THE DEATH OF THE REASONABLE MAN

by

Bruce R Clarke

(Serial No.68)

ISBN 0 85590 661 8

This paper should not be quoted or reproduced in whole or in part without the cO,nsent of the author, to whom all comments and enquiries should be directed.

c Clarke, B R, 1990

Enquiries about the Faculty of Business Staff Papers should be directed to:

Mr B R Clarke ) Dr C T Selvarajah ) Joint Editors, Staff Papers Faculty of Business Swinburne Institute of Technology PO Box 218 Hawthorn 3122 Victoria

THE DEATH OF THE REASONABLE MAN

The concept of 'the reasonable man'(1) has been so much

part of legal tradition that life without this enigmatic

creature would be anathema to the average lawyer. After

all, is not the resolution of disputes based upon

'reason'? And how can one be expected to explain legal

concepts to the layperson without reference to 'the

reasonable man'?

It is impossible to travel anywhere or to travel for long in that confusing forest of learned judgments which constitutes the Common Law of England without encountering the Reasonable Man. He is at every turn, an ever-present help in time of trouble, and his apparitions mark the road to equity and right. There has never been a problem, however difficult, which His Majesty's judges have not in the end been able to resolve by asking themselves the simple question, 'Was this or was it not the conduct of a reasonable man?' and leaving that question to be answered by the jury.(2)

Yet inexorably, at least in the commercial law

jurisdiction of Australia, 'the reasonable man' is dying.

Despite the fact that it can easily be argued that 'the

reasonable man' is in reality a figment of legal

imagination, unable to be found in the 'real' world, the

concept, in its simplicity, has much to support it. It

is, in a sense, the foundation stone of the modern law of

negligence, and is an important concept in many other

actions, tortious and otherwise.

(1) The author usually adopts a non-gender writing style but the literature and case-law is so full of references to 'the reasonable man' that to not follow suit and use such terminology would detract from the accuracy of this article. There is apparently no 'reasonable woman' known to the common law: Fardell v Potts, A P Herbert, Uncommon Law, Bibliophile Books, London, 1984, 1. (2) Fardell v Potts, op cit 2.

2

Why then would one speak of the demise of 'the reasonable

man'? The villain of the piece is in fact the Trade

Practices Act 1974 (Cth). This Act, and State mirror

legislation in the form of the Fair Trading Acts, has in

recent times rapidly become the statute to rely on in

lieu of, or in addition to, many civil common law

actions. In many instances it readily lends itself to

providing an alternative to allegations of, inter alia,

misrepresentation, whether negligent, fraudulent or

innocent, injurious falsehood, passing off, deceit and

(in limited circumstances) defamation.(3) Even if not

strictly a surrogate for many such actions, the Act can

very often be used to similar effect.(4) The lynch-pin

in this exercise is Part V of the Act, and in particular

section 52, a section which prohibits conduct which is

misleading or deceptive or likely to be so.(5) A person

falling within the confines of the section, whether in

contractual relations or not, can bring an action against

any other person who has caused them loss or damage as a

result of that other person's misleading or deceptive

conduct. (6)

(3) See Hon Mr Justice French 'Lawyer's Guide to Misleading or Deceptive Conduct' (1989) 63 ALJ 250. (4) See W Pengilley, 'Section 52 of the Trade Practices Act: A Plaintiff's New Exocet?', 1987 ABLR 247. (5) Division 2A of Part V also provides that in many cases the manufacturer will be strictly liable for the fitness and quality of goods it produces, thus further diminishing the importance of the law of negligence in the field of product liability. . (6) Hornsby Building Information Centre pty Ltd v Sydney Building Information Centre pty Ltd (1978) 140 CLR 216.

