Supreme Court New South Wales Medium Neutral Citation: Director General, Department of Services, Technology and Administration v Veall & Ors (No 2) [2011] NSWSC 358 Hearing dates: 24.3.2011; 11.4.2011; 14.4.2011; 02.5.2011 Decision date: 03 May 2011 Jurisdiction: Common Law Before: BUDDIN J Decision: (a) Between 1 March 2003 and 3 August 2009, TLC engaged in conduct which was misleading or deceptive, or likely to mislead or deceive within the meaning of s 52 of the TPA and s 42 of the FTA . It also engaged in conduct which was unconscionable within the meaning of s 51AB of the TPA and s 43 of the FTA ; (b) The first defendant from 12 March 2007 was directly or indirectly, knowingly concerned in or a party to, the said contraventions of TLC within the meaning of s 75B of the TPA and s 61 of the FTA ; (c) The third defendant was directly or indirectly, knowingly concerned in or a party to, the said contraventions of TLC within the meaning of s 75B of the TPA and s 61 of the FTA . Catchwords: Introduction agency - allegations of misleading and deceptive conduct - allegations of unconscionable conduct - accessorial liability of the defendants - ex parte proceedings Legislation Cited: Corporations Act 2001 (Cth) Evidence Act 1995 (NSW) Fair Trading Act 1987 (NSW) Trade Practices Act 1974 (Cth) Cases Cited: Ainsworth v Burden [2005] NSWCA 174 Australian Competition and Consumer Commission v Black on White Pty Limited [2001] FCA 187 Australian Competition and Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 Australian Competition and Consumer Commission v Kaye [2004] FCA 1363 Australian Securities and Investments Commission v Maxwell [2006] NSWSC 1052 Australian Securities and Investments Commission v Sydney Investment House Equities Pty Ltd [2008] NSWSC 1224 Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 Compac Computer Australia Pty Ltd v Merry (1998) 157 ALR 1 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 Crocodile Marketing v Griffith Vintners (1989) 28 NSWLR 539 Daniels v Anderson (1995) 37 NSWLR 438 Director-General of the Department of Fair Trading v Monaghan [2003] NSWSC 1099 Director General, Department of Services, Technology and Administration v Veall [2011] NSWSC 209 [No 1] Galea v Bagtrans Pty Limited [2010] NSWCA 350 Higgins v Sinclair [2011] NSWSC 163 Houghton v Arms (2006) 225 CLR 553 Medical Benefits Fund of Australia v Cassidy (2003) 205 ALR 402 Motor Trade Finances Prestige Leasing Pty Ltd v Elderslie Finance Group Corp Ltd [2006] NSWSC 1348 National Australia Bank Ltd v McCann [2010] NSWSC 766 Pereira v Director of Public Prosecutions (1988) 82 ALR 217 Rafferty v Time 2000 West Pty Limited (No 4) [2010] FCA 725 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157 WesTrac Pty Ltd v Eastcoast OTR Tyres Pty Ltd [2009] NSWSC 728 Yorke v Lucas (1985) 158 CLR 661 Category: Interlocutory applications Parties: Director General, Department of Services, Technology and Administration (Plaintiff) Hollie Veall (First Defendant) Helen Dimitrijevski (Second Defendant) Zivko Dimitrijevski (Third Defendant) Representation: Counsel: G Sarginson (Plaintiff) No appearance (Defendants) Solicitors: Ms B Mauro File Number(s): 2009/325996 Judgment Introduction 1By Amended Statement of Claim filed on 2 November 2010 the plaintiff seeks injunctive and declaratory relief as well as orders for restitution in respect of each of the three defendants. When the matter was called on for hearing on 21 March 2011 there was no appearance on behalf of any of the three defendants. For reasons which I gave on 24 March 2011, I determined that the proceedings would proceed ex parte but only in respect of the first and third defendants: Director General, Department of Services, Technology and Administration v Veall [2011] NSWSC 209 [ Veall No 1 ]. The plaintiff then elected to have the issue of liability severed from the issue of remedies in respect of the proceedings against the first and third defendants. For completeness, I should indicate that when the hearing resumed on 11 April and on subsequent occasions neither of the defendants appeared, although notice of the adjourned dates had been sent to each of them on each occasion that the proceedings were adjourned. 2The present anticipation is that the proceedings against the second defendant will commence on some future date, at which time the issue of liability in respect of her as well as the issue of remedies (where appropriate) will be determined. Background 3The proceedings arise from the activities of a company known as TLC Consulting Pty Limited (TLC). TLC is an acronym for 'True Love Corp'. The company operated as an introduction agency and advertised its services in a range of various magazines which included Rugby League Week, Cleo, Ralph, Cosmopolitan, Outback Magazine and Inside Football. It represented itself as an agency that was designed to assist its clients meet and form relationships with other people to whom it introduced them. The company operated from approximately 1996 until it was placed into administration on 3 August 2009. On 8 September 2009 a liquidator was appointed as a result of a creditors' voluntary winding-up. The second and third defendants each became bankrupt on 10 June 2010, with the first defendant following suit on 13 December 2010. 4On 30 April 2003 Atkinson J made orders in the Supreme Court of Queensland in proceedings in which the applicant was the Commissioner of Fair Trading of that State. The first respondent in those proceedings was TLC whilst the second and third defendants in these proceedings were the third and second respondents respectively in those proceedings. The following orders were made by consent: 1 The First, Second and Third Respondents by themselves, their servants and/or agents, and/or representatives be restrained permanently, from carrying on the business of offering to find, or finding persons to be introduced, or introducing persons to others ('introduction services'), such business including: (a) providing introduction services to persons resident in Queensland other than to persons who are parties to existing contracts for the provision of such services by the First Respondent; (b) accepting payment or other consideration for such introduction services from persons residing in Queensland whether under existing contracts or otherwise including accepting any further payment or other consideration from persons who are parties to existing contracts for the provision of introduction services by the First Respondent; (c) making available to persons, wherever located, information concerning persons available to be introduced who reside in Queensland, other than to persons who are parties to existing contracts for the provision of such information by the First Respondent; (d) introducing to persons, wherever located, persons resident in Queensland; other than persons who are parties to existing contracts with the First Respondent for the introduction of themselves to other persons; (e) entering into contracts with persons resident in Queensland for the provision of introduction services. ("providing introduction services in Queensland"). 2 The orders in paragraph 1 above commence to operate 7 days from the date these orders are made. 3 The First, Second and Third Respondents pay to the Applicant the following sums: (a) $396,111.00 by way of compensation pursuant to section 100 (5) (d) of the Fair Trading Act 1989 (Qld); (b) $37,500.00 by way of interest on the amount of $396,111.00. The combined amount of $433,611.00 shall be paid within 120 days from the date of this order, the liability for such payment being joint and several. 4 The Applicant will distribute the amount of $433,611.00 as follows: (a) To Andrew George the sum of $95,000.00 (b) To the remaining persons listed in the Schedule to the Originating Application except for: (i) Brett Anthony Elliott (ii) Conan Kelly. The balance of $338,611.00 on a pro-rata basis 5 The First, Second and Third Respondents will cause a notice to be published on all the First Respondent's websites including the website at the address www.tlccs.com.au, stating that the First Respondent is unable to offer or provide introduction services in Queensland (as that term is defined in paragraph 1 above), such notice to appear for at least six months from the date of these orders. 6 The First, Second and Third Respondents pay the Applicant within 120 days of the date of this order costs fixed in the amount of $130,000.00. 5I was informed that the proceedings in respect of the second defendant for contempt of court, to which I referred in Veall [No 1] , arose from the alleged contravention of those orders. 6Between February 2003 and July 2008, TLC operated out of premises at Suite 9, 10 Sands Street, Tweed Heads. For some of that time its registered office was also at those premises. Some time between July and December 2008, TLC moved to premises in Southport in Queensland. From there it operated Australia wide and continued to contact and promise services to its clients and other persons in NSW. Following the move to Queensland, TLC shared premises with Stangs Finance Pty Limited (Stangs). TLC and Stangs shared the same post office box address as their respective contact addresses for the Australian Securities and Investments Commission (ASIC). 7The first defendant was employed by TLC in March 2007 and continued working with the company until 2009. She was paid a salary and also received a commission. Payroll records reveal that for the 2007-2008 financial year she received a gross income of $105,534.24 and for the 2008-2009 financial year a gross income of $141,286.71. From 1 January 2009 she was listed as the sole director of TLC. In January 2010 she filed documents with ASIC requesting that she be removed from the ASIC registry as a director. She claimed that she had not realised that she had been appointed as a director and that the second defendant had effected her appointment without her permission. 8Although the second defendant was never a director of TLC, she nonetheless drew a salary from it. She also operated the company's bank accounts. She was at all relevant times involved in its management and was described by former employees as its "boss". She and her husband (the third defendant) were signatories to TLC's bank account with the National Australia Bank whilst the third defendant was a signatory to the company's bank account with Westpac. The third defendant was the sole director and shareholder of TLC from 8 February 1996 until 1 January 2009. As well as drawing a salary from TLC, the third defendant had an interest in Stangs which operated from the same premises as TLC. 9The plaintiff claims that TLC made a large number of representations concerning the services it would provide to its clients. Various persons were employed as 'consultants' by TLC, including the first defendant. It was their task to communicate those representations, usually by telephone, to the company's clients. The essence of the plaintiff's complaint, in broad terms, is that what was represented either did not eventuate at all, or if it did, it did so in a manner that fell well short of what had been promised. As a result, it is claimed that TLC engaged in misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) (the TPA) and/or s 42 of the Fair Trading Act 1987 (NSW) (the FTA), and in unconscionable conduct in contravention of s 51AB of the TPA and/or s 43 of the FTA. Of particular significance in the present proceedings is the plaintiff's claim that each of the defendants, by reason of his or her connection with TLC, aided or abetted and/or was knowingly concerned in the conduct of TLC such as to attract the provisions of the TPA and/or the FTA to which I have just referred. (Many of the legislative provisions referred to in this judgment have now been repealed and replaced, but that has no bearing upon these proceedings). 10The particulars of the representations in question, as well as the impugned conduct, are identified in the Amended Statement of Claim. Although there are numerous representations which are relied upon, the essential nature of the complaint is that over an extended period of time TLC, by its conduct, took advantage of persons, predominantly men, who were in an emotionally vulnerable position and exploited their vulnerability to those persons' considerable financial disadvantage. The legal requirements (a) Misleading or deceptive conduct 11Section 52 of the TPA is in the following terms: (1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1). See also s 42 of the FTA . 