Chen v Chu [2024] NSWSC 1139

Supreme Court New South Wales

Medium Neutral Citation: Chen v Chu [2024] NSWSC 1139 Hearing dates: 12, 13, 14, 15, 16, 19 and 20 August 2024 Date of orders: 6 September 2024 Decision date: 06 September 2024 Jurisdiction: Equity Before: Hammerschlag CJ in Eq Decision: Judgment for the plaintiffs for $7,438,548 Catchwords: CONSUMER LAW – Australian Consumer Law (ACL) ss 18 and 29 – Australian Securities & Investments Commission Act 2001 (Cth) (ASIC Act) ss 12DA and 12DB – Misleading or deceptive conduct, false or misleading representations in connection with the supply or possible supply of services or in connection with the promotion of the supply or use of services – Conduct in relation to financial services that is misleading or deceptive – Claim for damages against a real estate agent who made misrepresentations to the plaintiffs which induced them to purchase a series of real properties off-the-plan from a developer and to release their deposits on unsecured loan to the developer at a high interest rate for its own use – Developer was insolvent at all material times and was operating a fraudulent Ponzi scheme – Defendant denies having made the representations complained of - Defendant claims that he was acting as a mere conduit in the provision of information from the developer or its CEO – Defendant claims that he did not cause the plaintiffs' loss because of the presence of various disclaimers in contractual and other documents seen by the plaintiffs STATUTORY DEFENCES – Civil Liability Act s 34 – ACL s 236 – ASIC Act s 12GF – Civil Procedure Act ss 64 and 65 - Defendant raises proportionate liability defence on the basis that all of the companies in the group of which the developer was part of and their CEO were concurrent wrongdoers – Defendant claims that certain of the causes of action relied on by the plaintiffs are statue barred HELD – Defendant engaged in conduct which was misleading or deceptive or made false or misleading representations in connection with the supply or possible supply of services or in connection with the promotion of the supply or use of services – Because of the conduct of the defendant the plaintiffs suffered loss – The presence of disclaimers did not affect their reliance or play any part in the cause of their loss – Defendant not a mere conduit – Proportionate liability defence not available, amongst others, because it does not apply to claims under ACL s 29 or ASIC Act s 12DB – Defence inadequately pleaded – The developer and related companies and CEO were not a cause of the plaintiffs' loss – Limitations defences not available PRACTICE AND PROCEDURE – Observations concerning the practice in NSW of deposing in affidavits to conversations using the first person Legislation Cited: Australian Consumer Law Australian Securities and Investments Commission Act 2001 (Cth) Civil Liability Act 2002 (NSW) Civil Liability Act 2003 (Qld) Civil Procedure Act 2005 (NSW) Competition and Consumer Act 2010 (Cth) Fair Trading Act 1987 (NSW) Cases Cited: ASIC v Rent 2 Own Cars Pty Ltd (2020) 147 ACSR 598 Briginshaw v Briginshaw (1938) 60 CLR 336 Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 CH Real Estate Pty Ltd v Jainran Pty Ltd [2010] NSWCA 37 Chu v Lin, Gold Stone Capital Pty Ltd [2024] FCA 766 Helton v Allen (1940) 63 CLR 691 Kane's Hire Pty Ltd v Anderson Aviation Australia Pty Ltd [2023] FCA 381 Lantrak Holdings Pty Ltd v Yammine [2023] FCAFC 156 March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 Rejfek v McElroy (1965) 112 CLR 517 Sidhu v Van Dyke (2014) 251 CLR 505 Travel Compensation Fund v Tambree t/as R Tambree and Associates (2005) 224 CLR 627 Ucak v Avante Developments [2007] NSWSC 367 Wallace v Kam (2013) 250 CLR 375 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 Watson v Foxman (1995) 49 NSWLR 315 Yorke v Lucas (1985) 158 CLR 661 Category: Principal judgment Parties: Su-Hui Chen (First Plaintiff) Teresa Chen Pty Ltd as Trustee for the Teresa Chen Superannuation Fund (Second Plaintiff) A-Kan Chen Lan (Third Plaintiff) Timothy Wayne Edstein (Fourth Plaintiff) Amy Chu Yan Edstein (Fifth Plaintiff) Gary Chu (Defendant) Representation: Counsel: D Cook SC w N Riordan (Plaintiffs) T Di Francesco w H Zhao (Defendant)