CATCHWORDS TRADE PRACTICES - Misleading and deceptive conduct in contravention of S. 52 of Trade Practices Act - appointment of contract carrier - appointment of prime contractor leading to discharge of carrier - warnings given as to risks in purchase of run - whether conduct at interviews of prospective carriers is conduct "in trade or commerce" identification of class of persons likely to be affected by misleading or deceptive conduct — measure of damages under s. 82 of Trade Practices Act - recovery of interest on monies borrowed for purchase of run - whether Court has discretion to reduce amount of damages assessed under s. 82. CONTRACT - Contract arising from documents and conversations, Interpreted by reference to surrounding circumstances - relevance of parties' subjective intentions to creation of contract - construction of contract - period for which contract carrier's appointment to subsist - termination of contracts of continuing nature. Egg Industry Act 1983 (NSW) Federal Court of Australia Act 1976 (Cth): s. 541A Supreme Court Act 1970 (NSW): s. 94 Trade Practices Act 1974 (Cth): ss. 52, 53, 82. PETER EDWARD FINUCANE v. NEW SOUTH WALES EGG CORPORATION G 24 of 1987 LOCKHART J. SYDNEY 22 APRIL 1988 n ig? IN THE FEDERAL COURT OF AUSTRALIA) ) NEW SOUTH WALES DISTRICT REGISTRY) ) No. G24 of 1987 GENERAL DIVISION ) BETWEEN: PETER EDWARD FINUCANE Applicant AND: NEW SOUTH WALES EGG CORPORATION Respondent JUDGE MAKING ORDER: LOCKHART J. DATE ORDER MADE: 22 APRIL 1988 WHERE ORDER MADE: SYDNEY MINUTE OF ORDERS THE COURT ORDERS THAT: 1. The applicant bring in Short Minutes of Order to give effect to these reasons for judgment. 2. The matter is stood over to a date to be fixed for the purpose of making declarations and orders on that date. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. m IN THE FEDERAL COURT OF AUSTRALIA) ) NEW SOUTH WALES DISTRICT REGISTRY) No. G24 of 1987 ) GENERAL DIVISION ) BETWEEN: PETER EDWARD FINUCANE Applicant AND: NEW SOUTH WALES EGG CORPORATION Respondent 22 April 1988 REASONS FOR JUDGMENT LOCKHART J. In this case Peter Edward Finucane sues New South Wales Egg Corporation ("the Corporation") for declarations and damages relating to alleged misleading and deceptive conduct of the Corporation in contravention of s. 52 of the Trade Practices Act 1974 ("the Act"). The conduct in question relates to negotiations in 1984 between Mr. Finucane and the Corporation for the sale of an egg run, in the St. George and Southern areas of Sydney, the owner of which was a Hr. Mayoh and the purchaser of which was Mr. Finucane. Mr. Finucane asserts that the Corporation made false representations and false or misleading statements in contravention of ss. 53(c) and (9g) respectively of the Act. He also claims damages for alleged breach of contract between himself and the Corporation. All causes of action arise from the same basic facts and circumstances. Pst The Corporation is a statutory corporation established on 1 July 1983 under the Egg Industry Act 1983 (NSW). Subject to certain immaterial exceptions under that Act, the title to eggs produced in New South Wales vests in the Corporation. The Corporation is responsible for many functions relating to the egg industry in New South Wales, primarily with respect to the marketing of eggs and egg products. The Corporation may, for example, engage in the carriage, storage and distribution, by wholesale or retail, and the delivery of eggs and egg products; may fix prices at which eggs may be sold by wholesale; may itself purchase eggs and egg products for resale or use; and may make arrangements with regard to sales of eggs and egg products for export to countries or other parts of Australia than New South Wales. The Corporation, broadly speaking, took over the functions formerly carried on by its predecessor, The Egg Marketing Board ("the Board") of New South Wales, which was abolished by s. 73 of the Egg Industry Act 1983. The Board's policy was to appoint various carriers in New South Wales within defined areas in the State to carry eggs and egg products from distribution points or depots operated under the supervision of the Board to wholesale and retail outlets for sale. Carriers used their own vehicles for this purpose. The carriers were described as "contract carriers", and had the exclusive right to deliver the Board's eggs to customers of the Board in certain areas upon terms and conditions set out in a document called the "Contract Carrier's Appointment". That document required the particular carrier to enter into a written undertaking described as a "Contract Carrier's Undertaking" and to enter into a deed whereby the carrier guaranteed that he would perform the terms and conditions of his appointment as a 3. contract carrier and indemnified the Board against loss or damage which might be incurred by him if he defaulted in the performance and observance of his duties ("the Deed of Indemnity"). At times relevant to this case there were 31 contract carriers operating in New South Wales. If a carrier wished to sell his "run" the Board assumed the task of advertising the run for sale, receiving applications and interviewing applicants for the purchase of the run, settling a short list of applicants, and determining the successful candidate who was then permitted to negotiate with the vendor and agree on whatever terms were acceptable as between vendor and purchaser. The goodwill attached to these runs varied from carrier to carrier and from run to run. The Corporation inherited the distribution system established by the Board and continued to operate that system, though it made only three appointments of contract carriers after 1 July 1983: a Mr. Cross, a Mr. Johnson and Mr. Finucane. Specific Findings of Fact The Board's role (which, by its conduct, the Corporation adopted after i July 1983) in the sale and purchase of egg runs in New: South Wales was described by Mr. K.P. Baxter, the managing director of the Corporation, as that of a broker. That description is broadly accurate; but to fully understand the Board's (and therefore the Corporation's) role requires some delving into earlier years of the Board's activities. The Board's (and later the Corporation's) status and the character of its operations derived from its statutory rights and duties under New South Wales legislation relating to the egg 4. industry and from the necessary interaction between the Board (and the Corporation) as State marketing authorities with private enterprise. One aspect of the Board's (and later the Corporation's) activities relevant to this case concerns the relations between it and the Transport Workers Union of Australia (New South Wales Branch) ("the Twu"). The Board entered into an industrial agreement with the TWU on 1 October 1973 which was gazetted on 28 May 1975. The agreement provided, amongst other things, that if a carrier decided to assign his contract he shall notify the Board in writing and the Board shall cause three advertisements to be placed in the press calling for buyers at a maximum price of $25,000 increased by 5% per annum from 1 October 1973. The Board was required to interview applicants and refer any satisfactory persons to the carrier for the purpose of finalising the sale. Certain other provisions were made in the event of the advertisement not attracting a satisfactory applicant: see clause 6 of the industrial agreement. That agreement was treated by the Corporation and the TWU as binding both bodies. This case is essentially one of fact. Although some of the evidence is uncontentious the basic issues turn on the reliability and credibility of the main witnesses for the parties. Each of the witnesses was alert to the issues in the case. There was an absence - of detailed contemporaneous notes or records of the principal conversations, the principal exception being some of Mr. Baxter. I shall state my findings of fact, a process which involves an assessment of the witnesses based on my impression of them in the light of contemporaneous documents (including the few notes of conversations) and the probabilities. I do not accept the whole of the evidence of any witness. Some witnesses were more credible or a ee o reliable than others. This is not a case where I believe the whole or almost the whole of the evidence of any particular witness and reject conflicting evidence of other witnesses. The resolution of conflicts turns on shades of grey rather than black and white. In making finding of fact I shall refer only to the main discussions and events; but I have considered all the evidence, oral and documentary, and have been helped considerably in that task by a carefully prepared chronology made available to me by counsel. On 4 January 1984 Mr. Baxter, the managing director of the Corporation, wrote a memo to Ms. S. Park, the marketing managing of the Corporation. It is an important document in this case and is in the following terms: "Re: INTERVIEWS FOR THE CARRIER'S RUN In any discussions with intending purchasers of a Carrier's run two people should always be present. One of the persons present should keep notes of what was said to the intending purchaser, and in particular the responses to statements by representatives of the Corporation about the purchase of the run. 1. The intending purchaser should be advised that an arrangement exists between the Corporation and the Transport Workers' Union which prescribes a formula for the determination of the price of the run. The price determined under that formula is $45,000. If the interviewee is successful and purchases the run for an amount in excess of the $45,000, he does so entirely at his own risk. 2. The purchase of the run is a commercial risk undertaken by the interviewee, and the Corporation is not responsible for guaranteeing the goodwill in that run. 3. The Corporation is in the process of completely reviewing its transport and distribution arrangements and there is no guarantee that the existing distribution arrangements will necessarily continue over the long tern. No commitment should be given by representatives of the Corporation that imply any guarantees of any kind in terms of security for goodwill or permanency of tenure. Attention should be drawn to the contract between the old Egg Marketing Board and the Carrier, and in particular the Clause which determines the price of the run." A Mr. Hughes was the contract carrier for the Corporation for a run mainly in the Eastern Suburbs of Sydney. On 14 January 1984 the Corporation inserted an advertisement in the Sydney Morning Herald newspaper notifying prospective applicants that the run was for sale and that applications in writing should be sent to the Personnel Manager of the Corporation and that applications closed on Friday, 3 February 1984. Mr. Finucane sent a form of application to the Corporation by letter dated 18 January 1984 applying for the purchase of the run. On 21 January 1984 a further advertisement appeared in the Sydney Morning Herald to the same effect as the advertisement of 14 January. The Corporation contacted Mr. Finucane and an interview was arranged for 20 February 1984. This interview was held in the offices of the Corporation and the interviewing officers were Mr. A.J. Russell, then the safety officer of the Corporation and Mr. A. Jones, the distribution manager. Mr. Jones had commenced employment with the Corporation shortly before this interview, some time in January 1984. - His task was in essence to rationalise the transport arrangements of the Corporation, though he did not really start this task until March because he spent the first two months familiarising himself with the general scope of his duties. Mr. Finucane completed a form of written application for engagement by the Corporation at the time of this interview and Mr. Russell added some handwritten comments. Mr. Finucane, Mr. Russell and Mr. Jones all gave evidence in the case including evidence about the interview of 20 February. There 1s no point in my stating my findings as to everything that was said and occurred at that interview or any other interviews. I will deal with the critical points. Mr. Russell was the principal spokesman at the meeting on behalf of the Corporation, Mr. Jones joining in occasionally. I am satisfied that Mr. Russell had in his possession at that interview a copy of the memorandum of Mr. Baxter to Ms. Park of 4 January 1984 and that he told Mr. Finucane the substance of its contents. In short, he told Mr. Finucane of the arrangement between the TWU and the Corporation which prescribed a formula for the determination of the price of the run of $45,000 as then assessed pursuant to the 5% formula, and told him that if he was successful and purchased the run for more than $45,000 he did so entirely at his own risk. It was made clear to Mr. Finucane that the purchase of the run was a commercial risk undertaken by him and that the Corporation did not guarantee the goodwill in the run. It was also made clear that the Corporation was in the process of completely reviewing its transport and distribution arrangements and that there was no guarantee that the existing distribution arrangements would necessarily continue over the long term (the emphasis is mine). Neither Mr. Russell nor Mr. Jones made - any express statements to Mr. Finucane that the Corporation gave any guarantee to him as to the security of the goodwill of the run or as to his permanency of tenure. I am also satisfied that at that meeting Mr. Finucane said that in order to purchase the run he would have to borrow money in the vicinity of $65,000. 