85. At no point, during their discussions, did Mr Haros enquire of Mr Anderson as to whether Linfox had anyone, other than Mr Anderson, performing commercial work at or in relation to Avalon and, if so, whether any such persons would be available to assist him (Mr Haros) as business manager.
86. Mr Haros’ case, must, thus, be understood as being one of implication by omission.
87. It is common ground that Mr Haros was not advised about the commercial work being undertaken by Messrs Giddings, Grant and Polk at or in relation to Avalon airport in the latter part of 2008. There appear to be a number of reasons for this. Mr Haros did not ask any questions which might reasonably have been expected to elicit such information. Mr Anderson appears to have been ignorant of much of what Mr Grant and Mr Polk were doing at Avalon and, had he been asked, he probably would have given a less that fulsome account of their activities. Furthermore, given the ad hoc nature of their work, the fact that they may have been pursuing certain commercial projects at the time the recruitment process was underway, did not necessarily give any indication of what their activities, if any, might be after Mr Haros took up his duties.
88. In these circumstances it cannot, in my opinion, reasonably be suggested that Linfox (acting through Mr Anderson and others), by failing to mention that commercial work was ongoing at Avalon during the recruitment period, thereby implied that the company did not then employ anybody other than Mr Anderson to perform such work. Avalon, as Mr Haros knew, was a busy and developing airport. It handled a considerable number of passenger and cargo movements each year. It could not reasonably be expected that Mr Anderson was the only person in the Linfox organisation who undertook commercial work associated with these activities.
89. I do not consider that the pleaded representation was made.

The longevity omission

90. This alleged omission is related to the security representation. Mr Haros complained that he had not been informed, prior to 1 October 2008, “that Linfox would or might resile from the Security Representation in the event that [Mr] Anderson resigned his employment with Linfox.”
91. The insurmountable difficulty which confronts Mr Haros in relation to this alleged representation is that, for reasons already given, I have found that there was no security representation made by Linfox. There was, therefore, no representation from which it might resile.

The exclusivity omission

92. This alleged representation by omission is pleaded in the alternative to the exclusivity representation. Mr Haros alleged that Linfox and Mr Anderson failed to inform him prior to 1 October 2008, that it already employed people in the management or performance of the activities comprehended by the business manager role.
93. As already noted, it was common ground that Mr Haros had not been told, prior to his commencing employment at Linfox, that employees, other than Mr Anderson, were engaged, from time to time, on commercial work relating to the Avalon Airport. Whether this failure amounted to a representation by silence is another matter.
94. It is difficult to see how this failure had the potential to mislead or deceive Mr Haros. The fact that others may have been engaged on commercial work in relation to Avalon from time to time was not something which had any obvious bearing on Mr Haros’ future employment with Linfox. Had he been so advised he may have asked whether it was proposed that they would continue to do such work after he took up his duties and, if so, whether they would report to him and be available to assist him. In all likelihood, Mr Anderson would not have been in a position to give unqualified answers to these questions. During the recruitment period, it would appear that Mr Anderson and other Linfox executives had not turned their minds to such details. What is clear, however, is that the business manager’s position had been established and was, subject to the contractual terms, a position which Linfox anticipated would be pivotal in the development of Avalon airport for an indefinite period. There is nothing in the evidence which persuades me that Linfox was other than genuine in its desire to employ a business manager to perform a wide range of work at Avalon. The work was there to be done. While Mr Haros made numerous complaints about his treatment during the short period he was employed by Linfox, he did not complain of having insufficient work to do despite the fact that others were also then engaged in commercial work at Avalon.
95. When considered from a practical business perspective the issue of who, apart from Mr Anderson, was undertaking commercial work at Avalon during the recruitment period, cannot be regarded as material for relevant purposes. This failure did not, in my view, constitute a representation by silence.

Were the representations misleading or deceptive?

