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) Solicitors: Platinum Lawyers (Appellant) Nelson McKinnon Lawyers (Respondent) File Number(s): 2020/7219 Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity Division Citation: [2018] NSWSC 86; [2019] NSWSC 103; [2019] NSWSC 1658; (Supreme Court (NSW), Stevenson J, 13 December 2019, unrep) Date of Decision: 06 February 2018 Before: Stevenson J File Number(s): 2015/332497 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] The appellant was one of two partners in The Sports Trading Club Partnership ("STC"), which purported, through a proposal document issued to all prospective investors ("the Proposal"), to operate a betting syndicate using sophisticated methods to guarantee high returns on investment. Between early 2013 and late 2014, more than 400 members of the public advanced funds totalling $29.6 million to STC and its successor partnership, STC Sports Trading Club, of which the appellant was not a member, having resigned from STC on 21 January 2014. STC and its successor were in fact the vehicles of notorious conman Peter Foster, and essentially all of the investors' funds were lost. The respondent had advanced $200,000 to STC, and sued the appellant, together with eleven other defendants, as representative plaintiff for 153 STC investors. The appellant was the only active defendant in the proceedings below, and the primary judge held that she was liable to the respondent for the whole of the $200,000, by reason of having engaged in misleading and deceptive conduct within the meaning of Competition and Consumer Act 2010 (Cth), Schedule 2 – Australian Consumer Law ("ACL"), s 18, by representing that the contents of the Proposal were true, and by not disclosing Mr Foster's involvement in STC ("the Representations"). Before this Court, the appellant argued that the primary judge erred by: 1. finding that the respondent relied upon the Representations, and that the Representations were thus causative of his loss; 2. allowing the respondent to amend his pleadings on the second day of the trial, without regard to the dictates of justice, so as to add an alleged misrepresentation by silence that Mr Foster was not involved in STC, and to clarify that the appellant was one of the parties alleged to be liable for the purported misrepresentations within the Proposal; 3. adopting a prejudicial construction of the respondent's pleadings by inferring allegations which were not clearly pleaded as to the falsity of representations; 4. finding that the appellant knew the representations in the Proposal to be false, and by finding that the appellant 'made' those representations; 5. finding that the appellant was liable for a misrepresentation, by silence or omission, that Mr Foster was not involved in STC, by reason of not disclosing such involvement; 6. disallowing the appellant's late application to rely on a defence of apportionment; and 7. failing, when quantifying damages, to give credit for recoveries made for the benefit of group members and trading profits received by the respondent prior to judgment. The respondent filed a Notice of Contention seeking to uphold the decision below on grounds other than those relied upon by the primary judge, namely deceit and conspiracy. Held (per Brereton JA; Macfarlan JA and Simpson AJA agreeing), dismissing the appeal: [1], [289]-[299], [304]. As to causation and reliance: 1. It is logical and reasonable that a prospective investor would be influenced by the Proposal's contents, and given Mr Foster's reputation, knowledge of his involvement would be a powerful deterrent to investing. While the Proposal may have been "too good to be true", gullible investors are not disentitled to protection against misleading and deceptive conduct; indeed, this is why the cause of action exists. There was no error in the primary judge's conclusion that the respondent had established reliance and causation of loss: [63]-[73]. As to the amendment of the pleadings: 2. The primary judge did not fail to have regard to the dictates of justice, as contained in Civil Procedure Act 2005 (NSW), s 58. Those considerations are sufficiently notorious that they cannot be assumed to have been disregarded by the mere absence of express reference within the primary judge's reasons. Ultimately, while the amendments were no minor matter, and while they prevented the appellant from making a "no case" submission, the appellant was not deprived of a fair and reasonable opportunity to meet the case against her. The appellant did not seek an adjournment below, and the appellant has not demonstrated before this Court that the amended pleadings had such an effect, nor that they were in any way insufficiently clear: [74]-[103]. Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 29, referred to. As to the construction of the pleadings: 3. Although some subparagraphs of the pleading of falsity did not correspond precisely with the representation said to be false, they were sufficient to make clear that that is what was alleged: [104]-[110]. As to the representations in the Proposal: 4. Per Simpson AJA; Macfarlan JA agreeing: Even applying Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34, the overall circumstances of the appellant's participation in the syndicate, the conversations with the Mackinnons, and the primary judge's general rejection of the appellant's evidence, demonstrate no error in the finding that the appellant was aware of the Proposal's existence and the falsity of the representations within it, prior to the respondent's investment: [3] (Macfarlan JA), [301]-[302] (Simpson AJA). 5. Per Brereton JA, contra: The burden facing an appellant who seeks to overturn findings of fact, especially those based on credibility, is heavy. However, in circumstances where the appellant adamantly denied knowledge of the Proposal representations and their falsity, and where there was no direct evidence to the contrary, that burden was met. The primary judge erred in finding that the appellant was aware that the Proposal contained false representations, prior to the respondent's investment: [112]-[141]. Lee v Lee (2019) 266 CLR 129; [2019] HCA 28; Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34, applied. 6. Per Brereton JA; Macfarlan JA and Simpson AJA agreeing: In any event, first, knowledge that conduct is misleading and deceptive is not an element of ACL, s 18. Second, the appellant was sued as a partner, and partners are jointly and severally liable for misrepresentations made by other partners in the ordinary course of the partnership's business. Additionally, partners are liable for the misleading and deceptive conduct of their agent(s) in the course of their employment. The Proposal was issued in the ordinary course of STC's business, thus the appellant was legally responsible for the misrepresentations regardless of whether she knew of their content. The primary judge therefore correctly concluded that the appellant 'made' the misrepresentations: [1]-[2] (Macfarlan JA), [60], [142]-[149] (Brereton JA), [300] (Simpson AJA). 7. Per Macfarlan JA: There is some uncertainty as to whether liability as a partner in the way correctly explained above was within the ambit of the respondent's pleadings. Ultimately, the conclusion that it was is open, and in any event, liability can also be established on another basis, namely the deceit claim: [2]. As to the representation by silence or omission: 8. There was no error in the primary judge's factual findings that the appellant knew of Mr Foster's notoriety, knew that he was involved in STC under an alias, suspected that investors' funds were being misappropriated, actively concealed Mr Foster's involvement, knew that her name, image, reputation, and standing were being deployed to add respectability to STC, and knew that Mr Foster's involvement could not be revealed to the public as it would have destroyed that respectability and been highly detrimental to STC's business: [150]-[236]. 9. In such circumstances, the appellant knew, or at least ought to have known, that Mr Foster's involvement would be material to investors, who would have reasonably expected it to be disclosed. The appellant therefore engaged in misleading and deceptive conduct by not doing so, and, although not required to establish liability, by deliberately concealing such involvement: [237]-[259]. Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193; [2011] WASCA 76, applied; Rafferty v Madgwicks (2012) 203 FCR 1; [2012] FCAFC 37; Demagogue v Ramensky (1992) 39 FCR 31, considered. As to the tort of deceit: 10. Per Simpson AJA; Macfarlan JA agreeing; Brereton JA contra: The claim in deceit, relied upon within the Notice of Contention, is made out in respect of the misrepresentations in the Proposal, as the primary judge did not err in finding that the appellant knew of the Proposal's contents and their falsity: [3] (Macfarlan JA), [301]-[302] (Simpson AJA), [267] (Brereton JA). 11. Per Brereton JA; Macfarlan JA and Simpson AJA agreeing: The claim in deceit also succeeds in respect of the misrepresentation by silence. These conclusions do not advance the respondent's case if the pleading of a defence of apportionment by the appellant were disallowed, as it was below, but it assumes significance if the appellant ought to have been permitted to agitate such a defence: [1] (Macfarlan JA), [260]-[269] (Brereton JA), [300] (Simpson AJA). As to apportionment: 12. Although the defence of apportionment was not raised by the appellant until after the primary judge's judgment on liability, the applicability of the defence could not seriously be disputed, and the primary judge's decision to disallow reliance upon it denied the appellant a real prospect of substantially reducing her liability. Further, the likelihood of prejudice to the respondent was remote, hence there was strongly arguable error in the primary judge's approach. However, while an apportionment defence is applicable to a misleading and deceptive conduct claim, Civil Liability Act 2002 (NSW), s 34A(1)(b) has the effect that wrongdoers who act fraudulently do not have the benefit of apportionment. Accordingly, the defence would not apply to the respondent's claim in deceit. The result, therefore, of upholding the respondent's Notice of Contention (in respect of the claim in deceit; it being unnecessary to consider conspiracy) is that the appellant's liability would not be reduced by a defence of apportionment, if it were permitted to be raised: [276]-[288]. IBEB Pty Ltd v Duncan [2011] NSWCA 368; Kayteal Pty Ltd v Dignan (2011) 15 BPR ¶29,515; [2011] NSWSC 197, considered. As to quantification: 13. The sum of $200,000 awarded to the respondent self-evidently represented the principal amount of his investment. Trading profits received from STC did not affect his right to full repayment of this principal, while recoveries made for the benefit of other group members are irrelevant. There was no error in quantification of damages: [270]-[275]. Judgment 1. MACFARLAN JA: Subject to the following qualifications, I agree with the judgment of Brereton JA. 2. First, whilst I agree with his Honour's conclusions stated in [142]-[144], I have some concern as to whether they fall within the case put by the respondent against Ms Johnson. Ultimately, I have concluded that they do on the basis that they are within the ambit of the pleading against her (Further Amended Commercial List Statement at [3], [7], [7A], [20]-[21] and [23]) which was not, in any relevant respect, clearly narrowed by the course of conduct of the trial or appeal. I note that his Honour's conclusions in those paragraphs are not in any event critical to his Honour's ultimate conclusion that the appeal should be dismissed because his Honour finds that Ms Johnson's liability was established on another basis as well. 3. Secondly, I agree with the observations made by Simpson AJA in [301]-[303] of her Honour's judgment. 4. BRERETON JA: Between early 2013 and October 2014, more than 400 members of the public advanced funds totalling $29.6 million, initially to The Sports Trading Club Partnership ("the Partnership" or "STC"), in which the partners were the appellant Ms Leigh Johnson, a senior solicitor specialising in criminal law, and Ms Anne Patricia Larter, and following Ms Johnson's resignation on 21 January 2014, to another partnership, called the STC Sports Trading Club ("the Second Partnership"), of which Ms Johnson was not a member. According to a document described as a proposal which was provided to all intending investors ("the Proposal"), STC was ostensibly a betting syndicate that used sophisticated methods to ensure high returns to investors (called "Associate Members") without risk. In fact, STC was the vehicle for a fraudulent scheme of which the architect was one Peter Foster, described by the primary judge as a "notorious conman", and essentially all the investors' funds were lost. In proceedings in the Commercial List, the respondent Mr Ian Mackinnon, who had lent $200,000 to STC, sued, as representative plaintiff for 153 of the investors ("the Group Members"), twelve defendants, including STC (as first defendant), Ms Larter (second defendant), Ms Johnson (fifth defendant), Foster (twelfth defendant), and various other alleged partners and participants. Claims against some defendants were compromised or discontinued; Ms Larter entered a submitting appearance and was bankrupt; Foster did not participate in the hearing and, at the time of hearing, was also bankrupt and had criminal charges pending against him. Ms Johnson was the only active defendant. The primary judge held that she was liable for the whole of the loss suffered by Mr Mackinnon, by reason of having engaged in misleading and deceptive conduct [1] by representing that the statements in the Proposal were true, and by not disclosing that Foster was involved in STC, and gave judgment against her for $200,000, interest and costs. 5. The appellant does not dispute that the representations in the Proposal ("the Proposal Representations") were false, nor that Foster was involved in STC. In this appeal, the essential issues are: 1. whether Ms Johnson made the Proposal Representations; 2. whether Ms Johnson represented, by silence, that Foster was not involved in STC ("the Foster Representation"); 3. whether Mr Mackinnon relied on the Proposal Representations and the Foster Representation; 4. whether moneys received or recovered by Mr Mackinnon or for the benefit of Group Members ought to have been deducted from the damages awarded; and 5. whether the appellant ought to have been permitted to advance a defence of apportionment. 1. By a Notice of Contention, the respondent contends that the decision below should be upheld on grounds other than those relied upon by the primary judge, namely deceit and conspiracy. The Notice of Contention assumes significance because, if the appellant ought to have been permitted to rely on a defence of apportionment to reduce her liability for misleading and deceptive conduct, such a defence would not have reduced her liability for deceit. BACKGROUND 1. The following summary draws heavily on the extensive and comprehensive account contained in the primary judge's principal judgment. [2] Foster 1. Details of Foster's "sad and lengthy history of dishonesty, deception and evasion" [3] including "direct involvement in marketing schemes which have resulted in the misappropriation of assets" [4] and his criminal history are related in a number of reported cases. [5] One episode involved the sale of distributorships in respect of a purported weight loss pill called "TRIMit"; on 2 September 2005, Foster was found guilty of price fixing and misleading and deceptive conduct, in respect of which he was fined, and restrained from being involved in any business relating to weight loss or to the cosmetic or health industries for a period of five years. [6] 2. Immediately before the events which give rise to the present proceedings, in September and October 2012, there was a trial of proceedings brought in the Federal Court by the Australian Competition and Consumer Commission against SensaSlim Australia Pty Ltd, which marketed a diet nasal spray, and which was found to be in effect a front for Foster. [7] Yates J found, inter alia, that "it was essential that Mr Foster not be publicly associated with SensaSlim or its business. Mr Foster's self-assessment was that his name was 'mud' and that he could not be seen to be connected to a weight loss product"; [8] that "the mask" of Mr Foster's involvement was provided by others, each of whom was no more than a "front man" for Mr Foster's alter egos, who "only had … roles calculated to create a façade of respectability for that business"; [9] and that "SensaSlim's conduct was deliberate, covert and fraudulent to a high degree. It was clearly directed to obtaining money by deceit. Its objective was to conceal the activities of an avowed and notorious conman, Mr Foster." [10] 3. During the events which gave rise to the present proceedings, on 27 September 2013, Foster was held, by Logan J in the Federal Court, to be in breach of the orders of 2 September 2005, by reason of his involvement in SensaSlim, [11] and on 24 October 2013, he was sentenced to three years' imprisonment for contempt of court. [12] However, he remained "on the run" until he was arrested a year later in October 2014. 4. The extent to which Ms Johnson was aware of Foster's history and record was an issue in the present proceedings. Ms Johnson 1. Ms Johnson was admitted to practice as a solicitor in 1984, and has specialised in criminal law. According to her evidence, she met Foster in or around August 2012, while on a holiday to the Gold Coast, when her good friend Ms Larter introduced her to Foster's sister, who in turn invited Ms Johnson to her home, where she met Foster. What Ms Larter said to Ms Johnson about Foster is mentioned later. 2. According to Ms Johnson, during her visit to Foster's sister's home, Foster mentioned pending litigation in which he was then involved – the SensaSlim matter. On her return to Sydney, he telephoned her "and persuaded me to act for him to seek an adjournment". As a result, on 29 August 2012, Ms Johnson appeared for Foster before Yates J to seek an adjournment of the hearing, which was set down to commence on 3 September 2012. The application was unsuccessful, [13] and on 2 September 2012, Ms Johnson appeared before Perram J, on an application for leave to appeal from Yates J's decision. Leave was refused. [14] The proceedings, in which Ms Johnson played no further part, were ultimately resolved by the judgments of Yates J earlier mentioned. 3. According to Ms Johnson, after she had acted for him on the adjournment applications, Foster asked her to contact him again, and told her about "sports trading". He proposed that she become a "limited partner" in a proposed new sports trading business, in which the other partner would be Ms Larter, and Ms Johnson agreed to do so. She was given to understand that Foster would not be involved in the management or operation of the proposed new business and would only be involved in setting up and operating the business's website and similar technological aspects, while one Richard Holmes, who was said to have been a professional sports trader for decades, would be doing the sports trading. Ms Johnson's account of various assurances she says she was given by Foster is important and is more fully set out later. 4. On 30 December 2012, Ms Johnson and Ms Larter executed a "Limited Partnership Agreement", which stated that: 1. Ms Larter and Ms Johnson wished to form a limited partnership for the purposes of the (NSW) Partnership Act 1892 ("Partnership Act"), to be known as "The Sports Trading Club Partnership"; 2. Ms Larter was to be the General Partner, and to have "unlimited liability for the obligations, debts and liabilities of the Partnership"; while 3. Ms Johnson was to be a Limited Partner, with her liability "limited ... to the amount of [her] invested capital", and would not participate in the management of the Partnership, execute any document binding the Partnership, or act in any way purporting to have authority in the business of the Partnership. 1. Provision for the formation of a limited partnership is made by Partnership Act, s 50A(1), which provides: Limited partnership or incorporated limited partnership is formed on registration (1) A limited partnership is formed by and on registration of the partnership under [Pt 3 of the Act] as a limited partnership. 1. By s 60(1), "[t]he liability of a limited partner to contribute to the liabilities of the limited partnership is … not to exceed the amount shown in relation to the limited partner in the Register as the extent to which the limited partner is liable to contribute." 2. While Ms Larter and Ms Johnson clearly intended their partnership to be a limited partnership, with Ms Johnson's liability to be as a "Limited Partner", their "Limited Partnership Agreement" was never registered – apparently by oversight – and so their partnership was not a limited one, and Ms Johnson's liability was not limited. The discovery of this, shortly before the commencement of the hearing, led to a late amendment to the pleadings, which is referred to below. [15] 3. Concurrently with the establishment of the partnership, Ms Johnson advanced $182,500 in cash to STC, which Ms Johnson described as her "seed money". She was the only one of the promoters and partners to contribute any capital; Ms Larter and Foster contributed no funds. Ms Johnson said that she borrowed all of the $182,500 in cash from "friends"; that the arrangement was that she would be paid 100% interest on her advance; that the money would be repaid within a few months; and that there was a document recording the arrangement, but that she had been unable to locate it. The evidence did not expressly reveal with whom Ms Johnson made this arrangement, but it must have been Foster and Ms Larter. In an email sent by Ms Johnson to Foster and Ms Larter on 10 September 2013, she wrote: [16] "The seed money loan was for $182,500 to be repaid by end of Feb 2013 by payment of $182,500 of principal plus $182,500 as interest. Without the $182,500 loaned STC could not have got started. Neither of you was able to provide one cent of seed capital. Peter [Foster] had no objections to this loan at the time when he needed the money" 1. Ms Johnson's loan was unsecured. She said that she undertook no due diligence before becoming a partner or advancing funds to STC; that she did not ask Ms Larter how she had secured the rights STC was supposed to have, nor their value; and that she made no enquiries as to "who would be doing what" in the business. [17] 2. Ms Johnson said she paid the $182,500 in four tranches: the first tranche of $88,000 in cash, to one Bill Duffy, who she said was "a friend of Mr Foster's". In her 10 September 2013 email, referred to above, [18] Ms Johnson said that $100,000 of the $182,500 seed capital was to be placed into STC's trading account, to be traded by Richard Holmes. However, in cross-examination she said that she deposited the remaining three tranches of $37,000, $25,000, and $32,500, in cash, into a bank account, and that she did not know who controlled that account. As there was no evidence of deposits of those amounts into the STC Westpac account in the joint names of Ms Johnson and Ms Larter, which was opened on 28 December 2012, the primary judge concluded that the account into which they were deposited must have been one associated with Ms Larter or Mr Foster. [19] 3. Ms Johnson withdrew $50,000, which she later claimed remained owing in respect of her initial loan, from the Westpac account in late December 2013. This fully repaid her $182,500 seed capital loan, with 100% interest. She resigned as a partner on 21 January 2014. When she resigned, Ms Johnson also froze the STC Westpac bank account, of which she was a signatory. Following her resignation, the Second Partnership, in which Ms Larter and others, but not Ms Johnson, were the partners, was formed. At least by the end of the trial, there was no suggestion that Ms Johnson had any liability as a partner in respect of the period after her resignation, and in this appeal it is the first partnership, of which Ms Johnson was a member, that is relevant. [20] The STC Scheme The marketing campaign 1. In early 2013, STC placed advertisements in a number of major newspapers inviting potential investors to call "Mark Hughes", which the primary judge found was an alias used by Foster as he understood that he could not be seen to be associated with STC. A "Sales Script", which his Honour inferred was prepared by or at the direction of Foster, instructed those who answered the telephone calls to tell potential investors: [21] 1. "we are financial traders ... but we trade on a market that is absolutely totally transparent and substantially more profitable than the stock market, and that is the sports and prediction markets"; 2. "we are not gamblers"; 3. "we are traders with expert analysts from our team of scientists, statisticians, mathematicians and data analysts"; 4. "there is no risk and ... your contribution is fully guaranteed"; 5. "your investment can't go down because it is treated as a profit share loan which means that your investment is always returned to you in full"; 6. "you can't lose money you can only make money"; 7. "if you go to our website and you click on our newspaper cuttings ... there is a photo of our senior partner [i.e. Ms Johnson] with Julia Gillard (but don't hold that against her) when she [i.e. Ms Johnson] announced that she obtained the rights of $20 million"; 8. "there is a $10 million cash bond security. That money is simply locked up and can't be touched"; and 9. "it is an important point to understand that this is not a situation where you can lose money". 1. Investors were directed to the STC Website, which had a link to a media release showing Ms Johnson with former Prime Minister the Hon Julia Gillard AC and stating that Ms Johnson was involved in a $20 million partnership deal. The photograph of Ms Johnson and Ms Gillard had in fact been taken in a context unrelated to STC, and contrary to the "sales script", the photograph was not taken on an occasion where Ms Johnson made any announcement about obtaining any rights connected with STC. It is not suggested that Ms Johnson was personally involved in the provision or use of this photograph, although she at some stage became aware that it was being used. [22] The Proposal 1. The key marketing document was the Proposal, which was available on application by entering one's particulars on a form accessible via the STC Website, through a hyperlink labelled "click to download proposal". [23] It seems that the Proposal was not directly accessible from the website, but was forwarded in response to an on-line application. Mr Kenneth Gamble, an investigator retained on behalf of the Group Members, gave evidence that: [24] "In fact what actually happens is people would fill out the proposal application to receive a proposal and they would then be emailed the proposal, that's my recollection, so it was something that was emailed to them when they displayed an interest in the site." 1. The Proposal was also mailed to investors after the initial telephone call. [25] Thus it seems that it was not directly downloadable from the website nor viewable on it. 2. On the front page of the Proposal, Ms Larter was described as the "General Partner" and Ms Johnson as the "Legal Partner". The Proposal included a photograph of Ms Johnson and Ms Larter, and the following description of Ms Johnson: [26] "Leigh Johnson has carved out a distinguished career over 30 years as a lawyer representing clients from all walks of life, including prominent politicians, actors, physicians, members of law enforcement agencies, large corporations and Aussie battlers. Her passion for justice and the Aussie ethos of everyone being given a 'fair go' is legendary. Her opinion has been much sought after with countless television appearances on programs such as A Current Affair, Today Tonight, Sunday, as well is [sic] being a regular member of the panel on the highly successful Beauty and the Beast. She brings to the Partnership unlimited enthusiasm, a fierce intelligence and belief that everyone should share equally in the financial rewards." 1. Ms Johnson said that this was not an accurate summary of her career, and that she had never acted for "politicians", "actors", "physicians" or "large corporations". [27] It was not found that she was personally involved in the provision of that resume. 2. The Proposal contained statements that: [28] 1. STC had "secured the exclusive rights and been appointed the Club Member for Australia" from the Sports Trading Club Ltd; 2. these "highly prized rights" allowed for $20 million to be "traded on sporting events and prediction markets in Australia and overseas"; 3. STC sought to raise "$10 million by way of a loan so as to maximise profits and fully utilise the $20 million allocation"; 4. any loan made to STC would be "100% secured against the value of the Australia rights and by way of personal guarantee by" Ms Larter; 5. instead of paying interest on moneys advanced STC would share one half of the profits it made "as a Member" with "Associate Members", 6. there were opportunities to make "successful trades" on sporting events by using "intelligence"; 7. the "intelligent trader" maximised profits and minimised losses "through the use of established financial risk management strategies such as stop loss, hedging and the equivalent of short selling", and that "these are just a few of the skills that are second nature to our highly trained Account Managers"; 8. the "actual trade decisions are made by our Account Managers, under the supervision of our Senior Analyst and Chief Investment Officer"; 9. each "Account Manager has extensive experience in trading on sporting events, and a track record of discipline and intelligent decision making"; 10. the Account Managers "expertly analyse and trade the betting markets, taking the emotion out of the betting game and putting quantitative analysis in its place"; 11. the Account Managers "are a team of analysts with experience on sports and investment, and with professional qualifications in quantitative disciplines such as science, accounting and mathematics"; 12. the Account Managers support the Chief Investment Officer "through undertaking extensive statistical and trending analysis coupled with rigorous background research and market intelligence" to "seek attractive risk-reward profile[s]" and "allocate assets" "using sports specific algorithms that are used to identify value at all markets"; 13. the Account Managers "have the invaluable access to information received from our Scientific Research Director, Dr Allan Snyder, from the Sports Trading Club Insight Project at the University of Sydney, harnessing the extraordinary talents of Savants"; 14. STC "has also created the 'Insight Project', a world first with the study of savants and sports trading"; 15. STC "have embraced the extraordinary skills of savants to give ourselves a unique advantage. Certain savants unmask patterns that others can't see and are bewilderingly quick at performing calculations and recalling enormous amounts of data"; 16. those "savants are mysteriously gifted at setting odds and point spreads on games such as football and basketball with extraordinary accuracy"; 17. the "Sports Trading Club Ltd has the expertise and knowledge to trade on sporting events worldwide" and "they only appoint one Club Member in each country"; and 18. "the amount of money to be traded in each country is calculated in accordance with the specific size of the country" and other like matters and that "in Australia it was determined that that sum was $20 million and the Australian sole rights were obtained by Leigh Johnson and Anne Larter." 1. The Proposal concluded: [29] "In simple terms, we are not for sale. Leigh Johnson and Anne Larter do not want to sell any equity in The Sports Trading Club Partnership. They believe the rights are just too valuable, and only going to increase in worth in the years ahead. They are however prepared to share with you, and other lenders, 50% of the profits for a specified period of time. If you were investing money in a managed investment scheme or the stock market, the value of your investment can potentially increase or decrease. In some cases your investment can be completely wiped out. That's why there are warnings on those type of investment schemes stating that your investment may go down as well as up. However as a loan you are always legally entitled to the return in full of the principal of the loan. As it is a loan and not an investment the principal sum we borrowed must be repaid to you in full. The principal sum remains the unchanged. This gives you security and peace of mind that you are not risking your principal. And you do get to share in the rewards, 50% of all profits made by the Member. Reward without risk ... it may sound too good to be true. It isn't. However where there is a plus there normally is a minus. In this this [sic] case, 'all good things must come to an end' and there is a time limit on the term of the loan and the period that you will be able to be an Associate Member. The term of the loan is for either one year, two years or a maximum of three years, depending upon what suits your personal circumstances. At the end of the term your loan will be repaid to you in full. But you will have had up to three good years of reaping the rewards ... without worrying about risking the principal." 