Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

If the actual term of the representation is that the maker of the representation is of the view at the time that the occupancy rate or rental nominated could be achieved in the future, does that express statement turn a representation as to the future into a representation as to existing fact?

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Whatever may be the case where there is an express representation as to the maker’s state of mind concerning a future matter, it is not, in my opinion, correct to treat a representation as to an event or conduct in the future, be that in the form of a prediction or otherwise, as not being a representation with respect to a future matter merely because it implies a representation as to the maker’s present state of mind.’ 141

For representations with respect to future matters, the prohibition in section 18 of the ACL of misleading or deceptive conduct must be read in the context of section 4(1).

Section 4(1) of the ACL provides that where a person makes a representation about a future matter and does not have reasonable grounds for making it, the representation shall be taken to be misleading. Section 4(2) of the ACL then creates a presumption of a lack of such reasonable grounds that is rebuttable by the person making the representation. That is, the person making the representation bears the onus of establishing that they had reasonable grounds for making the representation.

To rebut the presumption in section 4(2), a representor needs to demonstrate:

1. ‘some facts or circumstances; 2. existing at the time of the representation; 3. on which the representor in fact relied; 4. which are objectively reasonable; and 5. which support the representations made.’ 142

Ultimately, the existence of reasonable grounds for the making of a representation about future matters is something to be determined by the court. In McGrath v Australian Natural Care Products Pty Ltd , Emmett J of the Federal Court said: ‘However, if evidence is adduced by the representor to the effect that the representor had reasonable grounds for making the representation, the deeming provisions 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.’ 143 Silence Section 2 of the ACL defines the phrase ‘ engaging in conduct ’ in sufficiently wide terms to include, relevantly, refusing to do any act. In some circumstances, ‘any act’ can constitute silence.

An important limitation, however, is that inadvertently refraining from doing an act is insufficient. Section 2 of the ACL requires actual knowledge for a failure to disclose to be actionable. 144

141 (1993) 118 ALR 543, 552–553. 142 Sykes v Reserve Bank of Australia (1998) 158 ALR 710, 712. 143 (2008) 165 FCR 230, 242. 144 Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592, 622 (in respect of the predecessor provision in s 4(2) of the TPA).

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