The Case

Mr Carr commenced general protection proceedings against his former employer, Empirical Works Pty Ltd (Empirical), in the Federal Circuit Court. Empirical sought leave from the Federal Circuit Court to amend its cross claim against Mr Carr. Empirical is alleging that Mr Carr engaged in misleading and deceptive conduct when being interviewed for the position by making false representations about his experience and seniority.

Empirical alleges that Mr Carr falsely represented he:

• had worked as a sales director for 6 years at another management firm;
• had more than a decade of experience in sales;
• had substantial experience with large multinational companies;
• had made over $2 million dollars in sales in the prior financial year;
• had close business ties that were guaranteed to result in sales;
• could independently source sale leads; and
• was “highly skilled and successful”.

As such, Empirical had offered Mr Carr employment on a remuneration package commensurate with his alleged experience and skill.

Empirical’s claim seeks damages of $450,000 for loss caused by the false and misleading conduct, including lost sales and the recruitment fee paid to secure Mr Carr’s employment.

Empirical claims Mr Carr:

• had no business connections that resulted in sales;
• could not identify any new business opportunities;
• could not achieve his sales targets; and
• did not have the claimed experience necessary to perform the role.

Mr Carr sought to strike out Empirical’s cross claim arguing it was an abuse of process. Mr Carr claimed that Empirical’s new cross claim set out completely new claims to those the company had filed in April 2016. Mr Carr also argued he was not acting in “trade and commerce” when he made the representations to Empirical at his interview.

The Verdict

Empirical is seeking to rely on clause 18 of Australian Consumer Law, contained in schedule 2 of the Competition and Consumer Act 2010 (Cth) (CC Act). For a misleading and deceptive argument to be successful under the CC Act, the representations have to be made in “trade or commerce”. Empirical argued that pre-employment negotiations are “commercial” in nature and that the alleged conduct “does not have to occur within the trade of the person making the representation, so long as it is within the trade of the person to whom the representation is made”.

In addition, Empirical argued that clause 18 of Australian Consumer Law was much broader than the prior s52 of the Trade Practices Act 1974 (Cth) and prohibits an individual “person” from engaging in misleading or deceptive conduct.

Judge Nicholls indicated that while Empirical’s cross claim raised a novel point, it did raise a reasonable cause of action and was not a new cause of action. Judge Nicholls held that the claim gave “definition to what was initially [pleaded], albeit insufficiently, expressed”. The cross claim detailed Mr Carr’s misrepresentations and particularised the damages that flowed from Empirical’s reliance on them. As such, Judge Nicholls refused to strike out Empirical’s cross claim.

Lessons for You

It will be interesting to see what decision is handed down at the final hearing of this matter. Many employees exaggerate their skill and experience to secure positions and obtain a more lucrative remuneration package. This interlocutory decision sounds a warning to employees who make such representations at an interview. There may now be options available to employers that rely on the misrepresentations of new employees, and suffer loss and damage when the employee fails to live up to the claims they have made about their experience and skills.

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.