"Knowingly concerned in": the requirements for accessorial liability clarified by the High Court

Accessorial liability extends liability beyond a primary wrongdoer to those who had some degree of involvement in a contravention. It is specifically provided for in many important statutes including the Corporations Act 2001, the enforcement and remedy provisions in Part IV of the Competition and Consumer Act 2010, the civil penalty provisions in the Australian Securities and Investments Commission Act 2001 and the Australian Consumer Law (ACL). Under statute, accessorial liability can take several forms, such as aiding and abetting a contravention, conspiring to commit a contravention and attempting to commit a contravention. Perhaps the broadest form of accessorial liability under statute is when a person is “in any way, directly or indirectly, knowingly concerned in, or party to” a contravention. This form of accessorial liability can apply to a liability for damages or a pecuniary penalty (for example, see the definition of “involved” in section 2 of the ACL, section 236(1) and section 224(1)(e)). For years, there has been uncertainty about the requirements for being held liable for being “in any way, directly or indirectly, knowingly concerned in, or party to” a contravention, particularly for misleading or deceptive conduct under section 18 of the ACL. The recent High Court decision of Productivity Partners Pty Ltd v ACCC; Wills v ACCC [2024] HCA 27 has provided some clarity.

Two dimensions – conduct and knowledge

There are two requirements for being “in any way, directly or indirectly, knowingly concerned in, or party to” a contravention:

1. the conduct requirement; and
2. the knowledge requirement.

The conduct requirement requires the accessory to intentionally participate in conduct that implicates or involves them in the primary contravention. The knowledge requirement requires the accessory to have knowledge of the all the “essential facts” constituting the contravention of the primary contravener.

There has been considerable debate over what the “essential facts” are for a particular contravention, particularly for misleading or deceptive conduct based on a false representation. In that case, there is “a longstanding difference of opinion in the decisions of intermediate courts of appeal as to whether … an accessory had to have knowledge of the falsity of the representation or if mere knowledge of the facts that rendered the representation false was sufficient”. There is also uncertainty over the knowledge requirements for being an accessory to unconscionable conduct: does the accessory need to know the conduct of the primary contravener was unconscionable or is it enough that they know the mere facts that rendered it unconscionable? The High Court in Productivity Partners has now provided some clarity in this area.

The High Court decision in Productivity Partners

Productivity Partners addressed two primary issues. First, the extent to which a court must have regard to the factors listed in section 22 of the ACL when determining whether a person has engaged in unconscionable conduct under section 21. Second, what is the knowledge requirement for being “in any way, directly or indirectly, knowingly concerned in, or party to” unconscionable conduct under section 21 of the ACL. This article addresses the second of these issues. Although Productivity Partners addressed unconscionable conduct, its findings are relevant to all instances of an accessory being “in any way, directly or indirectly, knowingly concerned in, or party to” a contravention.

The High Court delivered six separate judgments, all of them dismissing the appeals and finding that the knowledge requirement had been fulfilled for the alleged accessory. Although all six judgments reached the same ultimate conclusion, the reasoning is not entirely aligned. The following points can be drawn from the judgments.

First, it is unnecessary for the accessory to know that the primary contravener’s conduct is “capable of characterisation in the language of the statute”. For example, it is unnecessary for an accessory to know that the conduct was “unconscionable” within the meaning of section 21 of the ACL or “substantially lessen[ed] competition” within the meaning of the competition provisions of the Competition and Consumer Act 2010. This is consistent with the principle that an accessory does not need to know that they are contravening the law. For unconscionable conduct, it “is sufficient that the person knew the facts and circumstances which rendered the primary contravener's conduct unconscionable”. They do not need to know or believe the conduct was unconscionable.

Second, the accessory must know “all the essential facts” that “were established to show that the primary contravention was committed”. What constitutes the “essential facts” depends on the particular contravention.

Third, in some cases, the difference between the essential facts and the “legal characterisation or complexion” of those facts can be “fine”. To fulfil the knowledge requirement, the accessory need only know the former; not the latter.

What did the High Court say about the knowledge requirement for misleading or deceptive conduct? The High Court concluded that for a case of misleading or deceptive conduct based on a false representation, the accessory must actually know the representation was false – “mere knowledge of facts from which a person might have deduced or inferred falsity being insufficient”. This broke a deadlock between conflicting intermediate appellate court authorities where some said that the accessory must know the representation was false and others said that mere knowledge of the facts rendering the representation false was sufficient. But cases of misleading or deceptive conduct are not limited to false representations. Justice Beech-Jones gave the example of a failure to disclose amounting to misleading or deceptive conduct. In that case, His Honour said that “an accessory would have to be aware of the non‑disclosure and that disclosure was required”.