12In Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592, McHugh J (although dissenting in the result) observed that: The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. (at 625) See also Higgins v Sinclair [2011] NSWSC 163 at paras 192-198. (b) Unconscionable conduct 13Section 51 AB of the TPA provides that: (1) A corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services to a person, engage in conduct that is, in all the circumstances, unconscionable. (2) Without in any way limiting the matters to which the court may have regard for the purpose of determining whether a corporation has contravened subsection (1) in connection with the supply or possible supply of goods or services to a person (in this subsection referred to as the consumer), the court may have regard to : (a) the relative strengths of the bargaining positions of the corporation and the consumer; (b) whether, as a result of conduct engaged in by the corporation, the consumer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the corporation; (c) whether the consumer was able to understand any documents relating to the supply or possible supply of the goods or services; (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the consumer or a person acting on behalf of the consumer by the corporation or a person acting on behalf of the corporation in relation to the supply or possible supply of the goods or services; and (e) the amount for which, and the circumstances under which, the consumer could have acquired identical or equivalent goods or services from a person other than the corporation. (3) A corporation shall not be taken for the purposes of this section to engage in unconscionable conduct in connection with the supply or possible supply of goods or services to a person by reason only that the corporation institutes legal proceedings in relation to that supply or possible supply or refers a dispute or claim in relation to that supply or possible supply to arbitration. (4) For the purpose of determining whether a corporation has contravened subsection (1) in connection with the supply or possible supply of goods or services to a person: (a) the court shall not have regard to any circumstances that were not reasonably forseeable at the time of the alleged contravention; and (b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section. (5) A reference in this section to goods or services is a reference to goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption. (6) A reference in this section to the supply or possible supply of goods does not include a reference to the supply or possible supply of goods for the purpose of re-supply or for the purpose of using them up or transforming them in trade or commerce. (7) Section 51A applies for the purposes of this section in the same way as it applies for the purposes of Division 1 of Part V. See also s 43 of the FTA . 14In Director-General of the Department of Fair Trading v Monaghan [2003] NSWSC 1099, Bell J observed: It was common ground that the principles stated by the High Court in Commercial Bank of Australia Ltd v Amadio (1982-1983) 151 CLR 447 concerning unconscionability for the purposes of the common law have application when considering unconscionability for the purposes of s 43(1) of the FTA. In Amadio Mason J observed at 461: "But relief on the ground of 'unconscionable conduct' is usually taken to refer to the class of case in which a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage, e.g., a catching bargain with an expectant heir or an unfair contract made by taking advantage of a person who is seriously affected by intoxicating drink. Although unconscionable conduct in this narrow sense bears some resemblance to the doctrine of undue influence, there is a difference between the two. In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position." Deane J, in the same case, observed at 474: "The jurisdiction of courts of equity to relieve against unconscionable dealing developed from the jurisdiction which the Court of Chancery assumed, at a very early period, to set aside transactions in which expectant heirs had dealt with their expectations without being adequately protected against the pressure put upon them by their poverty. The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or 'unconscientious' that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable: 'the burthen of shewing the fairness of the transaction is thrown on the person who seeks to obtain the benefit of the contract' (see per Lord Hatherley, O'Rorke v. Bolingbroke (1877) 2 App. Cas., at p. 823; Fry v. Lane (1888) 40 Ch.D. 312, at p. 322; Blomley v. Ryan (1956) 99 CLR 362, at pp. 428-429). The equitable principles relating to relief against unconscionable dealing and the principles relating to undue influence are closely related. The two doctrines are, however, distinct. Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party (citations omitted). Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so. The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogued. In Blomley v. Ryan, Fullagar J. listed some examples of such disability: 'poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary' As Fullagar J. remarked, the common characteristic of such adverse circumstances 'seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other'". In Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; 77 ALJR 1853 the High Court discussed the concept of unconscionable conduct in a case involving a claim for equitable relief against forfeiture. In that context Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ in their joint judgment observed at [23] that the phrase "unconscionable conduct" tends to mislead in the several respects that are discussed in the succeeding paragraphs. By these proceedings the Plaintiff claims orders under the FTA in respect of unconscionable conduct engaged in by the First Defendant in the supply of services to various of her clients. Section 43 of the FTA is not confined to a consideration of the circumstances as they existed at the time of the formation of the contract but includes consideration of conduct that occurs during the course of the contract. In Holloway v Witham (1990) 21 NSWLR 70 Lee CJ at CL said at 74: "But important though it be that the Act enables the Commissioner to make applications on behalf of consumers for compensation, the real virtue in the Act, in so far as it is aimed at unfair trading, is that it enable remedies available to consumers and/or the Commissioner which are dependent, not upon breach of contract by the trader, but upon proof of specific conduct on the part of the trader as defined in the Act. The fact that the trader may by reason of the conduct engaged in be in breach of the contract, is largely irrelevant to the pursuit of remedies provided by the Act and, equally, breach of contract by the consumer will not necessarily displace the right of the consumer to the remedies provided in respect of the conduct of the supplier. In Holt v Biroka Pty Ltd (1988) 13 NSWLR 629, Kearney J held that s 4(4) of the Act, in defining "conduct", produced the result that the conduct to be considered was the whole of the conduct related to the contractual bargain and its performance and I respectfully adopt that view - it plainly carries out the purpose of the Act." [at paras 11-12] 15A little later her Honour, in a passage that is particularly apposite to the present case, observed: The Plaintiff particularises that the First Defendant took advantage of Mr Daniels' emotional vulnerability to extract large sums of money from him. A particular in like terms is pleaded with respect to the First Defendant's dealings with Mr Burns and Mr Marks. Emotional vulnerability is an inexact concept. However, it does seem to me that some clients of introduction agencies are likely to be persons who are vulnerable to pressure sales techniques because of an acute awareness of their loneliness and that such individuals may be disadvantaged in dealing with the operator of an introduction service. Abadee J acknowledged emotional vulnerability in this context as a matter that may give rise to relief against unconscionable trading in Commissioner for Consumer Affairs v Bona fide Consultants Pty Ltd (unreported), NSWSC, 28 March 1994 . I did not understand Mr Diethelm of the Second Defendant to submit that the taking advantage of emotional vulnerability in the way the Plaintiff particularised the case with respect to Mr Daniels, Mr Burns and Mr Marks may not constitute conduct that is unconscionable. Rather he contended that there was no evidence that the client was emotionally vulnerable, or if he was, there was no evidence that the vulnerability had been evident to the First Defendant or her staff. [at para 61] (emphasis added) Accessorial liability of the defendants 16Section 75B(1) of the TPA provides that: (1) A reference in this Part to a person involved in a contravention of a provision of Part IV, IVA, IVB, V or VC, or of section 95AZN, shall be read as a reference to a person who: (a) has aided, abetted, counselled or procured the contravention; (b) has induced, whether by threats or promises or otherwise, the contravention; (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention ; or (d) has conspired with others to effect the contravention. (emphasis added) See also s 61 of the FTA . 17As the focus of the plaintiff's case has been upon s 75B(1)(c) of the TPA , it is necessary to identify what it must establish in order to satisfy that particular provision. The concept of being "knowingly concerned" has both a physical and a mental element. (a) the physical element 18In Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157, Weinberg and Dowsett JJ in their joint reasons, observed: ... At a practical level, the following passage from the judgment of Wilcox J in Trade Practices Commission v Australian Meat Holdings Pty Ltd (1988) ATPR 40-876 at 49,512 demonstrates the relevant considerations: "The words 'knowingly concerned' are commonly found in statutory provisions creating criminal offences. In that context the word 'concerned' has been read as requiring facts connecting the accused with the commission of the relevant offence. ... In Ashbury v Reid, the Full Court of the Supreme Court of Western Australia, after quoting the Oxford Dictionary definition of 'concerned', said at p51: 'The question which a court should ask itself in determining whether an act or omission on the part of an individual comes within the terms of s54 is whether on the facts it can reasonably be said that the act or omission shown to have been done or neglected to be done by the defendant does in truth implicate or involve him in the offence, whether it does show a practical connexion between him and the offence .' (R v Tannous) is an interesting case, in the present context. The appellant had agreed with two other persons that certain money owing to him could be used in the importation of cannabis, in the sale of which he was to become a participant. He took no other part in the enterprise. In fact his money was not used so that there was no causal relationship between the involvement of the appellant and the actual importation. Notwithstanding this, the Court held that there was evidence upon which he could be convicted of being knowingly concerned in the importation. At p308 - p309, Lee J said: The 'concern' to which the section speaks is not a concern personal to the appellant in the sense of being in his mind, but it is a concern which can be demonstrated objectively by reference to his association, whatever it may be, with the importation. It must be shown that he is 'concerned in' not just 'concerned about the importation'. A father, learning that his son had made arrangements to import narcotic drugs into this country, might well be anxious about, interested in or concerned about the fact and he might evince that anxiety, interest or concern to others. But he would not be guilty of the offence of being knowingly concerned merely from his knowledge of the importation and his state of mind arising therefrom. Before he could be convicted under the section he would have to do something to connect himself with or involve himself in the importation .... [at para 154] (emphasis added) 19In Rafferty v Time 2000 West Pty Limited (No 4) [2010] FCA 725 Besanko J said: In Fencott v Muller (1983) 152 CLR 570, the High Court held that s 75B of the TPA is a valid law of the Commonwealth. In the course of his reasons, Gibbs CJ said (at 584): "By the combined provisions of ss. 75B and 82, the Parliament has made natural persons liable in damages for a contravention by the corporation only if they have been involved in the manner described by s. 75B, which, in my opinion, refers to a close rather than a remote involvement in the contravention. In the most general words of s. 75B, those of par. (c), the word 'knowingly' significantly confines the operation of the provision." In a case where a party seeks to establish that another party has been involved in a contravention within s 75B(1) of the TPA, there are two questions. The first question is whether the person's acts are sufficient to bring the person within the terms of the subsection. The second question is whether the person has sufficient knowledge for the purposes of the subsection. In terms of the authorities, a common case to come before the Courts is a case where a corporation has been guilty of misleading or deceptive conduct and an applicant seeks to make liable a director of the corporation who made representations or otherwise participated in the misleading or deceptive conduct. In those cases, the second question is likely to be the one which determines the outcome of the case. However, s 75B(1) has resulted in many other groups being held liable in respect of a contravention by another. In Sutton v A J Thompson Pty Ltd (in liquidation) (1987) 73 ALR 233, the company's accountant was held liable under s 75B(1) of the TPA. The representations which formed the basis of the misleading and deceptive conduct were made during discussions at which the accountant was present and in which he took part. In Heydon v NRMA Ltd (2000) 51 NSWLR 1, McPherson A-JA (with whom Ormiston A-JA agreed) said, obiter , that solicitors engaged to advise on a prospectus would fall within s 75B(1)(a) or s 75B(1)(c) provided they had the knowledge required by that section (at 150 [436]). There is not a great deal of authority on the level of involvement required in order to establish that a party was "knowingly concerned in" or "party to" a contravention within s 75B(1)(c). 