Professional Liability Guide

CHAPTER 1 – DUTIES

That is not to say the ACL imposes any particular duty of disclosure on a party. Rather, the whole of the circumstances needs to be examined to determine whether silence is of itself misleading or deceptive.

In Demagogue Pty Ltd v Ramensky & Anor , Black CJ observed 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 that is misleading or deceptive or that 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.’ 145 The relevant circumstances of the Henjo Investments case involved the seller of a business who knew that it was subject to serious limitations on its lawful seating capacity. These limitations affected the goodwill, takings, and profitability of the business, which was being conducted contrary to law with a substantial element of over-seating. These circumstances were found to be sufficient to give rise to a duty on the part of Henjo, as the vendor, to reveal the true position to Collins Marrickville, the potential purchaser, before any contract was signed.

The Full Court of the Federal Court upheld the primary judge’s findings that Henjo had engaged in misleading or deceptive conduct by silence, in breach of section 52 TPA.

Justice Lockhart (with whom Burchett J and, on this point, Foster J agreed) said that ‘misleading or deceptive conduct generally consists of representations, whether express or by silence; but it is erroneous to approach s 52 on the assumption that its application is confined exclusively to circumstances which constitute some form of representation.’ 146

His Honour went on to say:

‘The circumstances in which silence may constitute misleading conduct under the Act were referred to in Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 68 ALR 77; 12 FCR 477. That case established that silence may be relied on in order to show a breach of s 52 when the circumstances give rise to an obligation to disclose relevant facts: see Bowen CJ (ALR) at 84; (FCR) at 490; Lockhart J (ALR) at 98–9; (FCR) at 504; and Jackson J (ALR) at 102–3; (FCR) at 508. The duty to disclose is not confined to cases where there are particular relationships, such as trustee and beneficiary or solicitor and client, principal and agent and guardian and ward. There is no useful purpose in seeking to analyse the circumstances in which the duty to disclose will arise as this must depend on the facts of each case.’ 147 A different result ensued in Miller and Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited . 148 Consolidated Timber Holdings engaged Miller as its insurance broker to assist in an application with the financier, BMW, for a loan for insurance premium funding. Miller supplied BMW with various documents, including a memorandum and certificates of insurance in relation to the underlying policy.

145 (1992) 39 FCR 31. 146 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 [94]. 147 Ibid [96]. 148 (2010) 241 CLR 357.

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