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One might well have thought that in interpreting the

meaning of 'misleading and deceptive' the courts would

have turned to the familiar concept of 'the reasonable

man'. For instance, in many common law actions,

contractual and tortious, the courts resort to the

concept of the 'mere puff' (or self-evident exaggeration)

when deciding whether a person has been misled or

deceived. It has been said, for example, that faced with

a trader's hyperbole in describing his goods, 'the

ordinary reasonable man would take it with a large pinch

of salt'.(7) In other words, the task when deliberating

over the legality of a questionable statement made by a

trader is to decide whether 'the reasonable man' would

have taken the claim seriously or not. Naturally enough,

some judges did adopt the concept of 'the reasonable man'

when adjudicating upon an alleged breach of section 52.

However, the major~ty, cognisant of legislative

intention, have turned their backs on the concept.

Before discussing the dilemma facing the judiciary in

regard to 'the reasonable man' concept, one must

determine the nature of the beast. Only then can one

readily comprehend why the justices of the Federal Court,

in particular, have gradually decided to dispense with

'the reasonable man'.

As already noted, the concept is put to most use when the

law of negligence is under review. A classic test for

deciding whether a person has been negligent, by

(7) De Beers Products v Electric Co of New York [1975] 2 All ER 599 at 605 (per Walton J).

4

breaching a duty of care owed, was laid down by Anderson

B in Blyth v Birmingham Waterworks Co (1856) 11 Exch 781:

Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do.

Obviously, it is the concept of 'the reasonable man'

which is all-important in ascertaining the standard of

conduct required of persons going about their daily

business. Whilst the intuition of individual judges

probably determines the eventual outcome in most cases,

the standard of care expected of the defendant in each

particular case will be based upon what 'the reasonable

man' would have done in similar circumstances. Thus, the

law assumes that 'the reasonable man' has the knowledge

and average amount of competence of the ordinary layman,

or if he claims certain skills, the amount of competence

commensurate with the particular trade or calling

involved.

The reasonable man, therefore, is not necessarily bound within the narrow confines of his own skills, for he may assume the mantle of knowledge of others. He is a man free from idiosyncrasies, over­apprehension and over-confidence. He is in fact a man who probably does not exist except in the mind, yet who has been given the rather uninspiring title for so important a figure as 'the man on the Clapham omnibus'. (8)

The 'uninspiring title' referred to in the above

quotation is in fact one of a number of descriptions put

forward by Greer LJ in Hall v Brooklands Auto-Racing Club

(8) P L Bradbury, Law Relating to Business, Butterworths, UK, 1976 at p 277. See also Glasgow Corporation v Muir [1943] AC 448 per Lord MacMillan.

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[1933] 1 KB 205 when attempting to define the standard of

the duty of care required of the defendant in negligence

cases. The standard was variously expressed as requiring

the foresight and caution of the ordinary or average

prudent man, that is to say, 'the man in the street', or

'the man on the Clapham omnibus', or 'the man who takes

the magazines at home, and in the evening, pushes the

lawn mower in his shirt sleeves' (at p 224).

These descriptions, with their connotations of the

commonplace, are consistent with the generally held view

that standards must not be set at too high a level.

Thus, it has been recognised that 'the reasonable man'

has not the courage of Achilles, the wisdom of Ulysses,

or the strength of Hercules, nor has he 'the prophetic

vision of a clairvoyant'. (9) By way of contrast,

however, it should be observed that Baron Bramwell

occasionally attributed to 'the reasonable man' the

agility of an acrobat and the foresight of a Hebrew

prophet. In trying to synthesise these various

descriptions, it can only be concluded that the standards

expected of 'the reasonable man' have been set at a

relatively nigh level.

Devoid, in short, of any human weakness, with not one single saving vice, sans prejudice, procrastination, ill-nature, avarice, and absence of mind, as careful for his own safety as he is for that of others, this excellent but odious character stands like a monument in our Courts of Justice, vainly appealing to his fellow-citizens to order their lives after his own example. (10)

* * * (9) Hawkins v Coulsdon and Purley UDC [1954] 1 QB 319, 341 per Romer LJ. (10) Pardell v Potts supra 4.