316 In Butt v Tingey (1993) ATPR (Digest) 46-110 a claim was made that a solicitor had been knowingly concerned in a contravention of s 52 of the TPA. The solicitor had been retained by Blu-Binda Marina Pty Ltd. Blu-Binda had entered into a contract to sell a motor vessel to the respondent. Blu-Binda had accepted part-payment from the respondent in the form of money and an old vessel which Blu-Binda had promptly sold. Blu-Binda failed to deliver the new vessel to the respondent. The respondent sought return of the funds provided and an assurance that they would not be distributed. The solicitor for Blu-Binda wrote to the respondent by facsimile indicating that the funds would not be disbursed. In fact, the funds had already been applied to Blu-Binda's overdraft facility. At first instance, the solicitor was held liable. This decision was overturned on appeal by Neaves and Beazley JJ (Davies J dissenting). The majority held that the solicitor in question did not have actual knowledge that the funds had been applied to the overdraft. Their Honours also held that the evidence did not establish that the solicitor was doing anything more than conveying to the respondent's solicitors the essence of the instructions he had received. Davies J, in dissent, held that, by giving his authority as a solicitor to the facsimile and letter, the solicitor had knowingly assisted Blu-Binda to mislead and deceive the respondent. In Nescor Industries Group Pty Ltd v Miba Pty Ltd (1997) 150 ALR 633, Davies J said (at 641): "Agents may be held to be in breach of the statutory provision either because they are directly responsible for the misleading information or because the fact that the information has come from them has added something to its weight and authority" In John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd [1993] ATPR 41-249, Davies, Heerey and Whitlam JJ upheld a decision at first instance that a real estate agent was liable under s 75B(1)(c). The agent had provided to the purchasers a brochure produced by the vendors which contained misrepresentations as to the net lettable area of the property. The agent claimed that it was not "knowingly concerned" because it had merely passed on the information. The Court said (at 41,359): "In our opinion an estate agent which holds itself out as, amongst other things, 'consultants to institutional investors and to developers of major properties' would not be regarded by potential purchasers of properties as merely passing on information about the property 'for what it is worth and without any belief in its truth or falsity'." Their Honours placed particular reliance on the fact that the misrepresentations related to the net lettable area which "stands on a different footing from the puffery which often accompanies the sale of real property" because it is a figure of "hard physical fact" (see 41,359). The meaning of the phrase "knowingly concerned" has been considered in the context of criminal offences. The old s 233B(1)(d) of the Customs Act 1901 (Cth) prohibited a person being knowingly concerned in the importation of a prohibited import. In R v Tannous (1987) 10 NSWLR 303, the New South Wales Court of Criminal Appeal considered the meaning to be given to the phrase "knowingly concerned" as it appeared in s 233B(1)(d). Lee J (with whom Street CJ and Finlay J agreed) indicated that what was required was more than just knowledge, but also some act or omission which implicated or involved the accused by establishing a physical connexion between him and the offence (see 308). ... In R v Kelly (1975) 12 SASR 389, the Full Court of the Supreme Court of South Australia considered the meaning of the word "concerned". Hogarth ACJ, Mitchell and Zelling JJ said (at 400): "The word is no doubt deliberately chosen to cover a wide range of activities since it would be well-nigh impossible to define more closely the various acts which could go towards the fulfilment of a plan for the importation of prohibited articles." In R v Lam (1990) 46 A Crim R 402 (NSW CCA), Gleeson CJ cited this passage with approval. The Chief Justice said (at 405): "The expression 'concerned in' is of general import and it is impossible to state with precision what it comprehends. It is necessary to consider the facts and circumstances of the particular case." [at paras 312-322] (b) the mental element 20In Yorke v Lucas (1985) 158 CLR 661, a majority of the High Court observed that: ...a person will be guilty of the offences of aiding and abetting or counselling and procuring the commission of an offence only if he intentionally participated in it. To form the requisite intent he must have knowledge of the essential matters which go to make up the offence whether or not he knows that those matters amount to a crime. So much was affirmed recently in Giorgianni v The Queen where the relevant authorities were examined. [at 667] A little later, their Honours said: In our view, the proper construction of par (c) requires a party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention. [at 670] 21In Australian Competition and Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 the Court said: It is not necessary to establish any subjective element in relation to a contravention of Pt V of the Act. A contravention may be committed unintentionally. That is to say, a person may contravene a provision of Pt V even though that person does not have knowledge of all of the essential elements that constitute the contravention. However, before any accessorial liability will arise, it is necessary to establish the subjective element of knowledge of each of the essential elements of the contravention. That knowledge may be constructive in the same sense that it may be possible to show wilful blindness in relation to the elements of a contravention. However, absent a finding of wilful blindness, it is necessary to establish actual knowledge on the part of a person to whom it is sought to sheet home accessorial liability in respect of a contravention of PtV. [at para 135] See also Compac Computer Australia Pty Ltd v Merry (1998) 157 ALR 1 at pp4-5; Medical Benefits Fund of Australia v Cassidy (2003) 205 ALR 402; Australian Competition and Consumer Commission v Kaye [2004] FCA 1363 [at paras 176-189]. 22In Pereira v Director of Public Prosecutions (1988) 82 ALR 217 the High Court made the following observations: Even where, as with the present charges, actual knowledge is either a specified element of the offence charged or a necessary element of the guilty mind required for the offence, it may be established as a matter of inference from the circumstances surrounding the commission of the alleged offence. However, three matters should be noted. First, in such cases the question remains one of actual knowledge: Giorgianni v. The Queen [1985] HCA 29; (1985) 156 CLR 473 at pp 504-507; He Kaw Teh, at p 570. It is never the case that something less than knowledge may be treated as satisfying a requirement of actual knowledge. Secondly, the question is that of the knowledge of the accused and not that which might be postulated of a hypothetical person in the position of the accused, although, of course, that may not be an irrelevant consideration. Finally, where knowledge is inferred from the circumstances surrounding the commission of the alleged offence, knowledge must be the only rational inference available. All that having been said, the fact remains that a combination of suspicious circumstances and failure to make inquiry may sustain an inference of knowledge of the actual or likely existence of the relevant matter. In a case where a jury is invited to draw such an inference, a failure to make inquiry may sometimes, as a matter of lawyer's shorthand, be referred to as wilful blindness. Where that expression is used, care should be taken to ensure that a jury is not distracted by it from a consideration of the matter in issue as a matter of fact to be proved beyond reasonable doubt. [at pp 219-220] (emphasis added) 23The liquidation of TLC does not prevent orders being made against individuals provided it can be established that the individuals were 'knowingly concerned' in the impugned conduct of the company: Australian Competition and Consumer Commission v Black on White Pty Limited [2001] FCA 187 per Spender J [at paras 51-53]. As to the accessorial liability of an individual for his or her conduct even if he or she also be the "mind of the company": see Houghton v Arms (2006) 225 CLR 553. The evidence upon which the plaintiff relies 24The plaintiff read the affidavits of the following 15 persons, 14 of whom were clients of TLC: (i) Aaron Ashley Bennett; (ii) Stuart Leath Childs; (iii) Damien Clear; (iv) Neville Crockett; (v) Thomas Charles Gunthorpe; (vi) Clifford James Kopp; (vii) Janet Langley; (viii) Sundara Rengasamy; (ix) Veda Rengasamy; (x) Wayne Robson; (xi) Ashley William Ruiter; (xii) Christine Smith; (xiii) Linda Williams; (xiv) Alan Westoby Young; and (xv) Kenneth Williams Vickers. 25Affidavits of the following three former TLC employees were read: (xvi) Jessica Erin Allison; (xvii) Kellie Stacey Arrowsmith; and (xviii) Tracey Ann Rutledge. 26Affidavits or reports from the following experts were read: (xix) Yvonne Allen; (xx) Professor Susan Hayes; and (xxi) Matthew Pullen. 27The final affidavit that was read was prepared by the officer who had primary responsibility for the investigation, Emma Sharkey. She produced a very considerable body of documentary evidence which consisted, inter alia, of financial records and banking records of TLC and its employees, as well as ASIC records and other material. I have referred to what some of that documentation reveals in paragraphs 6-8 of this judgment. Many of the clients were also able to produce records of their financial dealings with TLC together with other relevant correspondence. 28I will now endeavour to outline key aspects of the evidence upon which the plaintiff relies, commencing with a summary of what each individual client asserted. It should be observed that many of the affidavits are extremely lengthy and they frequently include details of numerous telephone calls between TLC and the client. It is not possible, of course, to relate the details of each and every individual conversation. There are simply too many of them. Nevertheless, I have had regard to the totality of the evidence which ran to 9 lever arch folders. 29Although I am not presently concerned with the case which the plaintiff seeks to make out against the second defendant, it will nonetheless be necessary, in providing a narrative of the relevant events, to make reference to what it is alleged that she did. There are constant references to a woman named Hollie, which I take to be references to the first defendant and a number of references to a woman named Helen or Helena, which I take to be references to the second defendant. (a) the evidence of the clients of TLC Aaron Bennett 30Mr Bennett is a farmer. He saw an advertisement for TLC in 'Stock and Land' newspaper and telephoned TLC in November 2005. He provided the consultant with a profile of the type of person he wished to meet. Over a period of time, he was given details of 5-6 women, none of whom were compatible with him. A consultant from TLC told him that he was on the wrong membership package. From about September 2006 he received numerous phone calls from Cristy and Helena of TLC pressuring him to 'upgrade' his membership and to pay money to attend a 'grooming weekend' on the Gold Coast. 31In October 2006 he attended the 'grooming weekend' and was introduced to a woman called Christina Walsh. Both Paul of TLC, and Christina Walsh pressured him to pay money for a trip to Fiji. The trip was organised by TLC and he was told that it would enable him to become better acquainted with Christina Walsh, who was also going to be on the trip. Mr Bennett paid $12,500 for the Fiji trip but it never eventuated. Mr Bennett made repeated phone calls to TLC to ascertain when the trip would occur, but was always 'fobbed off'. Mr Bennett also tried repeatedly to get TLC to put him in contact with Christina Walsh. He even telephoned Swan Hill Hospital, where he had been told that she worked, but was told by the hospital that no person of that name was employed there. 32In February 2007 TLC refused his request for a refund. He was told that his membership had expired and that he would have to pay extra money. Between November 2006 and July 2008, Mr Bennett estimated that he contacted TLC more than 200 times by phone about getting introductions, but was repeatedly put on hold by the consultants. Consultants repeatedly told him that he was "not good enough" and that he needed to pay more money. When he told them that he would complain to 'A Current Affair', the TLC consultant threatened that he would be sued for defamation. In August 2009, he was told by Stephanie that TLC had been "taken over" and that Christina Walsh had married a man from the TLC 'Millionaires Club' but that she was unhappy. Between November 2005 and February 2007, Mr Bennett paid TLC a total of $34,640 in progressive payments. Stuart Childs 33Mr Childs is a divorced grazier. He saw an advertisement for TLC in 'Outback' magazine in July 2005, and contacted TLC in November 2008. On 14 November 2008, Hollie of TLC telephoned Mr Childs and informed him that she was a senior consultant, marriage counsellor and life coach. He agreed to join the 'Bachelor File'. In November 2008, he was given a telephone introduction to a woman called Jannet, who he was told, owned a motorcycle store. He contacted her but she proved to be unsuitable. In November 2008, Hollie called him and told him that he should upgrade his membership so that she could "work more closely" with him. He then paid the sum of $5,000. 34Following this payment, Hollie repeatedly called to encourage him to pay for a 'grooming weekend' on the Gold Coast. She told him that he would receive a discount. After paying $5,000, Hollie called to say that "the directors" had told her that he had not paid enough, and that he must pay more money. He was told about a woman called Kylie who loved horses and who, it was said, was "perfect" for him. He paid a further $13,000. In November 2008, Hollie called to tell him that Kylie was keen to meet him, but that she was a member of the 'Marriage File', and that he had to pay to upgrade to this membership in order to meet her. He received numerous phone calls during that month from Hollie and Christina requesting that he pay more money to 'upgrade'. He was told that membership of the 'Marriage File' would guarantee that he found a wife. Hollie told him that she was offering him an upgrade because she liked him. Mr Childs said that Hollie sometimes called him as often as 5 times a day. In December 2008 he attended the 'grooming weekend' and was given a contract to sign. He said that he was pressured into signing it by Hollie. 