8. At the February interview either Mr. Jones or Mr. Russell showed Mr. Finucane three documents which were in printed form but otherwise blank. The three documents were standard printed forms issued by the Corporation's predecessor, the Board. They bore the name of the Board rather than that of the Corporation. One of these documents was the form of "Contract Carrier's Appointment", which purports to appoint the person concerned as a contract carrier of the Board. The appointment 1s expressed to be personal to the appointee and it is stated that the appointment may be immediately cancelled at the Board's discretion if the carrier becomes bankrupt or is insolvent or is convicted of an indictable offence or of any offence involving dishonesty or if the Board is wound up (clause 2(a)). The Board may also cancel the appointment 1f the contract carrier breaches the terms of an undertaking which is to be signed by him, subject to certain provisions as to consultation between officers of the Board, the carrier and delegates of the TWU not reaching successful resolution of the matter, and subject to provisions for arbitration (clause 2(b)). The appointment gives the carrier the exclusive right to deliver the Board's eggs to the customers of the Board nominated on a particular delivery schedule, excepting delivery by Producer Agents of the Board, who are irrelevant for present purposes. The Board undertakes that it will not authorise any other contract carrier to deliver eggs to retailers or customers nominated on the carrier's delivery schedule during the term of the "exclusive" appointment of the contract carrier (clause 3). Under clause 4 the Board reserves the right to alter or amend delivery schedules during the currency of the appointment. Certain recognised minimum weekly delivery quantities are fixed by clause 4 and provision is made for specifying minimum rates for carriage of particular egg products by clauses 5 and 6. If the 9. Carrier decides to assign his contract he must notify the Board in writing and the Board shall then cause three advertisements toa be placed in the Sydney Morning Herald calling for buyers at a maximum price of $25,000 plus 5 per cent per annum from i October 1973 (clause 9). It appears from the evidence that the rate of 5S per cent was fixed in 1973 to take account of the inflation rate. Notwithstanding the fact that it is notorious that the inflation rate has been much higher than 5 per cent since 1973 the adjustment percentage appears to have remained the same in the Board's documents. The Board is required by clause 9 to interview applicants and refer satisfactory persons to the carrier for the purpose of finalising the sale. The word "eggs" in the document of appointment means eggs in shell and such other products as the Board may from time to time determine (clause 10). The "Contract Carrier's Undertaking", which was one of the three documents shown to Mr. Finucane, is a document which requests the Board to appoint the person concerned as one of its contract carriers for a term commencing from the date of his appointment until a date shown in blank. The contractor undertakes not to carry or buy or sell eggs except in the normal course of carrying out his duties to the Board (clause 1) and undertakes generally that he will comply - strictly with the requirements of the Board and do all the sort of things that one would expect of a carrier doing his job properly. Restraints are imposed upon carriers, including a restraint that for three years after the determination of his appointment a carrier will not in any capacity deliver or sell eggs to any retailer or customer with whom he may have dealt during the currency of his appointment (clause 13). 10. The third document 1s the form of "Deed of Indemnity" which the Board required carriers to execute and which 1s expressed to be supplementary to the Contract Carrier's Appointment and Contract Carrier's Undertaking. The carrier promises to perform all the promises on his part as a contract carrier and to indemnify the Board against loss and damage which may be incurred by him by reason of any default in his performing and observing the agreements contained in the Contract Carrier's of Appointment and Contract Carrier's Undertaking (clause 1). The Board is authorised to deduct and retain at its discretion a sum not exceeding $3,000 in partial satisfaction of such claims from the proceeds of the sale by the Board of the run to which the appointment relates (clause 3). On 23 February 1984 the Corporation informed Mr. Finucane that his application had been unsuccessful. On 26 June 1984 the Corporation received a letter from Mr. Mayoh requesting it to advertise his egg run for sale. Mr. Mayoh had been appointed by the Board as a carrier on 16 December 1981. The letter said that a reasonable price for the run, including the cost of a three years old truck, would be $95,000. The market rate for runs at that time was something in the order of $90,000 to $95,000. On 12 July 1984 Mr. D. Boesen, the personnel manager of the Corporation, asked Mr. Baxter if there were any changes to the instructions given in the latter's Memorandum of 4 January 1984 with respect to interviews to be conducted for the sale of Mr. Mayoh's run. On 18 July 1984 Mr. Baxter replied in writing to Mr. Boesen that it should be emphasised very strongly that the Corporation was considering il. changes to the distribution system and that no guarantees or indications should be given that existing runs would be retained. On 14 July 1984 an advertisement was inserted in the Sydney Morning Herald for the sale of Mr. Mayoh's egg run. The advertisement required applicants to send relevant details to the Corporation and stated that applications closed on 24 July 1984. Mr. Jones was by then well advanced with his task of considering the rationalisation of the existing distribution system. By mid-July 1984 he had concluded that the number of carriers could be reduced without endangering the efficiency of deliveries, although it appears that this conclusion had not at that date been communicated to senior management of the Corporation. Mr. Finucane applied for the purchase of Mr. Mayoh's egg run by application dated 17 July 1984 which was received by the Corporation on 20 July. A Mr. Bob Gadge, who was an existing contract carrier of the Corporation and who knew Mr. Finucane, suggested to Mr. Boesen on 23 July 1984 that Mr. Finucane was a suitable purchaser for Mr. Mayoh's- run and on same date the Corporation received a letter from Mr. Mayoh recommending Mr. Finucane as purchaser of the run. Before the interview on 31 July 1984 Mr. Finucane went to the State Bank of Maroubra Junction, where he banked, saw a loans officer and made it clear to the officer that if he was successful he would seek a loan of $80,000 from the bank. 12. On 31 July 1984 Mr. Finucane was interviewed at the offices of the Corporation by Mr. Russell, Mr. Jones and Mr. Boesen. Mr. Finucane completed an Application for Employment at or immediately before the commencement of the interview. Printed forms of the same three documents which had been shown to Mr. Finucane at the February interview were also shown to him at the July interview. I am satisfied that one or other of the officers of the Corporation brought to Mr. Finucane's attention the substance of the contents of the Memorandum of Mr. Baxter to Ms. Park of 4 January 1984 which was in the possession of at least one of the officers conducting the interview. Mr. Finucane was told by one of the Corporation's officers at the 31 July meeting that the Corporation was intending to alter the egg distribution system by a greater use of trolleys in the delivery areas. Mr. Finucane was asked if he would be prepared to put a hydraulic lift on the back of Mr. Mayoh's truck suitable for the reception of trolleys, at a cost of about $6,000 to $7,000. Mr. Finucane replied that he would be prepared to do that. Other things were said to Mr. Finucane by one or more of the Corporation's officers on 31 July about rationalisation of the Corporation's distribution system. It was suggested that carriers in runs where deliveries fell below a mean of 1,200 cartons per week would be allowed to do additional deliveries in growth areas in the western suburbs of Sydney so as to top up deficiencies in their own runs to 1,200 cartons per week. In other words the system would be rationalised by sharing the excess burden in the areas of greatest growth. 13. I am satisfied that the Corporation's review of the distribution arrangements and any risks to carriers that might emerge therefrom were not otherwise brought to Mr. Finucane's attention at the July meeting or indeed at the earlier February meeting. In particular, I do not accept the evidence of Mr. Jones that he told Mr. Finucane at the 31 July interview: "The reason I am telling you this is because you said you were interested in forking out 90 grand for a run that may not exist in a few weeks time and I and Alan Russell wanted to sleep at night, and by wanting to sleep at night what I was trying to say and what I did say because I explained 1t was that I wanted to go to bed with a clear conscience, that if he walked out of that room with the intention of spending $90,000 on a run, that I would have a clear conscience a fortnight later when I told him - can I use the vernacular or not? Yes, you use the words that you used. --- I said ina fortnight's time I would have no conscience about going up to him and saying, 'Piss off, we don't need you anymore' because I know I had made it as clear as I possibly could at the interview that that was a probable outcome of what would happen when I had finished my distribution audit. What did you next say to Mr. Finucane? -- I said, 'Now tell me you are still interested." What did he say? -- He said, 'Yes I am.'" As mentioned earlier, Mr. Jones had come to the conclusion by mid-July 1984 that the number of carriers should be reduced. He had not discussed his conclusion with management at that stage. He was directly responsible to Ms. Park, the Marketing Manager, but she had informed him that on the matter of recommendations about distribution arrangements he should deal direct with Mr. Baxter. Mr. Jones first spoke to Mr. Baxter about his conclusions with respect to the te 14. distribution changes in August 1984. He informed Mr. Baxter of the various alternatives and of Mr. Jones' views so that Mr. Baxter could present his (Mr. Baxter's) recommendations to the Board. What emerged with the approval of the Board of the Corporation in November 1984 was, in Mr. Jones' view, substantially the system that he (Mr. Jones) had recommended except in relation to the appointment of a prime contractor. This reference to "prime contractor" is to the system whereby the Corporation retained one contractor for distribution of eggs and egg products in the metropolitan area of Sydney, leaving it to the contractor to determine whether it sub-contracted runs to other persons. By early August 1984 Mr. Baxter held the view that the preferred course for the future was to introduce a prime contractor system. Such was the recommendation which Mr. Baxter made to the Board. It was Mr. Baxter's aim to get the new system into place as quickly as he could; but the matter was very sensitive because of the necessity for negotiations with the TWU over the implementation of the scheme. Mr. Baxter knew on 3 August 1984 (with respect to the total distribution system and not only the Sydney metropolitan distribution - system) that the Corporation was considering changes to the system of transporting eggs from the branches to the metropolitan area; that at that stage the Corporation was having discussions with three prime contractors; and that it had been indicated by the Corporation to the TWU on a number of occasions that, unless the TWU came up with a system for reducing the number of carriers and rationalising the distribution system, a prime contractor would be appointed. Mr. 15. Baxter had at that time said to carriers who were concerned about their future that carriers who worked well and hard had nothing to fear. Mr. Baxter said this to a carrier, Mr. Attard, on 3 August 1984 and also said to Mr. Attard that he believed that, when the prime contractor eventually made a decision about how to organise the runs, the carriers who had worked well and done the job well would probably be retained. In August 1984 Mr. Baxter addressed a meeting of employees of the Corporation at the Auburn RSL Club. Among the persons present were delegates from the carriers, and representatives of relevant unions and farmers. Mr. Baxter said that there would be some changes in the method of distributing eggs, but the basic principle would be reward for effort. That was the only specific reference that was made un that address to changes to the distribution system. Nothing was said about the consideration of any particular options. Originally there were 14 applicants for the purchase of Mr. Mayoh's run, but 11 of those withdrew following interviews in July 1984 with Messrs. Russell and Jones leaving only three: Messrs. Finn, O'Keefe and Finucane. Arrangements were made for those three applicants to be interviewed by Mr. Baxter. The interview of Mr. - Finucane took place on 9 August 1984. It was held in Mr. Baxter's office. Mr. Baxter, Mr. Boesen and Mr. Finucane were present. At the interview of 9 August Mr. Baxter asked Mr. Finucane if he knew that the price of egg runs was governed by a clause in the agreement with the TWU which provided a formula valuing runs at about $45,000 to $46,000 on then figures and that the Corporation could not 16. guarantee any goodwill in the run. Mr. Finucane said that he was aware of that. Mr. Baxter told Mr. Finucane that the Corporation was likely to make significant and radical changes to its distribution system, but that no decision had yet been made about such changes. Mr. Baxter said that no guarantees could be given to Mr. Finucane or any other carriers that present transport arrangements would continue in the long term. Mr. Baxter said that among the possible changes being considered by the Corporation was one whereby it would buy out some of the older carriers. Mr. Baxter also said something to the effect that the Corporation might improve distribution by having carriers make greater use of trolleys in certain delivery areas. Mr. Baxter told Mr. Finucane more than once that if he bought- Mr. Mayoh's run he was buying a high risk business; that the Corporation accepted no liability in the event of changes to the distribution system; and that the Corporation gave no guarantees to Mr. Finucane as to security for the goodwill of the run or permanency of tenure. Mr. Baxter told Mr. Finucane that carriers were operating pursuant to old forms of agreement signed by the Board and that the Corporation had not executed any new form of agreement with carriers engaged before 1 July 1983 by the Board or engaged thereafter by the Corporation. Mr. Baxter said that if Mr. Finucane purchased the run he must regard it as he would any other commercial venture; and that he should make whatever enquiries he considered necessary from his bank manager, solicitor or accountant or the NRMA to fully evaluate the proposition. Mr. Finucane was informed by letter dated 24 August 1984 from the Corporation to him that he had been unsuccessful. The Mayoh run 17. was offered by the Corporation to Mr. Finn. On 27 August 1984 Mr. Finn informed the Board that he did not wish to proceed with the purchase. Mr. O'Keefe, who was apparently next in line as purchaser of the run, informed the Board on 29 August 1984 that he also did not wish to proceed with the purchase. Mr. Boesen informed Mr. Finucane on 30 August 1984 by telephone that his application to purchase Mr. Mayoh's egg run had been successful and that a letter was being forwarded from Mr. Baxter to him confirming the approval of Mr. Finucane as a person who might negotiate with the vendor toward the purchase of the run. . There was tendered 1n evidence a letter of 30 August 1984 from Mr. Baxter to Mr. Finucane. Mr. Finucane denied receiving the letter. He said the first time he saw it was when his solicitor showed it to him, presumably in connection with this case. I admitted the letter on a limited basis and reserved the question whether I admitted it against Mr. Finucane as a document received by him. I am satisfied that the letter was received by Mr. Finucane and that he understood its contents at all material times. I therefore admit it for all purposes. It reads as follows: "Dear Mr. Finucane, This letter will confirm our telephone advice that your application to negotiate the purchase of Mr. R. Mayoh's run has been approved by the Corporation. As advised, you should now approach Mr. Mayoh to complete negotiations for the purchase of the run. However, as discussed with you on several occasions, you are advised that:- 1. an arrangement exists between the Corporation and the Transport Workers' Union which prescribes a formula for the determination of the price of the run. The price determined under that formula is approximately $45,000. If you purchase the run for an amount in excess of the $45,000, you do so entirely at your own risk; 18. 