96. Although I have found that the pleaded representations were not made I would also have been disposed to hold, were it necessary, that those representations were not misleading or deceptive.
97. Section 51A of the TP Act assumes the existence of representations. If a representation has been made in relation to a future matter it will be taken to be misleading if the maker of the representation did not have reasonable grounds for making it. This presumption will be displaced if evidence is led by the alleged representor that it had reasonable grounds for making the representation. In the present case Linfox and Mr Anderson did adduce evidence sufficient to displace the statutory presumption. That evidence outlined the guarded statements which had been made relating to prospects of advancement within the company of the person selected to fill the business manager’s position and explained the arrangements in relation to the performance of commercial work at Avalon. As a result the onus of establishing that any representations made by Linfox and Mr Anderson were made without reasonable grounds remained with Mr Haros.
98. The conduct of the respondents, on which Mr Haros founds his case, must be viewed objectively and in its entirety: see Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 at 605, 625; Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 at 341-2.
99. Linfox was about to embark on a major expansion of its activities at Avalon Airport. Mr Anderson had been doing some of the commercial work and he had been assisted (knowingly or otherwise) by other Linfox employees on an ad hoc basis.
100. In order to meet future needs Linfox determined to establish a business manager’s position at Avalon. The business manager was to undertake, on a flexible basis, the full range of commercial work which was likely to be required. Mr Haros was attracted to the position. He applied for it. He did not seek, nor was he granted, employment for a fixed term. He was offered the business manager’s position and accepted it. He did so on mutually acceptable terms and conditions which had been freely negotiated. He laboured under no disabilities during the negotiations. On the contrary, he was an astute lawyer with relevant experience in employment law. He carefully reviewed the draft contract which Mr Anderson sent to him and, having done so, suggested certain amendments. He did not demur from any of the terms proposed by Linfox. The amendments which he proposed were additions. He signed the contract. This was not a mere formality. As the High Court said in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at 180-1:

“It should not be overlooked that to sign a document known and intended to effect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it.”

101. The contract provided, at Mr Haros’ request, that, after the probation period had expired, Linfox could terminate the contract on three months’ notice or by making a payment in lieu thereof. Statements attributed to Mr Anderson, Mr Fox and Ms Rekas about future prospects for advancement within the company must be understood in this context. Even if one of Linfox’s representatives had told Mr Haros that the company wished him to perform the business manager’s functions for three years, such a statement would have had to be understood in the light of this legal reality. The contract also contemplated the possibility of the position becoming redundant and prescribed what was to occur in that event. Mr Haros was not misled about the term for which he would be employed.
102. When he was appointed Mr Haros knew that, as a business manager, he would report to Mr Anderson or anyone else holding the General Manager’s (or, later, Managing Director’s) position. His acceptance of the position was not in any way influenced by any concern as to who may or may not have been performing commercial work at Avalon during the negotiation period. He did not raise the issue with Linfox and Linfox did not do anything which could reasonably be understood as suggesting that nobody other than Mr Anderson was doing such work. This was simply not a material issue during the negotiations and accordingly, Linfox’s and Mr Anderson’s silence about the matter was not misleading. As French J observed in Kimberley NZI Finance Limited v Torero Pty Ltd [1989] ATPR 46-054 at 53,195, “unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that fact does not exist.” See also Demagogue at 31, 41 and 46.

Concluding observations

103. Mr Haros was understandably aggrieved by the manner in which certain aspects of his employment were handled by Linfox executives. He was, for example, advised to prepare Linfox’s submissions supporting the recognition of Avalon as an international airport. He was given the wrong precedent to work on. He was then criticised for his delay in completing the project. His termination was badly handled. He had fallen out with Mr Giddings. Mr Giddings perceived him as a rival and put an ultimatum to Mr Fox: “either Mr Haros leaves or I do”. Mr Fox did not wish the equanimity of the family business to be disturbed by such a rivalry and he valued Mr Giddings’ accumulated knowledge of the airport business. For these reasons Mr Fox agreed that Mr Haros’ employment should be terminated. None of this was explained to Mr Haros. Rather, he was summoned to a short meeting and peremptorily dismissed on the false ground that the business manager’s position had become redundant. His requests for a proper explanation were ignored.
104. Mr Haros was, in part, at least, the architect of his own predicament. He had a competitive nature and a strong sense of self belief in his business acumen. Before he had had an opportunity to obtain a mature appreciation of all aspects of Linfox’s business at Avalon, he embarked on a self promotion exercise which gave rise to conflict between him and Mr Giddings and attracted the displeasure of Mr Fox.
105. Whilst these matters may assist in the understanding of the competing stances adopted by the parties in this proceeding, they have no bearing on its outcome. The causes of action pleaded have, for the reasons which I have given, not been made out. Mr Haros is not entitled to compensation for the loss of his employment with Linfox in excess of the amount which he has already been paid.

DISPOSITION

106. Having regard to the findings which I have made it is not necessary that I deal with the other defences pleaded by Linfox.
107. Mr Haros’ application must be dismissed with costs.
     

I certify that the preceding one hundred and seven (107) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey.

Associate:

Dated: 22 June 2011