35After returning home to South Australia, Mr Childs was contacted by Elivia of TLC who said that he had signed a contract for $150,000. When he objected, she said that he must pay at least part of it. He paid further large sums of money in December 2008. He made numerous phone calls to Hollie requesting a refund. She refused his request and told him that he was "self-centred". 36In January 2009 he was told by Hollie that he should purchase a phone from TLC with "special software". Hollie said that he would get the phone at a discount. When he paid the agreed price, he received calls demanding that he pay more money for the telephone. Although he was given details of some women to contact in 2009, none of them were suitable. When he told Hollie in June 2009 that he would complain to the ACCC that he thought the 'introductions were fake', Hollie told him that he would "make a fool of himself" if he went to court. 37Mr Childs paid TLC a total of $190,300 in progressive payments in the period between November 2008 and June 2009. Damien Clear 38Mr Clear was single and unemployed. He was also left depressed and profoundly deaf as a result of a work accident. He said that his fiance had left him in 2006. He said that he contacted TLC via their website in March 2008. Between March and October 2008 he received numerous telephone calls from TLC, including from Hollie, persuading him to join TLC. He eventually paid a membership fee in October 2008, and paid further money the following month when requested to do so. In November and December 2008, Steena and Hollie both telephoned him to tell him that TLC had suitable women for him, but that he had to pay a further amount of money to 'upgrade' his membership in order to meet them. 39In December 2008 Hollie told him that he needed to pay $35,000 in order to meet a woman named Cristy whose photo he had seen. He said that Hollie cried telling him that "the directors" wanted him to pay more money. Hollie however refused to allow him to speak to "the directors" and said that she would pay part of the money if he paid the remainder. He paid the money. 40In December 2008, Mr Clear went on a 'grooming weekend' to the Gold Coast. He met Hollie who told him that if he did not transfer $45,500 to TLC he would not be able to meet Cristy. He paid the money. He then went to dinner with Hollie and a woman named Kelly, and was told that he would have to pay more money if he wished to continue to have contact with Kelly. He was given a contract and told to sign it by Hollie. On the basis of being told that Kelly was interested in him, he signed the contract. When he contacted TLC subsequently, he was told that he could not contact Kelly as her mother was in hospital. 41Mr Clear paid TLC $110,000 between October and December 2008. He subsequently took action against the first defendant in the Victorian Civil and Administrative Tribunal in an endeavour to recover his money. Neville Crockett 42Mr Crockett was unemployed and had the care of two young daughters. He lived in country Victoria when he saw an advertisement for TLC in the 'Shepparton News'. He telephoned TLC. In April 2009, Hollie contacted him to tell him that TLC had "lots of girls" in his local area. She said that she had over 15 years' experience, and that she had owned her own business. He joined TLC and was given details of a woman named Michelle who was a nurse at Shepparton Hospital. He contacted the hospital but ascertained that there was no nurse named Michelle working there. In May 2009, Hollie and Stephanie from TLC telephoned Mr Crockett in an endeavour to get him to 'upgrade' his membership. He refused to do so. He was given details of women named Flora and Linda, neither of whom matched the 'profile' which he had provided. He complained to TLC about its lack of service, and demanded a refund. When TLC refused to provide one, he complained to Consumer Affairs Victoria. Mr Crockett paid TLC $150. Thomas Gunthorpe 43Mr Gunthorpe is a farmer and IT Manager. He operated a small aircraft business in Goulburn but resided in Yass, NSW. In November 2007 he saw an advertisement for TLC in 'Outback' magazine, and rang the company. In December 2007, he received telephone calls from Hollie in relation to attending a 'grooming weekend' on the Gold Coast. He declined the offer. In May 2008, Hollie telephoned him and told him that TLC had a "100% match" for him. The woman, who was named Chrissy Smith, was a horse breeder and former model. He was told that she had made her wealth in real estate. 44Hollie subsequently telephoned him and told him that he could meet Chrissy if he attended the 'grooming weekend'. He paid $4,000 to do so. Between May and August 2008, Hollie called to say that Chrissy could not attend the 'grooming weekend' as her father had died and that she was nursing her terminally ill mother. In late August 2008, Hollie called him to say that Chrissy could attend a 'grooming weekend' in Melbourne provided he paid $6,000. She told him that "you can't put a price on love". He paid the money. Hollie then telephoned Mr Gunthorpe and told him that Chrissy was having financial difficulties. She said that he should 'loan' Chrissy $5,000 by paying monies to TLC so that she could attend the 'grooming weekend'. He did so and spoke briefly to Chrissy on the phone. 45In October 2008, Hollie told Mr Gunthorpe that he and Chrissy were a "perfect match", but that if he wanted to meet her he would have to pay $35,000 to join the 'VIP Rural Marriage File'. He also received other calls demanding that he pay more money. When he requested a refund of the monies which he had previously paid, it was refused. 46Mr Gunthorpe traced the email address which he had been given for Chrissy, and found that it originated on the Gold Coast. When he told Hollie that he had traced the emails to TLC offices and that he would complain to the Fair Trading Office, she told him that TLC would sue him for defamation. Mr Gunthorpe made inquiries and located Chrissy Smith in Victoria. She told him that she had been a member of TLC, but that she had not paid for membership. She said that her parents were alive and that she was unaware of the representations which TLC had made about her. 47Mr Gunthorpe paid TLC $16,600 between 2007 and 2009. Clifford Kopp 48Mr Kopp is a bus driver. He completed a membership form in April 2003 to join TLC via the internet. During April and May 2003, he received telephone calls from Kim of TLC who stated that TLC had suitable women for him, but that he needed to pay more money in order to 'upgrade' if he wished to meet them. In November 2003, Prue of TLC telephoned him about a 'grooming package' on the Gold Coast, which she said would 'improve his self esteem'. He attended the 'grooming weekend' in February 2004. He paid further money to 'upgrade' to the 'Men's Single Marriage Club' the same month. Between April 2003 and June 2005 he received a number of introductions, but was often introduced to the same woman 2 or 3 times. In June 2005, he complained to TLC about his treatment. Cristy telephoned him and stated that she would be 'taking over his file'. In July 2005, Cristy convinced Mr Kopp to pay money to attend a trip to Fiji, where TLC consultants would assist him with his confidence and self-esteem. This plan was subsequently changed to Cristy coming to Sydney to meet Mr Kopp. The meeting never occurred, despite Mr Kopp paying an additional amount of money for it. 49In March 2006, Mr Kopp attended the Gold Coast for a 'grooming package'. Between March and August 2006, Mr Kopp received numerous phone calls from Cristy and Helena in which they pressured him to pay more money to TLC. He was told that Cristy would lose her job if he did not pay. He then paid various sums of money. In August 2006, Cristy telephoned Mr Kopp about attending a 'theme park weekend' on the Gold Coast. He paid for and attended the 'theme park weekend', but was not taken to any theme parks. He was merely taken to a bus stop from where he was able to catch a bus to Movie World. 50In June 2007 Mr Kopp was telephoned by Cristy, who stated that a client of TLC called Rebecca was interested in Mr Kopp, and would like to meet him if he was prepared to travel to the Gold Coast. He agreed to go and paid a further $2,000. In October 2007 Mr Kopp was telephoned by TLC and encouraged to 'upgrade' to a 'VIP Grooming Package'. He paid a further $7,500 to do so. In January 2008 Mr Kopp was telephoned by Shelly from TLC and encouraged to pay further monies for special computer access to the TLC computer system. 51In May 2008, Mr Kopp travelled to the Gold Coast to meet his new consultant Hollie, who stated that she would "fix all the problems". He 'upgraded' to the 'VIP Platinum Package" at a cost of $20,000. Hollie spoke to him for a number of hours. She asked him "how would you feel if all your life you had no one special in it? When you pass away, no one will remember you". Mr Kopp agreed to pay the additional sum. After he returned from the Gold Coast, Hollie made numerous telephone calls in May 2008 encouraging him to 'upgrade', including joining a 'Wedding Package' for $7,000, and obtaining the services of a nutritionist and psychiatrist at a cost of $14,000. In July 2008, Hollie encouraged Mr Kopp to take out a loan from Citibank so that he could pay for a 'VIP grooming package' worth $21,000. After telling TLC that he had cancelled the loan, Mr Kopp was pressured to change his mind. He was given an authority to obtain credit information from Stangs and in due course borrowed $25,000 from them. 52In September 2008 Hollie made numerous phone calls to Mr Kopp pressuring him to pay further monies, on the basis that he had received a 'discount' from Hollie in respect of the upgrade, and that she would lose her job if he did not pay the full amount. In April 2009, Stephanie from TLC telephoned Mr Kopp stating that she was now his consultant and that she would fly to Sydney to meet him upon the basis that he paid $5,000. She pressured him to pay the money, even if it was by instalments. She said that Hollie had informed her that he had money "stashed away". After Mr Kopp wrote to TLC in April 2009 asking for a refund, he spoke to Hollie who stated that there had been a "buy out" of TLC and that he should "get over" his financial problems and stop "being a child". She said that he would not want to be on his death bed thinking "Gee, I've been a bus driver all my life and I have nothing to show for it". Mr Kopp requested refunds from TLC on many occasions, but was always refused. 53Mr Kopp paid TLC $123,000 between April 2003 and September 2008. Janet Langley 54Ms Langley is a 41 year old professional and executive coach. She saw an advertisement for TLC in 'Outback' magazine, and telephoned TLC in July 2008. She paid $550 to join. In August 2008 she received a number of telephone calls from Kelsie at TLC, including one stating that she would have to pay more money to 'upgrade' if she wished to see a photo of Aaron Bennett, who was represented as being suitable for her. In September 2008 she was called by Kelsie from TLC who told her that she would have to 'upgrade' by paying $1,000 to be introduced to "VIP men". She refused to do so. Ms Langley received further telephone calls in September 2008 from Hollie and Summer of TLC requesting that she 'upgrade' her membership. Although she received some introductions, including an introduction to Tom Gunthorpe, she believed that she was being matched with unsuitable men, and in November 2008 placed her membership on hold. Wayne Robson 55At the time he made his statement, Mr Robson was a 42 year old man who lived with his parents and was employed as a casual traffic controller. He has difficulty reading and writing. In December 2007 he contacted TLC after seeing an advertisement in 'Cleo' magazine. In December 2007, Hollie telephoned Mr Robson and spoke to him for one and a half hours. Hollie encouraged him to pay $10,000 for a "package" involving a trip to Tweed Heads and a PDA telephone. Hollie also told him that a wealthy nurse who lived in Balmain named Rebecca wanted to meet him. He was transferred to Rebecca who told him that he was handsome. She said that $10,000 was "no big deal" as she had paid $36,000. He was transferred back to Hollie whom he told that he had difficulty in reading and writing. Hollie told him that TLC would help him borrow money so that he could meet Rebecca and obtain the PDA phone. 56Hollie subsequently telephoned and said that she had spoken to "a Queensland insurance company" about Mr Robson getting a loan. She then transferred the call. When the loan was not approved, Hollie telephoned Mr Robson again, and organised a loan with another company, Flexirent. In February 2008, Mr Robson attended a 'grooming weekend' at Tweed Heads where he met Hollie who showed him a photo of Rebecca. She told him that he must pay $20,000 to meet Rebecca, and that Rebecca wanted to be with him. The next day Hollie told Mr Robson that Rebecca could not meet him as she had had to return to Sydney urgently because her daughter was ill. 57After Mr Robson returned to Sydney, Hollie arranged for documents to be faxed to him in respect of the 'Men's Single Marriage File' package, which he signed because, as he put it, he trusted Hollie. In late March and early April 2008, Hollie pressured Mr Robson to take out a loan with GE Finance, and told him to inform them that it was for home renovations. A representative of GE Finance contacted Mr Robson, and the loan was eventually approved. After he transferred money to TLC, Hollie telephoned Mr Robson and said that a dinner would be arranged with Rebecca. A few days before the dinner was to take place, Hollie telephoned Mr Robson, and stated that Rebecca had cancelled the dinner. When Mr Robson insisted on meeting her, he was given various excuses. Between April and October 2008, TLC introduced Mr Robson to a number of women, but none of them were suitable. In October 2008, Mr Robson telephoned Hollie requesting a refund. This request was refused. 