2. the purchase of the run is a commercial risk undertaken by you and the Corporation is not responsible for guaranteeing any goodwill in the run; and 3. the Corporation is in the process of completely reviewing its transport and distribution arrangements and there is no guarantee that the existing distribution arrangements will necessarily continue over the long term. May we take this opportunity to congratulate you on the success of your application and look forward to a mutually beneficial association. Yours sincerely, K.P. BAXTER MANAGING DIRECTOR" On 12 September 1984 the Board of the Corporation met. Mr. Baxter reported that further discussions had taken place with Alltrans Bulk Division ("Alltrans Bulk") about appointment of a prime contractor to undertake distribution. He informed the Board of certain discussions between himself and representatives of the TWU relating to the Contract Carriers' Agreement. He expressed the opinion that there might not be industrial trouble if a prime contractor was appointed as the carriers would be offered employment with that contractor when the changes were introduced. He observed that the offer of continuing employment fulfilled the commitments given by the then Government that no jobs would be lost as a result of: changes in relevant legislation concerning the Corporation. Mr. Baxter further advised the Board that if the present carriers did not agree to work with the prime contractor there should not be any major problems with making alternative arrangements. It was noted that there would be a minimum saving of $200,000 in distribution costs if a prime contractor was appointed. The Board agreed that the proposed distribution arrangements would be discussed with the Customer Services Manager later in the meeting. 19. Mr. Jones, then Customer Services Manager, attended the meeting in the afternoon for discussions wath the members of the Board as to the proposed distribution arrangements. Mr. Baxter stated that Rapid Transport Industries was requesting a contract over a four year period but that it was felt that a three year period could be agreed. It was suggested that, should the Corporation agree to the appointment of a prime contractor, discussions should be held first with the Twu and then the Union's carrier delegates at the Corporation about the changeover. The Board resolved: "the Corporation approves the appointment of a prime contractor to undertake distribution on behalf of the Corporation of eggs and egg products in the Sydney metropolitan area subject to a report by the Managing Director at the next meeting following discussions with the T.W.U. and T.W.U. carrier delegates." On 12 September or thereabouts, Mr. Baxter advised Mr. Perry, the Secretary to the Corporation, that the Corporation should not in appointing Mr. Finucane sign either the Contract Carrier's Appointment or the Deed of Indemnity, as the Corporation had not done so in the cases of Mr. Johnson and Mr. Cross. By agreement dated 15 September 1984 between Mr. Mayoh and Mr. Finucane, Mr. Mayoh agreed to sell to Mr. Finucane his interest in his egg run and in his 1980 Mitsubishi 4.5 tonne diesel truck. The purchase price was $82,000 for the run and $8,000 for the truck, a total of $90,000. This amount was to be paid by Mr. Finucane to Mr. Mayoh or his company, Nayara Pty. Limited. Mr. Finucane declined to pay the money until the Corporation approved him as purchaser. On 17 20. September 1984 Mr. Finucane attended the offices of the Corporation with Mr. Mayoh. Mr. Finucane was handed by Mr. Perry three documents, being the three printed forms which he had been shown by the Corporation's officers in February and July 1984. They were the Contract Carrier's Undertaking, the Deed of Indemnity and the Contract Carrier's Appointment. Mr. Finucane signed the Undertaking and the Deed of Indemnity in each of which relevant details had been typed. He then handed all three documents back to Mr. Perry, and was given plain printed forms of the documents in their stead. Mr. Perry told Mr. Finucane that "the Corporation did not sign the appointment because there was no security in the run". Mr. Finucane and Mr. Mayoh then went outside the Corporation's offices, and the purchase moneys were paid by Mr. Finucane to Mr. Mayoh. On the following Tuesday Mr. Finucane asked Mr. Perry for copies of the forms he had signed in Mr. Perry's office on 17 September. Mr. Perry said that Mr. Finucane should come back the following day and Mr. Perry would have the copies prepared for hin. Mr. Finucane went back the next day, the Wednesday, but Mr. Perry said that he had been busy and had not had time to prepare the forms or have them copied, and asked Mr. Finucane to come back on the Thursday. Mr. Finucane did so and was then handed three forms being photocopies - of the two he had signed and of the Contract Carrier's Appointment. Mr. Finucane did not look at the forms until that evening. When he did so he telephoned Mr. Perry because he did not understand why the Contract Carrier's Appointment was blank. He then operated the run for the next seven or eight weeks, calling daily at the depots to collect eggs and then distributing them to outlets. 21. Mr. Jones started work three weeks before 12 November - the date on which the appointment of a prime contractor was ultimately announced to the carriers —- on amalgamating the existing 31 runs down to 23 runs. He was not seeking to divest any particular carrier of his run, but to divide the total number of "delivery drops" by the Number 23 so that in that sense each run was new. The main factor which Mr. Jones applied in rating carriers to allow the prime contractor to determine which carriers should be retained was the fact that the carriers were all members of the TWU and Mr. Jones anticipated that the TWU would insist on a "last on first off" principle. The ultimate decision was, however, left to Alltrans Bulk. Mr. Jones prepared a list of 31 names with his mark endorsed thereon rating them as "good, fair, indifferent or whatever". Alltrans Bulk then came back with a list of 23 carriers to be retained which had only two differences to the list prepared by Mr. Jones. Mr. Finucane did not have a high rating on Mr. Jones' list, both because he fell into the "last on first off" category, and because Mr. Finucane had not been a carrier to the Corporation for long enough for Mr. Jones to form a judgment as to whether Mr. Finucane was a good or poor driver. Mr. Jones dealt only with Alltrans Buik and not with the TWU. Mr. Jones did not canvass the opinion of drivers at all "because it would not have been possible to let them know what was in the offing without bringing down upon the head of the Egg Corporation considerable trouble". On 8 November or 9 November 1984 Mr. Baxter reached an agreement with Alltrans Bulk verbally appointing it as prime contractor which was followed by a written agreement. Carriers were told late in the afternoon of 9 November by the Corporation to attend 22. a meeting on 12 November at 6 a.m.. This procedure was adopted because the Corporation had received advice from the TWU that, in the light of experience which the Twu had had in other industries with this sort of changeover, unless the changeover was made "relatively short and sharp there would be very considerable logistic problems associated with it and in order to make it as clean as possible we [the Corporation] should do it as quickly as possible; in addition to which if we [the Corporation] left 1t for a longer period of time the news would inevitably leak out and it could prejudice the interests of the existing carriers and in fact create quite serious industrial roblems for us." The TWU's function in offering such advice to the Pp Corporation was not explored in evidence. Mr. Baxter announced at the meeting of carriers on 12 November that the cartage of eggs would in the future be undertaken by Alltrans Bulk, that 21 carriers would be retained by the Corporation and the remainder would not be retained. He said that a number of carriers would be employed as company drivers and that the Corporation would buy their trucks from them and they would be paid compensation, but he did not say how much compensation would be paid. Mr. Doig, the general manager of Alltrans Bulk, then read out the names of those who would be retained as carriers working for Alltrans Bulk. The names of - eight carriers were not read out, and those carriers were led outside. Mr. Parnell, the union delegate from the head office of the TWU, then spoke outside to the eight people including Mr. Finucane and Mr. Cross, another carrier for the Corporation. Mr. Finucane and other carriers present at this outside meeting were surprised and shocked by what they had been told. 23. Mr. Finucane and Mr. Cross were asked by Mr. Parnell to attend a meeting with Mr. Baxter in Mr. Baxter's office, and attended that meeting in the presence of Mr. Parnell. Mr. Cross asked Mr. Baxter: "How come you cancelled our contracts when there are numerous carriers over the age of 60 years of age or more, some with old trucks in excess of 10 or 15 years old? Why did you cancel our contracts?" Mr. Baxter replied that it was not his decision to cancel the contracts, but was a Board decision. Mr. Baxter said that Mr. Cross and Mr. Finucane were in a difficult position and that they should consider taking legal action against their respective vendors. He said that the Corporation might consider helping them with legal expenses to do this. Mr. Baxter mentioned a compensation figure: in the case of Nr. Cross $850. In the circumstances this figure appears to have been treated as an offer also to Mr. Finucane in the same amount. Mr. Finucane and Mr. Cross said that this offer was not satisfactory. Mr. Parnell said that he had looked at the "paperwork" and had concluded that there was nothing the TWU could do to help mr. Cross or Mr. Finucane and that the Corporation had no legal obligation to pay anything to then. On 12 November 1984 the Corporation terminated Mr. Finucane's engagement and sent him two cheques, one for $1,625.53 and the other for $40.54. The cheques were sent under cover of a letter of 12 November 1984 which referred to the Corporation's estimate of Mr. Finucane's week's earnings for the week commencing 12 November 1984 and certain other items. On 13 November 1984 Mr. Baxter met Mr. Finucane. In my view nothing critical turns on what was said there, so I shall not deal with the matter further. 24. The Board of the Corporation met on 14 November 1984. minutes of that meeting record the following: "The Managing Director reported two carriers who had purchased runs during the last few months were not offered alternative employment. He pointed out they had received letters explicitly warning them of possible changes to the distribution system and that there were no obligations on the Corporation in connection with the purchase of the runs. The Carriers had also been informed the Agreement with the Contract Carriers had not been registered and purchase of the runs was entirely at their own risk. Payment of a week's salary would be offered to the two carriers in lieu of notice. It was commented that the 21 lorry owner drivers who had transferred to Alltrans are now operating their The delivery runs and the situation appeared to be settling down apart from a few minor problems. Mr. Baxter said he wished to formally record his appreciation of the assistance given by Mr. Alan Jones, the Distribution manager in implementing the new arrangements. He commented Mr. Jones had worked long hours well beyond the call of duty in assisting with the changes. It was noted each member of the Corporation had been consulted about the changeover to the prime contractor arrangement prior to Alltrans being notified and the changes implemented. The commencing rate Alltrans is providing the Corporation is a cartage rate of 66.5 cents per outer. The contract would apply for a period of five years with a right of first refusal to extend for a further five years subject to satisfactory performance. Resolved 'the corporation formally ratifies the appointment of Alltrans Bulk Division as the prime contractor to undertake distribution of eggs and egg products on behalf of the Corporation.' 'the Managing Director and other Senior Executive be authorised to enter into negotiations with the New South Wales Branch of the Transport Workers' Union for payment of redundancy to any carrier proposed by the Union whose employment may be terminated within two months of the date of appointment of the prime contractor to undertake the distribution work.' 25. The Managing Director pointed out that Mr. W. Cross and Mr. P. Finucane, the two carriers who would not be transferring to the prime contractor had been formally warned about purchasing the runs and the risks involved. It was advised that in interviews they had been informed of discussions with the prime contractor and that there were no guarantees covering carriers' runs or a formal agreement existing between the carriers and the Corporation. Mr. Baxter said he had indicated to Messrs. Cross and Finucane he would put a proposal to the Board at their request that the Corporation consider an ex gratia payment to them. It was noted Mr. Cross had apparently paid $100,000 for his run although at the time of transfer a figure of $90,000 had been advised. Mr. P. Finucane, as understood had paid $82,000. Both had borrowed substantial amounts to finance the purchase of the runs. Mr. Baxter pointed out that legal advice indicated the Corporation is not obligated in this matter as the carriers had acted against its advice. Mr. Baxter said he understood Mr. Cross borrowed funds from his brother-in-law who is a solicitor and should have been aware of the risks involved. It was advised that during discussions with the two carriers it had been indicated a possible action could lie against the sellers of the runs for mis-representation [sic]. Resolved 'the Corporation indicates to the Transport Workers' Union that carriers W. Cross and P. Finucane be assisted, if possible, to examine the availability of legal action against the vendors of carrier runs purchased by them, but until the position is clarified the Corporation makes no commitment to payment of monies to the purchasers beyond any payment in lieu of notice.'" On or about 14 November 1984 Mr. Russell prepared a file note which purported to set out his recollection of the interviews with Mr. Finucane on 16 February 1984 and 31 July 1984 together with certain other matters. Reliance was placed upon this document as supporting 26. the case for the Corporation. It was a document prepared by Mr. Russell and agreed in by Mr. Jones. I have reached the view that the file note is of minimal evidentiary weight. It was prepared with knowledge of the fact that a dispute had arisen between the Corporation and Mr. Finucane of the kind which became the subject of this litigation. It was plainly in contemplation of litigation and related to events months before. In particular it purported to set out the recollection of Mr. Russell (and also Mr. Jones, although the latter simply agreed with the document without alteration) about interviews with Mr. Finucane at times when many applicants for runs were interviewed by those