1. The Proposal included the Terms of Associate Membership (as investors who made loans to STC were called), and attached the form of Loan Agreement. [30] 2. Whether Ms Johnson knew of the Proposal and its contents was an issue in the proceedings. The fraud 1. Over 400 members of the public, including Mr Mackinnon, became "Associate Members", depositing a total of $29.6 million into a Westpac account in the name of Ms Larter and Ms Johnson ("the STC Westpac account"), of which the 153 Group Members' deposits account for some $12.3 million. Each investor executed a loan agreement which recorded that "The Sports Trading Club Partnership" was a limited liability partnership, and that the money loaned was to be used for trading on financial markets and to be repaid in full, along with distribution of all profits made "as outlined in the Sports Trading Club Associate Member Proposal". The principal amount was repayable at the end of a fixed term. The terms of the Associate Member Proposal ("Proposal") and "Terms of Associate Membership" were to apply as if incorporated in the loan agreement. The STC Westpac account was opened on 4 January 2013. Mr Gamble, an investigator retained on behalf of the Group Members, has identified all of the Group Members' deposits in the STC Westpac account. [31] 2. All of the money paid into the STC Westpac account has been paid away. Funds were withdrawn immediately after the deposits were made, often in round numbers; there were also "debit card withdrawals" in odd amounts for apparently private purposes. Mr Gamble's investigations revealed that almost $8.5 million of the funds paid into the STC Westpac account was transferred to an account with HSBC Bank in the name of the sixth defendant, Sports Trading Club Ltd. Funds were then transferred from that account into bank accounts in Hong Kong and Vanuatu in the name of offshore companies associated with Ms Arabella Foster and Mr Duffy (the person to whom Ms Johnson handed cash in December 2012). Thereafter, the funds were applied principally for the benefit of Mr Foster and his relatives and associates for purposes unrelated to those stated in the Proposal. Mr Gamble's investigations also revealed that a further amount of some $5 million was transferred from the STC Westpac account to accounts controlled by Mr Duffy, and was then used by Foster for personal expenditure and payments to his relatives and associates. Another almost $2 million was paid directly to Foster's associates and relatives. Almost $15 million of the money paid into the STC Westpac account has not been accounted for. [32] 3. There was no evidence that any of the money was spent for the purposes identified in the Proposal. In truth, as the primary judge found, STC had not acquired any rights from Sports Trading Club Ltd, or anyone else, to trade on sporting events or "prediction markets"; and STC did not conduct any trading or betting activity of the kind described in the Proposal, or at all. [33] 4. On 30 October 2014, shortly after Mr Foster's arrest, Ms Larter sent an email to all "STC Members" expressing confidence in the integrity of STC and offering a refund to investors who requested it; however, only five of the Group Members received a partial refund offered by Ms Larter, with the total amount refunded being $138,905. Otherwise no Group Member has been repaid the amount advanced to STC, although some recoveries have been made on behalf of Group Members: of the $12.3 million invested by Group Members, some $6.4 million has been recovered. [34] 5. Although Ms Johnson was one of the two persons authorised to operate the STC Westpac account, the other being Ms Larter, there was no suggestion that Ms Johnson received any of the money deposited into it (other than the $50,000 that she withdrew in December 2013 as final repayment of her advance of $182,500 and interest), nor that she authorised any payment out of the account. The primary judge found that Ms Larter must have authorised the transfer of funds out of the Westpac account, at the direction of Foster. [35] 6. Ms Johnson's case at first instance was conducted on the basis that investors' funds had been fraudulently misappropriated, by Mr Foster, with Ms Larter's assistance. Mr Mackinnon 1. On 28 October 2013, after seeing an advertisement for STC in the Sydney Morning Herald and then speaking by phone to "Mark Hughes", and receiving and reading the Proposal, Mr Mackinnon and his wife executed a loan agreement for $100,000, which was deposited into the STC Westpac account on 31 October 2013. On 4 November 2013, Mr Mackinnon executed a second loan agreement, and on 7 November 2013 he transferred a further $100,000 to the STC Westpac account. [36] THE PROCEEDINGS AND JUDGMENTS BELOW The representations 1. In the Further Amended Commercial List Statement ("FACLS"), Mr Mackinnon complained about two categories of alleged misrepresentations. 2. The first category was referred to in [20] of the FACLS, which ultimately alleged that between about February 2013 and about October 2014, representations were made to Mr Mackinnon and/or the Group Members by Foster or persons employed or instructed by Foster (including Ms Johnson, though the specific reference to her was a late amendment), to the effect that: [37] 1. STC was a legitimate sports betting business capable of generating significant profits on traded sports bets; 2. Mr Mackinnon and the Group Members could invest in the business by making loans of between $50,000 and $250,000 to STC in exchange for which STC would pay 50% of any profits earned on sports betting trades up to the amount loaned; 3. "Mark Hughes" was the National Sales Manager of STC; 4. Foster was not involved with STC. The late amendment to the FACLS adding this, the so-called "Foster Representation", said to have been made "by silence or omission", is impugned in the appeal; 5. the loans made by Mr Mackinnon and the Group Members would be guaranteed and repayable at the end of a nominated loan period; and 6. STC had assets of $10 million. 1. The second category, comprising the Proposal Representations, was referred to in [21] of the FACLS, which alleged that between about February 2013 and about October 2014 STC, Ms Larter, Ms Johnson, and Foster made representations to Mr Mackinnon and the Group Members, in the Proposal, to the effect that: [38] 1. STC offered members an alternative to the stock or property markets and traditional investment channels; 2. the sports trading market was recession proof and offered unique tax free returns that could not be replicated in any mainstream investment product currently on offer; 3. STC was a sophisticated operation with trading desks in Sydney, Hong Kong, and London; 4. trade decisions were made by "Account Managers", under the supervision of a "Senior Analyst" and "Chief Investment Officer"; 5. each Account Manager had extensive experience in trading on sporting events and a track record of discipline and intelligent decision making; 6. Account Managers expertly analysed and traded on the betting markets; 7. Account Managers were a team of analysts with experience in sports and investment, and with professional qualifications in quantitative disciplines such as science, accounting, and mathematics; 8. STC had created "the Insight Project, a world first with a study of savants in sports trading"; 9. the scientific director of STC was Prof Allan Snyder who, for some twenty years, had conducted ground breaking research on savants at both the Australian National University and the University of Sydney; 10. STC had the expertise and knowledge to trade on sporting events worldwide; 11. STC had obtained rights from Sports Trading Club Ltd (Hong Kong) to operate the STC business in Australia; 12. STC was registered in NSW and had offices and a trading desk in Sydney; 13. STC had borrowed $10 million to enable it to maximise the profits to be earned from sporting trades; and 14. investors were always legally entitled to a return in full of the principal of their loan. 1. It was alleged that all representations in both categories were false and/or misleading or fraudulent because: [39] 1. "Mark Hughes" was really Foster, who was a fraudster who had been charged, convicted, or served sentences in respect of fraud related matters in Australia, the United Kingdom, the United States of America, and Vanuatu; 2. STC did not have trading offices but operated from a residence in Byron Bay; 3. Prof Snyder was not a scientific director of STC; 4. STC did not have a team of analysts or traders with professional qualifications in the disciplines alleged; and 5. STC was not a legitimate sports betting or trading business but a fraudulent scheme in which loans from Mr Mackinnon and Group Members were: 1. transferred to the benefit of entities controlled by Foster, his niece, and his associates; and 2. used as part of a Ponzi scheme under which Mr Mackinnon and the Group Members were being paid purported profits on fictitious sports betting trades. 1. Causes of actions were pleaded for breach of contract, misleading or deceptive conduct, deceit, conversion, and conspiracy. [40] Judgment No 3 of 6 February 2018 1. The hearing commenced on 5 February 2018, and on 6 February 2018, after cross‐examination of Mr Mackinnon had commenced, an application was made for leave to further amend the Commercial List Statement ("CLS"), essentially to clarify that the plaintiffs' case was that certain representations had been made by persons including Ms Johnson. In a judgment delivered on 6 February 2018, [41] the primary judge granted leave to the plaintiff to file the FACLS, which had the effect of: 1. reflecting that STC was not a limited partnership, as had originally been thought; 2. clarifying that references to the partnership as a defendant were to be understood as references to the parties (including Ms Johnson) alleged to be members of the partnership; 3. clarifying that the "persons employed or instructed" by Foster alleged to have made the representations in [20] of the CLS included Ms Johnson; and 4. adding to [21] of the CLS an alleged representation "by silence or omission, that Peter Clarence Foster … was not involved in Sports Trading Club" (the Foster Representation). 1. The grant of leave to amend by adding the Foster Representation is impugned in the present appeal. Judgment No 4 of 12 February 2018 1. On 12 February 2018, the primary judge refused to recuse himself on the basis of alleged apprehended bias. [42] Judgment of 22 February 2018 1. On 22 February 2018, his Honour granted an adjournment of the hearing, while Ms Johnson was under cross-examination, on the basis of hardship to Ms Johnson if cross-examination were to continue, based on medical evidence as to mental health distress arising from the trial. [43] Judgment No 7 of 19 February 2019 1. On 19 February 2019, the primary judge delivered the No 7 Judgment, in which his Honour concluded that Ms Johnson had engaged in misleading and deceptive conduct. His Honour found that Ms Johnson: knew that Foster's involvement in the Sports Trading Club (STC) could not be publicly revealed; knew that Foster was using the alias "Mark Hughes"; knew of the "Proposal" and that it contained false statements; knew by mid-2013 that Foster was in control of STC; strongly suspected by September 2013 that investors' funds were being misappropriated; and engaged in misleading or deceptive conduct by remaining silent despite these suspicions. [44] 2. His Honour relevantly found that: 1. by silence or omission, Ms Johnson represented to Associate Members of STC that Foster was not involved in STC; [45] 2. STC was a fraudulent scheme and, in substance, each of the Proposal Representations was false; [46] and 3. Ms Johnson knew of the Proposal, must have known that the Proposal was made available to potential investors, and, as a partner in STC, must be taken to have represented to investors that its contents were true. [47] Judgment No 8 of 28 November 2019 1. Having heard further argument on issues not resolved by the No 7 Judgment, his Honour delivered a judgment on 28 November 2019 addressing questions of liability arising from the findings that Ms Johnson had engaged in misleading and deceptive conduct, including causation and apportionment. [48] Misleading and deceptive conduct 1. His Honour summarised the findings in the No 7 Judgment that Ms Johnson had engaged in misleading and deceptive conduct by making misrepresentations on the instructions of Foster: [49] 1. on 14 March 2013 and 30 May 2013, to Mr de Klerk, that a person whose real name was "Mark Hughes" was the National Sales Manager of STC; 2. on 14 March 2013, to Mr de Klerk, that monies invested by Associate Members to STC were secured; 3. on 14 March 2013, to Mr de Klerk, that STC had assets of $10 million; 4. on 14 March 2013 and 30 May 2013, to Mr de Klerk, that Foster was not involved in STC; 5. from at least 30 September 2013, to all existing Associate Members of and all prospective investors in STC, that Foster was not involved in STC; and 6. from 14 March 2013, to all existing Associate Members of and all prospective investors in STC, that the statements made in the Proposal were true. 1. However, only the representation, by silence, that Foster was not involved in STC, and the representation that the statements made in the Proposal were true, were found to have been made or conveyed to, or relied on by, Mr Mackinnon, and only those representations ultimately resulted in Ms Johnson incurring liability to the Mr Mackinnon. Thus, although it was found that Ms Johnson had made the misrepresentations referred to in (1), (2), (3) and (4) above to Mr de Klerk, they can, for present purposes, be set to one side. 2. His Honour found that the statements in the Proposal were intended, and were likely, to induce investment in STC, and that the Proposal Representations did in fact induce Mr Mackinnon to invest in STC. [50] As to the Foster Representation, His Honour found that there were many points at which Ms Johnson could have disclosed Foster's involvement, and that it was "more likely than not" that if Ms Johnson had taken such steps, Foster's involvement would have become publicly known and thus known to Mr Mackinnon before he made his investment. [51] Deceit 1. His Honour found that deceit was established against Ms Johnson to the extent that it was held that she had made the Foster Representation knowing it to be false, but being of the view that it did not further Mr Mackinnon's case in respect of the relief to which he was entitled, it was not considered further. [52] Apportionment 1. His Honour refused to permit Ms Johnson to propound a defence of apportionment, for the reasons that the issue had been raised for the first time on 20 September 2019, [53] and had not been pleaded. [54] Judgment No 9 of 13 December 2019 1. On 13 December 2019, short minutes having been brought in, his Honour gave judgment for Mr Mackinnon against Ms Johnson and Foster for $200,000, with interest of $71,188.36, and costs. [55] THE APPEAL 1. The grounds of appeal are contained in paragraphs 5 to 31 of the Notice of Appeal. Some of the grounds of appeal were not addressed at all in written or oral submissions, and are not further considered. Those which were relied on were summarised in Ms Johnson's written submissions as follows: "a. His Honour erred in the exercise of his discretion not to allow the Appellant to either amend her Commercial List Response or to make submissions on the issue of apportionment and by failing to take proper account of matters such as the significant prejudice and injustice to the Appellant in that the Respondent's successful claim is statutorily apportionable; the Respondent's failure to clarify his claim until late in proceedings and where his only success was on the pleading added on Day 2 of the hearing (over 2 years after the case started) related to a small part of his claim that is clearly apportionable; and the balance of prejudice to the parties and the Court: Grounds 9 and 30. b. His Honour erred in the exercise of his discretion in allowing the amendment of the FACLS and interpreting the FACLS in manner that was unfair and prejudicial to the Appellant such that the claim was able to proceed, instead of being struck out: Grounds 5 ‐ 8. c. His Honour erred in finding that the Appellant contravened the Australian Consumer Law (ACL) and was liable to the Respondent by reason of failing to say publicly that Peter Foster was "involved" in the Partnership: Grounds 12, 15, 16, 18, 20 – 28. d. His Honour erred in not accounting for the prior recoveries made by the Respondent and other group claimants in giving judgment in the amount of $200,000 in favour of the Respondent: Ground 29." 1. As has been noted, not all the contravening conduct found by his Honour resulted in Ms Johnson incurring liability, because not all of it was causative of Mr Mackinnon's decision to invest. As Ms Johnson can be liable only for such conduct as caused loss, it is convenient to address first the grounds of appeal that relate to causation, as that course will enable attention to be focussed on such conduct as was causative of loss. 2. Although his Honour found that Ms Johnson knew of the falsity of at least some of the representations for which she was responsible, this finding was not necessary to establish contravening conduct for the purposes of ACL, s 18: it is well-established that knowledge that conduct is misleading or deceptive is not an element of a contravention of the statutory prohibition on such conduct contained in s 18. [56] Although it is an element of accessorial liability as a "person involved" in a contravention, under ACL, s 236, [57] Ms Johnson was not sued as an accessory, but as a principal. 3. However, knowledge of the falsity of the representation is an essential element of the tort of deceit. While his Honour found that deceit was established to the extent that it was found that Ms Johnson knew of the falsity of at least some of the representations for which she was responsible, liability for deceit was not further considered, as it was "accepted that such a finding does not take Mr Mackinnon's case, so far as it concerns the relief to which he is entitled, any further." [58] In circumstances where his Honour had disallowed any defence of apportionment, that was so. However, if his Honour erred in disallowing that defence, liability for deceit might be of considerable significance, as the statutory defence of apportionment is not available where the tortfeasor caused the relevant loss fraudulently. [59] 4. It is therefore convenient to consider first the appeal grounds relating to causation, and then those relating to amendment, before turning to those which impugn his Honour's findings of fact in relation to the contravening conduct, including the extent to which Ms Johnson knew that the relevant conduct was misleading or deceptive, then to the Notice of Contention by which Mr Mackinnon seeks to uphold the primary judge's conclusion on the alternative basis of deceit, and finally to the grounds which impugn his Honour's quantification of damages, and the disallowance of a defence of apportionment. Causation (Grounds 16, 27, and 28) 1. These grounds, which challenged his Honour's conclusion that Ms Johnson's contravening conduct caused Mr Mackinnon's loss, were as follows: "16. His Honour erred by finding as a fact that Mr Mackinnon relied upon a representation by silence by the appellant with respect to Mr Foster's involvement in STC in the absence of evidence of that fact (J8[105] – [110]). … 27. His Honour erred by finding as fact that Mr Mackinnon invested in STC because of the statements in the Proposal and thus 'because of the appellant's 'representations' by silence that the Proposal was true (J8[62J- [87]). 28. His Honour erred by finding as a fact that Mr Mackinnon suffered loss because of the appellant's representation by silence that Mr Foster was not involved in STC (J8[148][178])." 1. In respect of the Proposal Representations, his Honour was satisfied that the matters stated in the Proposal were in fact matters which caused Mr Mackinnon to make his investment, and were "of such a nature as would be likely to provide such inducement", [60] and thus that Mr Mackinnon invested in STC "because of" the statements in the Proposal and Ms Johnson's misleading or deceptive representation that the statements in the Proposal were true, with the consequence that Mr Mackinnon was entitled to recover his loss from Ms Johnson. [61] 2. As to the Foster Representation, his Honour found that if Ms Johnson had disclosed Foster's involvement to Mr Murray, a journalist who approached her with questions about Foster's involvement in October 2013, then STC would have collapsed almost immediately, just as it ultimately did a year later following Foster's arrest and the attendant publicity; and that had Ms Johnson taken any steps from March 2013 onwards to cause Mr Foster's involvement in STC to be disclosed, one way or the other such involvement would have become publicly known and thus likely known to Mr Mackinnon before he made his investment, so that he would not have invested and incurred loss, again with the consequence that Mr Mackinnon was entitled to recover his loss from Ms Johnson. [62] 3. The appellant submitted that it was not shown that 'but for' the representations, Mr Mackinnon would not have entered the loan agreements, and that if there was reliance, it was not reasonable reliance. It was also submitted that the primary judge's conclusion that the matters stated in the Proposal were material in the sense required by the ACL was incorrect. 4. Causation in the present context involves two elements: the first is whether the contravening conduct caused or materially contributed to the plaintiff being under a misapprehension, and the second is whether the plaintiff incurred loss because of that misapprehension. Usual causation principles, including the 'but for' test of factual causation, apply. [63] 5. In his affidavit, Mr Mackinnon deposed: "On the basis of the information in the Proposal and my telephone calls with Tom Nolen [sic] from STC ... I decided to loan monies to STC." 1. Mr Mackinnon also deposed: "On 30 October 2014, I heard news reports that Peter Foster was involved in STC. If I had known this, I would not have loaned any monies to STC." 1. His Honour noted, and rejected, a submission that this evidence should be read as meaning that Mr Mackinnon would not have invested in STC had he known that Foster was involved in STC in the manner described in the 'news reports' to which he referred: that is to say, that the phrase "if I had known this" referred not to the mere fact of Foster's involvement in STC, but to his involvement in the manner in which it was described in the news reports. His Honour considered that the natural reading of Mr Mackinnon's evidence was that had he known that Foster "was involved in STC" – in any way – he would not have invested. 2. Neither of Mr Mackinnon's statements of reliance, set out above, [64] was challenged in cross-examination. Moreover, it is logical and reasonable that a prospective investor would be influenced by the contents of the Proposal, and that knowledge of the involvement of Foster, given his reputation, would be a powerful deterrent to any investor. Indeed, it was for that very reason that, as discussed later, his involvement could not be and was not disclosed and he used an alias. His Honour was in those circumstances entitled, if not bound, to accept Mr Mackinnon's evidence of reliance. 3. His Honour did not overlook that what was represented in the Proposal was "too good to be true", and acknowledged that Mr Mackinnon may have been somewhat gullible, but that is not inconsistent with materiality or reliance. The gullible are not disentitled to protection against misleading and deceptive conduct; indeed, it is for the protection of those who believe and trust what they hear and see that the cause of action exists. After all, the statements in the Proposal were designed and intended to have the very result that their readers would be attracted to advance money to STC. 4. No error is apparent in his Honour's conclusion that Mr Mackinnon's decision to invest was a result of the Proposal Representations, and of the Foster Representation. These grounds of appeal fail. Amendment and pleadings (Grounds 5, 6, 7, and 8) Amendment (Grounds 5 and 6) 1. Paragraphs 5 and 6 of the grounds of appeal concern the amendment, on the second day of the trial, of [20] of Mr Mackinnon's Amended Commercial List Statement ("ACLS"), and are as follows: "5. His Honour erred by failing to accord the appellant procedural fairness and/or natural justice by allowing the amendment of paragraph 20 of the respondent's further amended commercial list statement on the second day of hearing (J3[22] – [26], J7[742] – [748]). 6. The appellant was taken by surprise at trial by the allowance of the amendment to paragraph 20 of the respondent's further amended commercial list statement on the second day of hearing (J3[22] – [26], J7[742] – [748])." 1. When the trial commenced, the extant pleading was the ACLS which named as the first defendant "The partnership of Anne Patricia Larter, Alan Jones, Miraleste Pty Limited trading as USG Partner and Leigh Johnson, trading as 'STC Sports Trading Club'". After identifying the plaintiff and the capacity in which he sued (at [1]-[2]), it continued: "The Defendants STC Sports Trading Club (Australia) 3. At all material times, the first defendant, a partnership of Anne Patricia Larter, Alan Jones, Miraleste Pty Ltd (trading as USG Partner) and, until 21 January 2014, Leigh Johnson, trading as "STC Sports Trading Club" (ABN 92 914 683 823): a. was, and is a limited partnership as defined by the Partnership Act 1892 (NSW) and liable to be sued in its own name and style; and b. held itself out as having a licence from the sixth defendant, Sports Trading Club Limited (Hong Kong) to run a sports betting business in Australia referred to as the "Sports Trading Club". 4. At all material times, the second defendant, Anne Patricia Larter was, and is, a partner in the first defendant. 5. The third defendant, Alan Jones was, and is, a partner in the first defendant. 6. The fourth defendant, Miraleste Pty Ltd, trading as USG Partner (ABN 74 603 231 376) was, and is: a. a corporation registered in accordance with the Corporations Act 2001 (Cth); and b. a partner in the first defendant. 7. Until 21 January 2014, the fifth defendant, Leigh Johnson, was a partner in the first defendant." 1. The pleading then identified the various other defendants (at [8]-[16]), and then the Group Members and common questions for the purposes of the representative proceedings (at [17]-[19]). Then, the representations sued on were pleaded, as follows: "Representations 20. Between about February 2013 and about October 2014 the following representations were made to the plaintiff and or the group members by the twelfth defendant or persons employed or instructed by the twelfth defendant: a. The Sports Trading Club was a legitimate sports betting business capable of generating significant profits on traded sports bets; b. The plaintiff and the group members could invest in the business by making loans of between A$50,000 and A$250,000 to the Sports Trading Club in exchange for which the Sports Trading Club would pay 500/0 of any profits earned on sports betting trades up to the amount loaned; c. Mark Hughes was the National Sales Manager of the Sports Trading Club; d. Tom Nolan was the National Sales Assistant of the Sports Trading Club; e. The loans by the plaintiff and the members would be guaranteed and repayable at the end of a nominated loan period; f. The first defendant had assets of A$10m; g. The Sports Trading Club had seven traders in its registered Sydney head office and had trading offices in London and Hong Kong; h. The traders working for the Sports Trading Club are the best paid in the business. Their junior trader is on $250,000 a year and their senior traders are on $450,000 a year; i. The Sports Trading Club was audited by KPMG; and j. If members wished to invest in the Sports Trading Club they needed to act quickly as the offer was about to close. Particulars Further particulars of the representations will be provided following service of evidence in the proceedings. 21. Between about February 2013 and about October 2014 the first to the fifth defendants and the twelfth defendant made the following further representations to the plaintiff and group members in a document entitled "Sports Trading Club Associate Member Proposal": a. The Sports Trading Club included the first and the sixth defendants. b. The Sports Trading Club offered Members an alternative to the stock and property markets and typically traditional investment channels. c. The sports trading market is literally recession proof and offers unique tax free returns that cannot be replicated in any of the mainstream investment products currently being offered. d. The Sports Trading Club was a sophisticated operation with a trading desk in Sydney, Hong Kong and London. e. Trade decisions are made by Account Managers, under the supervision of a Senior Analyst and Chief Investment Officer. f. Each Account Manager has extensive experience in trading on sporting events, and a track record of discipline and intelligent decision making. g. The Account Managers expertly analyse and trade the betting markets. h. The Account Managers are a team of analysts with experience in sports and investment, and with professional qualifications in quantitative disciplines such as science, accounting and mathematics. i. The Sports Trading Club had created The Insight Project, a world first with the study of savants and sports trading. j. The scientific director of the Sports Trading Club is Dr. Allan Snyder who, for some 20 years, has conducted ground breaking research on savants at both the Australian National University and the University of Sydney. k. Sports Trading Club Limited has the expertise and knowledge to trade on sporting events worldwide. I. The first defendant had obtained rights from the sixth defendant, Sports Trading Club Limited (Hong Kong), to operate the Sports Trading Club business in Australia. m. The first defendant was registered in New South Wales and had offices and a trading desk in Sydney. n. The first defendant had borrowed A$10m to be able to maximise the profits to be earned from sporting trades. o. The plaintiff and group members are always legally entitled to the return in full of the principal of the loan. p. A draft copy of a Loan and Profit Sharing Agreement stated that: i. The loans would be applied by the first defendant for trading on financial markets including but not limited to sports and prediction markets through The Sports Trading Club Limited at its sole discretion: Clause 2; and ii. The agreement could be terminated by mutual consent upon such terms as the parties may agree, allowing for the early repayment of the principal amount: Clause 5. Particulars The plaintiff refers to document entitled "Sports Trading Club Associate Member Proposal"." 1. It was then pleaded that the plaintiff and group members were induced by those representations to enter into agreements with and pay money to the first defendant (at [22]), and that the representations were false and or misleading or fraudulent (at [23]). After pleading causes of action for breach of contract (at [24]-[30]) and restitution (at [31]), the pleading turned to misleading and deceptive conduct, as follows: "Misleading and deceptive conduct 32. In the alternative, the Representations by the first and the twelfth defendants were made in trade and commerce within the meaning of that term in section 18 of the Australian Consumer Law (ACL). 33. By reason of the facts and matters referred to in paragraph 20 to 23 above, the first and the twelfth defendant, in making the Representations engaged in conduct that was misleading and deceptive in contravention of section 18 of the ACL (and to the extent that Representations were as to future matters, the plaintiff relies on section 4 of the ACL). 34. Induced by and in reliance on the Representations, the plaintiff and the group members acted on them to their detriment. Particulars The plaintiff refers to and repeats paragraph 22 above." 1. Finally, deceit was pleaded: "Deceit 35. In the alternative, the first and twelfth defendants: a. made the Representations with the knowledge that they were false or were reckless as to whether the Representations were false or not; b. concealed the information in paragraph 23 above with the knowledge that this would create a false impression, or had reckless disregard as to whether this would create a false impression; c. intended that the Representations and the false impression referred to in paragraph 35(b) above would be relied upon by the plaintiff and the group members. Particulars The plaintiff refers to and repeats paragraph 22 and 23 above." 