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Part V of the Trade Practices Act is headed 'Consumer

Protection'. Broadly, the conduct prohibited by Part V

requires that a significant section of the public be

misled or deceived, or to put it a little differently, be

led into error. Despite the heading, the elasticity and

scope of misleading and deceptive conduct take it well

beyond the boundaries of what many would think of as

consumer protection. The Act has in effect established

minimum absolute standards of commercial probity. (11)

The commercial conduct involved may extend to dealing

with the public at large, be confined to negotiations

between individuals, or involve dealings between traders

themselves. In applying the Act, the key issue is clear.

When assessing the impression likely to be made on the

minds of ordinary persons, are ordinary persons to be

defined as 'reasonable', or does one accept that many

people do not always act 'reasonably' when making

purchasing and other commercial decisions?

The great majority of judges in the Federal Court seem to

have found favour with the latter approach, supporting

sentiments long accepted in the United States, where it

has been stated that the general public includes

the ignorant, the unthinking and the credulous, who, in making purchases, do not stop to analyze, but are governed by appearances and general impressions : Florence Manufacturing Co v J C Dowd and Co 1787 73, 75 (1910).

(11) Hon Mr Justice French supra. See also B R Clarke 'Trade Practices and fair trading legislation : consumer or trader protection?' (1987) 61 LIJ 906.

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Perhaps the acceptance of this approach was best

expressed by Franki J in McDonald's System of Australia

pty Ltd v McWilliam's Wines pty Ltd (No 2) [1979] 41 FLR

436, 443:

The question of whether conduct falls within s 52(1) is to be determined by its likely effect on the type of person who is likely to be exposed to it. Broadly speaking it is fair to say that the relevant persons are those 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 is quite unusually stupid.

Thus, some judges have moved 'the reasonable man' aside

in order to make way for the person possessing 'somewhat

less than average intelligence'.

Some judges were clearly not pleased with this

development and vainly struggled to prevent 'the

reasonable man' from disappearing from a significant part

of our jurisprudence. For instance, in Annand and

Thompson Pty Ltd v Trade Practices Commission (1979) 25

ALR 91, a case involving an alleged breach of s 52,

Northrop J was quite certain that the question as to

whether conduct is misleading or deceptive or likely to

be so 'is to be answered by considering the effect of the

conduct on a reasonable man, the man in the street' (p

111), whilst his fellow judges decided the issue using

the lesser standard associated with the person of

'somewhat less than average intelligence'.

Arguably to the betterment of consumer protection

legislation, but sadly for the adherents of 'the

reasonable man', the approach of Northrop J did not

,:,

8

generally find favour in subsequent cases. Even Northrop

J himself soon relented and concurred with the modified

standard.(12) To continue to adhere to the 'reasonable

man' approach would surely have been inconsistent with

the legislative purpose of Part V of the Trade Practices

Act viz. to protect all persons, including the

inexperienced and the gullible.

It should be noted that the High Court of Australia has

given its imprimatur to the approach which recognises the

rights of the inexperienced and gullible consumer,

although some members of that court have attempted to

place some constraints upon the application of such

standards by suggesting that conduct can only be judged

to be misleading and deceptive if 'reasonable persons' of

that class of consumer (that is, the inexperienced and

gullible) are led into error:

Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and the gullible as well as the astute, [section 52] must in my opinion be regarded as contemplating the effect of the conduct on reasonable members of the class. The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests. (13)

Notwithstanding s:uch an approach, that the ultimate

standard applicable in such cases represents a definite

departure from 'the reasonable man' concept as applied at

common law cannot be doubted. The usurper of 'the

(12) Henderson v Pioneer Homes pty Ltd (No 2) (1980) 43 FLR 276, 292 (13) Parkdale Custom Built Furniture pty Ltd v Puxu pty Ltd (1982) 56 ALJR 715, 717-18 (per Gibbs CJ). Cf judgment of Mason J.