two gentlemen: some 31 applicants in or about February 1984 and 14 in late July 1984. Even if the document were to be taken into account by me it would not alter my findings as to the evidence which I have otherwise accepted. It is unnecessary to relate subsequent meetings that occurred between the parties except to say that an increasingly acrimonious relationship developed between Mr. Finucane and the Corporation. Indeed, the Corporation insisted that, unless Mr. Finucane "withdrew" a letter of demand from his solicitors of 13 November 1984, the Corporation would not allow him to be present at discussions between the Corporation and other carriers following the appointment of the- prime contractor which took place on 14 November and 20 November. The proffered explanation of the attitude of the Corporation was that it was adopted as an expression of the TWU's policy as to the union acting on a member's behalf. The curious attitude adopted by the Corporation in reaction to the threat of a carrier seeking to resort to the courts is not the less curious because the Corporation claims to have followed the TWU's policies in adopting it. Thereafter 27. correspondence was exchanged between solicitors for Mr. Finucane and the Corporation and in due course these proceedings were instituted on 23 January 1987. After the termination of his engagement by the Corporation on 12 November 1984, Mr. Finucane did not work until 1 March 1985 when he was employed on a casual basis as a truck driver until December 1985. Mr. Finucane subsequently took up employment as a bus driver employed by the Urban Transit Authority. After November 1984 Mr. Finucane took steps to sell his truck, which was sold for $12,750. After the termination of Mr. Finucane's engagement by the Corporation Mr. Finucane continued for about twelve months to pay about $700 a month to the State Bank in repayment of his loan: this was only half of the amount he was obliged to pay. Mr. Finucane's position became so desperate that his father paid the loan out for him on 28 October 1985. Mr. Finucane's parents took a mortgage in their favour over Mr. Finucane's house to secure an advance of $83,194.06. The amount paid by Mr. Finucane's father to the State Bank, Maroubra Junction branch, was $71,000 plus flexible deposit proceeds of $12,194.06, a total of $83,194.06. This was the same amount as secured by the mortgage to Mr. Finucane's parents. General Findings of Fact Most of my findings of fact thus far have been with respect to particular occasions. I shall now make some findings of fact of a more general character. 28. The Corporation came into existence on 1 July 1983. Not long after this it became apparent to the Corporation that there were deficiencies in the distribution system of eggs in New South Wales including in distribution in the metropolitan area of Sydney. The Corporation was in a dilemma. On the one hand it recognised that it owed duties to the carriers who had been engaged by its predecessor, the Board. The Corporation did not wish to disturb its relations with the carriers whom it had taken over or antagonise them or the TWU of which the carriers were members; otherwise industrial relations would sour and tensions would arise. On the other hand the Corporation wished to improve the distribution system which it had inherited from the Board. The dissatisfaction of the Government of New South Wales with the performance of the Board had led to the incorporation of the Corporation to improve the egg industry. The Board had lost $24m in the 1983 financial year and the Corporation had the task before it of running at a profit. In the perception of the Corporation, to achieve a profit it would be necessary to make changes in the egg industry including improvements to the distribution system. The Corporation, like the Board before it, had been involved in a public display of enforcing provisions of the relevant legislation relating to unlicensed producers of eggs. Such enforcement proceedings had attracted criticism from the Government, producers and others. The egg industry was in the political limelight and the Corporation was aware of the sensitive task which it had before it and of the fact that if it failed to improve the egg industry including the distribution system for eggs and egg products there was a real possibility that the Corporation would be abolished and the egg 29, industry left to the interplay of free market forces. Hence, the Corporation was under significant pressure to achieve better performance. The Corporation's dilemma was particularly acute with respect to the sale of egg runs. Most carriers had been appointed by the Board: only three were appointed by the Corporation. When any of the carriers wished to sell his run it was necessary for the Board to advertise the run for sale, interview applicants, select a successful applicant and put him in touch with the seller, after cautioning the successful applicant that, if he paid a higher price for the run than the price arrived at by the application of the formula in the industrial agreement with the TWU, he did so at his own risk. These were the duties of the Corporation to the established carriers. The Corporation was acutely aware of these duties because of events associated with the sale of a run by Mr. Hughes, who was a carrier appointed by the Board. Mr. Hughes had wished to sell his run which was first offered for sale by the Board about February-March 1983. Mr. Hughes complained to various authorities, including the Ombudsman of New South Wales, about delays by the Board and the Corporation in finding a purchaser. The Corporation received a first draft of the Ombudsman's Report in late April or early May 1984. That draft report criticised the Board and the Corporation in relation to the delays and other matters. - What was the Corporation to do when a carrier wished to sell his run? If it did not fulfil its duties of advertising the run for sale, interviewing applicants, selecting an applicant and introducing him to the vendor, the vendor would complain to the Corporation and 30. others including the political authorities. Yet the Corporation was investigating substantial changes to the distribution system and considering various possible options including a reduction in the number of runs and amalgamation of the remaining runs or appointment of one "prime carrier" in place of the existing 31 carriers, with arrangements of one kind or another being made to accommodate the existing carriers or some of them whether as _ sub-contractors, employees of the "prime carrier" or otherwise. In my opinion the Corporation's officers did inform Mr. Finucane on one or more than one of the occasions mentioned earlier that:- * an arrangement existed between the Corporation and the TWU which prescribed a formula for the determination of the price of the run and that the price determined pursuant to that formula was $45,000. If Mr. Finucane was successful in his application and purchased the run for an amount in excess of $45,000 he did so entirely at his own risk; * the purchase of the run by Mr. Finucane from Mr. Mayoh was a commercial risk undertaken by Mr. Finucane and the Corporation was not responsible for guaranteeing the goodwill in that run; * the Corporation was in the process of completely reviewing its transport and distribution arrangements and it offered no guarantee that the existing distribution arrangements would necessarily continue over the long term; 31. * the Corporation offered Mr. Finucane no fixed term of tenure of his run or any permanency of tenure thereof. In my opinion the Corporation's officers did not inform Mr. Finucane that his occupation was a weekly tenancy or some other tenure terminable on a week's notice. Activities in trade or commerce It was submitted on behalf of the Corporation that the conduct occurring at interviews between the Corporation's officers and persons like Mr. Finucane who may in due course become engaged by the Corporation as independent contractors for the purpose of delivering eggs on a run is not in trade or commerce but antecedent to it and constituted the exercise by the Corporation of functions of an administrative character. There is some authority that a statement by a prospective employer to a prospective employee in negotiations leading towards employment is capable of being conduct within trade or commerce within s. 52 of the Act: Patrick v. Steel Mains Pty. Ltd. (1987) A.T.P.R. 40-794 per Wilcox J. at 48,665. His Honour there referred to the- cases establishing that the words "trade or commerce" are of the widest import, to which I shall also refer shortly. Counsel for the respondents rightly pointed out that his Honour's observations were obiter in that case. His Honour did not say, of course, that conduct at the stage of negotiation towards employment will in every case constitute conduct "in trade or commerce" within s. 52 of the Act. Whether that result would follow in a particular case, and whether it 32. would follow where the negotiations are toward the appointment of an independent contractor rather than the appointment of an employee, will depend upon characterising the corporation's activities in and about the negotiations. It may be that the critical issue in a particular case is whether the degree of connection between the negotiations and subsequent appointment on the one hand and the course of the corporation's business on the other is such as to bring the negotiations within the ambit of conduct in trade and commerce, however widely such ambit be defined. It was emphasised by counsel that there is a distinction between a law "with respect to" trade and commerce and laws about conduct "in" trade and commerce. That distinction is illustrated by the difference between ss. 51(i) and 92 of the Constitution. Section 51(i) grants parliament power "with respect to" trade and commerce whereas s. 92 provides that trade and commerce between the States shall be absolutely free. Section 92 applies so that matters which are in, and not merely with respect to, trade and commerce between the States shall be free. Section 52 of the Act uses the word "in", not the phrase "with respect to". It was submitted that the phrase "in trade or commerce" in s. 52 means "within" trade or commerce. The submission needs to be considered in the context of the facts surrounding the activities of the Corporation in relation to the sale of eggs and egg runs. The Corporation was required by the terms of the industrial award to advertise runs for sale, interview prospective purchasers, select a suitable purchaser and put him in touch with the vendor of the run. The terms of sale were a matter to be negotiated between the successful applicant and the seller of the 33. runs. However, runs could not be sold without the Corporation's approval of the purchaser and without the appointment by it of the purchaser as a licensee. The interviews between officers of the Corporation and Mr. Finucane were all directly concerned with these Matters. When officers of the Corporation interviewed Mr. Finucane they were performing various functions. The interview process was conducted for the purpose of determining whether Mr. Finucane was a person who in the opinion of the Corporation was a fit and proper person to be entitled to negotiate with Mr. Mayoh with a view to purchasing Mr. Mayoh's run. The second purpose of the interview was to ensure that Mr. Finucane was a fit and proper person to be appointed by the Corporation as one of its contract carriers for the carriage of its eggs. Third, the information provided by the Corporation to Mr. Finucane as a prospective purchaser of an egg run was provided with a view to promoting the sale of the run between the vendor and the person found by the Corporation's officers to be a suitable purchaser. The Corporation's activities in relation to the interview process were part of its statutory functions of ensuring an orderly - system of marketing and distribution of the Corporation's eggs. They formed part of the process whereby the Corporation provided an effective transportation system for its trade in eggs. The Corporation's activities ensured effective control over the suitability of its carriers and secured control over the transportation system used by the Corporation for the delivery of its eggs. 34, An examination of the provisions of the Contract Carrier's Undertaking and Contract Carrier's Appointment and Deed of Indemnity, the first and third of which were signed by Mr. Finucane and the second of which was handed to him and provided some of the terms of the contract between the Corporation and Mr. Finucane, is relevant. I will briefly summarise only the more significant provisions here, since 21t will be necessary to consider these documents in some detail later in this judgment. In the form of Contract Carrier's Undertaking signed by Mr. Finucane he undertook to the Corporation (which for this purpose should be taken to stand in place of the Board throughout the document) that he would, for example, not carry or trade in eggs except in the normal course of his carrying for the Corporation (para. 1); that he would not be concerned in the distribution or sale of eggs otherwise than to retailers and customers on the delivery schedule for the time being allocated to him by the Corporation (para. 2); that he would comply strictly in all respects with the requirements of the Corporation with regard to prices for eggs (para. 3); that the delivery vehicles used by him would fulfil certain of the Corporation's requirements (para. 4); that he would make available to the Corporation for inspection all books of account and other records relating to his business as a contract carrier (para. 7); that he would use his best endeavours to promote the sale of the Corporation's eggs and would cooperate with the Corporation in respect of sales programmes and merchandising projects (para. 10). The terms of the Undertaking, of which those to which I have referred are merely examples, are designed to ensure that the Corporation's carriers will o 35. be suitable to the Corporation, and the Undertaking functions for the purpose of ensuring an orderly and efficient transportation system for the carriage of the Corporation's eggs. Paragraph 13 of the Undertaking prohibited Mr. Finucane for three years after the termination of his appointment by the Corporation from delivering or selling eggs or being in any manner concerned directly or indirectly in the distribution or sale of eggs to any retailer or customers allocated to him under the Undertaking or Contract Carrier's Appointment either as principal agent or employee. An undertaking not to engage in competitive commercial conduct was regarded as a relevant circumstance by a Full Court of this Court in Bevanere Pty. Limited v. Lubidineuse (1985) 7 F.C.R. 325 at 329 in concluding that the negotiations leading up to the sale of a business as a going concern were conduct "in trade or commerce" within the scope of s. 52 of the~ Act. The provisions of the document of Contract Carrier's Appointment are to similar effect and in my view were utilised by the Corporation for the same purposes as the provisions of the Undertaking signed by Mr. Finucane. In my opinion the activities of the Corporation in and about - the conduct of interviews of Mr. Finucane by the Corporation's officers