1. It may be observed that this pleading: 1. purported to treat the first defendant, a partnership, as if it were a corporation with legal personality; 2. did not allege that Ms Johnson, the fifth defendant, made the representations referred to at [20], which did not propound an allegation against anyone other than the twelfth defendant, Foster; in effect, it was pleaded only that he made the relevant representations, by himself or by his (unspecified) agents; 3. did not contain any allegation of a representation by silence, or non-disclosure, that Foster was not involved in STC; 4. did allege that Ms Johnson was one of those who made the "Proposal Representations" referred to at [21]; 5. did not allege (in [33]) that Ms Johnson, the fifth defendant, as distinct from the partnership, the first defendant, had engaged in misleading and deceptive conduct; 6. did not plead deceit against Ms Johnson specifically, as distinct from the partnership; and 7. did not allege that Ms Johnson was liable as an accessory as having been "knowingly involved" in contravening conduct by Foster or anyone else. Indeed, no such pleading was ever propounded. 1. Mr Argy, the solicitor advocate who appeared for Ms Johnson at the trial, had foreshadowed that there would be a "no case" submission at the end of the plaintiff's case, apparently relying on the defects in the pleading. In response, on the second day of the trial, Mr Dixon, who appeared for Mr Mackinnon, sought to address the defects in the pleading by seeking leave to amend. For reasons given that day, [65] the primary judge granted leave to file the FACLS, which effected a number of amendments. 2. Relevantly, first, paragraph [3] describing the first defendant (the partnership) was amended, to read as follows: "3. At all material times, the first defendant, a partnership of Anne Patricia Larter, Alan Jones, Miraleste Pty Ltd (trading as USG Partner) and, until 21 January 2014, Leigh Johnson, trading as 'The Sports Trading Club Partnership' until on or about 21 January 2014 and thereafter as the 'STC Sports Trading Club'…: a. was, and is a limited partnership as defined by the Partnership Act 1892 (NSW) and liable to be sued in its own name and style; and b. held itself out as having a licence from the sixth defendant, Sports Trading Club Limited (Hong Kong) to run a sports betting business in Australia referred to as the 'Sports Trading Club'." 1. Thus, the name of the partnership was corrected, and the allegation that the partnership was a "limited" one was omitted. As amended, the pleading thus alleged that there was one partnership, that traded as "The Sports Trading Club Partnership" until 21 January 2014, when Ms Johnson resigned, and thereafter as "STC Sports Trading Club". In fact, there never was a partnership with the membership alleged, and Ms Johnson was never a member of a partnership called "STC Sports Trading Club", [66] but at least by the end of the trial, it was common ground that there were two distinct partnerships, and that Ms Johnson was never a member of the second. In granting leave to amend in this respect, his Honour did so "upon the basis that such amendment was not to be taken as permitting Mr Mackinnon to advance a cause of action against Ms Johnson beyond those already pleaded in the ACLS. In particular, the amendment is not to be taken to enable Mr Mackinnon to allege, separately to the causes of action already pleaded, that Ms Johnson is jointly and severally liable for the debts of the partnership by reason of her status as a general or unlimited partner." [67] This amendment is not challenged by the Notice of Appeal. 2. Secondly, to overcome the infelicity of nominating a partnership as first defendant, and although the inapt allegation that the partnership was "liable to be sued in its own name and style" remained, a number of amendments were made "to make clear that references to "the first defendant" in the ACLS are to include, and be read as, references to the parties (including Ms Johnson) who are alleged to have been members of the partnership from time to time." [68] As the trial judge observed, the nomination of a partnership as a defendant was inapt, as a partnership is not a legal person. [69] Thus, the following allegation was inserted as [7A] (omitting an irrelevant reference): "References in these Contentions to the first defendant include inter alios the second defendant [Ms Larter] … and (until 21 January 2014) the fifth defendant [Ms Johnson]." In addition, the phrase "including inter alios the second, third and fifth defendants" was inserted after the references to the first defendant in [19A], [20], [35], and [37]. In allowing these amendments, his Honour said: [70] "The conclusion to which I came was that all of the defendants, and Ms Johnson in particular, must be taken to have understood that the reference in the Amended Commercial List Statement to "the first defendant" was intended to be a reference to the persons named in the Amended Commercial List Statement as being members of that partnership. For that reason, I allowed the amendments directed to this issue." 1. As his Honour observed, [71] this was a somewhat inelegant way of dealing with the incorrect nomination of a partnership as a party, but made it clear enough that the pleadings were to be read as if references to "the first defendant" were to be read as referring to Ms Larter and Ms Johnson, as members of STC. 2. This amendment also is not challenged by the Notice of Appeal. 3. Thirdly, amendments were made to [20], as indicated by underlining below: "Representations 20. Between about February 2013 and about October 2014 the following representations were made to the plaintiff and or the group members by the twelfth defendant or persons employed or instructed by the twelfth defendant including inter alios the second, third and fifth defendants: a. The Sports Trading Club was a legitimate sports betting business capable of generating significant profits on traded sports bets; b. The plaintiff and the group members could invest in the business by making loans of between A$50,000 and A$250,000 to the Sports Trading Club in exchange for which the Sports Trading Club would pay 500/0 of any profits earned on sports betting trades up to the amount loaned; c. Mark Hughes was the National Sales Manager of the Sports Trading Club; c(i) By silence or omission, that Peter Clarence Foster, the twelfth defendant, was not involved in the Sports Trading Club. d. Tom Nolan was the National Sales Assistant of the Sports Trading Club; e. The loans by the plaintiff and the members would be guaranteed and repayable at the end of a nominated loan period; f. The first defendant had assets of A$1 Om; g. The Sports Trading Club had seven traders in its registered Sydney head office and had trading offices in London and Hong Kong; h. The traders working for the Sports Trading Club are the best paid in the business. Their junior trader is on $250,000 a year and their senior traders are on $450,000 a year; i. The Sports Trading Club was audited by KPMG; and j. If members wished to invest in the Sports Trading Club they needed to act quickly as the offer was about to close. Particulars Further particulars of the representations will be provided following service of evidence in the proceedings." 1. As to the insertion of the words "including inter alios the second, third and fifth defendants", his Honour observed that in a request for particulars dated 4 March 2016, Ms Johnson had sought particulars of the representations alleged in [20], and evidently appreciated that the allegations contained in that paragraph may have been intended to be directed to her, and continued: [72] "[20] Whether or not that is so, the response that Ms Johnson received from the solicitors acting for Mr Mackinnon's predecessor as representative plaintiff (who also act for Mr Mackinnon) on 19 May 2016 made quite clear that this was so. [21] In those circumstances, I was satisfied that Ms Johnson had long understood the allegations in par 20 of the Amended Commercial List Statement were directed to her, amongst other people." 1. As to the insertion of the new representation by silence, his Honour said): [73] "[22] Finally, Mr and Mrs Mackinnon sought to add as one of the representations in par 20 a representation by Mr Foster and by "persons employed or instructed" by him (including Ms Johnson) was: "By silence of omission, that Peter Clarence Foster ... was not involved in Sports Trading Club". [23] Currently there is an allegation in par 20 that "Mark Hughes" was the National Sales Manager of the Sports Trading Club. [24] It is Mr Mackinnon's case that "Mark Hughes" is an alias adopted by Mr Foster for the purpose of the fraudulent scheme he is alleged to have masterminded. [25] The conclusion I came to was that the further proposed representation is the corollary of that existing representation, and should be allowed." 1. Thus it first became part of the pleaded case that Ms Johnson had, by silence, misrepresented that Foster was not involved with STC (or, alternatively put, that she did not disclose that he was associated with STC). As it transpired, this allegation, on which Mr Mackinnon ultimately succeeded, was fundamental to its case. I take his Honour's reference to the "corollary" as indicating that his Honour thought that the issue was already, in substance, in play. For myself, I would think that this amendment, introducing for the first time an allegation of misrepresentation by silence or omission, was more than a mere corollary of the alleged misrepresentation that "Mark Hughes" was an alias adopted by Foster for the purpose of his scheme, and that it potentially opened up new issues. In particular, in a case of non-disclosure, questions typically arise as to the context, and as to the occasion which called for disclosure, which do not arise in the same way on an express misrepresentation case. 2. Moreover, the effect of the amendments was to clarify that it was alleged that Ms Johnson (now referred to in [33] via the amended [7A]) had engaged in misleading and deceptive conduct, by making the representations pleaded in [20] (in which she was now specifically mentioned) as well as [21] (in which she had always been mentioned); and that deceit was pleaded against her in [35] (in which she was now specifically mentioned). 3. These amendments were therefore no minor matter. The limitation imposed by his Honour, that the amendment omitting reference to a "limited" partnership did not permit Mr Mackinnon to allege, separately to the causes of action already pleaded, that Ms Johnson was jointly and severally liable for the debts of the partnership by reason of her status as a general or unlimited partner, did not significantly mitigate their impact, because the view was taken that causes of action for misleading and deceptive conduct and deceit were already pleaded against her as a partner in STC. 4. It was the amendments to [20] that were challenged by the Notice of Appeal. Ms Johnson submitted that in granting leave to amend, the primary judge did not have regard to, or address at all, the dictates of (NSW) Civil Procedure Act 2005 ("CPA"), s 58, and Aon Risk Services Australia Ltd v Australian National University, [74] and the relevant considerations referred to in them, and in particular, that no explanation had been offered for the delay in proposing the amendments; that the proposed amendments were bad in form, because they did not set out particulars of the Foster Representation or particulars of why Ms Johnson ought to be liable for it; and that his Honour failed to take into account the prejudice that would be occasioned by the insertion of an additional (unparticularised) claim (the Foster Representation) on the second day of the hearing, and sought no submissions on the issue. 5. I do not accept that his Honour failed to have regard to s 58 and the factors referred to in it (in s 58(2)). Reference was made, in the course of argument on the application for leave to amend, to s 58: at the conclusion of his submissions, Mr Dixon said: [75] "There are matters that your Honour would need to consider under s 58 of the Civil Procedure Act when looking at the question of amendment. HIS HONOUR: Yes. DIXON: It's generally the dictates of justice, that is the rubric through which your Honour's discretion is conditioned and there are a number of subparagraphs that your Honour can take into account. Paragraph-- HIS HONOUR: Yes - I think I'll be assisted to hear from Mr Argy." 1. The applicability of s 58 and the factors referred to in it, which universally provide the backdrop against which judges implicitly consider such applications, is sufficiently notorious that it should not be assumed, from the mere absence of express reference to it in the primary judge's reasons, that it was ignored by his Honour. On an application for leave to amend, a judge is not generally expected to give expansive reasons. In particular, it is not necessary to recite seriatim all the relevant factors to which consideration is given. To the extent that reasons are required at all, it will usually suffice that they identify the key or determinative considerations. In particular, it will usually not be necessary to refer to considerations that were not agitated by the unsuccessful party. 2. In submitting that his Honour failed to have regard to prejudice that would be occasioned by allowing the amendments, the appellant identified as relevant prejudice that allowing the amendments would deprive her of the opportunity to take advantage of the deficiencies in the pleading by making a "no case" submission without going into evidence; would require her to reshape her case, to seek particulars concerning the Foster Representation, and to adduce further evidence; and would result in an unfair open‐ended examination of her conduct without reference to any proper pleading or particulars. 3. Whether an amendment will occasion unfair prejudice to the other party will usually be a key question on a late application for leave to amend. The loss of a forensic opportunity to make a "no case" submission based on defects in the pleadings will usually carry little weight in the balance of prejudice. On the other hand, it is quite possible that to allow the amendments which were permitted in this case – having the effect both of introducing for the first time an alleged misrepresentation by silence, and articulating expressly a case that she had engaged in misleading and deceptive conduct – might have required Ms Johnson to reshape her case and potentially call additional evidence. However, I am unpersuaded that Ms Johnson was deprived of a fair and reasonable opportunity to meet the case against her. First, no such objections were taken at the time. Secondly, the appellant has not shown that the amendments had this effect. 4. After the application for leave to amend had been presented by the plaintiff's counsel, Mr Argy was offered and accepted an adjournment to consider the position. He was then afforded an opportunity to make submissions, and he did so, addressing a number of issues; but he did not claim that he or his client would be unfairly prejudiced by the addition of the Foster Representation. Having afforded him a full opportunity to be heard, to the extent he wished, in opposition to the amendments, it was not necessary for his Honour expressly to invite submissions on the question of prejudice, which had not been raised. Indeed, his Honour would have been entitled to observe that Mr Argy did not submit that unfair prejudice would be occasioned to his client by that, or any other, of the amendments. Further, after the primary judge had indicated that he proposed to allow the amendments, Mr Argy did not seek an adjournment, but instead said "I don't want to add because at the end of the day I think we want to get on with it, and I think we can meet the amended case subject to one more point" [76] (that point was that the extant response would stand as a response to the amended pleading). 5. The complaint that the amendments were "bad in form" because they did not set out particulars of the Foster Representation or why Ms Johnson ought to be liable for it is without substance. The pleading, as amended, explicitly stated that the alleged representation was made by silence. From its context (in [20]), it is apparent that it was alleged to have been made concurrently with the express representations referred to in [20] of the pleading, by omission. That plainly sufficed to assert the relevant material facts. The basis of Ms Johnson's alleged liability was provided by the assertion in the chapeau of [20], as amended, that she was one of those by whom the pleaded representations were made, and by the allegation at [33], as amended, to the effect that STC, in which she was a partner, had thereby engaged in misleading and deceptive conduct. It may be that further particulars could have been sought and provided, but they were not. No objection as to the insufficiency of the pleading was raised at the time, in opposition to the amendments. Ms Johnson has not identified what, if any, further particulars were required in order to enable her to meet the case. 6. From the outset, [21] pleaded the Proposal Representations specifically against Ms Johnson. There is force in his Honour's observation that Ms Johnson's 4 March 2016 request for particulars, including particulars of the representations alleged in [20], was indicative of her appreciating that the allegation in [20] may have been intended to be directed to her; and that the 19 May 2016 response to that request made quite clear that it was so directed; with the consequence that Ms Johnson had long understood that the allegations in [20] were directed to her, amongst others. [77] The relevant request for particulars was as follows: "10. If the respective representations made (as asserted at paragraphs 20. and 21. of the PLAINTIFF'S CONTENTIONS) were oral, in writing, partly oral and partly in writing, or otherwise. 11. What was said and by whom, if it is asserted that any of the respective representations made (as asserted at paragraphs 20. and 21. of the PLAINTIFF'S CONTENTIONS) were made or partly made orally. 12. All the facts, matters and circumstances upon which the plaintiff relies to make these alleged assertions. 13. What was in writing, if it is asserted that any of the respective representations made (as asserted at paragraphs 20. and 21. of the PLAINTIFF'S CONTENTIONS) were made or partly made in writing. 14. What was otherwise, if it is asserted that any of the respective representations made (as asserted at paragraphs 20. and 21. of the PLAINTIFF'S CONTENTIONS) were made otherwise than orally or in writing." 1. There was no proper basis for Ms Johnson as fifth defendant to seek those particulars unless she believed that the representations pleaded in [20] and [21] might be relied on to establish that she was liable to the plaintiff. Moreover, the relevant response in the particulars provided on 19 May 2016 explicitly identified Ms Johnson as one who was alleged to have made the representations pleaded in [20]: "10. The representations in paragraph 20 of the Commercial List Statement were oral. They were made by various of the second defendant (Larter), the fifth defendant (Johnson), the twelfth defendant (Foster) and Peter Thomas Nolan. They were made at different times to the plaintiff and each plaintiff group member shortly prior to the date on which each of them executed the Loan and Profit Sharing Agreement. The date of each such Agreement is found in the third column of Annexure A to the Commercial List Statement. 11. The representations in paragraph 21 of the Commercial List Statement were in writing and are found inter alia in the document headed STC Sports Trading Club Associate Member Proposal and the document headed Loan & Profit Sharing Agreement as follows: …" 1. In any event, at the latest from the time the amendments were made, it was transparently clear that Ms Johnson was being sued personally in respect of misrepresentations allegedly made by STC when she was a partner. 2. I am unable to accept Ms Johnson's submission that as a result of the amendments, the hearing developed into "a roving inquiry" or an "unfair open-ended examination of Ms Johnson's conduct without reference to any proper pleading or particulars." The amendments clarified the capacity in which she was sued, and added one specific alleged misrepresentation (the Foster Representation). That did not open up a "roving inquiry" into her conduct. If her cross-examination was wide-ranging, that was not a result of the amendments. 3. It follows that I am unpersuaded that the primary judge erred in permitting the amendment, on the second day of the trial, of [20] of Mr Mackinnon's ACLS. Grounds 5 and 6 fail. The pleading of falsity (Grounds 7 and 8) 1. Paragraphs 7 and 8 of the grounds of appeal concern the manner in which the trial judge construed [23] of Mr Mackinnon's FACLS, and are as follows: "7. His Honour erred by failing to accord the appellant procedural fairness and/or natural justice by applying an improper, unfair and prejudicial construction of the respondents' Further Amended Commercial List Statement (J8[23]). 8. The appellant was taken by surprise at trial when his Honour applied an improper, unfair and prejudicial construction of the respondents' Further Amended Commercial List Statement (J8[23])." 1. The relevant portion of the No 8 Judgment is as follows: [78] "[20] During argument on 20 September 2019, the question arose as to whether, on the proper construction of the pleading, par 23 amounted to an allegation that each of the statements made in the Proposal, as set out at par 21 of the List Statement and at J801, was false. [21] Against the possibility that that allegation was not clearly made by par 23 of the List Statement, Mr Dixon sought leave to amend the chapeau to that paragraph to add "inter alia" so that it read: "The Representations were false and or misleading or fraudulent inter alia in that:". [22] Mr Argy opposed that amendment and submitted that had he understood that the matters specified in sub-pars 23(a)-(f) were not a complete statement of the respects in which the Representations were said to be misleading, he would have conducted the case differently. [23] On reflection, my conclusion is that, on its proper construction, the effect of par 23 in its existing form is to allege that all of the Representations alleged in the List Statement were false, notwithstanding the fact par 23 does not list each of the Representations earlier alleged. In my opinion that is made clear by par 23(e) which alleges, as a matter of generality, but with sufficient clarity that there was no "legitimate sports betting or trading business" but rather a "fraudulent scheme" of the kind described. That is, in effect, what I found at J802-J803. [24] Accordingly, my conclusion is that the List Statement in its present form alleges that each of the pleaded representations arising from the Proposal was false. Thus it is not necessary that I grant Mr Mackinnon leave to amend." 1. Thus his Honour concluded that the effect of [23] of the FACLS was to plead that each of the representations pleaded in [20] and [21] was false, notwithstanding that the subparagraphs of [23] do not precisely correspond with each of the pleaded representations. 2. Paragraphs [20] and [21] of the FACLS have been set out above. [79] In [22], the representations referred to in [20] and [21] together were defined as "the Representations". Paragraph [23] was as follows: "23. The Representations were false and or misleading or fraudulent in that: a. The person describing himself as 'Mark Hughes' to the plaintiff and the group members was, in fact, the twelfth defendant, Peter Foster, a fraudster who had been charged, convicted, or served sentences in respect of fraud related matters in Australia, the United Kingdom, the United States of America, and Vanuatu; b. The person describing himself as 'Tom Nolan', the National Sales Assistant of the Sports Trading Club was, in fact, Peter Thomas Nolan; c. The first and the sixth defendants did not have trading offices in Sydney, Hong Kong or London but were operated at a residence at 14 Magnolia Place, Ewingsdale, Byron Bay, New South Wales; d. Dr Allan Snyder was not the scientific director of the Sports Trading Club and neither the first nor the sixth defendant had a team of analysts or traders with professional qualifications in quantitative disciplines such as science, accounting and mathematics; e. The first and sixth defendant were not operating a legitimate sports betting or trading business but a fraudulent scheme in which the loans from the plaintiff and the group members were: i. transferred off-shore to and for the benefit of the sixth to the tenth defendants, which were controlled by the eleventh and twelfth defendants or associates of them; ii. transferred to and for the benefit of the eleventh and twelfth defendants; and or iii. used as part of a 'ponzi' scheme in which the plaintiff and the group members were paid as purported profits on fictitious sports betting trades. Particulars Further particulars to be provided following receipt of documents the subject of Norwich Pharmacal orders, discovery and forensic expert reports. f. The first defendant had no intention of repaying the loans by the plaintiff and the group members and has failed to repay them notwithstanding an agreement to do so. Particulars The plaintiff refers to and repeats paragraphs 24 and 28 to 30 below." 1. I agree with his Honour's conclusion that the effect of [23] was to plead that each of the representations pleaded in [20] and [21] was false. The opening words – "The Representations were false … in that" – quite plainly refer to all the Representations as defined, being all the representations referred to in [21] and [22]. In essence, [23] propounds a matrix of facts – including, as his Honour pointed out, [23(e)] which alleges that there was no "legitimate sports betting or trading business" but rather a "fraudulent scheme" – which is said to render false each of the pleaded representations. 2. The appellant also complained that the primary judge found that Ms Johnson contravened the ACL in circumstances where that allegation was only pleaded against the first defendant and Foster, asserting that [32] and [33] plead that "… the representations by the first and twelfth Defendants …" were misleading and deceptive, and that the first defendant was a partnership which did not come into existence until after Ms Johnson (the fifth defendant) had resigned from the entity of which she had been a partner. However, this overlooks that: 1. the amendment that had inserted [7A], to the effect that references to the first defendant include inter alios and until 21 January 2014 the fifth defendant; and 2. the ultimately undisputed fact that Ms Johnson was a partner with Ms Larter in STC until 21 January 2014. 1. Grounds 7 and 8 therefore fail. The misrepresentations 1. Ms Johnson challenges the primary judge's findings that she made the Proposal Representations and the Foster Representation, and knew them to be false (or, in the case of the Proposal Representations, at least ought to have known them to be false). 2. These are challenges to findings of fact. Many of the appellant's submissions relied upon evidence given by Ms Johnson, as if that evidence ought to have been accepted by the primary judge. His Honour formed an adverse view of Ms Johnson's credibility and reliability as a witness: [80] "Credit of Ms Johnson [719] On the other hand, I found Ms Johnson to be an unreliable witness. [720] She seemed to be unable to face up to the catastrophic situation in which she found herself and equally unable to accept the significance of her actions and inaction while at STC. [721] I found it impossible to tell what Ms Johnson holds to be true. She gave inconsistent evidence. She was prepared to assert the improbable and to deny the obvious. [722] There are many examples." 1. After referring to numerous examples, his Honour concluded: [81] "Overall, I cannot accept Ms Johnson as a witness of truth. She exhibited a tendency to eschew responsibility for the actions that her own correspondence showed she had engaged in, and to be unable to face up to the consequences of the manner in which she conducted herself while a partner in STC. In my opinion she was prepared to assert, on her oath, whatever she thought was necessary to repel the express or implicit burdens, as she perceived them, of questions put to her in cross-examination or of other difficulties she perceived to be facing her." 1. The No 7 Judgment is replete with references to evidence of Ms Johnson which was inconsistent with previous statements, to answers which were non-committal or less than responsive to the question, to assertions of absence of recollection, and to evidence which was implausible; only a few of these are captured in the summaries of and extracts from her evidence contained below. Although there were challenges to particular findings of fact, there was no challenge to his Honour's rejection of Ms Johnson as a witness of truth, nor realistically could there have been. Where her evidence has been disbelieved by the primary judge, it cannot of itself provide a basis for overturning a finding of fact. 2. The burden facing the appellant in seeking to overturn findings of fact based in substantial part on the evaluation of the credibility of witnesses is a heavy one. While this appeal, being one governed by (NSW) Supreme Court Act 1970, s 75A, is by way of rehearing, so that this Court has the powers and duties, including powers and duties concerning the drawing of inferences and the making of findings of fact, of the court of first instance, caution must be exercised in departing from findings of fact made by the primary judge based on impressions about the credibility and reliability of witnesses formed as a result of seeing and hearing them give their evidence. Such findings should be disturbed only if they are demonstrated to be wrong by "incontrovertible facts or uncontested testimony", or are "glaringly improbable" or "contrary to compelling inferences". [82] As the High Court explained in Lee v Lee: [83] "A court of appeal is bound to conduct a "real review" of the evidence given at first instance and of the judge's reasons for judgment to determine whether the trial judge has erred in fact or law [Fox v Percy (2003) 214 CLR 118 at 126-127 [25] per Gleeson CJ, Gummow and Kirby JJ; Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679 at 686 [43]; 331 ALR 550 at 558]. Appellate restraint with respect to interference with a trial judge's findings unless they are "glaringly improbable" or "contrary to compelling inferences" [Fox v Percy (2003) 214 CLR 118 at 128 [29] per Gleeson CJ, Gummow and Kirby JJ; Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679 at 687 [43]; 331 ALR 550 at 558-559] is as to factual findings which are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence. It includes findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts [Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392 at 434-435 [144]; Thorne v Kennedy (2017) 263 CLR 85 at 104 [42]]. Thereafter, "in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge" [Warren v Coombes (1979) 142 CLR 531 at 551 per Gibbs A-CJ, Jacobs and Murphy JJ; see also Fox v Percy (2003) 214 CLR 118 at 127 [25]]." 1. In this respect, the appellant observed that the case was one which involved allegations against a solicitor of participation in deceptive conduct, such as to attract the standard of proof described in Briginshaw v Briginshaw, [84] and that despite reference to that standard in Ms Johnson's submissions at first instance, it was not mentioned by the primary judge. In considering whether the impugned findings of fact made by his Honour should stand, I have borne in mind the Briginshaw standard. However, it is also necessary to bear in mind that, in a circumstantial case, the question of whether a state of "comfortable satisfaction" is achieved is not resolved by examining independently each one of the circumstances relied upon, but by considering the collective impact of all the circumstances, united and taken as a whole. [85] The Proposal Representations (Grounds 12 and 26) 1. Ground 12 contends that his Honour wrongly concluded that Ms Johnson knew that the Proposal contained false statements. Ground 26 contends that his Honour erred in holding that Ms Johnson must be taken to have represented to investors that the contents of the Proposal were true. 2. His Honour's reasoning on these issues is encapsulated in the following passage from the No 7 Judgment: [86] "[808] Mr Argy did not seek to justify the representations made in the Proposal. Indeed, Mr Argy conducted Ms Johnson's case upon the basis that STC was a fraudulent scheme and thus the representations in the Proposal about the scheme were also false. [809] Mr Argy's case was that although the Proposal contained numerous false and indeed absurd claims, Ms Johnson did not know this as she had never seen or read the Proposal during her time at STC. [810] Ms Johnson was adamant that she had not seen the Proposal until after the commencement of these proceedings. [811] Ms Johnson knew her name and references to her appeared on the Public STC Website. In her 10 September 2013 email Ms Johnson made specific reference to the Public STC Website (which she correctly identified as being www.sportstradingclub.com) and demanded that "my name and all references to me be removed". Ms Johnson told Mrs Mackinnon in November 2014 that she had "asked Ms Larter to take her name off the proposal". [812] Ms Johnson's email exchange with Mr Foster on 14 March 2014, and Mr Foster's further email of 29 April 2014, shows that Ms Johnson then remained concerned about being named in the Proposal. [813] In his 14 March 2014 email (referred to at [674]) Mr Foster said all references to Ms Johnson had been removed from the website and that he would forward "in the next email" a copy of the front page of the Proposal showing that her name "as well as your accountant's name" had been removed. Mr Foster's "next email" is not in evidence. [814] Mr Foster also referred to "the front page where it used to have your photo and Anne's with the headline 'Meet the Partners'". Mr Foster's email reads as if he thought Ms Johnson was familiar with the form of the Proposal. Ms Johnson simply responded "thank you". Ms Johnson expressed no surprise at Mr Foster's assertion that the Proposal had included these details. [815] These matters suggest, albeit not decisively, that Ms Johnson was familiar with the form of the Proposal. [816] The matter is however put beyond doubt by Mr de Klerk's evidence about his discussion with Ms Johnson at the Catalina restaurant on 14 March 2013 about the Proposal (see [273] to [281] above), which evidence I accept. Mr de Klerk's evidence shows that Ms Johnson's denial cannot be correct. [817] Mr de Klerk was clear that he asked Ms Johnson detailed questions about various aspects of the Proposal and that Ms Johnson was able to "clarify" the matters of concern to Mr de Klerk (see [278] above). [818] I am satisfied that Ms Johnson knew the contents of the Proposal and that she was sufficiently familiar with it to discuss it in some detail with Mr de Klerk. [819] Ms Johnson must have also known the Proposal was made available to all prospective investors in STC. As one of the partners in STC she must therefore be taken to have represented to investors that its contents were true. The contents of the Proposal were false." 