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9

reasonable man' has been multifariously described as

follows:

'the knowledgeable and those who are not, the superficial reader or viewer or listener as well as the profound, the gullible as well as the cautious'. (14)

'the astute and the gullible, the intelligent and not so intelligent, the well educated and the poorly educated ... ' ( 15)

'the unsuspecting modest members of the community'. (16)

the 'fairly typical member of the community who is ... seeking what might be described as good value for money'. ( 17 )

'the reasonable man's somewhat duller progeny'.(18)

'he who just missed the Clapham omnibus'. (19)

* * * CONCLUSION

Although I have somewhat melodramatically suggested that

'the reasonable man' approach to solving legal problems

is almost dead and buried, it must be admitted that the

concept still has a role to play in the common law

jurisdiction. Nevertheless, the overall importance of

the concept has certainly declined significantly since

the passing of the Trade Practices Act in 1974. As this

(14) World Series Cricket pty Ltd v Parish (1977) 16 ALR 181 (per Brennan J). (15) Taco Co of Australia Inc v Taco Bell pty Ltd (1982) 42 ALR 177 (per Deane and Fitzgerald JJ). (16) Henderson v Pioneer Homes (1980) ATPR 40-168. (17) Weitman v Katies Ltd (1977) 29 FLR 336 (per Franki J) • (18) W Pengilley, 'Section 52 of the Trade Practices Act : A Plaintiff's New Exocet?', 1987 ABLR 246, 254. (19) Ibid 255. For some other colourful descriptions (including descriptions of 'the reasonable man'), some of which are used in this article, see W Pengi1ley Advertising and the Trade Practices Act (CCH Australia 1984), pp 8-12.

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Act is used more and more as an alternative to (or in

addition to) reliance upon the common law, so the

importance of 'the reasonable man' will correspondingly

decline.

Whether in reality the difference between 'the reasonable

man' and 'the ordinary consumer' of somewhat less than

average intelligence is truly significant is a moot

point. There are many instances, usually depending upon

the particular area of the common law being relied upon,

where the standards adopted for 'the reasonable man' have

been applied with some degree of flexibility by the

court. Thus, it might be argued by some that the common

law cases and the statutory decisions based around the

Trade Practices Act are reasonably consistent with the

adoption of either test, and that whatever test is

adopted would make little or no difference to the outcome

of any case before the courts. (See for instance Annand

and Thompson pty Ltd v Trade Practices Commission (1979)

25 ALR 91).

In support of the contrary view, one need only turn to

cases like Dewhirst and Kay Rent-A-Car pty Ltd v Budget

Rent-A-Car System PtyLtd (1986) 8 FCR 1 and Hanimex Pty

Ltd v Kodak (Australasia) pty Ltd (1982) ATPR 40-287.

In the latter case the applicant was the seller of the

'Fuji' brand of film which is sold in a predominantly

green box. It alleged that in an advertising spoof

broadcast over radio stations involving 'The Kodak

Kendalls' the defendant had engaged in misleading or

11

deceptive conduct by conveying the impression that a

person who accepts film in a green box instead of Kodak

in a yellow pack is so lacking in judgment that he or she

deserves rebuke and should be ashamed of his or her

stupidity, and that Hanimex's products are of such shoddy

quality that any sensible person would be ashamed to have

accepted them, even as a gift. The defendant's

advertisement was alleged to have falsely disparaged the

applicant's goods in breach of section 52. The Federal

Court found that there was a serious matter to be tried

and that Kodak did have a case to answer. Admittedly

this was only an interlocutory hearing, but more

recently, in a full hearing conducted in the Federal

Court, Paul Hogan successfully alleged that posters and a

television advertisement which included an unauthorised

'send up' of a scene from the movie 'Crocodile Dundee'