fall within the ambit of conduct in trade or commerce within s. 52 of the Act. As Bowen C.J. observed in Re_ Ku-Ring-Gai Co-Operative Building Society (No. 12) Ltd. (1978) 36 F.L.R. 134 at 139: 36. "The terms 'trade' and 'commerce' are ordinary terms which describe all the mutual communings, the negotiations verbal and by correspondence, the bargain, the transport and the delivery which comprise commercial arrangement (W_& A McArthur Ltd. v. State of Queensland ((1920) 28 cLR 530 at 547)). The word 'trade' is used with its accepted English meaning: traffic by way of sale of [sic] exchange or commercial dealing (Commissioners of Taxation v. Kirk ([1900] aC 588 at 59 per Lord Davey; W & A McArthur Ltd v State of Queensland (({1920) 28 CLR 530)). The commercial character of trade was mentioned more recently by Lord Reid in Ransom v Higgs ([1974] 1 WLR 1594). His Lordship there said: "As an ordinary word in the English language 'trade' has or has had a variety of meanings or shades of meaning. Leaving aside obsolete or rare usage it is sometimes used to denote any mercantile operation but is commonly used to denote operations of a commercial character by which the trader provides to customers for reward some kind of goods or services ({1974] 1 WLR at 1600).' Moreover, the word covers intangibles, such as banking transactions, as well as the movement of goods and persons, for historically its use has been founded upon the elements of use, regularity and course of conduct (Bank of New South Wales v Commonwealth ((1948) 76 CLR lat 381j))." Deane J. said in the same case at 167 that the terms "trade" and "commerce" are not terms of art and are of the widest import. See also Lubidineuse v. Bevanere Pty. Ltd. (1984) 3 FCR 1 per Wilcox J. at 11 - 14; Hornsby Building Information Centre Pty. Limited v. Sydney Building Information Centre Limited (1978) 140 CLR 216 per Murphy J. at 234; Handley v. Snoid [1981] ATPR 40-219 per Ellicott J. at 42,984 - - 42,985; Bond Corporation Pty. Limited v. Thiess Contractors Pty. Limited (1987) 71 ALR 615 per French J. at 618-619; O'Brien v Smolonogov (1983) 53 ALR 107 per Fox, Sheppard and Beaumont JJ. at 110-114. While these cases involve factual situations different from the present, they establish an approach to the scope of s. 52 which'in my view 1s consistent with the purpose of the Act, and is applicable in the present context given the connections between the Corporation's a 37. activities in interviewing prospective carriers and its trade in eggs to which I have referred above. It may be that not everything done by a corporation that is engaged in trade or commerce is done "in" trade or commerce. However, whether in the context of s. 52 "in" trade or commerce means "within" or "as part of" or "in connection wath" or "in relation to" trade or commerce, in my opinion the activities of the Corporation in and about the conduct of interviews by its officers of applicants for the purchase of egg runs are "in trade or commerce" within the meaning of that expression in s. 52. See Glorie v. W.A. Chipp & Pulp Co. Pty. Limited (1981) 55 FLR 310 per Morling J. at 320. After the argument in this case had concluded, counsel properly drew to my attention the judgment of Lee J. in Wright v. TNT Australia Pty. Ltd., delivered in the Supreme Court of New South Wales on 20 April 1988. That judgment is relevant to the "trade or commerce" issue in this case. In Wright's Case, the plaintiff employee claimed, inter alia, that the respondent employer had, in breach of s. 52 of the Act, made misleading or deceptive representations as to the provision of a proper and safe system of work. The plaintiff claimed damages under s. 82 of the Act as to personal injury occurring during the course of his employment. Lee J. dismissed the summons. His Honour observed that the plaintiff's claim sought to avoid the denial of a remedy of damages by an action for negligence in consequence of s. 149 of the Workers 38. Compensation Act 1987 (N.S.W). Two elements of his Honour's reasoning are relevant here. First, his Honour held that s. 52 is to be interpreted with reference to the meaning of the word "consumer" in the context of consumer protection. His Honour referred to the judgment of Stephen dg. in the Hornsby Building Information Centre Case (supra) at 233. Stephen J. there rejected a submission that s. 52 was to be read down by the heading to Part V of the Act, but found that the heading "Consumer Protection" does colour the meaning to be given to the sort of conduct against which the section is aimed. In Wright's Case, Lee J. emphasised that s. 52 was intended for the protection of consumers, and held that the relationship of employer and employee is not a relationship in which the employee receives services supplied by the employer in trade or commerce. His Honour also observed that there was no relationship between the enforcement of a right of an employee to a safe system of work and the protection of consumers of services in trade or commerce. Second, his Honour considered the scope of the words "in trade or commerce" in s. 52, noting that the fact that corporations " must employ labour before they can engage in trade or commerce is not sufficient to "make the employment of labour an activity of trade or commerce in the sense of an activity which goes to make up trade or commerce" (at 21). The facts of Wright's Case are clearly distinguishable from the facts of the case before me. In particular, the facts before Lee J. exhibited no connection between the negotiations leading to 39. employment and the activities of the defendant in trade or commerce. By contrast, I have found that the Corporation's activities in relation to the interview process were part of the process of its providing an orderly distribution system for its trade in eggs, and have found that the terms of the documents exchanged between Mr. Finucane and the Corporation were designed to secure an orderly and efficient transportation system for the carriage of the Corporation's eggs. I adhere to my conclusion that the activities of the Corporation in and about the conduct of interviews of Mr. Finucane by the Corporation's officers fall within the ambit of conduct in trade or commerce within the scope of s. 52 of the Act. In Wright's Case Lee J. expressly differed from the reasoning of Wilcox J. in Patrick v. Steel Mains Pty. Ltd. (1987) A.T.P.R. 40-794. I observed earlier that Wilcox J.'s reasoning did not have effect that conduct at the stage of negotiation towards employment would in every case constitute conduct "in trade or commerce" within s. 52 of the Act. To the extent that Lee J. in Wright's Case held that conduct in that context is of its nature outside the scope of s. 52, whatever the scope of a corporation's activities in and about the negotiations and whatever the course of a corporation's business, then I must respectfully differ from his Honour, and to that extent prefer the reasoning of Wilcox J. in Patrick's Case. This should not be taken to suggest that the approach I have adopted would have led toa different result on the particular facts of Wright's Case from that which Lee J. reached. 40. Specific allegations of breach of s. 52 I turn to the allegations of Mr. Finucane in the amended statement of claim supporting his case that the Corporation engaged in misleading or deceptive conduct in contravention of s. 52 of the Act. No separate submissions were made by counsel for Mr. Finucane with respect to ss. 53(c) or (g) of the Act so I shall not consider those sections separately. The allegations are contained in para. 20 of the amended statement of claim which I shall set out in full: "20. Between 14th July, 1984 and 12th November, 1984 the Respondent contrary to Section 52 of the Trade Practices Act, 1974, engaged in conduct which was misleading or deceptive and/or which was likely to mislead or deceive the Applicant and others in or in connection with the acquisition of the Business by the Applicant in that the Respondent by its servants or agents :- (a) Represented to the Applicant that it would appoint him as its contractor 1n respect of the Business, such appointment to be determinable by the Respondent only in accordance with the provisions of Clause 2 of the "Contract Carrier's Appointment", when it knew at the time such representations were made that the Applicant would not be so appointed. (b) Represented to the Applicant that in purchasing the business the only risk he took was if the Respondent ceased to exist as the body responsible for distribution of eggs and egg products within New South Wales, when it knew at the time of making such representation that the appointment of the Prime Contractor was imminent which appointment would or may result in the loss to the Applicant of the right to carry on the business. (c) Failed to inform the Applicant on or before 17th September, 1984 that the Respondent had decided to appoint a Prime Contractor. (d) Failed to inform the Applicant that an effect of the appointment of a Prime Contractor would be to reduce the number of egg sales carrier's run operated by the Respondent. (e) Failed to inform the Applicant that upon the appointment of a Prime Contractor there was a visk that the Applicant might not continue to be authorised by the Respondent to operate the Business. (f) (g) (h) (i) (3) (k) (1) (m) 41. Failed to inform the Applicant that in the event that he ceased to be so authorised, the Respondent would not pay any or any proper compensation to him for the loss of his contract. Failed to inform the Applicant that it did not intend to execute the "Contract Carrier's Undertaking" and the "Contract Carrier's Deed of Guarantee", and that it did not intend to appoint the Applicant as its contractor pursuant to the terms and conditions contained in those documents. Induced the Applicant to believe that on and from 17th September, 1984 he had an agreement with the Respondent to operate the business according to the terms and conditions contained in the "Contract Carrier's Undertaking" and the "Contract Carrier's Deed of Guarantee". Induced or permitted the Applicant to expend the sum of Ninety thousand dollars ($90,000.00) to purchase the Business when it knew or ought to have known that there was a risk that the Applicant would suffer serious financial loss and damage thereby. Failed to warn the Applicant of the risk that he may suffer serious financial loss and damage by paying the sum of Ninety thousand dollars ($90,000.00) to Mayoh. Failure to inform the Applicant prior to 17th September, 1984, that the Respondent held the intention of treating carriers retained after lst July, 1983 differently from carriers retained prior to the date in any of the following respects :- (a) The Corporation would retain directly or indirectly the services of those retained before ist July, 1983 but not after, in the event of changes to the transport system. (b) The Corporation would make some compensation payments to carriers retained before lst July, 1983 in the event of changes to the transport system but would not make any such payments to those retained after lst July, 1983. Failure to inform the Applicant prior to 17th September, 1984, that the Respondent had formed the intention of reducing the number of carrier drivers engaged 1n Metropolitan egg deliveries. Failure to inform the Applicant prior to 17th September, 1984, that the Respondent had the intention of appointing a Prime Contractor. Failure to inform the Applicant prior to 17th September, 1984, that the Board of the Respondent Corporation had resolved on the 12th September, 1984, to appoint a Prime Contractor. 42. (o) Failure to inform the Applicant prior to 17th September, 1984, that when the number of carrier drivers was reduced, the drivers most recently hired by the Corporation would be the most likely persons not to be retained. (p) Prior to i7th September, 1984, by advertising the carriers run. conducting interviews of applicants, providing the applicant with copies of the carrier appointment, and undertaking, the Respondent falsely represented that the Respondent intended retaining the Applicant as a contract egg carrier." Some of the allegations in the sub-paragraphs of paragraph 20 are discrete, but others are inter-related and overlap. For convenience of analysis I shall consider the sub-paragraphs where appropriate in groups. Paragraph 20(a) This allegation has not been established. I shall consider later Mr. Finucane's cause of action based on breach of contract where I shall set out my findings as to the relevant terms of any contract formed between the Corporation and Mr. Finucane. The Corporation did represent to Mr. Finucane that it would appoint him as its carrier in respect of the run owned by Mr. Mayoh. It is sufficient for present purposes to say that the Corporation appointed Mr. Finucane as its carrier in place of Mr. Mayoh for an indefinite term, terminable upon the happening of any of the events mentioned in clause 2 of the Contract Carrier's Appointment or upon reasonable notice by one party to the other provided that such notice shall not be given by the Corporation to Mr. Finucane until the term of the appointment has subsisted until at least the commencement of the long term. I shall develop my reasons for holding these to be the terms of Mr. Finucane's 43. appointment more fully later when dealing with the contract claim. As I said earlier, officers of the Corporation brought to Mr. Finucane's attention that no permanency of tenure was offered to him and that he was not appointed for a fixed term. The evidence which I have accepted is inconsistent with the case alleged by Mr. Finucane in this sub-paragraph. Paragraph 20(b) The findings which I have made are plainly inconsistent with this allegation. The Corporation's officers had brought to Mr. Finucane's attention various risks which he ran if he purchased the run from Mr. Mayoh. I shall refer to the second part of the allegation - namely, the alleged knowledge of the Corporation that the appointment of the prime contractor was imminent at the time it made the alleged representation - when dealing with paragraphs 20(c) and other related paragraphs. Paragraph 20(c), (d), (e), (£), (m) and (n) The option of appointing a prime contractor in lieu of the system inherited by the Corporation from the Board of separately- appointing some 31 carriers was at all material times during 1984 when discussions took place with Mr. Finucane one of several options under consideration by the Corporation. It was not the preferred option recommended by Mr. Jones to Mr. Baxter in August 1984 but it was the option which Mr. Baxter ultimately preferred and recommended to the Board of the Corporation. On 12 September 1984 the Board of the Corporation resolved to approve the appointment of a prime contractor 44, to undertake distribution on behalf of the Corporation of eggs and egg products in the Sydney metropolitan area subject to a report by Mr. Baxter at the next meeting following discussions with the TWU and TWU carrier delegates. Although this resolution of the Board is in essence an approval in principle by the Board of the Corporation of the appointment of a prime contractor 1t should be noted that no particular prime contractor was approved at that stage. Indeed, Rapid Transport and Alltrans Bulk were both under consideration at that time as possible