1. In the No 8 Judgment, his Honour summarised his findings in respect of the Proposal Representations as follows: [87] "[62] I have found that: (1) from 14 March 2013 Ms Johnson represented to Associate Members of and prospective investors in STC that the statements in the Proposal were true (see [35(6)] above); (2) numerous statements in the Proposal were false (see [36] above); and (3) Ms Johnson thereby engaged in misleading or deceptive conduct. [63] I have found that Ms Johnson knew of the Proposal, and was sufficiently familiar with it to discuss it in some detail with Mr de Klerk (see J818). As I said at J14, Ms Johnson must have known the Proposal to contain false statements. At the very least, she was recklessly indifferent to whether the statements were true or false." 1. Thus his Honour's findings in relation to the Proposal Representations involved the following components: 1. the Proposal contained a number of false statements. This was not in dispute, either before his Honour or before this Court; 2. Ms Johnson must be taken to have represented to investors that the contents of the Proposal were true. This finding, if upheld, suffices to render Ms Johnson liable for misleading and deceptive conduct, even if the finding that she knew that the Proposal contained false statements is not upheld, because, although much attention was focussed on whether Ms Johnson knew of the contents of the Proposal, liability for misleading and deceptive conduct does not require knowledge that the relevant conduct contains or conveys a misrepresentation; [88] and 3. Ms Johnson knew that the Proposal contained false statements. Although this finding was not necessary to render Ms Johnson liable for misleading and deceptive conduct, it is necessary if she is to be held liable in deceit. Ms Johnson's knowledge of the Proposal and its contents (Ground 12) 1. In her affidavit evidence, Ms Johnson deposed that she was not involved in drawing the Proposal and was not aware of it until it was provided to her during the litigation. In the course of cross-examination, she gave this evidence (emphasis added): [89] "Q. Just let me finish the sentence. When you wrote your 10 September 13 email, the long one, to Foster and Larter, I think, and you were complaining about the use being made of your name, I think, were you then aware that your image and this biographical detail was included in the proposal? A. Your Honour, I never looked at the website but I was aware because people told me that I was on the website. So I was aware of that. I was not aware ever, until this Court case, that they used a photograph of me with Julia Gillard on that website. Somebody did say to me at some point, "I saw a photo of you and Julia Gillard on the internet," and I went, "Oh, where would that have been?" Q. I know the photograph you mean. I think Mr Dixon at the moment is asking you about the use of your photograph in the proposal, being the photograph that I think you told me you gave Ms Larter. A. Your Honour, I provided my photograph to be included in whatever material it was required to be included in when I became a part of the business right at the beginning when Anne and I decided that I would be a part of it. … Q. If you could just answer my-- A. I'm not trying to say that I was not aware that they were using me. I don't recall ever seeing it myself, but I was certainly aware that they were using me. I was a partner and then after I resigned, people were ringing me up saying, "Well, they're telling us that you're the partner." So, I knew that they were still using me and before I knew that they were using me because I was a partner. That was the deal, but I don't - I don't know how to do computer stuff. I'm really bad at it. So, just to be clear, I'm not, for one second trying to say, "Oh, I didn't know they were using my photo," I'm not saying that. I knew that they were using me, as they could have and were entitled to whilst I was a partner, but not afterwards. Q. And you knew that they were using your photo on the proposal itself while you were a partner? A. I don't know, no. I can't say that specifically, but I certainly knew that they were using me in whatever way they were using me." 1. The significance of that passage is that while Ms Johnson denies that she was aware of the existence or contents of the Proposal, she admits having provided her photograph "to be included in whatever material it was required to be included in when I became a part of the business right at the beginning when Anne and I decided that I would be a part of it", and she "was certainly aware that they were using me … because I was a partner." 2. The first matter relied on by his Honour was that Ms Johnson knew that she was mentioned on the STC website. [90] This is founded upon an email of 10 September 2013 which requested that her name and references to her be removed from the website. That email does not refer to the Proposal, and it does not, at least of itself, establish that she even knew of the Proposal (as distinct from the website), let alone of its contents. Knowledge of the website does not bespeak knowledge of the contents of the Proposal, particularly as it seems that the Proposal was not directly readable or accessible from the website. 3. Next, chronologically, were the email exchanges between Ms Johnson and Foster in March and April 2014. On 14 March 2014, Foster sent an email to Ms Johnson (from teamleader@sportstradingclub.com): [91] "Leigh all reference to you has been removed from the website. It was done weeks ago. Will send you in the next email a pdf of the front page of the proposal where [you] will see your name has been removed, as well as your accountant's name. Also the front page where it used to have your photo and Anne's with the headline 'Meet the Partners'…that has also been changed." 1. Ms Johnson replied the following day: [92] "Thank you" 1. On 29 April 2014, Foster sent a further email to Ms Johnson: [93] "Further to your text to Tom [Nolan] yesterday, let me repeat we are not currently using your name, image or likeness in any promotion. All reference to you has been removed from the proposal." 1. These communications amount to assurances by Foster to Ms Johnson that her name and image had been removed from the public STC website and the Proposal, and support an inference that such removal was in response to a request or concern expressed by her. [94] They show that, at least by March 2014, she was aware that her name and image had been used in the Proposal. However, they do not sufficiently reveal the nature of her request to permit an inference that she had knowledge in any detail of the contents of the Proposal, and even less that she had such knowledge before she resigned from the partnership on 21 January 2014. 2. Next, on 3 November 2014, shortly after Foster's arrest, and after receiving Ms Larter's email of 30 October 2014 offering investors a refund, Mr Mackinnon called Ms Johnson on her mobile telephone. She was not available, but returned the call a few hours later and spoke to Mrs Mackinnon, who gave this evidence, which was accepted by his Honour: [95] "She said she was appalled at what had gone on with STC. She seemed to be very honest with her answers and her attitude. She said she hadn't been involved with STC in any shape or form for at least 12 months, and we put it to her that her name was on the proposal when we signed it on 30 October 2013 and she was genuinely - or seemed to be genuinely very surprised. She said she had asked Ms Larter to take her name off the proposal and she would be following up." 1. When asked about this conversation, Ms Johnson said: [96] "Q. I'm asking you about a phone call that occurred on 3 November 2014, with the Mackinnons? A. I wouldn't have said proposal, I would have said I resigned, I've got nothing to do with it. Q. What I'm putting to you is, that your words were, you asked for your name to be taken off the proposal, prior to October of 2013. Do you recall saying those words? A. I don't recall having any conversation. But I might have said, you know, my name shouldn't be associated with it, my name shouldn't be on it. But I don't think I would have used "proposal". But I may have, I don't know. I mean, if someone said to me, your name was on the proposal, I don't know what the conversation is alleged to have been. Certainly my name should not have been associated the second I resigned. And I was told that it wasn't." 1. I do not think that Mrs Mackinnon's recollection, expressed in conclusionary form in indirect speech, of what Ms Johnson had told her in November 2014, provides a firm basis for a conclusion that Ms Johnson actually referred to "the Proposal" in a conversation with Ms Larter before 30 October 2013. Nor do I think Ms Johnson's faint admission that she may have used the word 'proposal' in that conversation takes the matter much further. 2. In my view, the evidence to which I have so far referred suffices to found an inference that, at least by March 2014, Ms Johnson was aware of the existence of the Proposal, and that her name and image had been used in it. It does not follow that she was aware of it before she resigned, or before Mr Mackinnon invested. Even less does it establish that she was aware of its contents, beyond that her name and image was used in it. 3. The decisive evidence, so far as his Honour was concerned, was that of Mr de Klerk, an investor, to the effect that at a luncheon meeting at Catalina restaurant in Rose Bay on 14 March 2013, he asked Ms Johnson detailed questions about various aspects of the Proposal, and that Ms Johnson was able to "clarify" the matters of concern to Mr de Klerk. Mr de Klerk's relevant evidence was as follows: [97] "Q. What was said and by whom? A. Okay. First of all it came – when she asked me, obviously I said the main reason for STC was because of our involvement in charity in South Africa, because the profits I wanted to introduce in some charity work in South Africa. She obviously had similar – she worked charity – or had a heart for charity. So after that we went straight to business, we discussed the following topics of the South African trading, or the South African inquiry of the South African tradeship. We also discussed parts of the proposal that was given to me by Mark Hughes, that actually was meant for him, but because he wasn't there I've actually asked her the relevant questions on that. HIS HONOUR Q. So you asked questions of Ms Johnson about what was said in the proposal? A. That's correct, what they meant, like, on certain aspects of the proposal. Q. Did you have a copy of the proposal there with you? A. I haven't had, but I had a couple of notes that I've made previous, you know, in the week before or whatever. That was actually meant for Mr Hughes, but because he wasn't there I felt – I mean, I have to propose to her. Q. And you asked Ms Johnson questions about the proposal? A. Yes, I did. Q. About what was in the proposal? A. Some of the stuff in the proposal, yeah. Q. She gave you answers? A. Yes, she did. Q. Did she suggest to you that she didn't know anything about the proposal? A. No, not at all. Q. Did she say to you that she had never seen the proposal? A. No, definitely not. She acted like she knew what was in the proposal but was not – it was more for Mr Hughes – for John Hughes, you know, on that specific spots, or specific questions I had. Q. Mark Hughes, you mean? A. Mark Hughes, that's correct. Q. You said John Hughes. Mark Hughes? A. Mark Hughes, sorry." 1. After setting out that evidence, his Honour proceeded: [98] "[273] The answers that Mr de Klerk gave, particularly to the questions I asked, suggested to me that Mr de Klerk was saying that he discussed the Proposal with Ms Johnson. [274] Mr Argy submitted that that was not clear, and that Mr de Klerk may have been referring to a "small p" proposal concerning the proposed South African investment. [275] However, evidence that Mr de Klerk later gave made clear that Mr de Klerk was referring to the Proposal; and that Mr Argy as the cross-examiner understood this. [276] Thus the following exchange took place: "Q. I will put to you again, Mr de Klerk, that the purpose of the Catalina lunch was the South African deal? A. Part of it, yes. Q. You had already committed your $250,000 to the Australian partnership? A. I did. Q. And there was no reason for you to have a discussion with Ms Johnson about the proposal? A. There was. Q. I think you said yesterday that you had the questions on a piece of paper? A. That's correct. I had my own notes that was taken off the proposal." [277] It is clear from this passage that, although the transcript records Mr Argy asking about the "proposal", his question was directed to the Proposal. It is also clear that Mr de Klerk's response was directed to the Proposal. [278] That was confirmed in re-examination when Mr de Klerk gave this evidence: "…I've asked [Ms Johnson] about the surety, you know who is responsible sureties, et cetera on the money part of it of what I've invested. Q. What was the question exactly if you can -- A. The question was, who, they talk about the money is secure and I wanted to know how they -- Q. When you say they talk about, what do you mean by that? A. In the actually [sic] proposal there was wording in the way of that the investment or the loan to STC is secured by the company. So my question was, I wanted to know how it was secured and she explained to me about the 20 million cost, 10 million they've - she and Larter put up and then that's why the 10 million balance would be needed from outside investors like us a limited amount of people that would have the benefit of borrowing them the money would give you 50% profit, until the end of the term the 10 million is full, then they can withdraw it any time. She gave me specific information of that and also that the surety, the 10 million that they've paid would be held as security on the 10 million they borrowed. So that was the next thing." And: "Q. … In answer to one of the questions put to you if you recall this, you said you took the notes there because you needed to get clarification on some areas of the proposal? A. Exactly, what happened was the - my main aim was to clarify that that was what in the proposal was satisfied to my questions on to legitimate the proposal. Q. Do you recall the question or questions that you asked in respect of the proposal itself? A. Yes, I was asking for the proposal was if she was - if she was not aware of the proposal but if she - I assumed that she knew everything in it, it's just like I was clarifying that the proposal was - there was no rules outside the proposal because there was some areas that I thought of. Q. Do you remember a question you asked in that respect, the words that you used? A. Unfortunately I -- Q. Did you use the word proposal for example, when you spoke? A. Yes, I did. Although I did not take the proposal out and show it, because I had the notes, because I assumed as a major partner of the she would know exactly and being the legal or the legal I would say the advisor, but partner of the company, that she would exactly know what is actually in the proposal." [279] Mr de Klerk was thus clear that he had discussed the Proposal with Ms Johnson, evidently in some detail. [280] This is significant because, as I have mentioned, Ms Johnson denied ever seeing the Proposal. [281] Mr de Klerk said that he had reasons for discussing the Proposal with Ms Johnson at the meeting. In particular, he said he wanted to discuss the Proposal to confirm "who is responsible for what" given that "nobody was present". Mr de Klerk said he felt pressure to "find a way to…go ahead" and "was trying to determine how solid this company was"; and that Ms Johnson answered his questions to his "satisfaction"." 1. The appellant submitted that it was illogical for his Honour to have found that the Proposal was discussed at the Catalina meeting, because Mr de Klerk had already committed his investment, and that the "better interpretation" of Mr de Klerk's evidence was that the discussion was "a high level discussion of the STC Scheme as it operated globally". However, Mr de Klerk had withheld $100,000 of his investment, and he said that he proceeded with it on 21 March 2013, once Ms Johnson had cleared up "a lot of grey areas in the Proposal". I do not accept this basis of the attack on his Honour's finding. 2. However, while Mr de Klerk's evidence was to the effect that he asked questions for the purpose of clarifying a number of matters which were referred to in the Proposal, he did not have the Proposal with him, though he had "a couple of notes". He could not say with specificity what questions he had asked, nor what answers Ms Johnson had given. Neither in chief nor in cross-examination did he give evidence of having asked any question which actually referred in terms to the Proposal. Only in response to a leading question in re-examination did he say that he used the word "proposal", and he still did not provide any context in which that word was used. In re-examination, he also explained that he assumed that Ms Johnson "knew everything in it": [99] "Q. Do you recall the question or questions that you asked in respect of the proposal itself? A. Yes, I was asking for the proposal was if she was - if she was not aware of the proposal but if she - I assumed that she knew everything in it, it's just like I was clarifying that the proposal was - there was no rules outside the proposal because there was some areas that I thought of." 1. The high point of his evidence in this respect was that he said that he asked Ms Johnson about how investment in STC "was secured", in response to which Ms Johnson told Mr de Klerk that she and Ms Larter had invested $10m in STC which sum would be "held as security" [100] : [101] "… I wanted to know how it was secured and she explained to me about the 20 million cost, 10 million they've - she and Larter put up and then that's why the 10 million balance would be needed from outside investors like us a limited amount of people that would have the benefit of borrowing them the money would give you 50% profit, until the end of the term the 10 million is full, then they can withdraw it any time. She gave me specific information of that and also that the surety, the 10 million that they've paid would be held as security on the 10 million they borrowed. So that was the next thing." 1. That answer attributed to Ms Johnson – of which evidence was given for the first time by Mr de Klerk in re-examination – would have been false, and is consistent with the contents of the Proposal. However, the matters referred to in Ms Johnson's answer were not necessarily the result of her having read the Proposal. 2. Thus, even accepting Mr de Klerk's evidence, it does not follow that Ms Johnson was familiar with the contents of the Proposal. It is entirely possible that Ms Johnson could have had the conversation of which Mr de Klerk gave evidence without knowledge of the Proposal or its contents. 3. Other circumstances relied upon as founding the inference that Ms Johnson was aware of the contents of the Proposal included that she provided her photo (which was reproduced in the Proposal) for the purposes of marketing; that her resume appeared in the Proposal; and that the name of her accountants appeared on the front page of the Proposal as accountants for STC. Moreover, Ms Johnson alone supplied the seed capital to commence the business, but was very vague about her due diligence, though she thought that the 'business proposal' was a good one; it was submitted that assertions that she took no steps to understand what was involved in the marketing or played no role in those matters were not believable. 4. Ms Johnson readily accepted that she had provided her photograph for whatever purposes it might be required for, and was aware that it was used in connection with marketing. The extent to which a "silent partner" undertakes inquiries into marketing may vary widely. It is not at all improbable that, believing (incorrectly) that she was a "limited partner", Ms Johnson took a limited interest in the detail of what was done by Foster in promoting STC. The only evidence that Ms Johnson was aware of the Proposal is Mr de Klerk's assertion in re-examination that he used the word "proposal", without any context. It does not follow that she knew of the existence and contents of the Proposal, and the strong credit findings adverse to Ms Johnson do not provide a basis for positively inferring that she did. 5. In circumstances where Ms Johnson adamantly denied that she knew of the Proposal or its contents, and where there was no direct evidence that she did, the primary judge's conclusion that Ms Johnson knew of the existence and contents of the Proposal was one of inference, drawn from an accumulation of circumstances. While recognising that these circumstances derive their evidentiary force from their combined operation, in my judgment, having regard to the strictures of Briginshaw, and notwithstanding that her own evidence must largely be disregarded, I do not think it was open on the evidence to be "comfortably satisfied" that Ms Johnson actually knew of the existence and contents of the Proposal, at least before early 2014. It follows that in my view the primary judge erred in holding that Ms Johnson was aware of the existence and contents of the Proposal, and that they were false, before Mr Mackinnon made his investment in STC. On that basis, I would uphold ground 12. Ms Johnson's responsibility for the Proposal (Ground 26) 1. However, that does not conclude the question of Ms Johnson's liability for the Proposal Representations. The appellant submitted that while his Honour's finding that the matters stated in the Proposal were false was undoubtedly correct, his Honour erred in attributing those representations to Ms Johnson. The evidence did not disclose who the author of the Proposal was, nor when it was created, though there is a strong inference that it was created by Foster or at least at his direction. It was submitted that the conduct of publishing and distributing the Proposal could not be attributed to Ms Johnson for the purpose of ACL, s 18, as it could not be said that she had made the Proposal Representations if she had no awareness of and made no contribution to its drafting. 2. That submission misconceives the liability of Ms Johnson as a partner. The Proposal was issued by STC, a partnership in which the partners were Ms Larter and Ms Johnson. Ms Johnson was sued, and on her own case understood that she was sued, as a partner in STC. All the partners in a firm are jointly and severally liable for misrepresentations made by any one of them in the ordinary course of the firm's business, [102] and an action for damages for deceit lies against an innocent principal for the fraud of his or her agent committed in the course of the agent's employment. [103] These principles, together, mean that all the partners in a firm are liable for the misleading and deceptive conduct, and fraudulent misrepresentations, of their agent(s) in the course of their employment, even though the partners themselves may be innocent. 3. There can be no doubt that the issuing of the Proposal was in the ordinary course of the business of STC, the essential function of which was to raise funds from investors to engage in "sports trading". This is not a case of an unauthorised act of an employee on a frolic of his or her own. Moreover, whether or not Ms Johnson actually knew that there was a document called 'Proposal', she knew that marketing material to attract investment would be prepared and issued, and she provided her photo for such purposes as might be required, including for the purposes of marketing STC. If the form and contents of the Proposal were left to others working for STC, that does not detract from Ms Johnson's responsibility as one of the principals; a partner does not escape liability by taking no further interest in the contents of the marketing material. As a partner in STC, Ms Johnson was legally responsible for material issued in the name of STC, and she must be regarded as having made the representations contained in that material, regardless of whether or not she actually knew of the contents of the Proposal. 4. Although this basis of liability was not expressly addressed on the hearing of the appeal, it is I think what the primary judge was referring to when his Honour said: [104] "Ms Johnson must have also known the Proposal was made available to all prospective investors in STC. As one of the partners in STC she must therefore be taken to have represented to investors that its contents were true. The contents of the Proposal were false." 1. Moreover, on the hearing of the appeal, counsel for the appellant was asked why knowledge of falsity was necessary, and acknowledged that it was not: [105] "BRERETON JA: No doubt you will come to this in due course but both parties, from my perspective, need to help me understand why actual knowledge, in fact, matters in this case. I thought liability under the relevant provisions did not require actual knowledge or constructive knowledge and was just based on the misleading character of the representation objectively viewed. BURNSIDE: The proposition is right but the central allegation against the appellant was introduced on the second day of the hearing because there was an amendment which made a very profound difference to the nature of the case. What I want to do, if I may, is turn to the amendment. … It was allowed on—" 1. Counsel did not return to the proposition. 2. Thus, while I would not accept that Ms Johnson was shown actually to have known the contents of the Proposal, his Honour was nonetheless right to conclude that, as one of the partners in STC, Ms Johnson made the Proposal Representations to the investors and potential investors to whom the Proposal was provided – including to Mr Mackinnon, who gave evidence that "[o]n the basis of the information in the Proposal … I decided to loan monies to STC". [106] 3. Ground 26 therefore fails. The result is that although I would not accept that Ms Johnson knew that the contents of Proposal were false, she is nevertheless liable for the Proposal Representations. The Foster Representation (Grounds 10, 11, 13, 14, 15, 17, 19, 20, 21, 22, 23, 24, and 25) 1. In the No 7 Judgment, his Honour found that by silence or omission, Ms Johnson represented that Foster was not involved in STC, [107] and that Ms Johnson did so in accordance with Foster's instructions: [108] In respect of Ms Johnson's claims that she had attempted anonymously to alert authorities about Foster's involvement, his Honour "[found] it hard to accept that Ms Johnson actually took all the steps she claims to have taken", or that she could have believed they would be of any practical assistance, [109] and considered that in any event, the "most obvious persons" who would have had a reasonable expectation of disclosure were those who were continuing to invest in STC. [110] 2. In the No 8 Judgment, his Honour summarised the relevant findings from the No 7 Judgment, as follows: [111] "[88] In finding the representation at [35(5)], I accepted Mr Mackinnon's case that on Mr Foster's instruction and "by silence or omission" Ms Johnson represented to Mr Mackinnon and Associate Members including the Group Members that Mr Foster "was not involved in STC" (as alleged at List Statement par 20(c)(i)). [89] At J765, I referred to authority to the effect that if circumstances give rise to a reasonable expectation that, if a fact existed, it would be disclosed, then the failure to disclose that fact might give rise to an inference that it did not exist; and that failure to disclose the existence of the fact in those circumstances might constitute misleading or deceptive conduct. [90] At J782-J783, I concluded that, by the end of September 2013, Associate Members of STC and prospective investors in STC were entitled reasonably to expect that if, as I found was the fact, Ms Johnson, as a partner in STC: (a) knew of matters which suggested that investment in STC was unsafe; (b) knew that funds invested in STC may be in danger and may be being improperly used; (c) was extremely concerned that STC was being improperly managed and operated; (d) was extremely concerned that STC may be being operated as a Ponzi scheme by Mr Foster and was being illegally and fraudulently managed and operated; (e) was extremely concerned that Associate Members' accounts and records may be being falsified; and (f) was extremely concerned that Associate Members' monies may be at risk and not being properly accounted for, then those matters would be disclosed to them. [91] Ms Johnson's email of 10 September 2013 shows that Ms Johnson knew of, and was concerned about, each of these matters (J509 and J513). [92] Although Ms Johnson claims she took the steps set out at J687-J705, she did not disclose the matters at [90] to Associate Members of and prospective investors in STC. [93] I found that, in those circumstances, by the end of September 2013, Ms Johnson represented to Associate Members and to prospective investors in STC that Mr Foster was not involved in STC (J791-J792)." 