constituted misleading conduct under s 52 in that they

implied an association with or endorsement by Hogan of

the defendants 'Grosby' brand shoes (Hogan & Ors v

Pacific Dunlop Ltd (1988) ATPR 40-914). It is hard to

imagine that judges Sitting in the common law

jurisdiction and applying 'the reasonable man' test would

not have found that the advertisements used in these

cases had simply utilised 'mere puffery' as an attention

seeking device. It would thus seem that even the idea of

the 'mere puff' has developed into something different

under the Trade Practices Act in comparison with the

common law. Broadly it would seem that to qualify as a

'puff' a statement must be incapable of being objectively

12

measured, such as claiming that a food item is 'the

tastiest' •

Whatever argument or view one accepts, there can be

little doubt that reference to 'the reasonable man' is on

the decline in our case law literature. There is no need

for lament, for the concept was never very realistic. In

truth 'the reasonable man' has always merely been the

personification of the court or jury's social judgment.

The change in legal standards which has led to the

decline of 'the reasonable man' is simply an inevitable

consequence of social change.

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SUMMARY

THE PROGRESSION

From: The Reasonable Man

Rides the Clapham omnibus

Is an average prudent person

Is free from idosyncrasies, over-apprehension and over-confidence

Is an intellectual automaton

Probably does not exist

To: The Ordinary Person

Probably just missed the Clapham omnibus

Does not always act reasonably

Can be ignorant, unthinking and credulous

Is often inexperienced and uneducated

Is slightly below average intelligence, although not unusually stupid in the sense of expecting the Clapham omnibus to detour to his or her front door

Is a fairly imperfect type of person

A.bountiful thriving species

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'A Note on Customs Unions Theory: The Viner Controversy RIP' by D J Thomas

'Disequilibrium and the Expectations- Augmented Phillips Curve' by Max Grant

'A View of Ideological Pressures in the Context of Managerial Power' by Max Brown

'Short Term Prediction of Student Numbers in the Victorian Secondary Education System' by Miles G Nicholls

'The Legal Protection of Geographical Trade Names: prognosis for a Case of Champagne' by Bruce Clarke

'Corporate Planning Practice in Major American and Australian Manufacturing Companies' by Noel Capon, Chris Christodoulou, John U Farley and James Hulbert

'A Modified Markovian Direct Control Model in Fixed Time Incorporating a New Objective Function Specification' by Miles G Nicholls

'Government Intervention in the Labour Market - A Case Study of the Referral and Placement Activity of the Commonwealth Employment Service in a Major Metropolitan Area' by John B.Wielgosz

'Big Business in the US and Australia : A Comparative Study' by Noel Capon, Chris Christodoulou, John U Farley and James M Hulbert

'Modelling the Demand for Tertiary Education - An Exploratory Analysis Based on a Modified Human-Capital Approach' by Miles G Nicholls

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'Formal Corporate Planning Practices of Major Australian Manufacturing Companies' by Chris Christodoulou

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'Alternative Job Search and Job Finding Methods: Their Influence on Duration of Job Search and Job Satisfaction' by John B Wielgosz and Susan Carpenter

'A Comprehensive Study of Strategic Planning in Australian Subsidiary and Non-Subsidiary Companies' by Chris Christodoulou and Peter T Fitzroy

'Towards an Optimal Taxation Structure in Australia' by David Thomas

'A Suggested Theoretical Basis for the Interpretation of the Effects of Income on the Demand fo:r Tertiary Education' by Miles G Nicholls

'Austrian Economics and Australian Patents' by Bruce Oakman

'Ensuring a Future for your Organisation' by Chris Christodoulou

'The Long Search: A Pursuit of Organizational Understanding from the Perspective of "System" Thinkers' by Max Brown

'Managing the Introduction of New Technology' by John Newton

'Positive Economic Analysis and the Ta~k of State Enterprise Efficiency and Control' by Patrick Xavier

'Profitability of Horizontal Takeovers in the Australian Industrial Equity Market: 1978 to 1982' by M A Johns and N A Sinclair