appointees. Details of the appointment also remained to be worked out, and the whole matter was to be discussed with the TWU. It is apparent from the minutes of the meeting of the Board of the Corporation of 10 October 1984 that discussions were still in train and it was not until the meeting of the Board of the Corporation on 14 November 1984 that 1t resolved to formally ratify the appointment of Alltrans Bulk as the prime contractor. Mr. Baxter said in evidence that before 12 September 1984 the Board was considering a number of proposals and that none of them had at that stage reached fruition. Mr. Baxter said that at that point the Board had no "fixed intention" as to its treatment of original carriers. Even after the board meeting of 12 September, in Mr. Baxter's view the resolution was provisional and subject to further negotiations, including further negotiations with the TWU. In Mr. Baxter's account, the appointment of a prime contractor was a delicate matter which could have "fallen to pieces" at any time. In my opinion, the resolution of the Board of the Corporation of 12 September 1984 was at best a provisional decision to appoint a prime contractor, with the final adoption of that decision depending upon the occurrence of more than one event. There was in my opinion 45. no duty upon the Corporation to unform Mr. Finucane of the decision of the Board of 12 September. It is not entirely clear precisely when agreement was reached between the Corporation and Alltrans Bulk as to the appointment of the latter as prime contractor. It appears that such an appointment was made on or about 8 or 9 November 1984; the appointment was then an oral appointment which was later confirmed by the Board of the Corporation at its meeting held on 14 November 1984. Nor do I think there was any responsibility cast upon the Corporation under the circumstances to tell Mr. Finucane that the appointment of a prime contractor was a likelihood or a very real possibility or something of that kind. It was sufficient for officers of the Corporation to point out to him, as they did, and as Mr. Baxter in particular did at the interview on 9 August, that the Corporation was likely to make significant and radical changes to the distribution system but that no decision had yet been made about those changes and that Mr. Finucane was buying a high risk business. Nor was the Board obliged to tell Mr. Finucane that if a prime contractor was appointed an effect of the appointment would be to reduce the number of runs operated by the Corporation. Although it was possible that a prime contractor would not retain all existing carriers as sub-contractors or employees, there were various options open to a prime contractor and those options were all at the stage of negotiation prior to 17 September 1984 when Mr. Finucane purchased the run. It was made plain to Mr. Finucane, as my earlier findings demonstrate, that he was at risk that in the event of a new distribution system being introduced - whether a prime contractor system or otherwise - then Mr. Finucane might not be retained as a eee eee 46. carrier with the Corporation. It was also made plain to him that in the event of changes to the distribution system the Corporation accepted no liability to Mr. Finucane. For these reasons the allegations made in these sub-paragraphs have not been established. Paragraphs 20(g) and (h) As my earlier findings indicate, Mr. Finucane was informed by officers of the Corporation that the Corporation did not intend to sign the Contract Carrier's Appointment and that the Corporation had not executed any form of agreement with carriers which it had engaged after 1 July 1983. The form of Contract Carrier's Undertaking does not require execution by the Corporation although the Deed of Indemnity does require such execution. For reasons which I develop later, the terms of the contract between the Corporation and Mr. Finucane are derived from all three documents of Contract Carrier's Appointment, Contract Carrier's Undertaking and Deed of Indemnity and from conversations between officers of the Corporation and Mr. Finucane, interpreted in the context of the surrounding circumstances. The principal term not completed in the documents exchanged between the parties relates to the period of Mr. Finucane's appointment, to which I have already referred. My earlier and later findings do not support the allegations made in these sub-paragraphs. Paragraphs 20(i) and (j) These allegations are in very general terms and are not made out from the evidence, save for one matter to which I will refer later. The Corporation did not induce or permit Mr. Finucane to 47. expend $90,000 or any other sum in the purchase of the run from Mr. Mayoh, and did not fail to warn Mr. Finucane of the risk of financial loss by purchase of the business. Many warnings were given by the Corporation to Mr. Finucane of the risks he ran. The allegations in these two sub-paragraphs are not established. Paragraph 20(k) Although no firm decision was made by the Corporation until after 17 September 1984 as to the particular method to be adopted for changing the distribution system, various options were under consideration before that date, to which I have already referred. Although it was by no means certain that there would necessarily be any reduction in the number of carriers engaged by the Corporation, such a reduction was a distinct possibility. It must be emphasised that the impending change to the distribution system was not merely contingent or possible. It was practically certain that such a change would take place, and that it would be substantial in character. The near certainty of a change was known to the Corporation, and to its officers Mr. Baxter and Mr. Jones, at all material times. Where the uncertainty lay was not as to the fact that the distribution system was to be altered substantially, and in the near, if not immediate, - future, but merely as to the precise form of distribution system which would emerge from such an alteration. I am satisfied that before 17 September 1984 it was the view of Mr. Russell, Mr. Jones and Mr. Baxter that if the preferred option for changing the distribution system resulted in a reduction of the number carriers retained either by the Corporation or the prime 48. Carrier the carriers most recently engaged by the Corporation would be the persons most likely not to be retained. The TWU principle of "last on first off" would in all probability be recognised and adopted by the Corporation. It follows that the Corporation was aware of the near certainty of alteration of the distribution system and that the relevant officers of the Corporation were aware that 1f any carriers were to lose their employment as a result of the alteration, then Mr. Finucane would be likely to be one of the carriers to be discharged. Moreover, the Corporation drew a specific distinction between carriers engaged by the Board before 1 July 1983 who were inherited by the Corporation and those engaged by the Corporation thereafter of whom there were only three: Mr. Johnson, Mr. Cross and Mr. Finucane. This distinction was recognised by the relevant officers of the Corporation who gave evidence, including Mr. Baxter, and was based partly on legal advice received from the Corporation's solicitors. In Mr. Baxter's view such a distinction derived from undertakings given by the responsible Minister in his Second Reading Speech in the Legislative Council in March 1983 relating to the introduction of the Egg Industry Bill 1983. Mr. Baxter indicated in evidence that the distinction was also based upon his knowledge of TWU attitudes and upon his "uncertainties" as to "the whole history relating to the industrial agreement". The existence of such a distinction and its effect upon the Corporation's view of its legal obligations to carriers appointed by the Corporation rather than by the Board was not communicated to Mr. Finucane by any officer of the Corporation or in any document. 49. I am aware that Mr. Johnson, who was the third of the carriers appointed by the Corporation after 1 July 1983, was in fact retained by Alltrans Bulk as prime contractor. This does not in my opinion lead to a contrary conclusion to that which I have reached. Indeed Mr. Finucane was told at the 31 July interview that the Corporation was intending to buy out some of the older carriers (i.e. older in years of age) as some of those carriers were well over 60 years of age and near retirement. Mr. Finucane was also told that the Corporation was planning to redistribute the remaining runs amongst other carriers thus giving more growth to the other carriers. The indication of the Corporation's intentions given at that interview gave no hint of the course which the Corporation in fact adopted. The course indicated and the course adopted involved substantially different attitudes to the distinction between carriers appointed before and after 1 July 1983 and an entirely different result as to Mr. Fanucane's probable future with the Corporation. Where silence is relied on in order to show a contravention of s. 52, the issue is whether the silence constitutes conduct which is misleading or deceptive. The circumstances in which silence may constitute misleading or deceptive conduct in contravention of s. 52 were examined in Rhone-Poulenc Agromie S.A. v. UIM Chemical Services Pty. Limited (1986) 12 F.C.R. 477 per Bowen C.J. at 489-490, per Lockhart J. at 504, per Jackson J. at 508. See also Henjo Investments Pty. Limited & Ors. v. Collins Marrickville Pty. Limited, unreported, judgment delivered 26 February 1988, per Lockhart J. at 22-23. The cases establish, in summary, that silence may be relied upon as giving rise to a contravention of s. 52 when the circumstances give rise to an obligation to disclose relevant facts, and that the duty to 50. disclose does not require a previous relationship of trust between the parties. Whether a duty to disclose exists depends upon the facts of each case. In my opinion the circumstances in the present case gave rise to an obligation on the part of the Corporation to inform Mr. Finucane before 17 September 1984 that any change in the distribution system, if it resulted in the reduction of the number of carriers, would more likely than not lead to the termination of the engagement of the drivers most recently engaged by the Corporation which would necessarily include Mr. Finucane. The Corporation's failure to make such disclosure in even reasonably specific terms constituted the misleading or deceptive conduct in contravention of s. 52 of the Act. In my opinion the Corporation deliberately or knowingly refrained from drawing these matters to Mr. Finucane's attention, not because it wanted to trick him or induce him into purchasing the run from Mr. Mayoh, but because it thought that it was not necessary to do otherwise. The Corporation's officers took the view that by giving warnings of the kind to which I have already referred they had sufficiently discharged their obligation to a prospective applicant such as Mr. Finucane. The allegation in sub-paragraph (k) is not established according to its precise language. It was not that the Corporation would necessarily treat the carriers engaged before 1 July 1983 differently from those engaged thereafter. I am, however, satisfied for the reasons already given that the Corporation held the view that in the event of the services of some carriers being dispensed with, then the "last in first out" principle would probably apply. I am 51. also satisfied that the Corporation held the view that it was more likely than not that, in the event of changes to the transport system being introduced, it would make compensation to carriers retained before 1 July 1983 but not to those engaged thereafter. I am satisfied that the Corporation's knowledge of the near certainty that some alteration of the distribution system would take place (whatever its precise details) gave rise to a duty to disclose to Mr. Finucane both that he was likely to be the first of the carriers to be discharged if the changed distribution system reduced the number of carriers required, and that in that event it was more likely than not that the Corporation would not recognise any claim to compensation by him for the amount which he had paid to purchase the run even if it recognised claims of carriers appointed prior to 1 July 1983. These attitudes were not disclosed by the Corporation to Mr. Finucane in the course of discussions and in my opinion they should have been disclosed to him. This too was a deliberate withholding of the Corporation's view from Mr. Finucane in the sense which I have already mentioned, although it did not occur with a view to tricking him or inducing him to buy the run from Mr. Mayoh. Paragraph 20(1) The allegation in sub-paragraph (1) is not established. The Corporation had not formed the intention of reducing the number of carrier drivers engaged in the metropolitan egg deliveries before 17 September 1984. The view which it had formed was that which I have described earlier. 52. Paragraph 20(0) The allegation in sub-paragraph (0) is established for the Same reasons as those mentioned with respect to sub-paragraph (k), provided one reads the allegation as if it read "if and when" the number of carrier drivers was reduced. I have reached the conclusion that the Corporation should have informed Mr. Finucane as to the likelihood of his being redundant in the event of any new distribution system involving the reduction in the number of carriers and likewise informed Mr. Finucane as to the view of the Corporation that in that event it was more likely than not that no compensation would be offered, and that the failure to do so constituted misleading or deceptive conduct and therefore a contravention of s. 52. I am conscious of the fact that a number of warnings were given by officers of the Corporation to Mr. Finucane about various matters. I have already referred to such warnings so need not repeat them. I have found this failure of the Corporation to have been established in the context of the statements made by the Corporation and its officers at the various discussions with Mr. Finucane, and in reaching this conclusion have taken a sensible and broad approach to the matter, not a narrow or pedantic approach. In determining whether conduct is misleading or deceptive for the purposes of s. 52 the class of persons likely to be affected has to be identified: Taco Company of Australia Inc. v. Taco Bell Pty. Ltd. (1982) 42 A.L.R. 177 per Franki J. at 181, per Deane and Fitzgerald JJ. at 202. The issues involved in characterising that class has been considered in many of the reported cases. There have 53. been some differences of emphasis in expression of the test to be adopted. In Taco Company of Australia v. Taco Bell Pty. Ltd. (supra), Franki J. observed that "all persons exposed to the conduct should be considered although conduct which is only likely to mislead or deceive an extraordinarily stupid person will not fall within s. 52" (at 181). His Honour cited his earlier observation in Annand & Thompson Pty. Ltd. v. Trade Practices Commission (1979) 25 A.L.R. 91 at 101 that "the question is to be tested by the effect on a person, not particularly intelligent or well informed, but perhaps of somewhat less than average intelligence and background knowledge, although the test is not the effect on a person who 1s, for example, quite unusually stupid". The observations of Gibbs C.J. in Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd. (1982) 149 C.L.R. 191 suggest that the class of persons likely to be effected is more restricted, at least to the extent that the court will test the effect of conduct upon a reasonable member of the class. His Honour noted at 199 that the section must be interpreted "as contemplating the effect of the conduct on reasonable members of the class", and that, given the burdens which s. 52 imposed upon the defendant, would not operate "for the benefit of persons who fail to take reasonable care of their own interests" having regard to the circumstances of the transaction. Although Mason J. in that case referred to the inquiries which might reasonably be expected to have been made by a prospective purchaser of the furniture in question, and noted that one would expect greater vigilance to be exercised in the case of purchases of items of financial significance, I do not think his Honour's reference to the "ordinary purchaser" of the product in question imported the more restrictive approach of Gibbs C.J.. Murphy J. took the view that the purpose of the Act was "to protect the imprudent as well as the prudent" (at 214), "the trusting as well as the suspicious" (at 215). 