58Mr Robson paid TLC $30,000 and, at the time of swearing his affidavit, he was still making repayments on the loan from GE Finance. Ashley Ruiter 59Mr Ruiter is a taxi driver. He also has a stutter. He signed up with TLC in May 2004 after seeing an advertisement in the 'Bendigo Advertiser'. When he phoned to inquire why he had received no introductions, he was advised by TLC to 'upgrade' his membership. He paid further monies to TLC as a consequence. He was introduced to one woman, but she was unsuitable. In November 2004, he was telephoned by Prue of TLC who transferred him to Helen who said that he should 'upgrade' his membership so that he could meet a woman named Danielle. He paid further monies to TLC. He telephoned TLC in November 2004 to complain about not having been introduced to Danielle. Helen told him that Danielle's membership was on hold because her mother was sick. In January 2005, Helen telephoned Mr Ruiter and convinced him to attend a 'grooming weekend' on the Gold Coast. He attended and paid for the 'grooming weekend' in February 2005. He waited in the office of TLC at Tweed Heads, and was given 6 beers to consume whilst waiting to meet Helen. Helen told him that TLC had suitable women for him to meet, but that he must 'upgrade' his membership at a cost of $15,000. He was given a contract to sign for the 'Men's Single Marriage Club' and said that he felt pressured into signing it. 60In February 2005, he noticed that there were unauthorised debits from his credit card in favour of TLC. In May 2005 he was telephoned by Cristy from TLC and told that if he paid to attend a trip to Fiji, he would meet "plenty of girls". He paid $3,000 for the Fiji trip. Helen subsequently telephoned him stating that he must pay a further $5,000 for the Fiji trip. The trip never eventuated. 61In August 2005, Cristy from TLC telephoned Mr Ruiter and encouraged him to attend a function at the Melbourne Cup, where, for a cost of $4,000, he would stay at Crown Casino, meet female TLC members and 'Penthouse Pets'. Although he paid to attend the Melbourne Cup function, accommodation at Crown Casino was not provided and nor did female TLC members or any 'Penthouse Pets' attend the function. 62Between October 2005 and October 2006, Mr Ruiter paid further monies to TLC, but was not introduced to any suitable women. In October 2006, Mr Ruiter received a telephone call from Paul of TLC stating that he had a suitable woman called Lisa, but that Mr Ruiter would have to pay money to attend a function on the Gold Coast in order to meet her. Mr Ruiter was subsequently informed that Lisa's membership was "on hold" because her mother had died. Between October 2006 and August 2008, Mr Ruiter continued to pay monies to TLC on the basis of various representations, including a representation in August 2008 from Hollie that the membership of Lisa was no longer on hold, and that she wanted to meet him. 63Mr Ruiter paid TLC $49,300 between 2004 and 2008. Sundara Rengasamy 64At the time of swearing his affidavit, Mr Rengasamy was 28 years old. He has a mild intellectual disability and, since 2004, had been in receipt of a disability support pension. He had not made many attempts to find a partner prior to contacting TLC. 65In about April 2008 he saw an advertisement in his local newspaper "The Messenger" for True Love Corp ("TLC"), which he thinks said " Do you want to get into a relationship? Call True Love Corp." 66In April 2008 he telephoned the number in the advertisement and spoke to a person whom he believed was either Hollie or Christine. Mr Rengasamy told the consultant that he wanted to meet a woman of Indian background aged between 25 and 30 with no children. He mentioned his mild intellectual disability. He was told that TLC had lots of members who fitted his profile and that he could be matched. He was quoted a fee of $1,200 which was to be deposited into the TLC account. 67Mr Rengasamy gave the consultant his credit card details and email address. He paid $1,000 by BPay to TLC and a further $1,200 in mid April 2008. There was no written contract with TLC. Over the next few days he received profiles of three women, but each of them lived in another state. 68On about 16 April, he received a phone call from either Hollie or Christine about the introductions. After he said that all the women lived too far away, the consultant told him about the different packages which TLC offered. He was told about the 'premium membership package' costing $10,000 and was encouraged to 'upgrade' to it. The consultant agreed to reduce the price because he was receiving the disability pension. He was told that "you won't regret it, it will be money well spent for you to find your perfect partner". 69In April 2008, Mr Rengasamy paid $2,000 and then a further $2,300 after he had received emails from Hollie requesting that he pay more money and threatening to send a debt collector if he did not do so. Mr Rengasamy also received telephone calls during April and May from TLC about attending a 'grooming weekend'. Between June and July 2008, Mr Rengasamy received further emails from Hollie requesting that he pay more money. She told him that a debt collector would be sent if he did not do so. Mr Rengasamy felt threatened and between May and July, Mr Rengasamy paid TLC a further $4,700. 70He continued to receive introductions but said that he could only get in touch with two of the four women on the telephone numbers which TLC had provided to him. He said that the other two women were nice but were not of Indian background and that they both lived interstate. 71On 17 July 2008 he said that he received a telephone call from Hollie checking on his membership payments. When he told her that he could not give her more money, she asked him "How are you going to meet the woman of your dreams if you don't continue paying?" He said that he had been too embarrassed to tell his parents but at the end of July he eventually told his mother what had been happening. 72Mr Rengasamy paid TLC $11,200 between April and December 2008. Veda Rengasamy 73Sundara's mother, Veda, is a medical practitioner. On 30 July 2008, Dr Rengasamy contacted TLC and spoke to a consultant named Christina. She asked for a refund on behalf of her son. Christina told Dr Rengasamy that her son had signed a contract with TLC and that he still owed the company $3,500. She said, "Sundara cannot terminate the contract now. We will send a debt collector to recover the rest of the money". 74When Dr Rengasamy mentioned her son's intellectual disability, Christina said that "If Sundara has an intellectual disability, he needs a doctor's certificate. Then we will reconsider about the debt collector". When Dr Rengasamy questioned what the $8,000 her son had paid had been used for, she was told that "[t]he money has also been used up for phone calls by the girls, Pamela, Prue, Shree and Georgina. We were planning to fly down a consultant for a weekend to improve Sundara's self esteem, to work on his shyness and to arrange photo shoots for a better presentation." 75Dr Rengasamy made a claim of $6,000 to the South Australian Magistrates Court on her son's behalf. Christine Smith 76Christine Smith lives in Victoria. For many years, she had worked as a horse breeder and prior to that she had been a model for five years. 77In June 2006, after seeing an advertisement for TLC in 'Inside Football' which she remembers included the phrase "Want to know how footballers meet their beautiful wives? Call True Love Corp", she contacted TLC telling the consultant that she was looking for a companion. She was asked to pay $265 for a basic package. When she told the consultant that she could not afford to pay she was given a complimentary membership for a period of six to twelve months. She gave the consultant details about herself and the type of man to whom she wanted to be matched. She insisted that her address not be given out. 78She was given a number of introductions but sometime in 2007 she complained to TLC that too many men were calling her. She continued to receive telephone calls from consultants, including Hollie, about matches. She estimated having received over 100 telephone calls from men since June 2006. 79In October 2008 Ms Smith contacted TLC after seeing a television program which featured the company. She requested that TLC not give her number or details to anyone. Despite the promise to remove her details from its database, Ms Smith continued to receive telephone calls from men referred by TLC. 80In January 2009 she met Tom Gunthorpe, a TLC member, who came to her property after having been able to find her address. She told him that her mother was still alive and that she had never sent TLC a photograph of herself. 81She contacted TLC again insisting that the company remove her details from its database. She was afraid that other men might be able to find her. She was both concerned and angry. 82In September 2010, Ms Smith received a telephone call from a woman who told her that she was telephoning from Adelaide from a new singles' club and that her details were on their database. Kenneth Vickers 83At the time of swearing his affidavit, Mr Vickers was employed as a security officer and living in country Victoria. In about April 2002 Mr Vickers telephoned TLC after seeing an advertisement in a magazine called 'Sporting Shooter' and requested a brochure. He then received a telephone call from Prue from TLC. He gave her information about himself and a profile of the type of woman that he wanted to meet. He was told that there were three women who resided within an hour of where he lived who were suitable and that they would call him that night. He was given details of membership packages and signed up for a 'three introduction package' for $165. 84He received the introductions but each of them was unsuitable. When he told TLC about it, he was told by Prue that it was because he had joined "the dole bludger's special" and that he should upgrade to the 'Bronze package' costing $900. He agreed to do so. 85Mr Vickers was subsequently telephoned about upgrading his membership. He was told that he would get better quality introductions with guarantees that a "fantastic" woman would be available. He was also telephoned and encouraged to attend 'grooming weekends' in order to improve his appearance. On one such occasion he was told that the 'grooming package' was being discounted by $500 because he was a "super, special valued client". 86In about April 2004 Mr Vickers spoke to Helena from TLC after he had indicated to TLC that he intended to lodge a complaint with "Fair Trading". Helena told him that she had been on maternity leave but agreed to deliver the services which had been promised to him. He was also offered a free twelve month 'Bachelor Club' membership. 87During the next few months he received a number of introductions. None of them was suitable either because the women lived too far away, were too difficult to contact or were not working. 88In late October 2004 he spoke to Helen from TLC after being told by another consultant that there were no girls available for introductions. Helen told him that there were many women available but that they were on the 'Marriage File package'. He was told that he could not be introduced to them unless he was also on the same package. Mr Vickers was sent information about the upgraded package called the 'Men's Single to Marriage Club' costing $15,000 together with a photograph of a client named Danielle. Helen telephoned Mr Vickers and told him that Danielle lived in Bendigo, where she owned her own home and that she wanted to meet him. Helen offered to reduce the package to $7,000 telling him that she considered him to be a personal friend. Mr Vickers organised a loan in order to pay for the package and agreed for the 'upgrade' when Helen further reduced it to $6,000. 89There were subsequently further promises made by Helen in late January 2005. They were to the effect that he would get an introduction within a week, that arrangements would be made for a video, as well as photographs and access to the profiles of women on the 'Marriage File'. 90Unhappy with the service he was receiving from TLC and his lack of contact with Helen who had promised that she would be his personal consultant, Mr Vickers sent her a letter of complaint in April 2005. He also sought a refund. Mr Vickers then began to receive details of more introductions but none of them appear to have been suitable because he was not given telephone numbers for some of the women whilst two of the women whom he contacted were not interested. 91In May 2005, Mr Vickers received a telephone call from Cristy from TLC concerning a seven day trip to Fiji which was being organised for single people. He was told that there would be ten men and thirty women on the trip. Cristy told him that the cost of the trip was $10,000 but that he was being charged $4,000 as Helen was paying $6,000 from her own money because she liked him. Helen then came on the phone and told him that in fact there were going to be thirty two men and sixty four women on the trip. After being told that Helen had found perfect matches for him, he agreed to pay for the trip. He then received a further call from Cristy informing him that the cost of the Fiji trip had increased by $2,000 which he agreed to pay by instalments. The Fiji trip did not eventuate. 92In June/July 2005, Mr Vickers received a telephone call from Cristy about a Melbourne Cup event which would cost $5,000 However, he was told that he would receive a discount of $1,000. Mr Vickers was told by various consultants that there would be more female than male clients at the event, that he would be transported by limousine from his hotel to the race track, that he would have access to a corporate box and a racing expert, that the waitresses would be Penthouse Pets, that there would be a five course black tie dinner at Crown Casino after the race and that, as it was a charity event, he could claim the cost back on tax. He agreed to pay the $4,000 by instalments. 