Contractual promises as misleading conduct

The Victorian Supreme Court refused to summarily dismiss the allegation that the making of a written contractual promise constituted misleading and deceptive conduct following a party's failure to fulfil that promise. The allegation will proceed to trial.

Misrepresentation in contractual terms

Visy Paper Pty Ltd and WTE Co-Generation Pty Ltd (principal) contracted with RCR Energy Pty Ltd (contractor) for the design and construction of a cogeneration plant. Amongst other things, the principal claimed the contractor contravened section 52 of the Trade Practices Act 1974 (Cth) and section 18 of the Australian Consumer Law by engaging in misleading representations in relation to the plant's performance, the suitability of the works, and the contractor's qualifications and experience.

The principal alleged these representations were contained entirely within the written terms of contract itself and were shown to be false after the contractual promises were not fulfilled by the contractor. The contractor alleged that the making of these contractual promises could not constitute representations, and sought an order that parts of the claim be dismissed and summary judgement given under sections 62 and 63 of the Civil Procedure Act 2010 (Vic) on the ground that the claim had no real prospect of success.

Summary dismissal denied in misleading conduct claim

Justice Vickery held the contractor failed to show the principal's claim had no real prospect of success. Accordingly, the contractor's application to strike out the claim was dismissed. His Honour found there was no direct authority where an entirely contractual promise which was not fulfilled constituted a misleading representation. However, several authorities supported the position that a contractual promise can constitute an implied representation that the party had the ability and intention to fulfil the promise.

Accordingly, Justice Vickery was not satisfied that the principal had 'no real prospect of success' on this ground as required by the Civil Procedure Act 2010 (Vic) and permitted the matter to proceed to trial. Following the handing down of the decision at trial a future update will be prepared.