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'An Economic Appraisal of Recent Reforms in Public Enterprise Pricing policy in Victoria' by Patrick Xavier

'Australian Manufacturing Companies and Academic Institutions: A Comparative Analysis of Strategic Planning' by Noel H Kelly and Robin N Shaw

'Centralisation of Information and Exchange with Special Reference to the South Australian Wine grape Industry' by C Hunt, P Tiernan and E Wilson

'The Impact of Home Office Culture on Subsidiary Strategic Planning' by Chris Christodoulou

'A Comparison between Guarantees Standby Credits and Performance Bonds' by Ann Johns

'The Effects of Uncertainty and Incomplete Information in a Foreign Exchange Market Subject to Noisy Rational Expectations by Edgar J Wilson

'Inflation Accounting for Australian Public Enterprises - Economic Rationale and Financial Implications' by Barry Graham and Patrick Xavier

'Financial Targets and Dividend Requirements for Commonwealth Government Business Enterprises - Are They Appropriate and How should They be Determined and Measured?' by Barry Graham and Patrick Xavier

'Whither Co-Operative Federalism? -An Analysis of the Commonwealth Government's Plan for Reform of Companies, Securities and Futures Legislation' by Peter Pascoe

'An Analysis of the Pricing of Section 23 Expert Reports' by Ann Johns

'Food Laws: Reviewing the Regulatory Framework' by Sandra Edmonds

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'Share Prices and Divestiture' by J Barker

'Marketing Education in Malaysia: Implications for Australian Tertiary Institutions' by Christopher Selvarajah

'Forecasting the Demand for Tertiary Education using Econometric and Markovian Models' by Miles G Nicholls

'Power Pays - An Analysis of the Relationship between Managerial Power and Interdepartmental Relations' by Max Brown

'Workers Participation - Concepts, Issues and Prospects. An Australian Perspective' by Christopher Selvarajah and Stanley Petzall

'Peformance Indicators for Telecommunications and Price-Cap Regulation' by Patrick Xavier

'Multinational Enterprises and Host Nation Response' by Christopher Selvarajah

'Women in Management' by Christopher Selvarajah and Stanley Petzall

'The Cultural, Political and Legal Environment of International Business' by Christopher Selvarajah

'Australia's Human Capital and Labour Markets - Their Role in Achieving a More Competitive Economy' by Mirella S De Lorenzo

'A Comparative Analysis of the Strategy and Structure of United States and Australian Corporations' by Noel Capon, Chris Christodoulou, John U Farley and James M Hulbert

'Strategies During Market Transition - A Study of Detergent Marketing in Australia 1930s to 1960s' by David Ch'ng

'Some Legal and Economic Aspects of Third World Debt' by Louise Kloot

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'Access to Corporate Documents -Section 265B of The Code' by Stephen Kapnou11as

'Minding Everybody's Business: Performance Indicators for Australia Post' by Patrick Xavier

'Some Legal Aspects of Electronic Funds Transfer' by Louise Kloot

'Japanese Work Ethics' by Christopher T Selvarajahand Stanley Petzall

'Strategy, Policy and Operational Planning' by Christopher T Selvarajah

'Technology' by Christopher T Selvarajah

'The Development of a National EFT System Network in Australia' by Antoinette Richardson

'International Marketing Research: A Review' by David Ch'ng

'An Exploration of the Relationship between Training System Effectiveness and the Environmental Variables' by Christopher T Selvarajah

'Interest Rates, Their Changes and the Australian All Ordinaries Index -An Empirical Result (with some theoretical justification)' by David L Dowe

'Current Monetary policy : A Review of Recent Literature' by Margaret L Freebairn

'Performance Indicators for Public Telecommunications Operators : Will Th~y Serve to Improve Performance?' by Patrick Xavier

'Mosaic mac-b: A Comprehensive Framework for Marketing Planning' by David Ch'ng

'The Death of the Reasonable Man' by Bruce Clarke