93He received further telephone calls about the Melbourne Cup event during which demands for payment of further monies were made. In August 2005, Mr Vickers received a telephone call from Cristy from TLC about paying more money because accommodation was being arranged at the Crown Casino. Mr Vickers paid an additional $1,000 for two nights' accommodation. Shortly after this conversation, Mr Vickers was contacted again by Cristy and told that the accommodation at the Crown Casino would cost more as the corporate rate required a person to stay for four nights not two. When Mr Vickers asked for a refund of the $1,000 which he had already paid he was told that as it had been paid to Crown Casino, it was not refundable. In September, a TLC consultant named Laura told him that he would have to pay $200 GST for the Crown Casino room. He was told that there would be no more introductions unless he paid. He paid that sum and a further $300 which he was told he owed for the 'after party' at the Crown Casino. Mr Vickers was later told by Cristy that Crown Casino had overbooked rooms and that other accommodation would be arranged for him. Mr Vickers contacted Crown Casino to be told that the only booking that had been made by TLC was for a single suite for the second defendant. Ultimately Mr Vickers was booked into a hotel at Box Hill which cost $380 for four nights. Mr Vickers travelled to Flemington by tram, a trip that took him 2 hours. He received access to the race track and to a shared marquee where food and drinks were provided but there were no female clients or 'Penthouse Pets' in attendance. 94In August 2005 Mr Vickers had been embarrassed when his credit card was declined at a service station due to there being insufficient funds in his account. Mr Vickers discovered that TLC had debited his account without his authorisation. When he contacted Helen to complain, she told him that it had been done by the accounts' department on Cristy's instructions. Mr Vickers cancelled his card. 95Some time in November or December 2005, Mr Vickers received a telephone call from Helen about his testing a life coaching service that TLC was introducing. After speaking to the life coach named Eric, Mr Vickers received a telephone call from Cristy who told him that "Eric thinks you're a psycho job". 96For some time, Mr Vickers had been taping his conversations with TLC consultants. After being informed of that fact, Helen offered him either a refund or alternatively new membership and trips in exchange for the tapes of the conversations. Mr Vickers flew to the Gold Coast and attended the TLC offices at Tweed Heads in February 2006 in order to discuss the matter with Helen and Cristy. After about six hours of discussion, a settlement was reached. Mr Vickers signed the settlement document and was given a copy of it in a sealed envelope. On his return home, he opened the envelope and found that all but the page which he had signed had been substituted. 97As a result of his experience with TLC, Mr Vickers experienced emotional and financial stress. He also received telephone calls from debt collectors in relation to money which he had borrowed in order to pay TLC. He became depressed and attempted suicide. 98Mr Vickers paid TLC about $26,365 between 2002 and 2006. He received $3,300 from TLC after having signed a deed of release with them. Linda Williams 99At the time of swearing her affidavit, Linda Williams was 50 years old. She had worked as a waitress for twelve years and lived in Victoria. 100Ms Williams contacted TLC in April 2003 after seeing an advertisement in a newspaper. The advertisement said "Well look no further....we are Australia's largest and most reputable introduction agency. Try our obligation free trial offer and let us find your perfect match." 101Ms Williams remembered being told that there were suitable matches for her and that there were a number of packages available. When she said that she could not afford to pay, she was given a free membership. She then gave the consultant her details and a profile of the type of man she wanted to meet. She estimated having received about 10 telephone calls from men after joining TLC. Alan Westoby Young 102Mr Young is a Financial Services Manager who lives in New Zealand. In February 2005, his wife of 29 years, died of cancer. He felt lonely after her death. In 2007, he lost his mother. 103In September 2006 Mr Young telephoned TLC after seeing an advertisement in the 'Taranaki Daily News'. The advertisement claimed that "with over 25,000 members, you can be sure that True Love Corp can introduce you to like-minded singles for friendship and love". He spoke to a consultant named Cristy and gave her a profile of the woman he wanted to meet. He also gave Cristy details of his background and interests. He was told about the 'Silver Primary Service' six month membership which cost $2,800. This membership, he was informed, included a personal consultant for two months, unlimited introductions, two advertisements in the classified section of the local newspaper, as well as having his photograph and profile placed on the TLC website. He paid the membership fee. 104In October 2006, Mr Young was twice contacted by Cristy about upgrading his membership, first to the twelve month 'Men's Silver Advanced Package' costing $7,890 which included invitations to social events and then to the 'VIP Platinum Marriage package' costing $21,500 for a year. He paid for the first package. In October 2006 he was introduced to two women, neither of whom was suitable. 105On 1 November 2006, Mr Young received a telephone call from Paul from TLC about flying to the Gold Coast. He agreed to do so and whilst there he was introduced to a woman named 'Angie Jovic'. He thought her compatible. While Mr Young was still on the Gold Coast, Paul told him that he should pay to upgrade to the 'VIP Platinum Marriage package' and also pay for a trip to Fiji. Mr Young was encouraged to consider both after being told that 'Angie Jovic' was also a member of the VIP Platinum package and that he might meet the love of his life on the trip. Mr Young paid substantial sums for the Fiji trip and for the VIP Platinum package. 106After his trip to the Gold Coast, he remained in contact with 'Ms Jovic'. Between 2006 and 2008, Mr Young paid TLC very significant amounts of money in order to constantly upgrade his membership and that of 'Ms Jovic' on the basis of her promise that the money would be repaid and that they would marry each other. 107In November 2006 Mr Young was encouraged to pay for the 'VIP Marriage Package' by Paul and 'Ms Jovic'. During November/December he paid a total of $157,025. In December he was asked by Paul to pay a further $14,000 for both his membership and that of 'Ms Jovic' which Paul explained was for GST. He was asked to pay for 'Ms Jovic' after she told him that her mother was ill in hospital and that her money was tied up. In January 2007 he paid a further $129,000 for the 'VIP Upgrade Service'. At the end of January 2007, Cristy from TLC telephoned Mr Young and told him that TLC had undercharged him for the upgrade and that he owed another $28,160 for GST. He paid TLC that sum. In February 2007, he was told by Cristy that 'Ms Jovic' also owed TLC the same amount but that she could not pay. He was told that her money was tied up in a family trust but that 'Ms Jovic' would repay him. He also received a text message from 'Ms Jovic' making a similar request. He paid the requested sum. In July 2007 Cristy told him that he and 'Ms Jovic' both owed $2,750 in administration fees. He agreed to pay both sums after being told by Cristy that 'Ms Jovic's' VIP membership fees would be reimbursed once she and Mr Young were married. 108Mr Young's efforts to meet up with 'Ms Jovic' were repeatedly thwarted. In December 2006 he went to Melbourne to meet 'Ms Jovic' only to be told by her that she could not meet him because she had to take her mother to Sydney by air ambulance. In January 2007 he again flew to Melbourne to meet her only to be told by her that she was in Sydney to see lawyers in respect of a dispute that she was engaged in with her sister about her mother's will. She told him to return to New Zealand even though he said that he was prepared to go to Sydney to provide support to her. It was during this conversation that Mr Young proposed to marry her, a proposal which she accepted. 109At the end of January 2007 Mr Young received a telephone call from 'Ms Jovic' who told him that she had bought her wedding dress and chosen the engagement ring. 110He received other telephone calls from 'Ms Jovic' in March, July and November 2007 requesting financial help for various matters including living expenses, legal costs and airfares for her daughter. She insisted that he pay the money to TLC who would then reimburse her. In March and April 2007, Mr Young paid $140,000 to TLC for the purpose of providing assistance to 'Ms Jovic'. In July 2007 he borrowed about $95,000 from his mother and transferred $80,000 of it to TLC again for the purpose of assisting 'Ms Jovic'. In December 2007, he transferred a further $100,000 to TLC for the same purpose. 111In November 2007 Mr Young flew to the Gold Coast to meet 'Ms Jovic' for a second time. He thought that the woman he met on this occasion seemed different in physical appearance and personality to the person whom he had met previously. He thought that her changed appearance may have been due to the family disputes about which she had told him. During this trip she continued to ask for financial help and Helen proposed that he buy a mobile phone for each of them to overcome their communication problems. He paid $21,000 for the phones in mid-November 2007. Throughout this time, 'Ms Jovic' continued to promise that they would marry and that she would come to New Zealand to see him. 112In February 2008 'Ms Jovic' came to New Zealand to see Mr Young but insisted on having separate bedrooms as she had "promised my dear departed mother that I would not have sex until I married you". As he was still unsure that the woman was the original 'Angie Jovic' that had been introduced to him in November 2006, Mr Young asked to see her passport. She told him that she had left it in the lockers at the airport. He took the opportunity to ask her about her background and her family. During this visit, 'Ms Jovic' told him that she had signed some documents and that TLC wanted him to sign them as well. She told him that if he signed the documents "we can get TLC off our backs, and get on with our lives". He was facsimiled three documents from TLC for his signature. One of the documents was a Heads of Agreement for the purchase of $1,000,000 worth of shares in TLC. 'Ms Jovic' told him that she had organised it as a surprise for him. Mr Young told her he did not want to invest in TLC. 'Ms Jovic' insisted that he sign the documents so that they could marry and start a new life saying "If you want to marry me on Saturday you had better sign those documents". Mr Young was unable to get legal advice at the time. He felt under extreme pressure and was emotionally vulnerable having lost his mother a few months earlier. He reluctantly signed the documents. As soon as he had signed and facsimiled the documents to TLC, 'Ms Jovic' told him that she would return to Australia in order to arrange their wedding for 16 February. 'Ms Jovic' gave him a gold pendant which she said had belonged to her mother and which was expensive. When Mr Young subsequently went to get the jewellery valued for insurance purposes, he was told that it was costume jewellery worth only a few dollars. 113On 15 February Mr Young flew to Brisbane for his wedding. Upon his arrival he received a telephone call from 'Ms Jovic' informing him that she had to go to Melbourne in order to see her lawyer. Mr Young flew to Melbourne where he received another telephone call from 'Ms Jovic' telling him that she was flying to the United States where her daughter had been in a car accident. When Mr Young returned to New Zealand he noticed that the documents that he had signed a few days earlier were missing. He spoke to 'Ms Jovic' who told him that she had taken the documents to show her lawyer. 114On 28 March 2008, Mr Young flew to the Gold Coast to meet with Helen from TLC to discuss what was left in the separate account which had been supposedly established for 'Angie Jovic'. She told him that nothing was left in it and that nearly $370,000 plus interest had been paid to her. Mr Young tried to reach a settlement with TLC without success. Mr Young said that in subsequent conversations with Helen in 2008, he was told that the 'Angie Jovic' whom he had met in November 2006 did not exist and that no-one called Hollie had worked for TLC. 115In April 2008, Mr Young commenced proceedings against TLC in the Queensland Supreme Court to recover his money but they were discontinued because of his financial difficulties. In November 2008 he was forced to sell his family home. 116In October/November 2009, Mr Young contacted TLC and recognised the voice who answered the phone as that of 'Angie Jovic'. The person who answered the telephone identified herself as Hollie Veall and as the director of TLC. Despite extensive searches, investigators were unable to locate any trace of a person with the name of 'Angie Jovic'. Mr Young asked for a refund which was refused. 117Although he had significant assets when he first contacted TLC, Mr Young said that he was in debt at the time that he swore his affidavit. He had sold his home, his car, his shares and had cashed in his superannuation. Mr Young paid TLC a total of $683,145 between September 2006 and March 2008. (b) the evidence of ex TLC employees Jessica Erin Allison 118Ms Allison worked as a contracts' administrator with Love Network Pty Ltd ("Love Network") which was located in Southport, Queensland, between April and August 2009. Her duties included the preparation of membership agreements, telephoning customers who registered interest through the internet or over the telephone, and booking weekend packages. 