1. Elaborating on these findings, in the No 8 Judgment, his Honour found that by not disclosing matters of which she knew – namely that Mr Foster was involved in STC more significantly than "setting up and operating the business's website and similar technological aspects", was instead involved at a sufficiently high level to be arranging meetings with potential investors, and was so acutely aware that his involvement in STC must remain concealed that he was passing himself off to investors actual and potential investors as "Mark Hughes", when investors and prospective investors in STC were reasonably entitled to expect that she, as one of the two partners in STC, would disclose what she knew to be the true state of affairs, either to them or to a person or body that would cause them to be made aware of those matters – Ms Johnson engaged in misleading or deceptive conduct on and from 14 March 2013, being the date of her meeting with Mr de Klerk at Catalina restaurant, in the course of which she apologised for the absence of "Mark Hughes", and represented that "Mark Hughes" was the "head of trading" at STC: [112] "[96] I have made the following findings relevant to Ms Johnson's knowledge and perception of the significance of Mr Foster's role at STC: (a) at some time after Ms Johnson appeared for Mr Foster to seek an adjournment of the proceedings before Yates J (see J104) (Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 3) [2012] FCA 939), Mr Foster proposed that Ms Johnson become a limited partner in STC and "stressed that he wouldn't involve himself in any more scams" and that "the business would be a legitimate business" (J107); (b) Ms Johnson knew Mr Foster "had been accused of selling diet products that didn't work" (J109); (c) Ms Johnson knew that Mr Foster had hitherto been involved in "scams", had "got into trouble" with businesses that were not "legitimate" (J111-J112), and had been involved in "improper" activities (J114); (d) the reason Mr Foster was not to be a partner of STC was because "he was going to go to gaol" in relation to "a case in Brisbane" in which he was involved (see J116): evidently a reference to the proceedings heard by Logan J between 12 June and 5 October 2012 and which led to his Honour's decision of 27 September 2013 in Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (No 3) [2013] FCA 984, to which I referred at J545; (e) from the outset, Mr Foster "was not to be associated with the business" (J443); (f) at the outset, Mr Foster insisted he would not participate in the management or operation of STC but would only be involved in "setting up and operating the business's website and similar technological aspects" (J117); (g) at the outset, Ms Johnson was concerned about Mr Foster having any role in the business, including one confined to setting up the website (J121); (h) Ms Johnson implored Ms Larter to "[g]et rid of him" and argued that "there's got to be someone who can manage that [sic] internet side of things" and that Mr Foster was "not indispensable" (J122); (i) Ms Johnson "would not have been interested in doing something with Mr Foster having access to the money" (J118); (j) Ms Johnson attended the meeting at the Catalina restaurant with Mr de Klerk on 14 March 2013 at Mr Foster's request (J242), apologised for the absence of "Mark Hughes" (J249) and explained his role as being "head of trading" (J257) knowing that "Mark Hughes" was in fact Mr Foster (J244 and J459); (k) Ms Johnson must have been aware at this time that Mr Foster was involved at a sufficiently high level at STC to be arranging meetings with potential investors (J243); (l) Ms Johnson attended on Pikes & Verekers in April 2013 at Mr Foster's bidding and was present when Ms Larter gave Mr Tassell instructions to write to two private investigators, Mr Jenman and Mr Baker, on behalf of herself and Ms Larter denying that STC was "a mere front for the notorious conman Peter Foster" (J315-J318); (m) Ms Johnson accepted that these instructions were given to Pikes & Verekers to prevent Mr Foster's involvement in STC from being exposed (J326); (n) Ms Johnson knew by then that Mr Foster was not merely setting up the website and attending to technological matters, but was also "getting going with the postings" and "doing the postings" (J328); (o) Ms Johnson attended on Pikes & Verekers to "try to shut down the attempt to make Mr Foster's involvement public" because "he wasn't supposed to be involved in it anymore" (J320); (p) in April 2013, Mr Foster "wasn't meant to be running it" but "he seemed to just do more and more" (J322); (q) Ms Larter asked Ms Johnson to attend at Pikes & Verekers because Ms Larter stood to lose everything if Mr Foster's involvement was exposed (J321); (r) Ms Johnson accepted that it would not have been good for the STC business were Mr Foster's involvement to be revealed and such revelation would have "jeopardised the funds of anyone who had invested" (J324); (s) Ms Johnson heard Ms Larter tell Mr Tassell at Pikes & Verekers that revelation of Mr Foster's involvement in STC "will destroy my business" (J325); (t) Ms Johnson was involved in this way in the sending of the Pikes & Verekers letter because Mr Foster had asked her to keep his identity secret and because she knew that the STC business would not attract investors if Mr Foster's involvement was known (J330); (u) Mr Foster asked Ms Johnson to attend the 30 May 2013 meeting with Mr de Klerk and knew that during the Skype call Mr Foster was passing himself off to Mr de Klerk as "Mark Hughes" (J340-J377 and J451-J459); (v) immediately after the 30 May 2013 meeting, Ms Johnson told Mr de Klerk that she would speak to "Mark" about Mr de Klerk's prospective investment in the purported STC South Africa venture, knowing that "Mark" was Mr Foster (J378); (w) by July 2013, Ms Johnson understood that Mr Foster was acting as STC's "team leader" (J403); (x) on or about 16 July 2013, Ms Johnson sent an SMS to Mr McMullen speaking of "everybody going to jail" and suggesting that "we were operating Ponzi scheme" (J406); (y) on around 16 July 2013, when an Associate Member, Mr Glen Radica made an enquiry of Ms Johnson about the return of the money he had loaned STC, Ms Johnson did not reveal Mr Foster's involvement because, she said, she was "hoping it would end" and was thinking "Foster's going to be gaoled" (J427) and, she said, because she was trying to encourage Ms Larter to "step up" and that Mr Foster "would be out" (J429); (z) on 30 August 2013, Ms Johnson told Ms Larter that Mr McMullen had told her that Mr Foster had a gambling problem, was improperly using the money of Associate Members to place large bets on sporting events for himself and was operating STC "as a giant Ponzi scheme" (J435-J436); (aa) in the same conversation, Mr Foster told Ms Johnson that he would "put a bullet" in her head if she "told anyone" that he was "involved" (J441); (ab) thus, by 30 August 2013, Ms Johnson not only knew that Mr Foster was "involved" in STC but had made it clear that his name was not to be associated with STC (J442); (ac) by 30 August 2013, Ms Larter was "in with" Mr Foster (J447); (ad) on around 1 September 2013, according to Mr Foster's 1 September 2013 email, which Ms Johnson did not dispute in her 10 September 2013 reply, Ms Johnson told Ms Larter that she believed that "millions of dollars are being made and that they're all being stolen" (J472 and see also J516); (ae) by 1 September 2013, Mr Foster was doing "all the trading" (J478 and J481); (af) by 10 September 2013, Ms Johnson understood that Mr Foster was in total control of STC's operations (J503-J504); (ag) the matters set out at [90] above; and (ah) there was a "striking similarity of methods, techniques and facts" between those found by Logan J in relation to the SensaSlim business and Mr Foster's modus operandi at STC (Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (No 3)) (J564-J567). [99] In light of those findings, I am persuaded that Mr Dixon is correct to submit that Associate Members of and prospective investors in STC were reasonably entitled to expect that Ms Johnson would disclose what she knew to be fact by 14 March 2013, that being the date of the meeting at the Catalina restaurant. [100] On 14 March 2013, Ms Johnson participated in the charade of apologising for the absence of "Mark Hughes" (J249), who she knew to be Mr Foster (J244 and J459), and explained his role at STC as being "head of trading" (J257). [101] By 14 March 2013, Ms Johnson knew that: (a) Mr Foster was involved in STC more significantly than "setting up and operating the business's website and similar technological aspects" (J117); (b) Mr Foster was instead involved at a sufficiently high level to be arranging meetings with potential investors (J243); (c) Mr Foster was so acutely aware that his involvement in STC must remain concealed that he was passing himself off to Associate Members of and prospective investors in STC as "Mark Hughes" (J244-J264 and J459). [102] By not disclosing these matters, Ms Johnson remained silent when Associate Members of and prospective investors in STC were reasonably entitled to expect that she, as one of the two partners in STC, would disclose what she knew to be the true state of affairs, either to them or to a person or body that would cause them to be made aware of those matters. [103] For these reasons my conclusion is that Ms Johnson engaged in misleading or deceptive conduct on and from 14 March 2013. [104] This is especially so in circumstances where, at the outset: (a) Mr Foster insisted he would not participate in the management or operation of STC but would only be involved in "setting up and operating the business's website and similar technological aspects" (J117); (b) Ms Johnson "would not have been interested in doing something with Mr Foster having access to the money" (J118); and (c) Ms Johnson was concerned about Mr Foster having any role in the business, including one confined to setting up the website (J121)." 1. The appellant challenges his Honour's findings that: 1. Ms Johnson knew that Foster's involvement could not be publicly revealed (Ground 10); 2. Ms Johnson knew that Foster was using the alias "Mark Hughes" (Ground 11); 3. Ms Johnson knew that Foster was in control of STC (Ground 13); 4. Ms Johnson knew that investors' funds were being misappropriated (Ground 14); 5. Ms Johnson actively represented to the recipients of a solicitor's letter that Foster was not involved in STC (Ground 15); 6. Ms Johnson knew of Foster's criminal record, notoriety and modus operandi (Ground 17); and 7. Ms Johnson represented, to Mr Mackinnon, by silence, that Foster was not involved in STC (Grounds 19 to 25). 1. Grounds 10, 11, 13, 14, 15, and 17 challenge various aspects of the factual findings which underpin the ultimate conclusion that Ms Johnson represented, by silence, that Foster was not involved in STC. Grounds 19 to 25, in substance, challenge that ultimate conclusion. It is convenient to deal first with the more specific grounds and progress to the more general. Ms Johnson's knowledge that Foster was using an alias (Ground 11) 1. Ground 11 contends that his Honour erred "by drawing the wrong inference of fact in finding that the appellant knew that Foster was using the alias "Mark Hughes"". 2. His Honour's conclusion that Ms Johnson knew that Foster was using the alias "Mark Hughes" was founded on her role in a series of transactions, evidence of which was given primarily by Mr de Klerk. 3. Mr de Klerk said that on or about 9 February 2013, he read an advertisement in The Weekend West Australian which invited readers willing to make a contribution of a minimum of $50,000, "fully secured and totally guaranteed", to "call Mark Hughes today" on a specified telephone number. He telephoned the advertised number and had a conversation with "Mark Hughes" about "sports trading". At his request, he was, on 14 February 2013, sent by email a copy of the Proposal. During February, he had several further telephone conversations with "Mark Hughes". He decided to invest in STC, and on 17 February 2013, signed five loan agreements, each for $50,000, which had been sent to him under cover of a letter of that date over the signature of Ms Larter. The letter referred to information said to have been communicated to Ms Larter by "Mark Hughes", and requested that the executed agreements be returned to "Mark Hughes". Mr de Klerk transferred $150,000 to STC on 18 February 2013; the remaining $100,000 was transferred on 21 March 2013, following the Catalina meeting on 14 March 2013. [113] 4. Mr de Klerk said that he spoke to "Mark Hughes" daily concerning STC's trading activity. In response to a suggestion made by "Mark Hughes" in the course of one of these conversations, Mr de Klerk, who was of South African origin, expressed interest in acquiring the South African "rights" to STC. On 6 March 2013, he received an email from "Howard Robin" – in fact Robin Reichelt, an associate of Foster – which referred to having spoken to "Mark Hughes" about Mr de Klerk's interest in the South African rights, and which nominated "Mark Hughes" as the liaison person. [114] The Catalina meeting on 14 March 2013 1. Mr de Klerk received a telephone call from "Mark Hughes" in which he was invited to come to Sydney to discuss the South African investment. He travelled to Sydney, and on 13 March 2013 went to STC's "office" in Market Street (in fact a serviced office), expecting to meet "Mark Hughes". Instead, he met "Kevin Joseph" (in fact Kevin McMullen, an associate of Foster) and, briefly, Ms Johnson. [115] In his second affidavit, he deposed: [116] "On 13 March 2013 I attended the STC office. I was met by a man who introduced himself to me as Kevin Joseph. He took me to a small boardroom to wait for the others. A short time later Leigh Johnson arrived. We had a conversation to the following effect: Johnson: I'm Leigh Johnson, I'm the legal partner of the Sports Trading Club. de Klerk: I'm Pieter de Klerk. Where are Anne Larter and Mark Hughes? Johnson: One of Anne's family is sick and she can't be here. And Mark is in Melbourne, he's not expected to return today, so he can't attend today's meeting. I'm sorry but we'll have to reschedule it for another day." 1. In cross-examination, Mr de Klerk accepted that he could not recall that Ms Johnson had said, in terms, that she was "the legal partner" of STC; rather, she said something to the effect that she was in charge of "STC's legal matters". [117] 2. Mr de Klerk said that later on 13 March 2013, either "Mark Hughes" or "Kevin Joseph" telephoned him and arranged a meeting at Catalina restaurant, in Rose Bay, the following day. On 14 March 2013, Mr de Klerk met "Kevin Joseph" and Ms Johnson at Catalina for lunch. [118] In his second affidavit, Mr de Klerk deposed: [119] "8. When I arrived, Kevin was already there and Leigh entered a few minutes later. We had a conversation to the following effect: Joseph: I'm sorry, but Mark can't be here today either. de Klerk: I was expecting to meet him. I very much want to meet Mark and speak with him. Johnson: He's stuck in Melbourne, he's negotiating with the University to buy a program that will help STC to trade, to work out games' results more accurately. de Klerk: What about Anne Larter? Johnson: Her family member is still sick and Anne can't attend. Anne is my best friend, if she could attend she would. … 10. During lunch Leigh and I discussed various aspects of the STC business. Among the many matters we discussed we had a conversation to the following effect: de Klerk: How long has the Sports Trading Club been trading in London? Johnson: Six years. Anne and I have just acquired the license in Australia. de Klerk: How long have you known Howard Robin? Johnson: Anne Larter has more to do with him. But I have met Howard on a few occasions and I've had lunch with him, he's a lovely man. de Klerk: I still want to meet Anne and Mark and I want to physically visit your trading floor. Johnson: That's not a problem. It can be arranged. But Mark is in charge of the trading team, I'll speak with Mark and he will arrange the visit for you." 1. To similar effect, in cross-examination, Mr de Klerk said: [120] "Q. Can you recall anything else that you discussed? A. Yeah, we also have discussed - I've actually - she was the one where I've asked her for the - to actually discuss before to view the control room, and then only I found out that it was not in Sydney where I thought it was, in the head office; it was actually mentioned to me that it was in [the] Gold Coast. She didn't give me -- Q. Ms Johnson told you that? A. That's correct. But she said to me that Mark - she will arrange that Mark will ring me and arrange that specific meeting, or the visit of that." 1. In re-examination, Mr de Klerk said: [121] "A .... Secondly, I've asked her about Mark Hughes. Q. What did you ask? A. I've asked her how does Mark Hughes - how does he - how did he come about - because I was curious to find out at that time and point of my investigation for my personal curiosity, you know, who was the actual brain behind the whole thing, because if that - in my view, if that person is like resigning or whatever, then my investment would be in the risk. Q. And what was the answer to your question? A. Answer was that he was the - she gave - put me through how they've met, how she met him. Q. What did she say, just try to remember? A. She said that Mark Hughes was their trading or head of trading of the trading part or the - the trading part of the STC business, so he's totally running or that's a division and the marketing side is under his portfolio if I can put it that way. Q. And you mentioned how they met, was there an answer to that question? A. Yes, apparently it was like she met Mark via through one of the like private functions, matters or with Anne Larter and then they started speaking about you know changing thoughts and stuff that had come about that he told them he's got this idea. Q. Can you remember the exact question and words you used when you asked that question? A. I've asked, how did she get involved with Mark Hughes." 1. Consistently with her position that she did not know "Mark Hughes", Ms Johnson's evidence was that she responded "I don't know Mark Hughes. He must be someone Anne knows". [122] In cross-examination, she said: [123] "Q. You knew that, at all times, that Mr Foster was supposed to attend that meeting, but would, as Mark Hughes? A. If Mr Foster had attended that meeting, there's no way I would have addressed him as any other name than his name and that's probably why he didn't come." 1. However, Ms Johnson agreed that it was at Foster's request that she was present at the meeting: [124] "Q. Now, Mr Foster [arranged] for you to meet Mr de Klerk at that point in time in March, did he not? A. Yes. I thought that there was going to be two people from the STC office and myself and Anne [Larter] having lunch with Pieter de Klerk." 1. On the following day, 15 March 2013, Mr de Klerk received a text message from Ms Johnson: [125] "Sorry [Pieter] I've been in court all day. I'll get someone to ring you. Regards Leigh" 1. Mr de Klerk responded: [126] "Thanks Leigh, Mark did contact me this afternoon and is helping me with the matter!" 1. In cross-examination, Ms Johnson accepted that she had "very possibly" contacted Foster in relation to Mr de Klerk's request to visit the "trading room", although she said that she may instead have spoken to "Tom" or "Kevin": [127] "Q. Now, when you said, 'I'll get someone to ring you' – Yeah. Q. -- who did you get to ring him? A. I can't recall. I can't recall if I sent an email. I guess if I don't have it, I didn't. I must have rung the office and asked someone to call him. Q. The person you rang was Mr Foster, Ms Johnson? A. I don't recall, but not necessarily. It could have been either Tom, Kevin or Peter Foster. Q. When you say not necessarily, you accept that you might well have rung Mr Foster in response to this request that Mr de Klerk left on your phone? A. Very possibly." 1. Thus: 1. On Mr de Klerk's account of the meeting on 13 March 2013, Ms Johnson answered Mr de Klerk's enquiry as to where "Mark Hughes" was by saying that "Mark Hughes" was in Melbourne; 2. The 14 March 2013 meeting was arranged by Foster. On Ms Johnson's own evidence, she knew this. As the primary judge observed, this reveals knowledge on the part of Ms Johnson that Foster's role included arranging meetings with potential investors, and was not confined to setting up the website and dealing with "similar technological aspects". Notably, there is no suggestion that there was anyone else involved with STC to whom she responded as she did to Foster; 3. In arranging the meeting with Mr de Klerk, Foster must have done so under the alias "Mark Hughes". As Mr de Klerk was given to expect that he would be meeting "Mark Hughes", this suggests that Foster trusted Ms Johnson not to reveal that "Mark Hughes" was non-existent, or an alias; 4. According to Mr de Klerk, Ms Johnson said that "Mark Hughes" was "stuck in Melbourne", explained what he was doing there, told him that "Mark" was in charge of the "trading team", and that she would speak to "Mark" to arrange a visit to the "trading room". The appellant submitted that in re‐examination, Mr de Klerk gave evidence that he asked questions of Ms Johnson about "Mark Hughes", which was "very unclear and muddled". However, the relevant evidence was broadly consistent across his second affidavit, his cross-examination and his re-examination, and clear to the effect that Ms Johnson conveyed the impression that she knew "Mark Hughes". This also reveals an understanding on her part of what she was expected to say in respect of "Mark Hughes"; and 5. According to Mr de Klerk, Ms Johnson said that she would arrange "that Mark will ring me and arrange that specific meeting, or the visit" [to view the trading room, on the Gold Coast]. According to Ms Johnson's own email of 15 March 2013, in response to a request from Mr de Klerk, she undertook to get "someone" to ring him; according to Mr de Klerk, "Mark Hughes" subsequently did so; according to Ms Johnson, it was "very possibly" Foster that she in fact contacted. This points strongly to Ms Johnson having contacted Foster for the purpose of responding to Mr de Klerk's request, and as the primary judge observed: [128] "[264] … Ms Johnson knew from Mr de Klerk's reply to her text message that "Mark", and not "Tom, Kevin or Peter Foster", had made contact with Mr de Klerk about this matter. The fact that Mr de Klerk referred simply to "Mark" without evidently eliciting any query from Ms Johnson is consistent with Mr de Klerk's evidence that he and Ms Johnson had earlier discussed that she would arrange for "Mark" to call; and impossible to reconcile with Ms Johnson's evidence that she did not know "Mark Hughes" and thought he "must be someone Anne knows" (see [248] above). [265] And the fact that Ms Johnson knew from Mr de Klerk's text message that "Mark" had contacted him suggests (albeit again not conclusively at this stage) that Ms Johnson knew that "Mark" and Mr Foster were one and the same." The Skype call on 30 May 2013 1. Mr de Klerk paid the final tranche of his investment – the remaining $100,000 – to STC on 21 March 2013. He continued to communicate with "Mark Hughes" on a daily basis. He travelled to the Gold Coast to view the trading room, where he met "Kevin Joseph" and Richard Holmes, observed what appeared to be some trading on sporting events, and asked some questions. He also continued to negotiate with "Howard Robin" and "Mark Hughes" for the acquisition of the South African rights to STC, including travelling to London to meet "Howard Robin" for that purpose. [129] This culminated in the following email from "Mark Hughes" to Mr de Klerk on 28 May 2013: [130] "I briefed Howard last night over the latest developments. I mentioned that you [had] said you had $1.3 M available at the bank now. He asked what your balance was in the Australian account, and when I said $700,000 approximately, he then put two and two together and assumes that you will be seeking to transfer the $700,000 in your Australian account over to [the] new venture for South Africa to make up the $2 million. That requires Leigh's approval as the loan to the Australian partnership is over three years. Therefore Howard has suggested you and I talk today and I get a better understanding of what it is exactly that you want to achieve so it can be put to Leigh before Thursday's meeting. A meeting has been scheduled at 10 a.m. on Thursday [30 May 2013] at Level 26, 44 Market Street. In attendance will be Leigh Johnson, Kevin Joseph, you and me. Howard will be available from London by Skype Conference call if required." 1. Although the email refers to the necessity of obtaining "Leigh's approval", and to the proposal being "put to Leigh" before the proposed meeting on 30 May 2013, there was no evidence that Ms Johnson knew of any of those matters. 2. On 30 May 2013, Mr de Klerk travelled to Sydney, expecting to meet Ms Johnson, "Kevin Joseph", and "Mark Hughes". According to Mr de Klerk, he was taken to a conference room, where he met Ms Johnson. Mr de Klerk said that she apologised for the absence of "Mark Hughes" but that he would attend by Skype; she then left to deal with a court matter, but returned and there was a Skype call in which "Mark Hughes" appeared on the screen of a laptop computer. Mr de Klerk said that he addressed the person on the call as "Mark" at least once while Ms Johnson was present, and that she also referred to that person as "Mark". [131] 3. In her affidavit, Ms Johnson deposed "I was never asked to attend the meeting on Thursday 30 May 2013". In cross-examination, she at first maintained that position: "No I wasn't asked to go to that at all". However, she agreed that "it must have been" the case that Foster asked her to attend that meeting, once she was taken to the email sent by her on 10 September 2013 to Foster and Ms Larter, which included the following: [132] "Peter has also lied to me. Peter asked me to pop into the Sydney meeting between Kevin [McMullen] and Pieter de Klerk and Kevin asked me to bring the STC coffee mugs. When I arrived with the mugs I became aware that de Klerk had deposited $1 M with Peter even though Peter had previously told me that de Klerk had not. The exposure of Peter's lie is what caused Peter's abuse of me at the de Klerk meeting ..." 1. Ms Johnson again acknowledged that Foster had asked her to attend the 30 May 2013 meeting when it was put to her that she knew that Foster was "heavily involved" in persuading Mr de Klerk to invest in the South African venture: [133] "He did ask me to attend but 'heavily involved' – I mean, I knew that he was organising the sale of the South African rights because he told me" 1. In her affidavit, Ms Johnson deposed: [134] "The incident I recall is that I walked into a conference room with a board table where a phone call was taking place, not a Skype call. I certainly did not see any computer screen with an image of a man. Had I seen that image, I would have instantly recognised it as Peter Foster were it he, and he would have seen who was in the room. However, I only heard a voice which I did instantly recognise as Peter Foster's." 1. In cross-examination, she said: [135] "Q. What I want to put to you is that a Skype call then happened in which Mr Foster's face appeared on the laptop screen? A. There was a call happening. They were talking when I walked into the room. Q. It was a Skype call. A. I don't know what it was. I just heard a voice. I thought it was a loud speaker call but I don't know. Q. So you accept that it might have been coming from the laptop computer? A. It very well could have been." 1. Thus: 1. Even if Ms Johnson did not see the image of Foster displayed on the computer screen during the call, she admittedly recognised the speaker's voice as that of Foster; 2. Foster must have expected that Ms Johnson would be present at the meeting, as in the email of 28 May 2013 "Mark Hughes" had told Mr de Klerk that Ms Johnson would be present. He must have trusted Ms Johnson not to expose his true identity, which would have necessitated Ms Johnson knowing that he was using the alias "Mark Hughes"; and 3. According to Mr de Klerk, whose evidence the primary judge preferred, he addressed the speaker as "Mark" in Ms Johnson's presence. The email of 30 August 2013 1. On 30 August 2013, very shortly after a telephone conversation with Ms Larter and Foster in which Ms Johnson said that she had been told by a friend of Foster that he was improperly using investors' money to place large bets on sporting events for himself, was losing a lot of money, and was operating STC as a giant Ponzi scheme using new money from investors to make up for losses of money from previous investors, [136] she had an SMS exchange with Mr de Klerk, as follows: [137] "Ms Johnson: "[Pieter] I am no longer associated [with] STC" Mr de Klerk: "A bit shocked to hear that, any reason I should be concerned about my future with STC? Don't worry this will stay between us! ..." Ms Johnson: "I'm very upset. I don't know where to start but I am worried about [you]. Anne Larter is not be trusted. I believe she's in [with] Peter Foster". Mr de Klerk: "May I give you call?" Ms Johnson: "Yes but can we talk tomorrow. I'm very fragile, I've been threatened [with] a bullet to the head if I say anything". Mr de Klerk: "So sorry, what time is convenient to you tomorrow?"" 1. In her affidavit, Ms Johnson said that on 30 August 2013: [138] "…I told [Mr de Klerk] by text that I had resigned and mentioned to him that Peter Foster was involved in [STC]." 1. She described her SMS messages as a "warning" to Mr de Klerk, deposing: [139] "I note that Pieter de Klerk used my warning to good effect by investigating who 'Peter Foster' was and then following up on that." 1. This was a reference to Mr de Klerk's description, in his affidavit evidence, of action taken by him in response to Ms Johnson's SMS messages. In cross-examination, Ms Johnson said: [140] "Q. You knew that Mr de Klerk had no knowledge whatsoever of Peter Foster's involvement in STC up until that stage, that's why you wrote the text message? A. I certainly had not mentioned it to him, but I don't know what he knew." 1. Thus: 1. On her own evidence, Ms Johnson had not previously mentioned the name "Peter Foster" to Mr de Klerk; and 2. As the primary judge observed, the fact that Ms Johnson thought that her "warning", involving the mere mention of the name of Foster, confirms that she believed, until then, that Mr de Klerk was unaware of Foster's involvement. It also shows that she was aware that disclosure of his involvement would deter investors, and aware of his notoriety, as mere mention of his name without any further context was sufficient to serve as a "warning". Yet, on her own evidence, Ms Johnson knew that it was Foster to whom Mr de Klerk was speaking on 30 May 2013. She must therefore have known that Mr de Klerk did not then realise that the person with whom he was speaking was Peter Foster. Analysis 1. The appellant submitted that the passage in Ms Johnson's cross-examination in which she said that if Foster had attended the Catalina meeting, she would not have addressed him by any name other than his own, and that this was probably why he did not attend – which the primary judge took to be an acknowledgement that Ms Johnson knew Foster was passing himself off as "Mark Hughes" [141] – did not support the theory that Ms Johnson knew (or even suspected) that "Mark Hughes" was an alias used by Foster. I agree that it does not, at least on its own. However, the theory is amply supported by other evidence. 2. First, as explained below (under grounds 10, 13, and 17), Ms Johnson knew that Foster's involvement could not be revealed. 3. Secondly, that "Mark Hughes" was an alias used by Foster cannot be seriously doubted. There was no evidence that there was in truth any such person as "Mark Hughes" involved in or connected with STC. Although "Mark Hughes" was the advertised point of contact and supposedly head of trading, Ms Johnson, though a partner, did not know any such person. Nor was any such person referred to in the Proposal. It was Foster whom Ms Johnson consulted about the affairs of STC, and from whom she appears to have received direction and guidance. 4. Thirdly, the meetings which "Mark Hughes" was supposed to attend were arranged with Ms Johnson by Foster. It is implausible that this could have happened if there were any risk that the fact that "Mark Hughes" was Foster would be disclosed, and that risk could have been avoided only if Ms Johnson knew of the alias. 5. Fourthly, the email exchange of 15 March 2013 in which Mr de Klerk referred simply to "Mark" without eliciting any query from Ms Johnson tells against her evidence that she did not know "Mark Hughes" and thought that he "must be someone Anne knows"; and the fact that Ms Johnson knew from Mr de Klerk's text message that "Mark" had contacted him – after she had spoken to Foster – suggests that Ms Johnson knew that "Mark" and Foster were one and the same. 6. Fifthly, given that Ms Johnson knew that Mr de Klerk was speaking to Foster on 30 May 2013 (because she at least recognised the voice of Foster), the fact that she thought that her "warning" involving the mere mention of the name of Foster confirms that she believed, until then, that Mr de Klerk was unaware of Foster's involvement, and thus that Mr de Klerk did not realise that the person with whom he was speaking on 30 May 2013 was Foster. 7. None of the foregoing depends on acceptance of the evidence of Mr de Klerk or rejection of that of Ms Johnson; it is largely founded on Ms Johnson's own evidence. However, Mr de Klerk's evidence, which the primary judge found reliable and preferred to that of Ms Johnson, [142] takes the matter further still, by establishing that Ms Johnson conveyed that she knew "Mark Hughes", and that Mr de Klerk addressed Foster as "Mark" in her presence on 30 May 2013. To that extent at least, the conclusion is not merely inferential but is founded on the direct evidence of Mr de Klerk, whose evidence his Honour accepted in preference to that of Ms Johnson. 8. Having regard to the effect of all that evidence taken as a whole, his Honour was well entitled to be "comfortably satisfied" that Ms Johnson knew that Foster was using the alias "Mark Hughes" in dealing with prospective and actual investors. Ground 11 therefore fails. Ms Johnson's suspicion that investors' funds were being misappropriated (Ground 14) 1. Ground 14 contends that his Honour erred "by drawing the wrong inference of fact in finding that the appellant knew that investors' funds were being misappropriated". In fact, his Honour did not make a finding in terms that Ms Johnson knew that funds were being misappropriated; his Honour's relevant finding was that by September 2013, Ms Johnson "strongly suspected" that investors' funds were being misappropriated. [143] Ms Johnson submitted that there was no evidence to support this finding. 2. In her affidavit, Ms Johnson said that when she left STC, "I thought I had a governance problem but had no inkling there might be a fraud problem". [144] However, as early as July 2013, Ms Johnson had expressed the view that STC was a Ponzi scheme run by Foster. [145] On 16 July 2013, Foster sent Ms Johnson an email which included the following: [146] "You sent a text to Kevin [McMullen] in an attempt to instil fear and to divide and conquer. Last week you spoke of everybody going to jail and you suggested that we were operating a Ponzi scheme… Your behaviour is clearly irrational in so far as one day you are threatening everybody with jail for running a Ponzi scheme and the next you are saying that you want to work full time in STC… You have admittedly gone and seen a defamation lawyer and sent legal letters to several people confirming that you are running a honest, legitimate business and that you have no business connections with the notorious conman." 