54. In my view, the decision in Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd. (supra) does not overrule the reasoning of Franki J. in Taco Company of Australia v. Taco Bell Pty. Ltd. (supra) as to the definition of the class of persons likely to be affected by conduct in contravention of s. 52. I prefer that reasoning and adopt it in this case. The definition of the class of persons likely to be affected cannot be stated in absolute terms. It 1s really a question of identification of the relevant class of persons according to the facts of a particular case. There may, for example, be a case of a corporation seeking to sell its products to more ingenuous members of society. The definition of the class of persons likely to be affected in that case would reflect the characteristics of those persons. However, even if the narrower test expressed by Gibbs C.J. in Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd. (supra) were the test to be applied, I would reach the same result on the facts as I have found them. Mr. Pinucane falls into the class of persons who were likely to be affected by the conduct of the Corporation, that is the class of persons being interested applicants for the purchase of egg runs in New South Wales. The opinion I formed of Mr. Finucane is that he is a rather trusting, perhaps gullible man, of strong, and perhaps slightly impetuous views. I say this with no disrespect to Mr. Finucane. These elements of Mr. Finucane's character are relevant to the conclusions on a number of issues including the determination of the class of persons likely to be affected for the purposes of s. 52. I conclude that Mr. Finucane does not fall outside that class in consequence of the aspects of his personality to which I have referred. 55. Paragraph 20(p) The allegation in this paragraph is rather incompletely expressed. It is plain that the Corporation intended to retain Mr. Finucane as a contract egg carrier in the sense that it proposed to engage him in that capacity. The submissions before me made it clear that the intention of the allegation in this paragraph is that the word "retaining" expressed the notion of retaining although not necessarily in a long term capacity. I therefore read the allegation as asserting that the Corporation so conducted itself by advertising Mr. Mayoh's run for sale, conducting interviews of applicants and providing Mr. Finucane with copies of the Contract Carrier's Appointment and Contract Carrier's Undertaking that it falsely represented to him that the Corporation intended to retain him as a contract egg carrier although no guarantee of tenure could be given as to the long term. Mr. Finucane was told at the interview of 20 February that there was no guarantee that the existing distribution arrangements would necessarily continue over the long term. Substantially the same statement was made at the interviews of 31 July 1984 and 9 August 1984. I am not satisfied that when these statements were made to Mr. Finucane the officers of the Corporation who made them did not believe them to be true. The change of mind on the part of the Corporation occurred after negotiations with Alltrans Bulk had reached or were reaching fruition when it became apparent that some of the carriers would 56. become redundant and that their services would therefore be dispensed with. In the result Mr. Finucane's contract was terminated on very short notice. For the purposes of s. 52 it has not been established that the statements made by the officers of the Corporation upon which reliance is placed in this sub-paragraph constituted misleading or deceptive conduct, although I return later to this question when dealing with alleged breach of contract by the Corporation. If such statements had been made when they were untrue to the knowledge of the persons who made them then a case would have been made out under s. 52. In the result Mr. Finucane succeeds in his case based on s. 52 so far as the allegations made in sub-paras. 20(k) and (0) are concerned. Causation In my opinion Mr. Finucane would not have agreed to purchase the run from Mr. Mayoh and would not have signed the Contract Carrier's Undertaking and the Deed of Indemnity on 17 September 1987 if the Corporation had revealed to him the true position as to the differential treatment of carriers retained before and after 1 July- 1983 including the Corporation's unwillingness to recognise an obligation to make any compensation payment to carriers appointed after 1 July 1983, and had revealed to him the true position as to the Corporation's likely adherence to the "last in first out principle" in the event that any carriers were to be discharged upon changes to the distribution structure which were almost certain to take place in the near, if not immediate, future. These were important, indeed 57. critical, matters. I am satisfied that had these matters been brought to Mr. Finucane's attention they would have led him to proceed no further with the purchase. Damages under s. 82 I turn to the question of damages under s. 82. I am satisfied that Mr. Finucane suffered loss and damage by conduct of the Corporation that was in contravention of s. 52. The measure of damages in cases of this sort has been considered by this Court more than once: Brown v.. The Jam Factory Pty. Ltd. (1981) 53 F.L.R. 340 per Fox J. at 351; Mister Figgins Pty. Ltd. v. Centrepoint Freeholds Pty. Ltd. (1981) 36 A.L.R. 23 per Northrop Jd. at 59; Hubbards Pty. Ltd. v. Simpson Ltd. (1982) 60 F.L.R. 430 per Lockhart J. at 440. The issue was considered by the High Court in Gates v. The City Mutual Life Assurance Society Limited (1986) 160 C.L.R. 1. The High Court accepted that in general the measure of damages in tort is the appropriate one for cases involving misleading or deceptive conduct and the making of false statements involving breach of Part V of the Act: per Gibbs C.J. at 7; per Mason, Wilson, Dawson JJ at 11-12. It follows that the relevant question for the court in assessing damages is to determine how much worse off the applicant is as a result of his entering the transaction in reliance upon the misleading or deceptive conduct of the respondent, by comparison with his situation if the transaction had not taken place: Gates v. The City Mutual Life Assurance Society Ltd. (supra) at 12. I therefore propose to apply the tort measure of 58. damages, namely, to assess damages which are such as to restore Mr. Finucane to the position he would have occupied had the misleading or deceptive conduct not occurred. The purchase price paid by Mr. Finucane to Mr. Mayoh for the egg run and the truck was $90,000. Mr. Finucane sold the truck and the net proceeds of sale were $12,750. He is therefore entitled to as a starting point to recover $77,250. In my opinion the fact that the Corporation informed him that if he paid more than $45,000 for the run he did so at his own risk is irrelevant in the determination of the quantum of damages. It was simply a warning to Mr. Finucane that the formula applicable under the industrial agreement between the TWU and the Board, to which the Corporation succeeded, produced a figure of $45,000. Therefore if Mr. Finucane paid any more than $45,000 for the run and the run in fact turned out to be worth less than the amount paid (for example, because of any incorrect representations by the vendor of the run to the purchaser as to takings) Mr. Finucane could not then assert as against the Corporation that the run was worth more than $45,000. The loss suffered by Mr. Finucane by reason of the misleading or deceptive conduct of the Corporation commences with the moneys actually paid by him for the run and the truck, and is in my view not reduced by the value attributed to the run for the purposes - of the industrial agreement. That valve might, however, have been relevant to determining the damages available to Mr. Finucane for breach of contract, had it been necessary to do so. Mr. Finucane paid the State Bank interest on the mortgage, the principal sum being $77,250. The rate paid to the Bank was 14.5 per cent and interest was paid to 28 October 1985 when the Bank was 59. repaid the moneys due to it. It was common ground between the parties that, were Mr. Finucane to succeed, it was appropriate to award interest for this period in the sum of $10,740.92. On 28 October 1985 Mr. Finucane became liable to his father and mother on the mortgage which they took from him after the bank had been paid out by Mr. Finucane's father. The interest payable to Mr. Finucane's parents is 12 per cent per annum, payable upon demand. It is common ground that interest from 28 October 1985 to 22 March 1988 (the last day of the hearing) is $23,959.85 calculated on a daily rate of $27.35. Interest from 22 March 1988 to the date of judgment at the daily rate of $27.35 produces a further sum by way of interest of $820.50. Whilst the accuracy of the interest figures as such is not disputed by the Corporation, Mr. Finucane's entitlement to it is challenged. In Milner v. Delita 61 A.L.R. 557 I considered the question whether the cost of borrowing money may be recoverable as damages under s. 82. I adhere to what I said at p. 581 and repeat my conclusion: "In my opinion where money has been paid in consequence or misleading or deceptive conduct, the loss suffered as a direct consequence of that conduct may include the cost of borrowing that money or the costs of terminating an earlier investment and, perhaps, other loss. It must depend on the circumstances of the case and this requires that evidence be led to support any claim of this nature." 60. In my opinion interest in the amount claimed by Mr. Finucane is recoverable from him. He borrowed money from the State Bank and in order to repay that loan borrowed from his father, and on each occasion the borrowings required the payment of interest. The borrowings and the consequent liability for interest, occurred in reliance upon or because of the misleading or deceptive conduct of the Corporation. I note that what I have just said and what I said in Milner v. Delita was addressed to a claim for damages under s. 82 of the Act. Counsel for the Corporation submitted that Mr. Faunucane had delayed for an unreasonable time before bringing these proceedings and that he should not be entitled to the benefit of interest during that period of delay. The cause of action arose not later than 12 November 1984 yet Mr. Finucane did not sue in this Court until 23 January 1987, a delay which was said to be unexplained. The delay was indeed considerable and was not explained to my satisfaction. I have come to the conclusion that, where the applicant has established loss or damage under s. 82, the Court must award the amount that will compensate the applicant for such loss or damage and has no discretion in quantifying the damages awarded. The section in terms provides that a person who suffers loss or damage by conduct in contravention of Part IV or Part V of the Act may recover "the amount of the loss or damage". The section requires the Court to assess the quantum of loss, and makes no express provision for any discretionary element within that assessment. The Court's limited powers under s. 82 are to be contrasted with the discretion authorised by s. 87 of the Act, which provides inter alia that the Court may "make such order of - wee 61. costs as it thinks appropriate against the person who engaged in the conduct of a person who was involved in the contravention (including all or any of the orders mentioned in sub-s. (2) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage". In Frith v. Gold Coast Mineral Springs Pty. Ltd. (1983) 65 F.L.R. 213, Fitzgerald J. observed that the assessment of damages under s. 82 is not to be confined by reference to common law tests, and that the Court's duty is that of "assessing the amount to which the applicants are entitled under the Act" (at 232). In Mister Figgins Pty. Ltd. v. Centrepoint Freeholds Pty. Ltd. (supra), Northrop J. contrasted ss. 82 and 87 of the Act, observing that "[t]here is no doubt that in a clear case under s. 82, the Court is under a duty to assess, on the evidence before it, the loss or damage suffered" and that s. 82 "confers a right upon applicants to recover the amount of that loss or damage", whereas s. 87 "confers a discretion upon the Court" (at 56). To the extent that the applicant's right to damages under s. 82 is a statutory entitlement, then in my view the Court has the obligation to award the amount which quantifies the applicant's actual loss. There is an obligation upon the applicant under s. 82 to take reasonable steps to mitigate his loss consequent upon the respondent's conduct, and the applicant cannot recover damages for losses which he could reasonably have avoided: Brown v. The Jam Factory Pty. Ltd. (supra) per Fox J. at 351. It was not argued by the respondent that the applicant had failed to mitigate his loss, either with respect to 62. s. 82 or with respect to the claim in contract. I£ the issue had been raised, I would not have found it established that the applicant's delay in commencing litigation, involving as it must both legal costs and uncertainty as to the outcome, amounted to a failure to mitigate such as to justify a reduction in damages. Nor do I find it established that the applicant's delay was such as to break the chain of causation between the conduct of the respondent in breach of s. 52 and the loss suffered by the applicant in the continued accrual of liability for interest. In the event, I hold that I have no discretion to reduce the damages to be awarded to the applicant in respect of interest on the borrowed monies, calculated as above. Interest cannot be awarded under s. 51A of the Federal Court Act 1976 as that section did not commence until 22 November 1984, after the cause of action arose in this case. For reasons which I expressed in Milner v. Delita (supra) at pp. 577-580, interest under s. 94 of the Supreme Court Act 1970 (NSW) is not available. Mr. Finucane also claims loss of earnings for the period during which he was unemployed, from 12 November 1984 to i March 1985 i.e. 15 weeks 4 days at $374.00 per week net, a total of $5,823.71. Again these figures are not disputed as to quantum by the Corporation, but the Corporation denies the applicant's right to an award for lost earnings if he otherwise establishes damages. In my opinion Mr. Finucane is not entitled to include this loss of earnings in his claim for damages. To allow such a claim would be in essence granting hima right of double recovery. 