119She was introduced to the second and third defendants who both worked in premises two suites up from Love Network called "Stangs Finance". She said that she saw the third defendant come in about two days a week. However, she said that she had frequent contact with the second defendant. She also saw the first defendant in the same suite. While visiting the Stangs Finance office suite, Ms Allison overheard telephones being answered with the words "True Love Corp" which she believed to be a branch of Love Network. 120In about June 2009, Ms Allison began answering the telephones for TLC. She was instructed by Kelsie Dubois-Smith, who moved from the Stangs Finance suite to the Love Network suite, that she should use a different name when answering the TLC lines. She was also instructed to say something in order to keep the TLC clients happy until either he was able to return their calls or the callers hung up. She answered the TLC lines by saying "True Love Corp" and giving her name as Sasha, Mia or Sarah. Many of the calls she took were complaints from clients about not receiving introductions or being required to 'upgrade' memberships. 121Ms Allison was able to access TLC client records during her period of employment. She also recalled seeing a commission structure for consultants although she was not sure whether it referred to TLC or Love Network. The base salary was $500 per week with commissions of 5% for sales of $10,000, 15% for sales of $15,000 and 20% for sales of $20,000. Kellie Stacey Arrowsmith 122Ms Arrowsmith was employed as an office junior with TLC at Tweed Heads between September 2006 and January 2007. Ms Arrowsmith's duties included filing, faxing, photocopying and telephoning potential customers who had completed the free compatibility test. She also took complaints from clients who were upset about not being suitably matched. Ms Arrowsmith was told, she thinks by Cristy Grinham, to tell potential clients that TLC had 28,000 members in Australia and New Zealand. Ms Arrowsmith regularly used the TLC database during her period of employment and estimated that TLC had, at most, 300 to 400 members registered. Her direct supervisor was Cristy Grinham but she knew that the second defendant ran the business. That was because the sales team reported to her and because she was the only one who could approve holiday leave. 123Ms Arrowsmith said that she believed that the second defendant listened in on conversations between staff and TLC clients. She related an incident in January 2007 when she had called an inactive member of TLC about re-joining the company. When she was unable to convince him to rejoin, Ms Arrowsmith terminated the call. A few minutes later, the second defendant told her that she had ended the call too soon and admitted to her that she (the second defendant) had listened to the call. 124Ms Arrowsmith said that when clients initially contacted TLC, they were registered on its database and then transferred to the sales team who would sell them one of the various levels of membership. Once a membership had been sold, the client was passed on to the introductions team. When the sales team identified clients with significant financial resources, the clients were referred to Paul, the second defendant's brother, who was the senior relationship consultant. He would try and sell them upgraded packages, called 'Elite' or 'VIP'. Ms Arrowsmith said that she saw summaries of both packages but could not discern any differences between them. 125Although she was not directly involved in the selling of memberships, she does remember that there were 'Bronze', 'Silver', 'Gold', 'Platinum' and 'VIP' packages with separate prices. Although she said that she remembered seeing clients coming to the TLC office for 'grooming packages', she saw no evidence that TLC staff organised overseas trips or gala balls. 126Ms Arrowsmith said that she also believed that TLC staff stayed on the line after they had transferred clients to their banks in order that they could find out their account balances. Following an argument with Cristy and Helen, Ms Arrowsmith was asked to resign. When she refused to do so, she was dismissed. Tracey Ann Rutledge 127Ms Rutledge was employed as a bookkeeper with TLC at its offices at Tweed Heads from June 2004 until her resignation in September 2007. Her duties included data entry, receipting client payments, bank reconciliations, preparing GST reports and liaising with the company's accountant. 128She said that when she first started working there she reported to two persons, one of whom was the second defendant. Although there were few permanent employees when she started, she estimated that TLC employed about 150 employees during the time that she was with the company, although most of them were juniors who worked for only a couple of weeks. 129As the company's bookkeeper, Ms Rutledge was in a perfect position to observe who controlled the day to day running of the company. She said that she reported directly to the second defendant. She said that although she herself prepared the payroll reports, the second defendant approved them. Ms Rutledge went on to say that if the second defendant was away, she (the second defendant) authorised someone else to approve the reports. She also said that the second defendant approved the purchase of stationery and equipment and authorised payments of expenditure. 130During her last year of employment, Ms Rutledge was instructed by the second defendant to put both the third defendant and herself (the second defendant) on the payroll. She said that they each received about $300 to $400 per week. 131Ms Rutledge said that the second defendant had control of the company's accounts with the National Australia Bank and Westpac. The NAB account was a cheque account used for BPay and credit card deposits and the Westpac account was a cheque account. Direct deposits went into both accounts. She said that she did not ever see a company credit card. Ms Rutledge said that payments of between $1,000 and $20,000 were regularly transferred from the NAB and Westpac accounts to the second defendant's personal credit card accounts. 132Ms Rutledge also said that she was aware of occasions on which money was debited from clients' credit card accounts without their authorisation. 133On one occasion, Ms Rutledge said that she saw the second defendant listening into telephone conversations between sales staff and clients. There were other occasions when Ms Rutledge overheard the second defendant telling a sales staff member to "get back on the phone and upgrade him [a client]". 134Ms Rutledge recalled that TLC had a few different packages including a 'grooming package'; a 'Fiji package'; and in 2005, a Melbourne Cup event. With respect to the Melbourne Cup event, she saw the invoice for a booking at the Crown Casino for the second and third defendants. She said that she recalled that clients were booked in hotels in the outer suburbs of Melbourne. She said that she was unaware of any bookings being made for the 'Fiji package'. 135Ms Rutledge was shown a series of photographs by investigators. Five of the photographs depicted TLC staff including the first and second defendants. Ms Rutledge was also shown a photograph with the heading "Dimitra ref: 219146" and was asked whether she recognised the woman. Ms Rutledge said that she did not recognise the woman but maintained that her photograph had been used for marketing purposes. Ms Rutledge said that photographs of women had been taken from the internet and passed off as female client profiles. (c) the expert evidence Yvonne Allen 136Ms Allen is the principal of the introduction agency, Yvonne Allen and Associates, with offices in Melbourne, Sydney and Brisbane. She is a registered psychologist, author and public speaker. 137Ms Allen said that her company assists clients to clarify what they are seeking in a partner, which can involve counselling and supportive work before and during the process of meeting potential partners. Introductions are only made once both parties have read each other's profiles and have agreed to meet. Ms Allen expressed the opinion that the practices adopted by TLC were unethical and that they were not the practices of a reputable agency. Matthew Pullen 138Matthew Pullen is a senior information security analyst employed by the Department of Services, Technology and Administration and has worked in the IT industry for fourteen years. He ran a trace of the email sent to Thomas Gunthorpe by Chrissy Smith in October 2008 and was able to confirm the conclusions about it which Mr Gunthorpe had reached. Susan Hayes 139Susan Hayes is a Professor of Behavioural Sciences in Medicine at the University of Sydney and has been a forensic psychologist for over 25 years. She undertook a psychological assessment of Wayne Robson. The tests which Professor Hayes administered showed that Mr Robson functions at the level of someone aged five years and eight months. She said that his communication skills lay in the range from seven years and seven months to eight years and six months, which is at the lower end of the category of primary school achievement. Professor Hayes concluded that he had major impairments in his ability to solve new problems. 140Professor Hayes expressed the opinion that Mr Robson suffers from "mild intellectual disability in the areas of both cognitive reasoning and adaptive behaviour" and that "his communication skills are in the category of severe impairment". Professor Hayes was also of the view that "it would only take a few minutes of conversation with Mr Robson to be aware of his intellectual limitations [and that] owing to his intellectual disability, Mr Robson has great difficulty understanding the motives of other people and, therefore, is excessively trusting of them." She was also of the view that he could not understand the loan documents that he had signed. The response of the defendants 141As I observed in Veall (No 1) , the third defendant has not filed a defence to these proceedings and has effectively played no part in them since about the middle of last year. On the other hand, the first defendant did file a defence to the statement of claim. It is apparent on the face of that document, that it was not drafted with the assistance of a lawyer. In due course, an amended statement of defence was filed on her behalf. That document does not appear to suffer from the deficiencies apparent in the original defence. Although it does not form part of the evidence in the proceedings I will, for completeness, refer to what is contained in it. In essence, she claimed that her appointment as a director of TLC had been procured without her knowledge or consent and that her signature on the relevant documentation had been forged. She maintained that although she had been employed by TLC, she had never acted as a dating agent or as a consultant and, accordingly, denied that she had engaged in misleading or deceptive conduct or unconscionable conduct. She acknowledged however that the second and third defendants had engaged in conduct of the relevant kind. She also maintained that they had subjected her to verbal, psychological and physical harassment and that they had retained absolute control over the operation of TLC at all relevant times. Liability of TLC 142The material reveals that through its agents, TLC employed a number of different techniques in order to extract money from its clients. Nevertheless, a number of common themes emerge from the evidence. The fact that more than one client provides a similar account adds a measure of cogency to their version of events. 