1. Foster's email also referred to an assertion by Ms Johnson that an investor (Mr Radica) had asked for a refund of $100,000 following a conversation with Ms Johnson about whether the business was a scam. [147] Ms Johnson accepted that this conversation occurred and said that she did not tell Mr Radica that Foster was involved, because she "was hoping that it would end". [148] 2. As has been foreshadowed, and as is confirmed by Ms Johnson's email of 10 September 2013, which is extracted below, [149] in a conversation with Ms Larter on 30 August 2013, at which Foster was present with Ms Larter (although his presence was not initially disclosed to Ms Johnson), [150] Ms Johnson informed Ms Larter that Foster's friend, Kevin McMullen, had told her that Foster had a gambling problem, was using investors' money for this purpose and was losing "a lot of money", and was operating STC as a Ponzi scheme; [151] and that she could not understand why she had not been repaid the principal and interest on her loan, given that the STC website showed a profit "in excess of $750,000". [152] Foster then started "screaming" and threatened to "put a bullet" in her head if she told anyone that he was involved. [153] It was immediately after this phone conversation, on 30 August 2013, that Ms Johnson sent the text message to Mr de Klerk, which has been set out above, [154] stating that she was no longer associated with STC, that she was worried about Mr de Klerk, that Ms Larter was not to be trusted, and that Ms Johnson believed Ms Larter was "in with" Foster. 3. Foster sent a lengthy email to Ms Johnson on 1 September 2013, from the email address "stcdesk@outlook.com.121", which confirms that Ms Johnson had made such allegations, as does the email sent by Ms Johnson to Ms Larter and Foster on 10 September 2013, which included the following: [155] "Kevin McMullen, Peter's best friend and involved in STC on a daily basis as its Sales Manager, had told me that: ● Peter had a gambling problem ● Peter was improperly using the [Associate Members'] money to place large bets on sporting events for himself and was losing a lot of money ● Peter was operating STC as a giant Ponzi scheme using new money from [Associate Members'] to make up for his losses of previous money from [Associate Members'] These are Kevin's words, not mine. … I am very concerned about the whereabouts, the management and the security of the large sums of money being generated by STC. … Anne has played a double-dealing role playing both Peter and me against each other. Anne, who after all has known Peter for some 25 years, told me that we needed to get as much money out of STC as we can as she's seen Peter's behaviour before and that he'll spend every cent that comes into STC. He was a huge spender and she said that we'd (Anne and Leigh) both end up with nothing. … In view of the above, I am extremely concerned that: ● STC is being improperly managed and operated. ● STC may be being operated as a Ponzi scheme by Peter and hence is being illegally and fraudulently managed and operated. ● The [Associate Members'] accounts and records may be being falsified. ● The [Associate Members'] moneys may be at risk and are not being properly accounted for. … It would seem to me that the more you are both wrongly and improperly managing and operating STC, the more aggressive your responses have become to my expressing my concerns about the management and operation of STC, and to my making legitimate requests both for information about STC and for payment to me of my profit share. The behaviour of both of you leading up to and including our 30/8/13 phone call, and as followed up by Peter in his 1/9/13 email, heightens my concerns that fraud may be being committed by STC and that the moneys of the [Associate Members'] may both be in danger and may be being improperly used. … I am not alleging either that 'millions and millions and millions of dollars are being made' nor that 'they're all being stolen'. I have no evidence for that at this stage. I am simply asking that both of you keep me properly and adequately informed about the affairs of STC so that I can properly carry out my obligations and duties as a limited partner of STC." 1. In cross-examination, Ms Johnson admitted that as at 10 September 2013, she was "extremely concerned that STC was being improperly managed and operated"; that records and accounts of the investors were being falsified; that the investors' money was at risk and not being properly accounted for; and that a Ponzi scheme might be involved. She gave this evidence: [156] "Q. So you had formed the view at that stage, or you were extremely concerned that STC was being improperly managed and operated as at 10 September 2013? A. Yes. Q. That AM records and accounts were being falsified, or may be being falsified? A. That's what I said. Q. And that money was at risk, and not being properly accounted for? A. Yes. Q. That there might have been a Ponzi scheme in operation? A. Yes, I wanted to, I wanted to put everything on the record. I wanted her to step up and take charge. I wanted, I really thought, the more I can scare her, the more she's going to take charge." 1. It may well be that, consistently with what she wrote in the 10 September 2013 email, Ms Johnson did not actually know whether invertors' money was being misappropriated. However, it is clear on her own evidence that she strongly suspected that STC was engaged in fraudulent practices and that investors' moneys might be "in danger" and "being improperly used". 2. His Honour's finding that by September 2013, Ms Johnson "strongly suspected" that investors funds were being misappropriated, was well founded in the evidence to which reference has been made. Ground 14 fails. Ms Johnson's active concealment of Foster's involvement (Ground 15) 1. Ground 15 contends that his Honour erred in finding that Ms Johnson "actively represented to the recipients of Mr Tassell's letter that Foster was not involved in STC". 2. On 5 April 2013, Mr Robert Tassell, a partner in the law firm Pikes & Verekers Lawyers, wrote to Mr Neil Jenman and Mr Neville Baker (private investigators, who had apparently asserted that the STC venture was a dishonest scheme under the control of Foster), in the following terms: [157] "We act for Ms Leigh Johnson and Ms Anne Larter who are in a partnership which is the proprietor of a business known as the 'Sports Trading Club'. Our clients have provided us with copies of two emails sent to Dr Allan Snyder on 4 April 2013 at 10.06am and 2.13pm respectively, copies of which are attached. The emails purport to have been sent by Neville Baker … The Sports Trading Club is a new business in Australia and is particularly vulnerable to damage by injurious falsehoods published about it. Ms Johnson is a solicitor whose professional reputation is of paramount importance to her. Ms Larter is a prominent and experienced businesswoman, whose professional reputation is also of considerable importance to her. The first email was sent to the email address 'XXX' as well as 'XXX'. Dr Snyder was certainly aware that each of our clients was a partner and proprietor of the Sports Trading Club and it is likely that other recipients of the email at Dr Snyder's Centre were also aware of that fact. The first email has therefore conveyed imputations grossly defamatory of our clients including that: 1 They are attempting to defraud members of the public by emails of an investment scam. 2 They falsely claimed that Dr Snyder was the Scientific Research Director of the Sports Trading Club. The second email conveys an imputation that our clients are operating the Sports Trading Club as a mere front for the notorious conman Peter Foster. These are very serious allegations to make about persons of our clients' standing and are calculated to undermine their relationship with Dr Snyder and their business. We are instructed that the imputations are quite without foundation. In the circumstances our clients seek forthwith an unreserved apology and retraction to be supplied to them in writing under your hand and forwarded by you to the email address to which the first and second email were sent. … Please understand that our clients' professional reputations are very important to them and the presently successful business they are operating may have already suffered loss and damage as a result of the publication of your emails and they have instructed us that they will certainly commence proceedings if there are any further defamatory publications by you." 1. His Honour found that Ms Johnson either gave Mr Tassell instructions to write the 5 April 2013 letter, or did not demur when Ms Larter gave Mr Tassell those instructions, and that she did so because Foster had asked her (and Ms Larter) to keep his identity secret and because she knew, in any event, that STC's business would not attract investors if Foster's involvement in the business were known. The appellant submitted that her role in causing the letter to be sent was unclear. 2. Ms Johnson agreed that she went to Pikes & Verekers in order to "try to shut down the attempt to make Mr Foster's involvement public", adding that "he wasn't supposed to be involved in it anymore". She claimed that Ms Larter asked her to attend Pikes & Verekers because Ms Larter stood to lose everything if Foster's involvement was exposed. Ms Johnson said that it would "affect her [Ms Larter's] business" if it "was said that [STC] was [Foster's] business". In response to the suggestion that Ms Johnson knew that Ms Larter wanted Ms Johnson to suppress public knowledge of Foster's involvement, she agreed that Ms Larter "certainly did not want that position to be made public because he wasn't going to be involved." Ms Johnson said that she recalled that Ms Larter spoke to Mr Tassell and said "this is a fledging business and, you know, this will destroy my business." She did not respond directly to the proposition that she knew "the entire business would collapse" "the second people knew that Mr Foster was involved", but when pressed, accepted that "it would not have been good, I suppose, for the business. It would have jeopardised the funds of anyone who had invested". [158] She gave the following evidence: [159] "HIS HONOUR Q. Is your evidence that you - that Ms Larter gave instructions to Pikes & Verekers to the effect that is set forth in this letter in a phone call that you were listening to. Is that what you said? A. Yes, your Honour. I put her on the phone. I rang her [sic] and put her on the phone. Q. Did you take any part in giving these instructions to the solicitors? A. I went and saw the solicitors your Honour, but they insisted on speaking to Anne Larter because she was the general partner. Q. So you gave Mr [Tassell] the instructions in this letter, did you? A. No, she did. Q. I thought you said you went to see the solicitor? A. Your Honour, I went and saw them and they didn't want to take instructions from me. They took - they wanted to speak to her because she was the general partner. DIXON: If I could your Honour, unless your Honour had other questions. Q. Just on that, this is a letter written on behalf of both you and Ms Larter, correct? A. Yes. Q. And the reason why the lawyers wanted to speak to Ms Larter was because they wanted to take instructions from both of the people that were making the threats concerning defamation? A. Probably. Q. Yes and – A. But in April – you see, this is right in the beginning of the business and that's right, he wasn't running it or not meant to be. HIS HONOUR Q. Did you understand Mr Foster to be a notorious conman as at 5 April 2013? A. I certainly have – probably aware that people called him that, but I never saw any evidence for it. Q. Did you give Mr Tassell [instructions] to write [the sentence asserting that the second email conveyed an imputation that Ms Larter and Ms Johnson were operating STC as a 'mere front for the notorious conman Peter Foster']? A. 'The second email [conveys] an imputation'? Q. Yes? A. Well I went and saw the lawyers so – I mean I saw the letter so, I mean, I'm aware of it. I must have been aware of it." 1. The letter was ostensibly sent on the instructions of both Ms Johnson and Ms Larter. Ms Johnson agreed that she saw the lawyers, made the call to the solicitors, was with Ms Larter when Ms Larter gave instructions to Mr Tassell on the telephone, and saw the letter once it was written. While she said it was Ms Larter who gave the instructions contained in that letter, it is not without significance that Ms Johnson, but not Ms Larter, was a lawyer; that despite Ms Johnson's assertion that the solicitors were insistent on obtaining instructions from Ms Larter because she was supposedly the 'general partner', Ms Johnson is the first-mentioned client in the letter; and that to the extent that it was Ms Larter who gave instructions, by telephone, it was Ms Johnson who arranged for those instructions to be given, by initiating the telephone call, having previously attended, unaccompanied, on Mr Tassell in his office, as to which she gave this evidence: [160] "I remember the office. I remember the building. I remember finding the building. Anne asked me to go in there and see them because she was off on another trip somewhere. So I really – I did see that letter at some point and I was very uncomfortable with it." 1. On Ms Johnson's own evidence, the conclusion that she at the very least acquiesced in the authorisation of the letter is inescapable. 2. The conclusion that Ms Johnson took this course of action at Foster's bidding was founded, at least in part, on her following evidence: [161] "Q. Throughout the course of your partnership you did Mr Foster's bidding by keeping his name from the public, including the potential investors? A. No. The only point that I did do that was when I first went to Pikes & Verekers and Anne told me, 'Just - he won't be involved with it very soon because somebody else is going to take over doing the postings.' That's what it was always meant to be from the start. He was getting going with the postings and somebody else, who was highly computer literate, would be able to do that." 1. While this answer demonstrates, as the primary judge found and as Ms Johnson concedes was open to be found, that Ms Johnson was aware that Foster was doing more than setting up a website, and was 'doing the postings', I do not think that, fairly read, it amounts to an acknowledgement that she was acting on Foster's direction; read in context, it may be no more than an assertion that she was acting on Ms Larter's request to suppress Foster's involvement. However, whether or not she was acting on Foster's instructions in going to the solicitors is beside the point; what matters is that Ms Johnson participated in steps to conceal Foster's involvement in STC when there was a risk that it would be revealed. Ground 15 fails. Ms Johnson's knowledge that Foster's involvement could not be revealed (Grounds 10, 13, and 17) 1. Ground 10 contends that his Honour erred "by drawing the wrong inference of fact in finding that Ms Johnson knew that Foster's involvement in the Sports Trading Club could not be publicly revealed". Ground 13 contends that his Honour erred "by drawing the wrong inference of fact in finding that the appellant knew that Mr Foster was in control of the Sports Trading Club's activities". Ground 17 contends that his Honour erred "by drawing the wrong inference of fact in finding that the appellant knew of Peter Foster's criminal record, notoriety and modus operandi". The substance of these grounds, which are closely related and are conveniently dealt with together, is to contend that Ms Johnson was not shown to have sufficient information about Foster's past record and his role in STC to trigger any obligation to disclose his involvement. 2. According to Ms Johnson, when Ms Larter introduced her to Foster in August 2012, Ms Larter told her (emphasis added): [162] "He [Foster] is a really nice person. He's not what they say he is" 1. The two adjournment applications in which Ms Johnson appeared for Foster in the Federal Court were in the SensaSlim matter, a case concerning the promotion of dietary products, but her involvement was not such as to require her to have any knowledge of the substantive case. In refusing the adjournment, Yates J observed: [163] "Ms Johnson, who appears for [Mr Foster] on this application, has made clear in both oral and written submissions (through her affidavit) that she appears only for [Mr Foster] for the purpose of making this application. She is not presently instructed to appear on behalf of [Mr Foster] at the principal hearing." 1. In her affidavit, Ms Johnson described how she came to be a partner in STC: [164] "469. After the two interlocutory matters Peter Foster asked me to contact him again. 470. Peter Foster told me about sports trading. He stressed that he wouldn't involve himself in any more scams and said that he had wasted too much of his life getting into trouble and that the business would be a legitimate business. 471. We also talked about our mutual love of animals. I have been a passionate animal lover all my life. I had a long-term goal to help animals by establishing and running animal shelters. 472. Peter Foster proposed that I become the limited partner of the new business. 473. Although I have no interest in sport and do not gamble – the only gambling that I do is to occasionally buy a lottery ticket – I thought that the proposed business model of the new business sounded good and likely to be profitable. I had been charmed by Peter Foster and hence I agreed to become the limited partner of the new business for several reasons, all of which reassured me that everything would be above board: (a) The fact that the proposed business had nothing to do with diets or the weight loss industry. (b) My good friend Anne Larter was to be the limited partnership's general partner and would manage and operate the business from day to day which was to include, as far as I was aware, doing all the banking and having control of all moneys … As to this, I confirm that, as far as I was aware, Anne Larter did all the banking for the partnership. Peter Foster said he wouldn't allow his longstanding friend, Anne Larter, to be involved in anything improper. This made sense to me, particularly as I did not imagine that Anne Larter would engage in any improper or dishonest conduct or that she would betray a good friend like me. (c) I was to be the limited partnership's limited partner with no managerial responsibility and limited liability … allowing me to continue practising as a solicitor. (d) Peter Foster stressed that he would not be involved at all in the management or operation of the proposed new business but would only be involved in setting up and operating the business's website and similar technological aspects which were in any event beyond the capabilities of both Anne Larter or myself. … (e) Richard Holmes who had been a professional sports trader for decades, would be doing [STC's] sports trading. (f) The clincher for me was that Peter Foster promised that once the new business was up and running [STC] would have a charitable arm running animal shelters and that I would run this charity." 1. Thus, on Ms Johnson's own affidavit evidence: 1. Ms Larter told her that "[h]e's not what they say he is", at least implying that he had a bad reputation, and that Ms Johnson understood this to be so, as there is no suggestion that she responded "what do they say he is?" or words to that effect; 2. Foster stressed to her that he would not involve himself "in any more scams", that he had "wasted too much of his life getting into trouble", and that "the business would be a legitimate business". It is implicit in this that she knew that he had previously been involved in scams and had got into trouble through businesses that were not, or at least had been alleged to have been not, legitimate; 3. Ms Johnson was reassured by a number of matters that the new business would be "above board", in which it is implicit that there was at least reason to suspect that earlier businesses in which Foster had been involved may not have been "above board"; and 4. Foster said that he would not allow his longstanding friend, Ms Larter, to be involved in anything improper – at least implying that other ventures in which he had been involved may have been improper. 1. In cross-examination, when asked about her knowledge of Foster's history and reputation, Ms Johnson did not categorically deny knowledge of Foster's past: [165] "Q. You weren't aware of what the allegations were against Mr Foster whatsoever? A. Vaguely. Q. Were you aware that in those proceedings that it was alleged that Mr Foster had assumed identities of other people involved? A. No. Q. Were you aware that Mr Foster was selling franchises to investors and taking their money and moving it overseas? A. No. Q. Were you aware that Mr Foster had assumed an identity by the name of Peter O'Brien in those proceedings? A. No. Q. Were you aware that Mr Foster was accused of having a long history of fraud and deception? A. At the time that I applied for the adjournment? Q. Yes? A. I was aware that he had had another case before that case. Q. Were you aware of his general notoriety as a confidence man, as a fraudster? A. I was aware of some things that had been in the media. There was something about the UK, him doing something for Cherie Blair or something. Q. Were you aware of his general reputation as someone who had committed frauds in the past? A. I don't know that I can answer that that clearly. I mean, I had seen him get knocked out wearing a swimsuit in Fiji, but I wasn't really aware of what it was about." 1. And subsequently: [166] "Q. When you went into this venture did you understand that Foster had been accused of fraud? A. That he had been accused of selling diet products that didn't work." 1. Ms Johnson offered, as an explanation for why Foster was not to be a partner in STC, that she thought he would be going to gaol: [167] "Q. You then entered into the partnership agreement with Ms Larter. Is there any reason why Mr Foster wasn't on the partnership deed, given that it was his business proposal? A. Well, it wasn't really his. He had the opportunity of getting the licence rights, of this trading, and he didn't want to do it anymore. So he was, Anne was going to do it, and they suggested that I would be, that I should be a partner in it. Q. When you say, 'he didn't want to do it anymore', he'd only just got the licence rights, you said. So this would have been a new venture for him? A. Well, I don't think he had the licence rights, but he had the opportunity of it, or he knew about the licence rights. Or he knew about the company where he could get the licence rights. Q. So what was the reason given why he wasn't party to the partnership agreement at the time? A. I think he was, I think he was going to go to gaol. Q. What was that in respect of? A. I don't know, a case in Brisbane. There was a case in Brisbane that he was involved in. Q. So your evidence is that the reason why Mr Foster wasn't on the partnership agreement, was that he was about to go to gaol? A. No, it's not my evidence. I don't know. I don't know, but he, I mean, he was sentenced, eventually, to go to gaol." 1. Ms Johnson maintained that according to her understanding, at least initially, Foster's role was to be limited to "setting stuff up" – in particular, the website – and that he was to have no involvement with investors' money. Ms Johnson gave evidence that as at January 2013, Foster was not going to be involved in STC because he was involved in the 'head company' (being the licensor of the country rights associated with the STC business). She said that she did not want him to be a formal partner, and that she did not want him to have access to the money. [168] However, Ms Johnson contributed $182,500 to STC as seed capital – the only capital provided by anyone. In her email of 10 September 2013, she wrote "Peter had no objections to this loan at the time when he needed the money". This is indicative that from the outset, Foster was the promoter of STC, and was controlling its funds – in particular, its seed capital. Moreover, as the following account reveals, it became clear to Ms Johnson at least by mid-2013 that Foster was not confining his activities to setting up or operating the STC website, but was involved in dealing with potential investors and conducting STC's trading activities, such as they were: [169] "Q. Given that Mr Foster brought the idea to you, did you insist on him being on the partnership agreement at any stage? A. Actually, I would insist that he would not be. Q. Why's that? A. Well, I didn't want him, one of the things that I really liked about it was that there were two people in charge of the money. There was one who was Richard Holmes, who's a really experienced trader of over 40 years, I think – maybe even 45 years – who would have access to the money, and Anne. So, you know, I liked that idea. Q. That meant that you wanted to keep Mr Foster away from the money? A. I would not have been interested in doing something with Mr Foster having access to the money. Q. I think your evidence is that you understood that Mr Foster would take a back seat role, but be involved in the initial set up of the business, do you recall that? A. He was going to set up the website, or, you know, the computer side of it. I'm not really, like, tech savvy, so when I say, 'website' don't hold me to that, but all of the computer side of it. He was setting up, cause Anne's not really that tech savvy either." 1. Later, she added: [170] "A. … [Foster] was setting up all of the online stuff. He had a company doing it, I couldn't have done it and Anne couldn't have done it and that's what he said. He said I'll set it up for you girls and, you know, it's your company, it's your business." 1. Reference has already been made to the circumstances that Ms Johnson attended the 14 March 2013 Catalina meeting at Foster's request, in which it is implicit that she was aware that Foster was involved in dealing with potential investors and arranging meetings with them, using an alias; and that following that meeting it was Foster whom she contacted to follow up Mr de Klerk's request. [171] 2. The letter sent, ostensibly on the instructions of Ms Johnson and Ms Larter, by Pikes & Verekers Lawyers on 5 April 2013, included a complaint that the email sent by the addressee "conveys an imputation that our clients are operating the Sports Trading Club as a mere front for the notorious conman Peter Foster." [172] Ms Johnson gave this evidence with reference to that letter: [173] "HIS HONOUR Q. Did you understand Mr Foster to be a notorious conman as at 5 April 2013? A. I certainly have – probably aware that people called him that, but I never saw any evidence for it." 1. She stated that "he [Foster] wasn't supposed to be involved in it anymore", [174] and: [175] "A. You see, … he wasn't meant to be running it. So he wasn't - my understanding was that he was setting stuff up and they're not going to run it. It just … instead of setting stuff up and then stepping away and not doing anything, he seemed to just do more and more and more. But it … was a progressive thing." 1. As the primary judge found, this evidence shows that Ms Johnson knew that Foster was doing more than setting up a website. 2. Ms Johnson was aware that it was Foster who was speaking with Mr de Klerk on the 30 May 2013 call. 3. Ms Johnson received emails from Foster in which he described himself as "STC Team Leader", which is inconsistent with him having no material role. Foster's email to her of 16 July 2013 was sent from the email address "teamleader@sportstradingclub.com", and asserted that Ms Johnson's only role, after providing start-up capital, was as a "figurehead" who could, in case of emergency, "put out any fires"; that Ms Johnson would be paid $12,500 per month for this; [176] that the 'principal' of her $182,500 investment had been repaid and the 'interest' (of the same amount) would be paid in instalments; [177] and that (emphasis added), "other than that you can sit back and relax … and allow me to run the business". [178] 4. In his 1 September 2013 email to Ms Johnson, Foster stated that he was working "18 hours a day seven days a week running the sales team and doing all the trading myself." [179] In an email to Foster and Ms Larter of 10 September 2013, Ms Johnson stated that the roles of sales manager and senior trader had been "replaced by one person, you" and that "STC is in fact operated from Peter's Gold Coast home where Peter holds all the [Associate Members'] contracts". [180] That evidence amply supports his Honour's finding that, by this point, Ms Johnson must have known that Foster was "exercising complete dominion over STC". [181] 5. On 23 September 2013 Ms Johnson sent an email to Ms Larter, again warning of the "risks", including that Ms Larter would be civilly and criminally liable for "[turning] a blind eye to fraud, if there is any". [182] 6. On 28 (or possibly 29) September 2013 – the day after Logan J published the judgment in Chaste No 3 and issued a warrant for Foster's arrest – Ms Johnson sent an email to Ms Larter in the following terms: [183] "I wrote to you twice recently on 10 and 23 September 2013 expressing my deep concerns about STC. You did not reply even though, as my partner in STC, you were legally obliged to liaise and co-operate with me, and even though, as STC's general partner, you bear unlimited liability for STC's business. You were with Peter Foster at his Gold Coast home in August 2013 and participated in the phone conversation in which he refused to provide me with the information and reports about STC that I had legitimately requested and in which he threatened my life. You have also failed to provide me with the information and reports. However, in view of recent dramatic events (events which you have witnessed at close hand as you were again with Peter on the Gold Coast since Wednesday 25 September 2013), now is not the time for recriminations. As I understand it, the following happened yesterday: 1 Justice Logan of the Federal Court handed down his judgment in the Chaste Corporation case and found against Peter holding that Peter was an unreliable witness and was in contempt of court for being involved in the SensaSlim weight loss scam thus breaching 2005 court orders. 2 Justice Logan adjourned the matter till 24 October 2013 for the hearing of submissions regarding penalties against Peter which were likely to include a gaol term. He ordered that Peter be held in prison until 24 October 2013. 3 Peter failed to appear in court for the judgment. 4 Justice Logan ordered that a warrant for the arrest of Peter be issued if Peter did not turn himself in to police by 5pm yesterday. 5 Peter did not do so thus the warrant was issued. 6 A manhunt has begun for Peter… As Peter breached the 2005 court orders while on parole, and because he was on bail pending Justice Logan's judgment, his gaol sentence will be increased. The media is speculating he'll get 6 months to 3 years. I have read the entire lengthy 254 paragraph judgment in Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (No 3) [2013] FCA 984. As I did so I came to the shocked and sickening realisation of a striking similarity of methods, techniques and facts to those which Justice Logan found Peter had used in the SensaSlim scam. I warned you in my emails that STC could ruin your life if things went wrong. Rather than recriminations, now is the time for us, as the STC partners, to take urgent action. Peter has absconded and we have to act together to take stock of the current state of STC's business and ensure that all is well and under control. We have to ensure that the STC moneys are secure and properly accounted for." 1. In her affidavit, Ms Johnson deposed: [184] "However, as stated above, I was unaware of the details and characteristics of Peter Foster's modus operandi until I read Logan J's judgment in ACCC v Chaste Corporation No 3." 