Representations as to future matters: s. 51A Trade Practices Act, 1974

Section 52 of the Trade Practices Act, 1974 prohibits corporations from engaging in conduct in trade and commerce which is misleading and deceptive.  Section 51A says representations about future matters are deemed to be misleading if the corporation does not have reasonable grounds for making the representation.  It also says that it will be deemed not to have had reasonable grounds for making the representation unless it leads evidence to the contrary, that is, that it did have reasonable grounds.  I was aware that there has been controversy about who needs to plead what in relation to s. 51A, but was surprised to read in Alpine Beef Pty Ltd v Trycill Pty Ltd [2010] FCA 136 that s. 51A imposes no burden of proof on the corporation to establish the reasonableness of the grounds for the future representation (other than an obligation to lead some evidence to rebut the presumption).  As Justice Flick explained:

‘Notwithstanding some divergence as to the manner of operation of s 51A(2) (cf Readymix Holdings International Pte Ltd v Wieland Process Equipment Pty Ltd (No 2) [2008] FCA 1480 at [91] to [99]), it is considered that that provision is to be interpreted and applied in the manner explained by Emmett and Allsop JJ in McGrath v Australian Naturalcare Products Pty Ltd [2008] FCAFC 2, 165 FCR 230. Emmett J there observed:

[44] 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.

Allsop J (as His Honour then was) said:

Section 51A(2) does not, in my view, mean that in those circumstances the representor has not met an onus. The section does not cast the legal or persuasive onus, in such a case, on the representor. Its terms do not say so. The enactment history makes clear that the terms were deliberately chosen not to say so. Keane JA, despite his reference to the “trend of established [first instance] authority”, does not say so. In my respectful view, to the extent that decisions such as IMB Group (1999) ATPR 41-704; Blacker [2000] FCA 681; Kaye [2004] FCA 1363; Lewarne [2007] FCA 1136 and Emerald Ocean [2006] ATPR 42-096 say, or may be taken as saying, that the legal or persuasive onus of proof is shifted to the representor by s 51A(2), they are wrong. None examined the enactment history of s 51A. If it be thought, contrary to my reading of Keane JA’s reasons, that his Honour’s reference to Kaye [2004] FCA 1363 as “established authority” was a conclusion that s 51A(2) effected a reversal of the legal and persuasive onus of proof, I would be driven to the respectful view that his Honour was plainly wrong for the reasons that I have given.

Emmett J also agreed with Allsop J as to the operation of s 51A: [2008] FCAFC 2 at [6], [2008] FCAFC 2; 165 FCR 230 at 234.’

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One Reply to “Representations as to future matters: s. 51A Trade Practices Act, 1974”

  1. You note, “there has been controversy about who needs to plead what in relation to s. 51A” … To that end, what are the traps / tricks we should be aware of?

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