Johnson v Mackinnon [2021] NSWCA 152

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Johnson v Mackinnon [2021] NSWCA 152 Hearing dates: 10, 11, 12 November 2020 Date of orders: 21 July 2021 Decision date: 21 July 2021 Before: Macfarlan JA at [1]; Brereton JA at [3]; Simpson AJA at [300]. Decision: Appeal dismissed with costs Catchwords: CONSUMER LAW – Misleading or deceptive conduct – Representations – Explicit false representations made in proposal document given to prospective investors in fraudulent betting syndicate scheme masterminded by notorious conman – Appellant a member of partnership promoting scheme – Whether appellant had knowledge of false representations – Whether appellant jointly and severally liable for misrepresentations made in ordinary course of business of partnership – Liability established APPEALS – From findings of fact and credibility – Function of appellate court – Circumstantial case – Briginshaw standard – Inferences from primary facts – Whether open to be comfortably satisfied various factual findings, including inference that appellant knew of false proposal representations PARTNERSHIPS AND JOINT VENTURES – Relationship of partners to persons dealing with them – Liabilities of partner – Partnership intended to be limited – Unlimited because limited partnership agreement never registered – Joint and several liability for misrepresentations made by other partner in ordinary course of business of partnership CONSUMER LAW – Misleading or deceptive conduct – Silence or non-disclosure – Whether appellant represented that conman not involved in scheme – Whether appellant had knowledge of various prerequisite facts such as notoriety, involvement, and alias of conman, and of need to conceal such information – Appellant unable to demonstrate any of these findings as glaringly improbable – Appellant ought to have known of reasonable expectation that conman's involvement would be disclosed – Appellant did not disclose and deliberately concealed conman's involvement CIVIL PROCEDURE – Pleadings – Amendment – Late application for amendment on second day of trial – Amendments added alleged liability of appellant for representation by silence and clarified alleged liability of appellant for explicit proposal representations – Whether appellant deprived of opportunity to make "no case" submission – Whether primary judge failed to consider dictates of justice – Not necessary to recite considerations seriatim – Appellant not deprived of fair and reasonable opportunity to meet case – Pleadings sufficiently clear and specific, and not unfairly open-ended CIVIL PROCEDURE – Pleadings – Construction of pleadings – Subparagraphs of pleadings not in precise correspondence with each other – Whether prejudicial construction by primary judge in finding that pleadings nevertheless sufficiently clear CONSUMER LAW – Misleading or deceptive conduct – Causation or reliance – Whether respondent's decision to invest caused by proposal representations – Whether prospective investor would have been deterred by knowledge of involvement of notorious conman – Gullible investors not disentitled to protection CONSUMER LAW – Misleading or deceptive conduct – Remedies – Quantification of damages – Whether primary judge failed to account for group members' prior recoveries and respondent's trading profits received from scheme – Award of damages below only for respondent's unpaid loan to scheme – Prior recoveries and trading profits irrelevant CIVIL PROCEDURE – Representative proceedings – Remedies – Award of damages to individual group member CIVIL PROCEDURE – Court of Appeal – Notice of contention – Reliance on claim in deceit in addition to misleading and deceptive conduct – Deceit considered briefly in judgment below – Contention material and advances respondent's case in circumstances where appellant claims apportionment for misleading and deceptive conduct but cannot do the same for claim in deceit – Notice of contention upheld and decisive of appeal – Unnecessary to consider further aspect of notice, namely conspiracy TORTS – Miscellaneous Torts – Deceit – Relationship with misleading or deceptive conduct – Apportionment defence available for misleading and deceptive conduct but not for deceit TORTS – Joint and several liability – Apportionment – Primary judge disallowed late attempt to raise apportionment defence – Disallowance denied a real prospect of significant reduction in liability – Strongly arguable error in disallowance – Unnecessary to consider further as respondent nevertheless able to rely on non-apportionable claim in deceit Legislation Cited: (CTH) Competition and Consumer Act 2010, Part VIA, ss 87CC, 87CD; Sch 2 – Australian Consumer Law, ss 2, 18, 236 (CTH) Trade Practices Act 1974, s 52 (NSW) Civil Liability Act 2002, Part 4, ss 34, 34A, 35, 35A (NSW) Civil Procedure Act 2005, ss 58, 177(1)(e) (NSW) Evidence Act 1995, s 140(2) (NSW) Partnership Act 1892, ss 10(1), 50A(1), 60(1) (NSW) Supreme Court Act 1970, s 75A Cases Cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (in liq) (2003) 127 FCR 418; [2003] FCA 180 Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (in liq) [2005] FCA 1212 Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (No 3) [2013] FCA 984 Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (No 6) (2013) 223 FCR 426; [2013] FCA 1112 Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 3) [2012] FCA 939 Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 5) (2014) 98 ACSR 347; [2014] FCA 340 Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 7) [2016] FCA 484 Belhaven and Stenton Peerage (1875) 1 App Cas 278 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Burbery Mortgage Finance & Savings Ltd (in rec) v O'Neill (No 2) [1995] ANZ ConvR 387 Chamberlain v The Queen (No 2) (1984) 153 CLR 521; [1984] HCA 7 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Foster v Australian Competition and Consumer Commission (2006) 149 FCR 135; [2006] FCAFC 21 Foster v Australian Competition and Consumer Commission [2012] FCA 953 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Gould v Vaggelas (1985) 157 CLR 215; [1985] HCA 75 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216; [1978] HCA 11 Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613; [2013] HCA 10 IBEB Pty Ltd v Duncan [2013] NSWCA 368 Kayteal Pty Ltd v Dignan (2011) 15 BPR ¶29,515; [2011] NSWSC 197 Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 Lloyd v Grace, Smith & Co [1912] AC 716 Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as "STC Sports Trading Club" (No 3) [2018] NSWSC 86 Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as "STC Sports Trading Club" (No 4) [2018] NSWSC 147 Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as "STC Sports Trading Club" (No 5) (Supreme Court (NSW), Stevenson J, 22 February 2018, unrep) Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as "STC Sports Trading Club" (No 7) [2019] NSWSC 103 Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as "STC Sports Trading Club" (No 8) [2019] NSWSC 1658 Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as "STC Sports Trading Club" (No 9) (Supreme Court (NSW), Stevenson J, 13 December 2019, unrep) Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193; [2011] WASCA 76 Palmer v Dolman [2005] NSWCA 361 Permanent Custodians Ltd v King [2010] NSWSC 509 Polkinghorne v Holland (1934) 51 CLR 143; [1934] HCA 28 R v Foster [2009] 1 Qd R 53; [2008] QCA 90 Rafferty v Madgwicks (2012) 203 FCR 1; [2012] FCAFC 37 Rose v Federal Commissioner of Taxation (1951) 84 CLR 118; [1951] HCA 68 S. Pearson & Son Ltd v Dublin Corporation [1907] AC 351 Sanderson Motors Pty Ltd v Lindsay Bennelong Developments Pty Ltd [2014] NSWSC 846 Sharma v Insurance Australia Ltd t/as NRMA Insurance [2017] NSWCA 307 Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 Ucak v Avante Developments Pty Ltd (in liq) [2007] NSWSC 367 Vertzayias v King [2011] NSWCA 215 Walker v European Electronics Pty Ltd (in liq) (1990) 23 NSWLR 1 Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65 Category: Principal judgment Parties: Leigh Diane Johnson (Appellant) Ian Henry Mackinnon as representative plaintiff of 152 plaintiff group members (Respondent) Representation: Counsel: J Burnside QC, S Lipp, D McClelland (Appellant) T J Dixon, H Pararajasingham (Respondent)