1. Yet in cross-examination, she denied that she had read the judgment: [185] "Q. When you read the judgment, you say that you came to the shocking and sickening realisation of a striking similarity of methods, techniques and facts to those which Justice Logan found appeared to have used in the SensaSlim scam, do you see that? A. I see that, but I didn't actually read the judgment. Q. So you didn't read the judgment, but you wrote an email saying that you were shocked and sickened at the striking similarity of methods, techniques and facts, so you just made that up? A. I didn't make it up, I was trying to get her to act, and give me what I wanted. Q. I put it to you, Ms Johnson, that what you wrote here was accurate at the time, that you did read that judgment and you did come to that realisation? A. Well, whatever, I didn't read the judgment, but I was told, I was told what was in it, but I didn't read it. Q. Who told you that? A. Leo." 1. Later, she gave this evidence: [186] "Q. So which is incorrect, your sworn affidavit evidence or the evidence that you gave yesterday where you said you did not read that judgment? A. Yeah, I did not read that judgment. HIS HONOUR Q. So why did you swear that you did? A. Your Honour, when I was doing this affidavit it was absolutely massive, I was really sick, I was not in my right mind. I had assistance from other people and by the time I'd finished it, I was going through it, I was trying to get stuff out. I asked for further time, I would have gone through it in absolute detail. By the time I swore it I just had to go through and just sign it. Q. So you swore you read Logan J's judgment, you sent an email to Foster and Larter saying you read Logan J's judgment but that wasn't true. Is that what you're telling me? A. It wasn't true. I'm sorry about that but I mean, I'm on my oath, I can tell you now I didn't read it but Leo read it and he told me about it but I can't remember what it is now." 1. Regardless of whether or not she read the entire judgment, or any of it, it is clear enough that she appreciated the substance of it, and in particular recognised in STC "a striking similarity of methods, techniques and facts to those which Justice Logan found Peter has used in the SensaSlim scam." On any view, by this time she was aware of matters which caused her very deep concern about the affairs of STC, the role of Foster, and the jeopardy in which investors' funds were. Critically, this was before Mr Mackinnon first invested in STC on 31 October 2013. 2. In answer to questions from the primary judge about draft answers she had provided to questions from Mr Murray, a journalist from The Courier Mail, that she said she prepared and forwarded to the STC desk on 4 or 5 October 2013, she said (emphasis added): [187] "Q. In your draft to STC, what did you say in the part of the question, "What connection does Peter Foster have with Sports Trading Club?"? A. Your Honour, every question that was asked of me - and I can't remember if these were the questions that were sent to me or not - but every question that was asked of me I answered accurately and I would have said that he managing the posting of the trades, I imagine. I wish I could find my email, because it was not this." 1. This bespeaks knowledge that Foster was running the trading operations. Notably, there was nothing to suggest that anyone else was running the operations of STC, and if there was, Ms Johnson as a partner ought to have known. Moreover, it was with Foster that Ms Johnson dealt when making arrangements or demands for payment of her seed capital loan and her remuneration. [188] 2. Ms Johnson's evidence, as the extracts set out above indicate, belies some knowledge of Foster's record and reputation; indeed, she admitted that she was "vaguely" aware of the allegations made against Foster, and she said that the reason why Foster's name was not on the Partnership Deed was that she was expecting him to be jailed. [189] It bespeaks knowledge that Foster had been involved in scams and illegitimate businesses, and in trouble as a result, and it shows that she believed that he ought not be trusted with investors' money. 3. Accepting that Ms Johnson was reassured and believed that the STC business would be legitimate, and even assuming that she understood, at least initially, that Foster's participation would be peripheral, that does not detract from the proposition that the investing public would consider it material that the undertaking in which they were being invited to invest was conceived and promoted by a notorious scamster. It is self-evident that the involvement of a notorious conman as principal architect of an investment scheme would be highly material to potential investors, and indeed that if it were revealed, no-one would invest. One can hardly conceive of a matter more requiring disclosure to the public, in the context of the promotion of an investment scheme, than the fact that its architect and a person involved in its management is a notorious conman. Ms Johnson's answer, referred to above, [190] that she "never saw any evidence of it", is redolent of a submission made on her behalf that, as a solicitor, she applied "Briginshaw-style thinking" to such rumours and allegations. I understand that to mean that she would not act on a suspicion or rumour unless "comfortably satisfied" of its truth. However, that entirely misconceives her role: she was acting not as a judge of the truth of allegations against Foster, but as one of two partners in an partnership promoting to the public an investment scheme for profit, in a context where her own professional standing was being used to provide an aura of respectability, and where mere knowledge of involvement of Foster would have been material to investors. 4. His Honour's conclusion that Ms Johnson knew that Foster's involvement in STC could not be publicly revealed was not inferential only, but was firmly founded in Ms Johnson's own evidence, which confirms that she held the view that disclosure of his involvement would be destructive of the business. When it was put to her, with reference to Foster, that "[t]here was an understanding at the outset, that notwithstanding the scope of his role, his name was never to be associated with the business", Ms Johnson responded that "he was not to be associated with the business". [191] I accept, as was submitted on her behalf, that that answer may well mean that her understanding was that he was to have nothing to do with the business, beyond the peripheral initial aspects already mentioned, rather than that his involvement was to be kept covert; the answer is at least ambiguous. However, there is other evidence that Ms Johnson well knew that public knowledge that Foster was involved in any way would be seriously injurious to the business: [192] "Q. My question was, if it became public knowledge that he was involved, in any way, shape or form, with STC, the business would collapse, and that was your concern? A. It would not have been good, I suppose, for the business. It would have jeopardised the funds of anyone who had invested. Q. When the threat of exposure occurred in April of 2013, you went to Pikes & Verekers Lawyers for the reason to try to shut down the attempt to make Mr Foster's involvement public, that was why you were there? A. Yes, because he was going to be out of it within a matter of weeks. He wasn't supposed to be involved in it anymore." 1. Viewed objectively, disclosure that Foster was involved, in any way at all, with STC, would have been a material consideration for potential investors, because of his reputation and record. Subjectively, there was no error in his Honour's findings that Ms Johnson knew that to be so, and that, at least by 1 September 2013, she "well knew" that Foster was directing the operations of STC. Grounds 10, 13, and 17 fail. The representation by silence that Foster was not involved (Grounds 19, 20, 21, 22, 23, 24, and 25) 1. For the foregoing reasons I would reject the several challenges to the findings of fact impugned by grounds 10, 11, 13, 14, 15, and 17. The critical conclusions that emerge undisturbed from their consideration are that: 1. Ms Johnson's name, image, reputation, and standing were being deployed as part of the marketing of STC, which was calculated to add respectability to the scheme; 2. Disclosure of Foster's involvement would have been destructive of that respectability and highly detrimental to STC's business; and 3. Ms Johnson knew each of those matters. 1. It follows that Ms Johnson knew, or at least ought to have known, that Foster's involvement would be material to investors, and that they would have expected it to be disclosed. 2. Those findings provided the foundation for his Honour's conclusion that Ms Johnson, by remaining silent on the topic, represented that Mr Foster was not involved in STC, and thereby engaged in misleading and deceptive conduct. 3. It is self-evident that Foster's role and involvement in STC was not disclosed to the public, or to the section of it constituted by investors and potential investors, by Ms Johnson or anyone else. Not only did Ms Johnson merely not disclose Foster's involvement, she actively participated in concealing it. At the March 2014 meetings with Mr de Klerk, she pretended that "Mark Hughes" was a real person with whom Mr de Klerk had been dealing, when it was in truth Foster. [193] She was involved in giving instructions to Pike & Verekers to send the 5 April 2013 letter, in which it was stated, on her instructions, that the "imputation that our clients are operating the Sports Trading Club as a mere front for the notorious conman Peter Foster" was without foundation. [194] At the 30 May 2013 Skype call meeting with Mr de Klerk, where Foster was to Ms Johnson's knowledge on the call, when Mr de Klerk addressed him as "Mark", she remained silent. [195] Ms Johnson received calls from a number of potential investors – including Mr Radica and Mr Seng – who inquired about aspects of STC, including, in the case of the former, whether it was a "scam", yet Ms Johnson never referred to Foster's involvement – even to Mr Seng, who contacted her in April 2014, after she had retired from the partnership; Ms Johnson warned him against investing, but still did not refer to Foster's involvement. [196] Although Ms Johnson was no longer a partner, and is not sued in respect of this period, this reinforces a consistent pattern of not revealing Foster's involvement, which supports the inference that she knew that it could not be, and was not to be, revealed, and is inconsistent with her claims to have taken steps at an earlier stage, albeit anonymously, to disclose his involvement. 4. In October 2013, in response to communications from the journalist Mr Murray, of The Courier Mail, who asked directly whether Foster was involved in STC, Ms Johnson again did not disclose it. [197] On 3 October 2013, in response to communications to STC from Mr Murray, the solicitor, Mr Tassell, again purporting to act on behalf of Ms Johnson and Ms Larter, wrote to The Courier Mail threatening to commence proceedings in relation to "grossly defamatory" allegations "[suggesting] that their business [STC] is in some way related to Mr Peter Foster". [198] Ms Johnson did not recall whether she had any role in giving instructions for that letter. [199] However, Mr Murray then called Ms Johnson, who asked him to put his questions in writing, which he did. [200] Ms Johnson prepared draft answers to these questions, which she sent to the "STC desk". The following day, 5 October 2013, an email was sent, purportedly on behalf of Ms Johnson, from her STC email address (to which Foster had access), stating that Foster had no involvement with the business and no relationship with Ms Johnson. [201] Ms Johnson denied having composed the answers which were sent, and the primary judge appears to have accepted her evidence on this point. However, as his Honour found, Ms Johnson must have known that by sending her proposed answers (which she was not able to produce) through the "STC desk", Foster would become aware of them, leaving open the near certainty that he would edit them before they were released to the journalist. [202] 5. Ground 19 of the Notice of Appeal was as follows: "His Honour erred in applying the wrong legal principle to the facts, namely that silence may amount to misleading or deceptive conduct because no claim was made against the appellant under the Australian Consumer Law and the only claims made by the respondent against the appellant were in respect of the Representations for 'deceit' (J7[764] – [766])." 1. No argument was addressed to this ground, which in any event appears to ignore the effect of the amendments to the pleading. It is misconceived. 2. Grounds 20 to 25 essentially challenge the conclusion that Ms Johnson, by her silence, represented that Mr Foster was not involved in STC, and thereby engaged in misleading and deceptive conduct. They are as follows: "20. His Honour erred in applying the wrong legal principle to the pleading and the facts, namely that Ms Johnson was required to 'speak' or reveal information to respondent (J7[776] and J7[786] – [790]). 21. His Honour erred in holding that the appellant misled the respondent into believing that Mr Foster was not involved in STC by silence (as opposed to leading the respondent to incorrectly believe that he was not) (J7[791]). 22. His Honour erred in applying the wrong legal principle to the pleading and the facts namely that respondent was entitled to expect that if the appellant knew of matters which suggested that an investment in STC was unsafe she would disclose those matters to them or a third party (J7[782]). 23. His Honour erred in applying the wrong legal principle to the pleading and the facts namely that the respondent was entitled to reasonably expect that the appellant disclose to them any impropriety in the affairs of STC (J7[783] and J8[99]). 24. His Honour erred in applying the wrong legal principle to the pleading and the facts namely that the appellant had an obligation at large to disclose any suspicion on her part to the respondent or third parties (J7[786] – [790]). 25. His Honour erred in holding that the appellant represented to the respondent that Mr Foster was not involved in STC (J7[791])." 1. The primary judge observed that silence can amount to misleading or deceptive conduct, referring to Demagogue Pty Ltd v Ramensky, where Black CJ said: [203] "Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive." 1. In particular, with reference to Rafferty v Madgwicks, [204] his Honour observed that "silence may constitute misleading or deceptive conduct if there is a reasonable expectation that the silence would be broken". [205] In this respect, the appellant submitted: "38. While a 'reasonable expectation' might arise on a claim by de Klerk, it cannot found any claim by the Respondent or other investors against the Appellant. The Foster Representation is of far greater scope than the 'Mark Hughes' representation in that it was found to have been made to all of the investors from 14 March 2013. But when analysed in light of Miller, the true representation is the "Mark Hughes" representation and the Foster Representation is an unnecessary overlay on the "Mark Hughes" representation. So far as the Respondent is concerned, no representation was made to him by the Appellant at all. The Foster Representation is an incorrect extension of the "Mark Hughes" representation to all of the represented Plaintiffs. 39. When considered from the perspective of the 'expectation' or duty imposed on the Appellant by the finding that she made the Foster Representation, it is that she was obliged 'confess a misrepresentation' (and a negative one at that) to a class of people with whom she had had no direct contact and whose identity she had no specific knowledge (other than de Klerk). Such an expectation or duty is not the correct analysis of the circumstances giving rise to this proceeding. There is no legal principle requiring the Appellant to speak to police or the media about unproven suspicions she had about Foster – this was not a misprision case. His Honour's construction of an obligation on the Appellant to inform the world of her suspicions about Foster, against which obligation he then found her silence to have mislead everyone on the planet who may have been contemplating an investment, is legally untenable apart from being forensically flawed." 1. The essential proposition advanced is that no "reasonable expectation" of disclosure could arise in respect of any investors other than Mr de Klerk. With reference to the judgment of McLure P in Owston Nominees, [206] it was submitted that reasonable inferences, reasonable assumptions, and reasonable expectations arise from the objectively determined circumstances in the actual or constructive knowledge of the parties, and that contextual circumstances of which a defendant has no actual or constructive knowledge, and which alter the scope of what would otherwise be attributed to the defendant, are irrelevant. 2. Properly analysed, Owston Nominees does not support the proposition that any "reasonable expectation" of disclosure was limited to Mr de Klerk and did not extend to other investors. McLure P's illuminating examination of the different roles that "silence" can play in the context of statutory misleading and deceptive conduct supports the following propositions. 3. First, "engaging in conduct" involves an act or, at a minimum, refraining otherwise than inadvertently from doing an act. As her Honour explained (in the context of the predecessor to ACL, s 18, namely (CTH) Trade Practices Act 1974, s 52) (footnote added): [207] "Based on the language of s 4(2) [208] as a whole, "refusing to do an act" requires an act or, at a minimum, refraining otherwise than inadvertently from doing an act. Thus, an omission (a failure to act) cannot itself constitute conduct for the purposes of s 52. In other words, in order for a person to engage in conduct contrary to s 52 that person must do an act or at least refrain, otherwise than inadvertently, from doing an act." 1. Secondly, "refraining otherwise than inadvertently" involves a deliberate decision not to disclose. As her Honour said: [209] "To refrain otherwise than inadvertently requires a deliberate decision to withhold information: Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211 at [58]; Rhone-Poulenc at 489-490; Costa Vraca at 723. Thus, the defendant must advert to the question and form an intention not to disclose. That conclusion is consistent with the natural and ordinary meaning of the term "refrain" which means to forebear or to keep oneself back." 1. Thirdly, however, conduct is to be viewed in context, and contextual matters may widen the range of conduct attributable to a person: [210] "The statutory prohibition in s 52, when read with s 4(2), is on conduct of (or "by") the defendant which is misleading or deceptive (which should be taken to include "likely to mislead or deceive"). When considering whether conduct is both "of the defendant" and "misleading or deceptive", the focus widens to include contextual matters. Contextual matters can have a material impact in widening the range of conduct properly attributable to the defendant. That is, the actual conduct (in its natural and ordinary meaning) of the defendant is examined in its broader context to assess the full scope of what can properly be characterised, expressly or impliedly, as conduct of the defendant. For example, a responsive nod of the head or raised thumb implies that the defendant in effect made or confirmed the correctness of the statement to which it was responding. Contextual conduct of this nature not only connects back to the defendant but also identifies what the defendant's conduct is capable of conveying or communicating to the persons to whom the conduct is directed. Ordinarily, the term "representation" is used to capture, in words, both the defendant's contextual conduct and what it conveys or communicates to others. That is how the term representation is used in the respondents' pleading and is its intended meaning in these reasons. It has a wider than normal meaning because it focuses on the defendant's contextual conduct. The making of a representation is the doing of an act for the purposes of s 4(2)." 1. Fourthly, in contextualising a person's conduct, regard may be had only to circumstances of which the person had actual or constructive knowledge. For this purpose, reasonable explanations arising from the objectively determined circumstances are in the constructive knowledge of the parties. Her Honour explained: [211] "Thus, the identification of the defendant's contextual conduct and what it conveys or communicates to the persons to whom it is directed must be assessed having regard to all relevant surrounding circumstances. Not all surrounding circumstances are relevant in the identification process. In particular, conduct cannot be attributed to the defendant unless it had actual or constructive knowledge of the circumstances that affect its content. In other words, contextual circumstances of which the defendant had no actual or constructive knowledge that alter the scope of what would otherwise be attributed to it, are irrelevant: see Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [27]. This specific proposition is but an aspect of the wider and well-established proposition that the identification of the defendant's actual conduct, the relevant surrounding circumstances and what is capable of being conveyed is to be undertaken by reference to the actual, objectively determined, circumstances. Reasonable inferences, reasonable assumptions and reasonable expectations arising from the objectively determined circumstances will be in the constructive knowledge of the parties. An objective test excludes from consideration subjective matters (knowledge, intention) not known to the parties. I leave open the question whether an objective test applies in circumstances where the only relevant conduct of the defendant is a deliberate failure to disclose." 1. Fifthly, the making of a representation is an act; ordinarily, the role of silence is negative in that it confirms that there is nothing to prevent a representation arising: [212] "When identifying the defendant's contextual conduct, regard can and should be had to all the actual conduct of the defendant which encompasses acts and omissions (including silence). Ordinarily, the role of silence is negative in the sense that it confirms there is nothing to prevent a representation arising, as in Fraser, Demagogue and Henjo. If the surrounding circumstances alter what the actual conduct would otherwise convey, it is the defendant's contextual conduct that must satisfy the definition of "engage in conduct" in s 4(2). The making of a representation is an act." 1. Sixthly, a non-disclosure can, because of common assumptions or other relevant surrounding circumstances, give rise to an implied representation that the undisclosed fact did not exist. Making such an implied representation is the doing of an act within ACL, s 2(2). In this way, the satisfaction of the "reasonable expectation" test can result in the defendant doing an act: [213] "A defendant's non-disclosure can, because of common assumptions or established practices or other relevant surrounding circumstances, give rise to an implied representation by the defendant that an undisclosed fact did (or did not, as the case may be) exist. The making of such an implied representation by the defendant is the doing of an act and is thus within s 4(2). The satisfaction of the "reasonable expectation" test can result in the defendant doing an act." 1. Seventhly, notwithstanding that to "refrain otherwise than inadvertently" requires a deliberate decision to withhold information, it is necessary to establish a deliberate omission only where the actual conduct together with all the relevant surrounding circumstances are (objectively) incapable of giving rise to the misleading or deceptive contextual conduct complained of. This is because, where the actual conduct in its surrounding circumstances gives rise to the misleading or deceptive contextual conduct, there is an "act" within the definition and it is unnecessary to resort to "refraining otherwise than inadvertently" from acting. However, where the actual conduct in its surrounding circumstances is objectively incapable of giving rise to the misleading or deceptive contextual conduct, there is no "act". In those circumstances, there may nonetheless be misleading or deceptive conduct, by a deliberate non-disclosure – for example, where the person is aware that the other party is under a misapprehension: [214] "The need to establish a deliberate omission will only arise if the defendant's actual conduct together with all the relevant surrounding circumstances are (objectively) incapable of giving rise to the misleading or deceptive contextual conduct complained of. In that event, the circumstances in which deliberate non-disclosure may be misleading or deceptive conduct will be limited; perhaps where the defendant is aware of another's misapprehension in the type of situations where relief is available for unilateral mistake (Taylor v Johnson (1983) 151 CLR 422) or where the plaintiff's misapprehension is caused by, but is not objectively attributable to, the defendant's conduct." 1. In the present case, Ms Johnson knowingly lent her name, image, and reputation to the promotion of STC, even if she did not know in detail how it was being promoted. Use of her name, image, and reputation as a senior member of the legal profession was objectively calculated to confer an appearance of respectability on STC. A manifestation of this is that Mr Mackinnon noticed her name in the prospectus and contacted the Law Society to confirm that she was a registered lawyer before deciding to invest. [215] 2. Objectively judged, knowledge that Foster was involved in STC in any role, but even more so in the role which he came to play, would have completely undermined that respectability. As has already been explained, objectively judged, it would have been material to investors and prospective investors: even if Foster's level of involvement was intended to be as limited as Ms Johnson claims to have believed, the fact that STC was conceived and promoted by someone with his record was likely to influence the decision of prospective investors. Objectively judged, prospective investors would reasonably have expected it to be disclosed: this was not an arms-length negotiation, but an approach to the public by promoters for the investment of funds in a scheme, which was represented to be risk free and reputable. 3. Thus, objectively judged, in the context that an investment in STC was represented to be risk free and reputable: 1. the involvement of Foster in STC was material to a decision to invest in STC; 2. there was a reasonable expectation on the part of members of the public invited to invest in STC that the fact that Foster was involved would be disclosed; and 3. the promotion of STC, via the Proposal or otherwise, without disclosing Foster's involvement, was conduct which was misleading and deceptive. 1. In circumstances where, on the principles already discussed, that was conduct for which the partnership of which she was a member is responsible, that suffices to render Ms Johnson liable for the contravening conduct, regardless of her knowledge. However, as "reasonable inferences, reasonable assumptions and reasonable expectations arising from the objectively determined circumstances will be in the constructive knowledge of the parties", [216] those matters were within Ms Johnson's constructive knowledge. Moreover, insofar as Ms Johnson's actual knowledge of contextual matters is relevant, even if she did not know the form and contents of the Proposal, she knew that there would have to be marketing material of some sort; she knew that her name and image were being used in connection with marketing; she knew that Foster's involvement was material to investors and could not be disclosed; and she at least ought to have known that investors and potential investors would expect it to be disclosed. Furthermore, even if it were necessary to show that she deliberately did not disclose Foster's involvement, that requirement would be satisfied. Indeed, she took positive steps to conceal it, in connection with the instructions given to Pike & Verekers for the 5 April 2013 letter. Ms Johnson's knowledge and deliberation is also relevant to the cause of action in deceit, considered below. [217] 2. His Honour therefore rightly concluded that Ms Johnson engaged in misleading and deceptive conduct, essentially by not disclosing to the public (or that section of the public constituted by potential investors) the involvement of Mr Foster in STC, in the context that STC was being marketed to the public as a risk-free and reputable investment using her name, image, and reputation, and where Foster's involvement would have undermined that impression. Grounds 19 to 25 fail. Deceit (Notice of Contention) 1. By Notice of Contention, leave to file and rely on which was granted at the hearing of the appeal but which had been foreshadowed in written submissions, Mr Mackinnon contends that the judgment below should be upheld on grounds other than those relied upon by the primary judge, namely: "1. His Honour should have found that the fifth defendant was also liable for the plaintiff's loss by reason of the matters pleaded at paragraphs 35 to 37 (deceit), and 39 (conspiracy) of the Further Amended Commercial List Statement." 1. Although I would uphold his Honour's finding of liability on the basis of statutory misleading and deceptive conduct, the Notice of Contention remains relevant, because of Ms Johnson's appeal from his Honour's disallowance of a defence of apportionment. As explained below, [218] while a claim for damages for statutory misleading and deceptive conduct is an apportionable claim, a claim in deceit is not. 2. If there were any doubt about it, ground 19 of the Notice of Appeal, referred to above, [219] makes clear that Ms Johnson understood that there was a claim in deceit against her. 3. In the No 8 Judgment, his Honour said: [220] "Deceit [40] On 20 September 2019, Mr Dixon submitted that I should make findings of deceit against Ms Johnson. [41] To the extent that I have made the finding reiterated at [38], I have done so. [42] However, Mr Dixon accepted that such a finding does not take Mr Mackinnon's case, so far as it concerns the relief to which he is entitled, any further." 1. The finding at [38] was as follows: [221] "Further, I found that Ms Johnson made representations referred to at [35(1), (4) and (5)] with knowledge that they were false." 1. The representations referred to at [35] of his Honour's judgment are those set out in [52] above; of them, ultimately only that in [35(5)] is relevant, namely that Ms Johnson represented, from at least 30 September 2013, to all existing Associate Members of and all prospective investors in STC, that Mr Foster was not involved in STC. 2. The consideration, above, of the grounds of appeal relating to the Foster Representation shows that there was no error in those conclusions. 3. His Honour did not, in the deceit finding, refer to the representation referred to in [35(6)], being the Proposal Representations, although his Honour's finding that Ms Johnson was "at the very least" recklessly indifferent to whether the statements contained in the Proposal were true or false would have supported a like finding in respect of the Proposal Representations. However, it follows from my conclusion that Ms Johnson was not shown to have known of the Proposal or its contents that she is not liable for deceit in that respect. 4. The primary judge considered that although deceit was established against Ms Johnson, it did not further Mr Mackinnon's case in respect of the relief to which he was entitled. In circumstances where a defence of apportionment was disallowed, both the conclusion that a finding of deceit would not advance Mr Mackinnon's case in respect of the relief to which he was entitled, and counsel's concession on which it was founded, were correct. However, for reasons explained below, [222] it is seriously arguable that Ms Johnson ought to have been permitted to agitate a defence of apportionment, insofar as the claims against her were apportionable. If she were so permitted, then a finding of deceit would very much advance Mr Mackinnon's case as to relief, because that claim would not be apportionable. 5. It follows that the Notice of Contention should be upheld, at least insofar as concerns the claim in deceit, in respect of the Foster representation. As that suffices to found liability to Mr Mackinnon on a non-apportionable claim, it is unnecessary further to consider the Notice of Contention, insofar as it concerns conspiracy. Quantification (Ground 29) 1. Ground 29 contends that the primary judge "erred in not taking into account recoveries made" by Mr Mackinnon and for the benefit of the Group Members prior to judgment. 2. In the No 8 Judgment, delivered on 28 November 2019, his Honour directed that the parties bring in short minutes to give effect to the reasons and to provide for the future conduct of the matter. In the No 9 Judgment, on 13 December 2019, his Honour made the following orders, in accordance with short minutes brought in by the plaintiff: [223] "1. Judgment in favour of Ian Mackinnon in his personal capacity against the fifth defendant and the twelfth defendant for $200,000.00. 2. Interest on the judgment pursuant to s 100 Civil Procedure Act 2005 (NSW) as against the fifth defendant and twelfth defendant from 4 November 2013 to 28 November 2019 in the sum of $71,188.36. 3. The fifth defendant and twelfth defendant to pay the plaintiff's costs of these proceedings as agreed or as assessed." 1. Ms Johnson submits that his Honour failed to take into account prior recoveries on behalf of the Group Members, and amounts received by Mr Mackinnon. In the No 7 Judgment, his Honour noted that of the $12.3 million invested by Group Members, some $6.4 million had been recovered, leaving a shortfall of some $5.9 million. [224] In his affidavit, Mr Mackinnon acknowledged that he had received what he was told were trading profits from STC, before he terminated the loan agreements, but not the principal. 