63. Judgment should be entered in favour of Mr. Finucane for the sum of $112,771.27 as damages under s. 82 of the Act. Breach of Contract In paragraph 23A of the amended statement of claim Mr. Finucane pleads a breach of contract by the Corporation in these terms: "23A. (a) On or about 17th September, 1984 the Applicant agreed with the respondent to cart eggs for the Respondent on the terms and conditions contained in documents entitled 'Contract Carriers Appointment', 'Contract Carrier Undertaking' and Supplementary Deed. (b) It was a term and condition of the said Agreement that the Respondent would not terminate the Agreement except in the case of breach by the Applicant of the Agreement, or upon the bankruptcy or insolvency of the applicant, or the Corporation ceasing to exist. (c) In breach of the said term the Respondent terminated the said Agreement on 12th November, 1984, and thereafter failed to retain the services of the Applicant for the delivery of Eggs in New South Wales. (d) By the conduct of the Respondent it impliedly refused to permit the Applicant to sell or assign his rights under the said Agreement after 12th November, 1984, in breach of the said Agreement. (e) By reason of the breaches referred to above the Applicant suffered loss and damage. PARTICULARS (a) The applicant lost the benefit of the Ninety thousand dollars ($90,000.00) paid by the Applicant to a third party, in consideration for the Applicant entering the said Agreement. 64. (b) Loss of income from 12th November, 1985 to lst March, 1985. [sic]" In my opinion there was a contract between the Corporation and Mr. Finucane whereby he was engaged as a carrier by the Corporation to conduct the egg run formerly conducted by Mr. Mayoh. In my view, that contract arises from a combination of documents and conversations between the Corporation and its officers and Mr. Finucane. The contract between the Corporation and Mr. Finucane was partly oral, partly in writing and partly by conduct, and in the circumstances the Court "is entitled to look at and should look at all the evidence from start to finish in order to see what the bargain was that was struck between the parties": J. Evans & Son (Portsmouth) Ltd. v. Andrea Merzario Ltd. [1976] 1 W.L.R. 1078 per Roskill L.J. at 1083. The Court may have regard to the intentions of the parties by drawing inferences from their words and their conduct in the making of the agreement, having regard also to the subject matter of the agreement and the surrounding circumstances: Allien v. Carbone (1975) 312 C.L.R. 528 per Stephen, Mason, Murphy JJ. at 531-532. The Court will be prepared to place greater weight on the surrounding circumstances where the statements and actions of the parties have not been merged in a formal document exhaustively setting out the terms of the bargain: Codelfa Construction Pty. Ltd. v. State Rail Authority of New South Wales (1982) 149 C.L.R. 337 per Mason J. at 352. In the present circumstances, the creation of a contract is the legal consequence of the parties' conduct. The subjective intention of the Corporation and of Mr. Finucane is, at its highest, a factor which may be taken into account in determining whether an 65. intention to enter a binding contract existed, and is not determinative of that issue: Air Great Lakes Pty. Ltd. v. K.S. Easter Pty. Ltd. (1985) 2 N.S.W.L.R. 309 per Mahoney J.A. at 330. The Corporation may at no stage have subjectively intended to make a contract with Mr. Finucane, and may have failed to recognise that its conduct might establish such a contract: neither fact will prevent the creation of such contract where the Court takes an objective approach to the dealings between the parties. The terms of the contract arise from the three documents, being the Contract Carrier's Undertaking, the Deed of Indemnity and the Contract Carrier's Appointment to which I have already referred, and from the conversations between Mr. Finucane and officers of the Corporation to which I have also referred. As I have noted these conversations and documents are to be interpreted by reference to the circumstances in which the documents came into existence and in which the conversations occurred. The Corporation denies that the Contract Carrier's Appointment has any part in any contract between the Corporation and Mr. Finucane, but I reject that submission. I accept that the Corporation declined to sign the form of Contract Carrier's Appointment. However, the Corporation completed the relevant details relating to Mr. Finucane in both the Contract Carrier's Undertaking - and the Deed of Indemnity and presented each to Mr. Finucane for signature. Those two documents plainly became part of the contract between the parties. Although the Contract Carrier's Appointment was not signed by the Corporation and was not intended to be signed by it, a fact which was communicated to Mr. Finucane in conversations, nevertheless the 66. Contract Carrier's Undertaking and the Deed of Indemnity depend for their operation upon the incorporation of the Contract Carrier's Appointment into the contract established between the Corporation and Mr. Finucane. The Deed of Indemnity is expressed in Recital A thereto to be supplementary to the Contract Carrier's Appointment and the Contract Carrier's Undertaking. Recital B states that the contract carrier has agreed to provide the guarantee, required by clause 15 of the Undertaking, in the sum of $3,000 for due performance by the carrier of the conditions in his contract of appointment and for due performance of the terms of his undertaking. Clause 1 of the Deed of Indemnity provides that the carrier shall comply with all the terms of his appointment as contract carrier and shall indemnify the Board against loss incurred by him by reason of any default in his performing and observing the agreements in the Contract Carrier's Appointment and Contract Carrier's Undertaking. Clause 2 of the Deed of Indemnity authorises the Board to deduct and retain a sum not exceeding $3,000 from the proceeds of sale of a run to which the Contract Carrier's Appointment relates in satisfaction of such a claim by the Board. In the Contract Carrier's Undertaking, although the date at which the appointment 1s to expire is left blank, reference is made to the standard form of Contract Carrier's Appointment which Mr. Finucane acknowledges that he has read by his signature of the Contract Carrier's Undertaking. Again, more than one reference is made to the Contract Carrier's Appointment, on the basis that the Appointment is part of the contract between Mr. Finucane and the Board (see for example clauses 5, 15 and 16(b)). The Contract Carrier's Appointment, although not signed by the Corporation, was handed to Mr. Finucane by 67. it in circumstances where it was obviously intended to be part of the contract. It is true that the term of the appointment is blank in the Contract Carrier's Appointment as it is in the Contract Carrier's Undertaking so that the Court must look elsewhere to determine the term of the appointment. But a perusal of the terms of the Contract Carrier's Appointment itself makes it clear that the Appointment is to be read as forming part of the contract between the parties so far as its terms are applicable. An important question is the term of the appointment by the Corporation of Mr. Finucane as carrier. As I said earlier, I find that the term of the appointment was in all the circumstances for an indefinite term terminable upon the happening of any of the events mentioned in clause 2 of the document of Contract Carrier's Appointment or upon reasonable notice by one party to the other provided such notice shall not be given by the Corporation to Mr. Finucane until the term of the appointment has subsisted until at least the commencement of the long term. As I observed in my reasons for judgment in State Bank of New South Wales v. Commonwealth Savings Bank of Australia (1985) 60 A.L.R. 73 at 101, the distinct tendency of reported cases this century has been to hold that contracts of a continuing or ongoing nature are terminable on reasonable notice. I there referred to many of the reported cases and I do not propose to review those cases here. It is sufficient that I refer to what was said by the Judicial Committee in Australian Blue Metal Limited v. Hughes (1963) A.C. 74 at 98: "It is true that it does not require very much to induce a court to read into an agreement of a commercial character, either by construction or by implication, a provision that the arrangements between the parties, 68. whatever they may be, shall be terminable only upon reasonable notice ... But a question of this sort depends entirely on the facts of the particular case." Although the observations in the cases are made in the context of confining the operation of a contract of a continuing or ongoing nature, they are of assistance with respect to the present question, namely, determining the period for which the appointment of Mr. Finucane was to subsist. As was observed in many of the cases including Australian Blue Metal v. Hughes, the issue ultimately depends on the facts of the particular case. The term of appointment of Mr. Finucane to which I have referred is not one that is too uncertain to be construed by the Court. Certainly officers of the Corporation made it clear to Mr. Finucane that no guarantee would be given at the interviews on 20 February, 31 July and 9 August that his appointment would necessarily continue "over the long term" and I am satisfied that he understood that. I am satisfied that what the parties must objectively be taken to have meant was that, although Mr. Finucane had nothing to fear in the short or middle term of his appointment, the Corporation could terminate the appointment thereafter in consequence of the proposed changes to the distribution system of the Corporation. It is of course a question of fact to determine what would be the "long term". Greater problems than these have confronted the courts from time to time and certainty of meaning has been achieved. Indeed the concept of the reasonable man which has loomed so'large in various branches of the law, while productive of difficulty in some cases, is not productive of uncertainty. So far as Mr. Finucane's appointment is concerned, the period of the "long term" extended well beyond 12 69. November 1984, when he had been appointed as carrier by the Corporation on 17 September 1984. In my opinion the Corporation breached the terms of Mr. Finucane's engagement by terminating his appointment as it did on 12 November 1984 and 1s liable in damages to him for breach of contract. The term and condition of the contract pleaded in paragraph 23A of the statement of claim is a different term from the one which I have found to have been established. I am satisfied that the term as pleaded was not in truth a term or condition of the contract for reasons which I have already given when dealing with the case alleged by Mr. Finucane under s. 52 of the Act. However, the question whether the term of appointment could be determined before it had subsisted until at least the commencement of the long term was the subject of evidence and argument and is involved in certain of the allegations in para. 20 of the statement of claim with respect to s. 52. As I do not propose to make any orders upon delivery of judgment but to stand the matter over for a short time so that the parties may bring in Short Minutes of Orders, I will give Mr. Finucane an opportunity to seek leave to further amend the statement of claim with respect to para. 23A to put this matter in order. What view I will then take of the matter will depend upon the circumstances that then exist. So far as damages for breach of contract are concerned, the measure of contractual damages is to award damages which are such as to put Mr. Finucane in the position which he would have been in if the contract had been performed by the Corporation according to its terms. The damages to which Mr. Finucane is entitled in consequence of the mw 70. breach of contract are considerably less than the damages to which he is entitled for contravention of s. 52 of the Act, since the Corporation would have been entitled to terminate his appointment after the short and middle term of the appointment had passed. Little argument was addressed as to the question of the number of weeks or months or years that would have had to expire before the Corporation would have been entitled to terminate Mr. Finucane's appointment and there was little argument as to the quantum of damages under the contractual head. As I have found contravention of s. 52 to have been established and as damages assessed for that contravention would he higher, I do not propose at this stage to assess the damages under the breach of contract count. If when the parties have considered my reasons for judgment either of them wishes to reactivate this matter they may make application to me to do so. Costs Mr. Finucane succeeded in establishing only a limited number of alleged contraventions of s. 52. He also succeeded in establishing breach of contract on a point not specifically pleaded in the: Statement of Claim but nevertheless treated as if it were part of the case by the conduct of the parties. He is entitled to an order that his costs be paid by the Corporation with one exception. On the fourth day of the hearing when the evidence had concluded and addresses were well advanced counsel for Mr. Finucane sought leave to amend the statement of claim with respect to the alleged misleading and deceptive conduct under s. 52 and to add what became para. 23A of 71. the statement of claim with respect to the alleged breach of contract. I granted leave to amend the statement of claim on terms that the further hearing of the matter be adjourned to a date to be fixed and on terms that Mr. Finucane must agree to such order for costs of and occasioned by the amendment and thrown away in consequence of the amendment as the Court made in due course. Those conditions were not opposed by counsel for Mr. Finucane. The leave to amend was given and the terms as to costs were imposed on 10 March 1988. The hearing resumed on the afternoon of 21 March and continued on 22 March. Mr. Finucane must pay the costs of the Corporation of both 21 and 22 March in any event. Accordingly the order for costs shall in due course be that the Corporation pay Mr. Finucane's costs of the proceeding except the costs of 21 and 22 March. Mr. Finucane shall pay the Corporation's costs of those days. I shall stand the matter over to a date to be fixed for the purpose of then making declarations and orders. I direct Mr. Finucane to bring in Short Minutes of Orders on that date. I certify that this and the preceding seventy (70) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart. Associate h.T Bod — Date: 22 April 1988