In Fonterra Co-operative Group Ltd v Mcintyre and Williams Partnership [2016] NZCA 538, the Court of Appeal dismissed Fonterra Co-operative Group's (Fonterra) appeal against a decision of Muir J in the High Court. The decision was that Fonterra had breached s 106 of the Dairy Industry Restructuring Act 2001 in relation to the contract terms offered to, among others, McIntyre and Williamson dairy farmers (Respondents).

One question at issue in the appeal was whether Fonterra breached s 9 of the Fair Trading Act 1986 (FTA) by providing misleading or deceptive advice to the Respondents about the Respondents' inability to buy shares.

The Respondents claimed that Fonterra representatives had made false representations regarding the Respondents' share-purchasing rights.

The Court held that when conduct merely induces a state of wonderment as to the true nature of affairs, it will be insufficient to establish an infringement of s 9, but when the misleading conduct induces a positive misunderstanding that is incorrect, as was the case here, liability may arise.

Fonterra also submitted that entire agreement clauses were relevant in determining a breach of s 9. However, the Court disagreed, stating such a clause is relevant only to causation or remedial discretion under s 43 of the FTA.

Aside from making FTA claims more difficult to strike out, the Court's confirmation of that approach appears to signal the way in which the new s 5D of the FTA will be interpreted. When an entire agreement clause is at issue, it may not be sufficient simply to rely on the fact of that clause alone as "agree[ment] to contract out of section 912A13, or 14(1)" (s 5D(3)(c)(ii)), because it would appear that the particular conduct may still on its face be misleading within the meaning of those sections.

See the Court's decision here.