2. CPA, s 177(1)(e), relevantly provides that in determining a matter in representative proceedings, the Court may "make an award of damages for group members, sub-group members or individual group members, being damages consisting of specified amounts or amounts worked out in such manner as the Court specifies". The judgment in favour of Mr Mackinnon was presumably given pursuant to the power to make an award of damages for an individual group member. The principal sum of $200,000 awarded to Mr Mackinnon represents, self-evidently, the principal amount of his investment. The question of what if any damages might be awarded for the remaining group members remains to be resolved. 3. The amounts Mr Mackinnon acknowledged having received were ostensibly trading profits, to which he was entitled, under the loan and profit-sharing agreement between him and STC, while his investment remained on foot, as distinct from the return of principal. Those receipts did not affect his right to full repayment of his principal. There was no evidence that Mr Mackinnon had received anything on account of the principal. Moreover, the No 9 Judgment reveals that upon the plaintiff bringing in short minutes, and although there was argument in respect of some related issues, including an attempt to re-agitate the question of apportionment, [225] there is no suggestion of any argument about the quantification of the judgment at $200,000. 4. In those circumstances, no error is apparent in assessing Mr Mackinnon's damages at $200,000. Ground 29 therefore fails. Apportionment (Grounds 9 and 30) 1. Grounds 9 and 30 concern the primary judge's refusal to permit Ms Johnson to advance, belatedly, a defence of apportionment. They are as follows: "9. His Honour erred by failing to accord the appellant procedural fairness and/or natural justice by refusing to allow the appellant's application to amend her defence to plead that Mr Mackinnon's claim was apportionable for the purposes of s. 34(1) of the Civil Liability Act 2002 (NSW) (J8[179] – [182]). … 30. His Honour erred in failing to apply ss. 34 and 35 of the Civil Liability Act 2002 (NSW) to the facts in that there were multiple concurrent wrongdoers disclosed on the facts and any judgment against the appellant must reflect the proportion or loss for which the appellant was responsible (J8[179] – [182])." 1. The issue of apportionment was first raised on behalf of Ms Johnson after delivery of the No 7 Judgment, and was addressed by the primary judge in the No 8 Judgment, as follows: [226] "Apportionment [179] On 20 September 2019, Mr Argy submitted, for the first time, that Mr Mackinnon's claim was an "apportionable claim" for the purposes of s 34(1) of the Civil Liability Act 2002 (NSW) and that accordingly, by reason of s 35(1)(b) of that Act I am not empowered to give judgment against Ms Johnson for more than an amount: " ... reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of [Ms Johnson's] responsibility for the damage or loss". [180] Ms Johnson did not plead that Mr Mackinnon's claim was an apportionable claim. Mr Argy made no such submission amongst the extensive submissions he made prior to my judgment of 18 February 2019. The question of apportionment was mentioned in passing in two paragraphs in Ms Johnson's 152 page submission of 22 July 2019. As I have said, Mr Argy first mentioned the matter on 20 September 2019. [181] Notwithstanding the language of s 35(1)(b) of the Civil Liability Act, there are numerous authorities in this and other courts to the effect if that a party wishes to invoke the relevant provisions of the Civil Liability Act or its analogues, the matter must be pleaded: Ucak v Avante Developments Pty Ltd [2007] NSWSC 367 at [41] (Hammerschlag J); Reinhold v New South Wales Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187 at [32] (Barrett J); Permanent Custodians Ltd v King [2010] NSWSC 509 at [31] (Schmidt J); Miletich v Murchie (2012) 297 ALR 566; [2012] FCA 1013 at [116] (Gray J); Polon v Dorian [2014] NSWSC 571 at [812] (Hall J); Wieland v Texxcon Pty Ltd; Porz v Texxcon Pty Ltd; Nominexx Pty Ltd v Wieland (2014) 313 ALR 724; [2014] VSCA 199 at [97] (Nettle, Hansen and Beach JJA); and In the matter of Kupang Resources Ltd (subject to Deed of Company Arrangement) [2018] NSWSC 1872 at [41] (Rees J). [182] The matter not having been pleaded or even mentioned prior to 20 September, I am not prepared to entertain it." 1. Before this Court, Ms Johnson submitted that she did not realise until the No 7 Judgment of 19 February 2019 that findings were being made against her personally, as distinct from in her capacity as a partner, and thereupon raised the issue at the first opportunity, in oral submissions on 20 September 2019 and then in written submissions on 27 September 2019. She submitted that the claim was clearly an "apportionable claim" which engaged (NSW) Civil Liability Act 2002 ("CLA"), s 35, and that on apportionment Foster ought to bear "a very high percentage" of the loss. 2. A claim for damages under ACL, s 236, for misleading and deceptive conduct in contravention of ACL, s 18, is an apportionable claim under CLA, Part 4, by reason of CLA, s 34(1)(b), which expressly so provides, and by reason of CCA, Part VIA, in which s 87CD provides as follows: 87CD Proportionate liability for apportionable claims (1) In any proceedings involving an apportionable claim: (a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss; and (b) the court may give judgment against the defendant for not more than that amount. (2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim: (a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part; and (b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant. (3) In apportioning responsibility between defendants in the proceedings: (a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law; and (b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings. (4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings. (5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise. 1. At least for all present purposes, the provisions are not materially different. Both CLA, s 35(1), and CCA, s 87CD(1), are expressed in mandatory terms, in stipulating that "the liability of a defendant … is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss" (emphasis added); and that "the court may give judgment against the defendant for not more than that amount" (emphasis added). However it is well established, by the authorities to which the primary judge referred, that it must be pleaded. [227] In this respect, it is analogous to a Limitation Act defence. The appellant's contention that his Honour was bound to apply it regardless of it not being pleaded is not correct. 2. Although a defendant invoking CLA, s 35, must provide information of "the circumstances that may make the other person a concurrent wrongdoer in relation to the claim", [228] and the appellant had not done so, it cannot seriously be disputed that the ACL claim against Ms Johnson was an apportionable claim, [229] and that at least Foster and Ms Larter were, for that purpose, concurrent wrongdoers. The relevant considerations in apportioning responsibility were described in Kayteal Pty Ltd v Dignan, [230] as follows: "In determining the relative responsibility of concurrent wrongdoers for a loss, it is necessary to compare the blameworthiness and causative potency of the conduct of each of them [Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187, [50]-[53]]. Relevant factors include, but are not limited to, which of the wrongdoers was more actively engaged in the activity causing loss, and which was more able effectively to prevent the loss [Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463, [93]-[97]]. Although allowance should be made for the circumstance that the responsibility of one wrongdoer may be relatively increased if it was engaged by the plaintiff specifically for the purpose of guarding against the potential wrongdoing of another (such as a fraudster), there must nonetheless still be a reduction in the liability of the first, as the fraudster is on any view a concurrent wrongdoer, and the fraudster's responsibility may well exceed that of the solicitor. Thus in Ginelle Finance Pty Ltd v Diakakis [2007] NSWSC 60, Hoeben J apportioned liability 90% to the fraudster and 10% to the solicitor. An almost identical result was reached by Bryson AJ in Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 25,259. And in Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505, [571]-[600], Young CJ in Eq (as his Honour then was) apportioned responsibility 72.5% to the principal fraudster (Caradonna), 15% to a solicitor who had falsely witnessed a signature (Flammia), and 12.5% to the negligent solicitors - even though a purpose of engaging solicitors was to guard against the conduct of the fraudster]. As Young CJ in Eq said (at [593]-[595]), it would be wrong simply to say that those cases almost compel subsequent courts to reach the same apportionment in similar cases; but they do provide much needed guidance." 1. It is difficult to see how, upon apportionment, Ms Johnson's responsibility would not have been a minority share, albeit a still significant one, perhaps in the order of 30% (Foster as the architect and promoter bearing 50% and Larter 20%, Ms Johnson's responsibility being arguably somewhat greater than Ms Larter's on account of the significance of her professional standing to the marketing of STC). Disallowing reliance upon a defence of apportionment denied Ms Johnson a real prospect of much reducing her liability. 2. Although the application was belated, it must be seen in the context that the plaintiff's case had been amended on the second day of the trial, when it became apparent that Ms Johnson's liability as a partner was not limited. The possibility that the case might have been conducted differently had apportionment been in play, as the respondent argued, in that additional questions might have been asked in cross-examination about the degree of Ms Johnson's involvement relative to the other protagonists, which would have been relevant to a submission on apportionment, appears remote, and its likely impact on any apportionment marginal. Although his Honour noted that the issue was not pleaded, and was raised after the evidentiary cases had closed, [231] his Honour did not refer, at least expressly, to what ought to have been the dominant consideration, namely the balance of prejudice between granting and refusing leave to amend to plead a defence of apportionment. In my judgment, it is at least strongly arguable that there was error in refusing leave to rely on a defence of apportionment, in circumstances where Ms Johnson's liability depended only upon the ACL claim. 3. However, the decision on the Notice of Contention to uphold Ms Johnson's liability on the concurrent basis of deceit renders further consideration of this issue unnecessary. It is only necessary to consider apportionment if Ms Johnson's liability depends on an "apportionable claim". While contravention of the statutory prohibition on misleading and deceptive conduct is such a claim, deceit is not. CLA, s 34A, provides as follows: 34A Certain concurrent wrongdoers not to have benefit of apportionment (1) Nothing in this Part operates to limit the liability of a concurrent wrongdoer (an excluded concurrent wrongdoer) in proceedings involving an apportionable claim if — (a) the concurrent wrongdoer intended to cause the economic loss or damage to property that is the subject of the claim, or (b) the concurrent wrongdoer fraudulently caused the economic loss or damage to property that is the subject of the claim, or (c) the civil liability of the concurrent wrongdoer was otherwise of a kind excluded from the operation of this Part by section 3B. (2) The liability of an excluded concurrent wrongdoer is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant. (3) The liability of any other concurrent wrongdoer who is not an excluded concurrent wrongdoer is to be determined in accordance with the provisions of this Part. 1. CCA, s 87CC, is to similar effect. 2. A person who causes loss by deceit does so fraudulently within s 34A(1)(b). In IBEB Pty Ltd v Duncan, it was held that apportionment was excluded by s 34A(1)(a) on the basis that the defendant intended to cause the loss the subject of the claim, where he had been "deliberately deceitful in the representation that he had arranged to be conveyed". [232] That conclusion could equally have been supported by s 34A(1)(b), on the basis that the defendant in that case had fraudulently caused the economic loss. 3. It is inherent in upholding Ms Johnson's liability on the basis of deceit that she caused the relevant loss fraudulently, and it follows that her liability would not be reduced by a defence of apportionment, if it were permitted to be raised. 4. For that reason, although I might have taken a different view in respect of leave to amend to raise apportionment as a defence, his Honour's approach did not affect the correctness of the ultimate judgment. On that basis, grounds 9 and 30 fail. CONCLUSION 1. My conclusions may be summarised as follows. 2. No error is apparent in the primary judge's conclusion that Mr Mackinnon's decision to invest was a result of the Proposal Representations and of the Foster Representation. Grounds 16, 27, and 28 fail. 3. The primary judge did not err in permitting the amendment, on the second day of the trial, to [20] of Mr Mackinnon's ACLS, to specifically refer to Ms Johnson as one of those who made the representations complained of, and to plead the Foster Representation (being a representation by silence that Foster was not involved in STC). Grounds 5 and 6 fail. 4. His Honour did not err in concluding that the effect of [23] of the FACLS was to plead that each of the representations alleged in [20] and [21] were false. Grounds 7 and 8 fail. 5. Applying the Briginshaw standard, it was not open to conclude, as his Honour did, that Ms Johnson knew the contents of the Proposal. I would therefore uphold ground 12, but that does not affect the ultimate judgment, because his Honour was right to conclude that, as one of the partners in STC, Ms Johnson made the Proposal Representations to investors and potential investors to whom the Proposal was provided, including Mr Mackinnon. Ground 26 therefore fails. The result is that though I would not accept that she knew that the contents of Proposal were false, Ms Johnson is liable for the Proposal Representations. 6. His Honour did not err in holding that Ms Johnson: knew that Foster's involvement could not be publicly revealed; knew that Foster was using the alias "Mark Hughes"; knew that Foster was in control of STC; strongly suspected that investors' funds were being misappropriated; actively represented to the recipients of the 5 April 2013 Pike & Verekers letter that Foster was not involved in STC; and knew of Foster's criminal record, notoriety, and modus operandi. Grounds 10, 11, 13, 14, 15, and 17 therefore fail. 7. Objectively judged, in the context that investment in STC was represented to be risk free and reputable, the involvement of Foster was material to a decision to invest in STC; there was a reasonable expectation on the part of members of the public invited to invest in STC that the fact that Foster was involved would be disclosed; and the promotion of STC, via the Proposal or otherwise, without disclosing Foster's involvement, was conduct which was misleading and deceptive. That suffices to render Ms Johnson, as a partner in STC, liable for the contravening conduct, regardless of her knowledge. However, insofar as Ms Johnson's actual knowledge of contextual matters is relevant, even if she did not know the form and contents of the Proposal, she knew that there would have to be marketing material of some sort; she knew that her name and image were being used in connection with marketing; she knew that Foster's involvement was material to investors and could not be disclosed; and she at least ought to have known that investors and potential investors would expect it to be disclosed. Moreover, even if it were necessary to show that she deliberately did not disclose Foster's involvement, that requirement would be satisfied. Indeed, she took positive steps to conceal it, in connection with the instructions given to Pike & Verekers for the 5 April 2013 letter. His Honour therefore rightly concluded that Ms Johnson engaged in misleading and deceptive conduct, essentially by not disclosing to the public (or that section of the public constituted by potential investors), and actively concealing, the involvement of Mr Foster in STC. Grounds 19 to 25 fail. 8. The Notice of Contention should be upheld, at least insofar as concerns the claim in deceit, in respect of the Foster representation. As that suffices to found liability to Mr Mackinnon on a non-apportionable claim, it is not necessary further to consider the Notice of Contention. 9. His Honour did not err in assessing Mr Mackinnon's damages at $200,000. Ground 29 fails. 10. It is inherent in upholding Ms Johnson's liability on the basis of deceit that she caused the relevant loss intentionally or fraudulently, and it follows that her liability would not be reduced by a defence of apportionment, if it were permitted to be raised. For that reason, although I might have taken a different view in respect of leave to rely on a defence of apportionment to the statutory misleading and deceptive conduct claims, His Honour's approach did not affect the correctness of the ultimate judgment. On that basis, grounds 9 and 30 fail. 11. The appeal should be dismissed, with costs. 12. SIMPSON AJA: I have had the advantage of reading in draft the judgment of Brereton JA with which, subject to one matter, I agree. 13. Brereton JA would uphold ground 12 of the appeal, by which the appellant complains of a factual finding that she was aware that the Proposal contained false statements. I am unpersuaded that that finding was not one that was open to the primary judge (even applying the Briginshaw (Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34) standard, effectively enacted in statutory form in s 140(2) of the Evidence Act 1995 (NSW)). 14. The overall circumstances of the appellant's participation in the syndicate, the evidence of conversations with Mr and Mrs Mackinnon, and the primary judge's general rejection of the appellant's contrary evidence all, in my opinion, point to the conclusion drawn by the primary judge that the appellant was aware of the Proposal and the falsity of some, at least, of its contents. I would not uphold Ground 12. 15. Since this ground is not determinative of the appeal it is not productive to say more. 16. I agree with the orders proposed by Brereton JA. ********** Endnotes 1. Within the meaning of (CTH) Competition and Consumer Act 2010 ("CCA"), Sch 2 – Australian Consumer Law ("ACL"), s 18. 2. 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 ("No 7 Judgment"). 3. Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (in liq) (2003) 127 FCR 418 at 429 [42] (Spender J); [2003] FCA 180 ("Chaste"). 4. Chaste at 431 [57] (Spender J). 5. Chaste at 429-431 [42]-[56] (Spender J); R v Foster [2009] 1 Qd R 53 at 54-55 [2]-[5] (McMurdo P; Mackenzie AJA and Chesterman J agreeing); [2008] QCA 90. 6. Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (in liq) [2005] FCA 1212; affirmed in Foster v Australian Competition and Consumer Commission (2006) 149 FCR 135; [2006] FCAFC 21. 7. 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 ("SensaSlim No 7"). 8. SensaSlim No 7 at [73] (Yates J). 9. SensaSlim No 7 at [42], [72], [76]-[77], [79] (Yates J). 10. SensaSlim No 7 at [79] (Yates J). 11. Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (No 3) [2013] FCA 984 ("Chaste No 3"). 12. Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (No 6) (2013) 223 FCR 426 at 439 [58] (Logan J); [2013] FCA 1112. 13. Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 3) [2012] FCA 939 ("SensaSlim No 3"). 14. Foster v Australian Competition and Consumer Commission [2012] FCA 953. 15. No 7 Judgment at [54] (Stevenson J). 16. No 7 Judgment at [130] (Stevenson J). 17. No 7 Judgment at [129], [138] (Stevenson J). 18. At [19]. 19. No 7 Judgment at [132]-[137] (Stevenson J). 20. No 7 Judgment at [646]-[647], [659]-[661], [672]-[673] (Stevenson J). 21. No 7 Judgment at [149] (Stevenson J). 22. No 7 Judgment at [150]-[153] (Stevenson J). 23. No 7 Judgment at [155]-[157] (Stevenson J). 24. Tcpt, 6 February 2018, p 124(5)-(8). 25. No 7 Judgment at [159] (Stevenson J). 26. No 7 Judgment at [162]-[163] (Stevenson J). 27. No 7 Judgment at [164] (Stevenson J). 28. No 7 Judgment at [165] (Stevenson J). 29. No 7 Judgment at [166] (Stevenson J). 30. No 7 Judgment at [161], [167] (Stevenson J). 31. No 7 Judgment at [38]-[40], [42]-[43], [170], [174]-[175] (Stevenson J). 32. No 7 Judgment at [176]-[183] (Stevenson J). 33. No 7 Judgment at [187]-[188] (Stevenson J). 34. No 7 Judgment at [9], [171]-[173] (Stevenson J). 35. No 7 Judgment at [192], [198] (Stevenson J). 36. No 7 Judgment at [635]-[642] (Stevenson J). 37. No 7 Judgment at [91(1)] (Stevenson J). 38. No 7 Judgment at [91(2)] (Stevenson J). 39. No 7 Judgment at [91(3)] (Stevenson J). 40. No 7 Judgment at [92] (Stevenson J). 41. 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 ("No 3 Judgment"). 42. 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. 43. 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). 44. No 7 Judgment at [14] (Stevenson J). 45. No 7 Judgment at [791] (Stevenson J). 46. No 7 Judgment at [803] (Stevenson J). 47. No 7 Judgment at [819] (Stevenson J). 48. 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 ("No 8 Judgment"). 49. No 8 Judgment at [35]-[37] (Stevenson J). 50. No 8 Judgment at [85] (Stevenson J). 51. No 8 Judgment at [177] (Stevenson J). 52. No 8 Judgment at [40]-[42] (Stevenson J). 53. No 8 Judgment at [179] (Stevenson J). 54. No 8 Judgment at [182] (Stevenson J). 55. 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) ("No 9 Judgment"). 56. Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228 (Stephen J; Barwick CJ and Jacobs J agreeing), 234 (Murphy J); [1978] HCA 11. 57. See the definition of "involved" in ACL, s 2(1), and Yorke v Lucas (1985) 158 CLR 661 at 667-671 (Mason ACJ, Wilson, Deane and Dawson JJ), 677 (Brennan J); [1985] HCA 65. 58. No 8 Judgment at [40]-[42] (Stevenson J). 59. (NSW) Civil Liability Act 2002 ("CLA"), s 34(1)(a), only applies to the "failure to take reasonable care". 60. Referring to Gould v Vaggelas (1985) 157 CLR 215 at 238 (Wilson J); [1985] HCA 68. 61. No 8 Judgment at [85]-[87] (Stevenson J). 62. No 8 Judgment at [176]-[178] (Stevenson J). 63. Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193 at 209 [67] (McLure P); [2011] WASCA 76 ("Owston Nominees"), citing Campomar Socieded, Limitada v Nike International Ltd (2002) 202 CLR 45; [2000] HCA 12. 64. At [68]-[69]. 65. No 3 Judgment. 66. No 7 Judgment at [16]-[20] (Stevenson J). 67. No 3 Judgment at [12] (Stevenson J). 68. No 3 Judgment at [14] (Stevenson J). 69. Rose v Federal Commissioner of Taxation (1951) 84 CLR 118 at 124 (Dixon, Fullagar and Kitto JJ); [1951] HCA 68, cited in No 3 Judgment at [5] (Stevenson J). 70. No 3 Judgment at [15] (Stevenson J). 71. No 7 Judgment at [85] (Stevenson J). 72. No 3 Judgment at [20]-[21] (Stevenson J). 73. No 3 Judgment at [22]-[25] (Stevenson J). 74. (2009) 239 CLR 175; [2009] HCA 29. 75. Tcpt, 6 February 2018, p 67(34)-(43). 76. Tcpt, 6 February 2018, p 70(40)-(42). 77. No 3 Judgment at [18]-[20] (Stevenson J). 78. No 8 Judgment at [20]-[24] (Stevenson J). 79. At [76], [86]. 80. No 7 Judgment at [719]-[722] (Stevenson J). 81. No 7 Judgment at [729] (Stevenson J). 82. Fox v Percy (2003) 214 CLR 118 at 128 [28]-[29] (Gleeson CJ, Gummow and Kirby JJ), 139 [66] (McHugh J); [2003] HCA 22; see also Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at 380-381 [76] (Heydon, Crennan and Bell JJ); [2010] HCA 31. 83. (2019) 266 CLR 129 at 148-149 [55] (Bell, Gageler, Nettle and Edelman JJ); [2019] HCA 28. 84. (1938) 60 CLR 336; [1938] HCA 34 ("Briginshaw"). 85. Belhaven and Stenton Peerage (1875) 1 App Cas 278 at 279 (Lord Cairns LC; Lord Hatherley agreeing); Chamberlain v The Queen (No 2) (1984) 153 CLR 521 at 535 (Gibbs CJ and Mason J); [1984] HCA 7; Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 at 129 (Winneke P); Palmer v Dolman [2005] NSWCA 361 at [41] (Ipp JA; Tobias JA and Basten JA agreeing); Sharma v Insurance Australia Ltd t/as NRMA Insurance [2017] NSWCA 307 at [66] (Meagher JA; Macfarlan JA and Sackville AJA agreeing). 86. No 7 Judgment at [808]-[819] (Stevenson J). 87. No 8 Judgment at [62]-[63] (Stevenson J). 88. Above at [60]. 89. Tcpt, 13 June 2018, pp 465(5)-(21), 467(6)-(21). 90. No 7 Judgment at [811] (Stevenson J). 91. No 7 Judgment at [674] (Stevenson J). 92. No 7 Judgment at [675] (Stevenson J). 93. No 7 Judgment at [676] (Stevenson J). 94. No 7 Judgment at [812]-[815] (Stevenson J). 95. No 7 Judgment at [684] (Stevenson J). 96. Tcpt, 9 February 2018, p 368(30)-(43). 97. Tcpt, 7 February 2018, pp 181(25)-182(19). 98. No 7 Judgment at [273]-[281] (Stevenson J). 99. Tcpt, 8 February 2018, p 285(1)-(6). 100. No 7 Judgment at [796], [799] (Stevenson J). 101. Tcpt, 8 February 2018, pp 283(44)-284(2). 102. Partnership Act, s 10(1); Polkinghorne v Holland (1934) 51 CLR 143 at 156-157 (Rich, Dixon, Evatt and McTiernan JJ), 167 (Starke J); [1934] HCA 28; Walker v European Electronics Pty Ltd (in liq) (1990) 23 NSWLR 1 at 7 (Gleeson CJ; Mahoney JA and Meagher JA agreeing). See also Burbery Mortgage Finance & Savings Ltd (in rec) v O'Neill (No 2) [1995] ANZ ConvR 387. 103. S. Pearson & Son Ltd v Dublin Corporation [1907] AC 351 at 354 (Earl Loreburn LC; Lord Ashbourne, Lord Macnaghten, Lord James of Hereford, Lord Robertson and Lord Collins agreeing), 357-359 (Lord Halsbury); Lloyd v Grace, Smith & Co [1912] AC 716 at 725 (Earl Loreburn LC), 726 (Lord Halsbury), 737 (Lord Macnaghten; Lord Atkinson and Lord Shaw of Dunfermline agreeing). 104. No 7 Judgment at [819] (Stevenson J). 105. Tcpt, 10 November 2020, p 10(18)-(28). 106. No 8 Judgment at [64] (Stevenson J). 107. No 7 Judgment at [791] (Stevenson J). 108. No 7 Judgment at [792] (Stevenson J). 109. No 7 Judgment at [706] (Stevenson J). 110. No 7 Judgment at [707] (Stevenson J). 111. No 8 Judgment at [88]-[93] (Stevenson J). 112. No 8 Judgment at [99]-[104] (Stevenson J). 113. No 7 Judgment at [145], [204]-[210] (Stevenson J). 114. No 7 Judgment at [212], [228]-[231] (Stevenson J). 115. No 7 Judgment at [232]-[235] (Stevenson J). 116. No 7 Judgment at [237] (Stevenson J). 117. Tcpt, 7 February 2018, p 180(14)-(17). 118. No 7 Judgment at [240]-[241] (Stevenson J). 119. No 7 Judgment at [247] (Stevenson J). 120. Tcpt, 7 February 2018, p 182(36)-(45). 121. Tcpt, 8 February 2018, p 284(11)-(39). 122. Tcpt, 14 June 2018, p 552(36)-(37). 123. Tcpt, 14 June 2018, p 547(12)-(16). 124. Tcpt, 13 June 2018, p 536(3)-(6). 125. No 7 Judgment at [260] (Stevenson J). 126. No 7 Judgment at [261] (Stevenson J). 127. Tcpt, 14 June 2018, p 554(24)-(37) 128. No 7 Judgment at [264]-[265] (Stevenson J). 129. Mr de Klerk paid USD$1 million to Bella Development Ltd to purchase "the licence for STC in South Africa"; there was no such licence, and Mr de Klerk lost that USD$1 million, but it is not the subject of these proceedings: No 7 Judgment at [230], [331]-[337], [392] (Stevenson J). 130. No 7 Judgment at [338] (Stevenson J). 131. No 7 Judgment at [340]-[367] (Stevenson J). 132. No 7 Judgment at [341]-[343] (Stevenson J). 133. No 7 Judgment at [344] (Stevenson J). 134. No 7 Judgment at [358] (Stevenson J). 135. Tcpt, 14 June 2018, p 559(34)-(44). 136. No 7 Judgment at [431]-[436] (Stevenson J). 137. No 7 Judgment at [448] (Stevenson J). 138. No 7 Judgment at [455] (Stevenson J). 139. No 7 Judgment at [452] (Stevenson J). 140. Tcpt, 14 June 2018, p 572(38)-(40). 141. No 7 Judgment at [245] (Stevenson J). 142. No 7 Judgment at [256] (Stevenson J). 143. No 7 Judgment at [14] (Stevenson J). 144. No 7 Judgment at [519] (Stevenson J). 145. No 7 Judgment at [406], [435]-[436], [474], [476], [507], [512]-[513], [518], [783] (Stevenson J). 146. No 7 Judgment at [406] (Stevenson J). 147. No 7 Judgment at [425] (Stevenson J). 148. No 7 Judgment at [427]-[428] (Stevenson J). 149. At [195]. 150. No 7 Judgment at [438] (Stevenson J). 151. No 7 Judgment at [436] (Stevenson J). 152. No 7 Judgment at [437] (Stevenson J). 153. No 7 Judgment at [438]-[439], [441] (Stevenson J). 154. At [178]. 155. No 7 Judgment at [507]-[509], [513]-[516] (Stevenson J). 156. Tcpt, 9 February 2018, p 397(24)-(39). 157. No 7 Judgment at [315] (Stevenson J). 158. Tcpt, 9 June 2018, p 377(48)-(49); Tcpt, 13 June 2018, pp 531(14)-532(38). 159. Tcpt, 9 June 2018, pp 378(44)-379(19). 160. No 7 Judgment at [319] (Stevenson J). 161. Tcpt, 14 June 2018, p 579(24)-(31). 162. No 7 Judgment at [101] (Stevenson J). 163. SensaSlim No 3 at [1] (Yates J). 164. No 7 Judgment at [107] (Stevenson J). 165. Tcpt, 9 February 2018, p 352(1)-(33). 166. Tcpt, 9 February 2018, p 359(26)-(28). 167. Tcpt, 9 February 2018, p 354(6)-(31). 168. No 7 Judgment at [118], [141], [322] (Stevenson J). 169. Tcpt, 9 February 2018, pp 354(33)-355(4). 170. Tcpt, 9 February 2018, p 393(9)-(13). 171. Above at [159]-[169]. 172. No 7 Judgment at [315] (Stevenson J). 173. Tcpt, 9 February 2018, p 379(9)-(12). 174. Tcpt, 13 June 2018, p 532(37)-(38). 175. Tcpt, 9 February 2018, p 378(16)-(20). 176. No 7 Judgment at [415]-[417], [606] (Stevenson J). 177. No 7 Judgment at [419]-[420] (Stevenson J). 178. No 7 Judgment at [422] (Stevenson J). 179. No 7 Judgment at [478] (Stevenson J). 180. No 7 Judgment at [504], [524] (Stevenson J). 181. No 7 Judgment at [481] (Stevenson J). 182. No 7 Judgment at [539] (Stevenson J). 183. No 7 Judgment at [553] (Stevenson J). 184. No 7 Judgment at [555] (Stevenson J). 185. Tcpt, 13 June 2018, p 518(23)-(40). 186. Tcpt, 14 June 2018, pp 540(41)-541(9). 187. Tcpt, 13 June 2018, p 486(19)-(25). 188. No 7 Judgment at [531]-[534] (Stevenson J). 189. No 7 Judgment at [116] (Stevenson J). 190. At [218]. 191. No 7 Judgment at [443] (Stevenson J). 192. Tcpt, 13 June 2018, p 532(28)-(38). 193. No 7 Judgment at [242], [244], [249], [257], [459] (Stevenson J); No 8 Judgment at [98(j)] (Stevenson J). 194. No 7 Judgment at [315]-[330] (Stevenson J); No 8 Judgment at [98(t)] (Stevenson J). 195. No 7 Judgment at [378] (Stevenson J); No 8 Judgment at [98(j), (u)], [100] (Stevenson J). 196. No 7 Judgment at [425]-[430],[678]-[682], [768] (Stevenson J); No 8 Judgment at [98(y)] (Stevenson J). 197. No 7 Judgment at [622] (Stevenson J); No 8 Judgment at [169], [177] (Stevenson J). 198. No 7 Judgment at [574] (Stevenson J). 199. Between 10 and 18 October 2013, Mr Tassell sent another four letters, which stated that they were sent on behalf of Ms Johnson and Ms Larter, threatening defamation proceedings if any article was published alleging an association with Foster. Ms Johnson denied that she had any knowledge of or involvement in the authorisation of this correspondence, and his Honour did not find to the contrary: No 7 Judgment at [624]-[628] (Stevenson J). 200. No 7 Judgment at [580] (Stevenson J); No 8 Judgment at [173] (Stevenson J). 201. No 7 Judgment at [599]-[600] (Stevenson J).; No 8 Judgment at [172] (Stevenson J). 202. No 7 Judgment at [597], [602], [613] (Stevenson J); No 8 Judgment at [172] (Stevenson J). 203. (1992) 39 FCR 31 at 32 (Black CJ), see also 40-41 (Gummow J; Cooper J agreeing). 204. (2012) 203 FCR 1 at 68-69 [278]-[279] (Kenny, Stone and Logan JJ); [2012] FCAFC 37. 205. No 7 Judgment at [765] (Stevenson J). 206. In particular at 208 [62] (McLure P). 207. Owston Nominees at 207 [58] (McLure P). 208. Now ACL, s 2(2). 209. Owston Nominees at 207 [59] (McLure P). 210. Owston Nominees at 207 [60] (McLure P). 211. Owston Nominees at 208 [62] (McLure P). 212. Owston Nominees at 208 [64] (McLure P). 213. Owston Nominees at 208 [65] (McLure P). 214. Owston Nominees at 208 [66] (McLure P). 215. Tcpt, 6 February 2018, pp 83(48)-84(18). 216. Owston Nominees at 208 [62] (McLure P). 217. At [260]-[269]. 218. At [276]-[288]. 219. At [241]. 220. No 8 Judgment at [40]-[42] (Stevenson J). 221. No 8 Judgment at [38] (Stevenson J). 222. At [276]-[288]. 223. No 9 Judgment at [9] (Stevenson J). 224. No 7 Judgment at [9] (Stevenson J). 225. No 9 Judgment at [8] (Stevenson J). 226. No 8 Judgment at [179]-[182] (Stevenson J). 227. Ucak v Avante Developments Pty Ltd (in liq) [2007] NSWSC 367 at [34]-[36] (Hammerschlag J); Permanent Custodians Ltd v King [2010] NSWSC 509 at [15]-[30] (Schmidt J; appeal dismissed: Vertzayias v King [2011] NSWCA 215); Sanderson Motors Pty Ltd v Lindsay Bennelong Developments Pty Ltd [2014] NSWSC 846 at [31]-[42] (Ball J). 228. CLA, 35A(1)(b). 229. Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613 at 623-624 [9], 627 [18] (French CJ, Hayne and Kiefel JJ); [2013] HCA 10. 230. (2011) 15 BPR ¶29,515 at ¶29,528-¶29,529 [71] (Brereton J); [2011] NSWSC 197. 231. No 8 Judgment at [179]-[182] (Stevenson J). 232. [2011] NSWCA 368 at [62]-[65] (Macfarlan JA; Young JA and Meagher JA agreeing). Amendments 21 July 2021 - Correct typographical error in Headnote DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 July 2021