The recent High Court decision in Forrest v ASIC  HCA 39 provides a useful illustration of the principle that in considering whether a statement/conduct is misleading and deceptive, it is not the opinion of a lawyer about what its effect would have been, but rather a court will stand in the shoes of the audience to whom it is directed.
Among the questions for determination by the Court was whether Fortescue had misled and/or deceived the market by announcing it had entered into a binding contract with a Chinese state owned company to build and finance the railway component of the Pilbara Iron Ore and Infrastructure Project.
The High Court said (at ) the audience for the claim in this case did not need be too tightly defined:
“The intended audience can be sufficiently identified as investors (both present and possible future investors) and, perhaps, as some wider section of the business and commercial or business community. It is not necessary to identify the audience more precisely.”
ASIC submitted that these investors would have taken the use of the words “binding contract” to mean that such a contract would withstand a legal challenge in an Australian Court. The HCA did not agree, saying at :
“…it by no means follows that such an audience would have understood the impugned statements as inviting any attention to what the courts of Australia could or would do if a party to one of the agreements did not perform its part of the bargain.”
This was particularly so because as the Court noted at [46-48], the agreement was made with an entity owned and controlled by the People’s Republic of China. There being no jurisdiction clause in the contracts, any enforcement proceedings may well have had to have taken place over there.
Although this decision is one driven by fine margins and semantics, it serves as a cautionary tale that any plaintiff alleging misleading and deceptive conduct needs to show what effect the statement/conduct had on him/her/it in all of the circumstances in which it was received. In a way, a court will need to use the evidence to step into the mind of the plaintiff back when the impugned conduct took place.
As an aside, the Court noted at  that no evidence was led at trial to show how investors would have understood the words “binding contract”.
Although it is often expensive and open to attack on admissibility issues, perhaps in proceedings of this significance, some survey evidence may well have assisted ASIC.
The other alternative would be expert evidence. However, some judges do not like being told what to think about matters that permit them to bring their own experience to their deliberations. Take for example Heerey J’s decision in Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2006) 228 ALR 719, where the court was asked to consider whether consumers would be confused between the products of Cadbury and Darrell Lea based on the latter’s alleged use of Cadbury’s colours and get-up. His Honour rejected expensive expert evidence from a person experienced in matters of consumer behaviour taking the view that the Court did not require an expert to tell it whether or not a chocolate wrapper was confusing.
At the very least, the process of preparing this kind of evidence might well have acquainted ASIC and, if adduced, the High Court with what the investor audience for Fortescue’s impugned announcement would have thought about the claim that a “binding contract” had been signed. Instead ASIC forced the Court to take a view that ultimately proved fatal to its case.