143It is convenient to now identify some of the common techniques that were used by TLC. (As I said earlier most of the clients were men. For convenience I shall simply refer to the persons to whom introductions were made as women); (a) making representations that clients needed to pay more money to 'upgrade' to a 'higher level of service' in order to meet compatible women when, by and large, those services were not provided; (b) making representations that there was a particular person who was 'perfect' for the consumer, but that it was not possible to introduce the consumer to the person unless the consumer paid more money to 'upgrade' to a higher level, or paid money to attend a 'grooming weekend', at which excuses were made that the woman who was a 'perfect match' could not attend; (c) making representations (both by telephone and in person when the client went to the Tweed Heads/Gold Coast area on a 'grooming weekend') that it was necessary for the client to pay further monies in order to meet a particular woman who was said to be interested in the client. Some clients were also pressured to 'lend' money to the woman by making payments to TLC, because the woman had particular financial problems (e.g. Thomas Gunthorpe; Alan Young). When the clients paid the money, repeated excuses were provided as to why the consumer could not meet the woman. (In some instances the overwhelming inference is that the women did not exist); (d) making representations that the client had to pay more money because they had 'underpaid', for example, for 'upgrades' or attending a 'grooming weekend'; (e) convincing three clients (Aaron Bennett, Ashley Ruiter and Kenneth Vickers) to pay money for a holiday in Fiji to be organised by TLC, on which the client would meet suitable women. Such holidays to Fiji never occurred, despite the clients having paid for them; (f) convincing two consumers (Kenneth Vickers and Ashley Ruiter) to pay money to attend a function at the 2005 Melbourne Cup at which female TLC members and 'Penthouse Pets' were going to be present and in respect of which accommodation at Crown Casino was to be provided. Although the event took place, neither female TLC members nor 'Penthouse Pets' were in attendance and nor was accommodation at Crown Casino provided; (g) convincing consumers (e.g. Stuart Childs; Clifford Kopp) to pay money for an extravagantly priced mobile telephone which had 'special software' on it and which, when delivered, did not contain 'special software'; (h) using emotionally manipulative language to pressure consumers to pay monies to TLC. On occasions consultants used language that belittled and humiliated the clients, while promising them that if they paid further monies, their problems would be solved and that they would meet a woman who was 'perfect' for them. I have already referred to several such examples. To reiterate, the first defendant told Clifford Kopp in May 2008 that "I think you can afford it...you can't put a price on falling in love with the right lady...how would you feel if all your life you had no one special in it? When you pass away, no one will remember you"; and saying to him in April 2009 "Cliff, stop being a child and get over it. Everyone has financial problems. Now tell me what are you going to think when you are 80 and lying on your death bed? Gee, I've been a bus driver all my life and I have nothing to show for it". By way of further example, in February 2008 the first defendant told Wayne Robson that he needed to pay $20,000 in order to meet Rebecca and that "she'll be your dream lady and you'll get to spend your life together. Rebecca definitely wants to meet you and be with you". (i) pressuring clients to pay more money because the TLC consultant had paid part of the fees for an 'upgrade' on behalf of the client, or had given a 'discount' and would lose their job if the monies were not paid. Examples of such conduct are the first defendant telling Damian Clear in December 2008 at a 'grooming weekend' that she could lose her job if he told anyone that he had been introduced to a woman on a more expensive membership, and telling Clifford Kopp in May 2008 that he would have to pay the "full amount" for a package which involved the provision to him of psychiatric and nutritional advice or she would lose her job; (j) pressuring clients such as Stuart Childs and Ashley Ruiter to sign contracts without first reading them, or after they had consumed significant amount of alcohol, when attending 'grooming weekends'. The client would then be told that they must pay more money as they had signed a contract; (k) pressuring clients to take out loans in order to pay monies to TLC, and then facilitating such loans. Examples of such conduct are the first defendant pressuring Clifford Kopp to take out a loan in July 2008 (including sending him documents from Stangs), and pressuring Wayne Robson to take out a loan in early 2008; (l) refusing to refund monies to clients when they complained about the lack of service, and telling consumers that they would be sued for defamation or 'humiliated' in court if they took any action against TLC. An example of such conduct is the woman who introduced herself as a "female director" of TLC who told Stuart Childs in April 2009 that "we are a big international company, so don't muck us around". 144The overwhelming impression which emerges from the evidence is that TLC's agents took every opportunity to target people (usually men) at a time when they were emotionally vulnerable. In some instances, the client lived in a remote location. Some had recently lost, or been separated from, a partner. Some clients (such as Damien Clear and Sundara Rengasamy) suffered from either a physical or an intellectual disability whilst Wayne Robson had difficulty reading and writing. Many of them were desperately lonely. In any event, what they each had in common was a deep yearning for a measure of personal fulfilment in their lives, a desire which made them susceptible to the extravagant claims which were made by TLC's agents who were prepared to exploit the situation in which the clients found themselves. 145At face value it may seem extraordinary that a number of the clients were prepared to expend what were clearly exorbitant sums of money over extended periods of time for services that were not provided either at all, or to only a limited extent. Clearly many of the clients were very gullible. Presumably they felt that having committed themselves financially, they had no alternative but to see the matter through. Ultimately, however, the explanation for what occurred lies in the fact that through its agents, TLC was prepared to go to just about any lengths in order to extract money from its clients. 146Whilst it is apparent that TLC did provide some introductions, it is also equally clear that, on many occasions, the person who was introduced did not have the characteristics or profile which the client had indicated that he or she was interested in. 147There can be no doubt that TLC was a corporation which was engaged in "trade or commerce": Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 604. Moreover, it continued as I have said, to have contact with persons in NSW even after it moved to Queensland. 148Bearing in mind the material to which I have referred, I am satisfied to the requisite standard that the plaintiff has demonstrated that TLC engaged in misleading and deceptive conduct within the meaning of s 52 of the TPA and s 42 of the FTA . I am equally satisfied that it also engaged in unconscionable conduct within the meaning of s 51AB of the TPA and s 43 of the FTA . In reaching the latter conclusion, I have placed particular emphasis upon paragraph 61 of the judgment of Bell J in Monaghan (supra) to which I referred earlier. 149The question which then arises is whether the plaintiff can establish that each of the first and third defendants should, by reason of s 75B(1)(c) of the TPA and s 61 of the FTA , be held liable for those contraventions. Liability of the first defendant 150The first defendant had a demonstrably clear connection to TLC and its activities. First, she was paid substantial sums of money by the company. In total she earned nearly $250,000 for the 2007-2008 and 2008-2009 financial years. Between January 2009 and January 2010 she was listed as the company's sole director. Secondly, there is an overwhelming body of evidence that a number of clients had direct contact with her, some of whom met her face to face on 'grooming weekends'. Moreover, the business records of TLC do not indicate that there was anyone else named Hollie working for the company. At least seven clients, Stuart Childs, Damien Clear, Thomas Gunthorpe, Clifford Kopp, Wayne Robson, Sundara Rengasamy and Alan Young provided direct evidence that the first defendant actually pressured them into paying money to TLC. She also made numerous other misrepresentations. Moreover, that body of evidence is supported by the accounts provided by TLC's ex-employees, Jessica Allison and Tracey Rutledge, which demonstrate that the first defendant's involvement in the relevant activities of TLC was at a high level. I accept that she could be described as the 'human face' of TLC and that she deliberately set out to win the trust of the clients whom she then manipulated in order to obtain money from them. In short, she was a central player in TLC's activities during the time that she worked there. The only inference which is available is that she well knew not only that TLC was engaging in misleading or deceptive conduct as well as unconscionable conduct but that she, as its agent, was by her own actions also so engaged. Putting the matter another way, the first defendant was "knowingly concerned in, or party to, the contravention[s]" of the Act by TLC. 151Finally, I observe that none of the plaintiff's evidence has been tested. Furthermore, there is nothing on the face of the evidence which would incline me not to accept it. Nor, as I have said, has the first defendant given, or adduced any evidence of her own. Since no explanation has been advanced for the failure to do so, it is appropriate to draw a "Jones v Dunkel" inference. See generally, Galea v Bagtrans Pty Limited [2010] NSWCA 350 per Allsop P [at para 2]; per Hodgson JA [at paras 50-61]; National Australia Bank Ltd v McCann [2010] NSWSC 766 per Davies J [at paras 72-4]. Liability of the third defendant 152It is axiomatic that "the mere circumstance that a person is a director of a company that engages in contravening conduct is insufficient to establish that he or she is a person involved in it". See Australian Securities and Investments Commission v Maxwell [2006] NSWSC 1052 per Brereton J [at para 92]. That said, significant duties are cast upon directors, pursuant to the Corporations Act 2001 (Cth) , in the performance of their positions. See generally Daniels v Anderson (1995) 37 NSWLR 438 at 505; Maxwell (supra) [at paras 99-103]; Australian Securities and Investments Commission v Sydney Investment House Equities Pty Ltd [2008] NSWSC 1224 [at paras 23-31]. 153Considerable emphasis was placed by the plaintiff, in its submissions concerning the third defendant's liability, upon the orders made by Atkinson J which are set out in paragraph 4 of this judgment. It was submitted that given the nature, content and terms of those orders the third defendant had, in consenting to them, made an 'admission' within the meaning of the Evidence Act 1995 (NSW) . An 'admission' is defined as meaning a "previous representation" that is "adverse to the person's interest in the outcome of the proceeding". A "previous representation" is defined as "a representation made otherwise than in the course of giving evidence in the proceeding in which evidence of the representation is sought to be adduced". It was submitted that since the orders restrained him, and TLC, from engaging in the activities of an introduction agency and required them to pay considerable sums of money to nominated persons, it could be inferred that the first defendant was complicit in the activities of TLC as 'an introduction agency' at least as at 30 April 2003. 154I accept those submissions. Even if I am wrong in concluding that what was contained in the orders constituted an "admission", I accept that the plaintiff can still rely upon that material. Although s 91 of the Evidence Act prevents the plaintiff from relying upon it in order "to prove the existence of a fact that was in issue in that proceeding", I nevertheless accept that the material could nonetheless be utilised to demonstrate that the third defendant had, as from 30 April 2003, a very clear awareness of what it was that TLC was then prevented from doing. See generally Ainsworth v Burden [2005] NSWCA 174 [at para 109]. 155The similarity between the conduct of TLC in these proceedings in which the third defendant is alleged to have been "knowingly concerned", and the conduct of both TLC and the third defendant, which was the subject of the orders made by Atkinson J, is stark indeed. In my view, there exists a powerful inference pointing to the third defendant's liability in these proceedings on either interpretation of the use to which the orders of Atkinson J may be put. 156Furthermore, although the evidence does not indicate that the third defendant had any direct contact with the clients, it demonstrates that he nevertheless performed an integral role in TLC's operations. First, he was both its sole director and secretary from 9 February 1996 until 1 January 2009, a period of nearly 13 years. Secondly, for at least some of the time, he drew a salary from the company. Thirdly, he was a co-signatory to the company's NAB account. Fourthly, according to the evidence produced by Emma Sharkey, the third defendant was a guarantor for a commercial loan in the name of TLC and wrote to Westpac Bank on TLC letterhead seeking the release of Bpay codes to the National Australia Bank. Fifthly, according to Ms Sharkey's evidence, the third defendant, in conjunction with the second defendant took out a business loan with the National Australia Bank, and repayments in respect of it were made from the TLC business cheque account. Sixthly, the business in which he also had an interest (Stangs Finance) was based in the same premises as TLC and Jessica Allison gave evidence of the close connection between the two organisations. Moreover, Stangs endeavoured to broker a loan for Clifford Kopp so as to enable him to pay further monies to TLC. Finally, he was listed as the billing name on a mobile telephone number which was provided by TLC to Alan Young. In my view, those considerations provide a factual foundation from which it can readily be inferred that the third defendant had a "practical connexion" with, and was thus "concerned" in the contraventions by TLC of the relevant legislation. 157I mentioned earlier that TLC operated from premises in Tweed Heads from February 2003. Until then, as the orders made by Atkinson J make clear, it had been operating in Queensland. The timing of the move from Queensland to New South Wales can hardly have been coincidental. 158Given all those considerations it would be extremely difficult, in my view, to suggest that the third defendant could have been unaware of the nature and scope of the conduct of TLC, particularly given that it endured over such an extended period of time. As I have said it involved persistent contraventions of the relevant legislation, and consisted of a very large number of misrepresentations of one character or another, which were made to a considerable number of individual clients. Furthermore, its 'driving force' was none other than the third defendant's wife who was, inter alia, the other co-signatory to TLC's bank account with NAB. I accept that the third defendant may not have been aware of every separate representation that was made, but I have little doubt that he knew, in general terms, of the techniques that were employed by the company's agents when dealing with its clients in order to obtain money from them. 159As I said earlier, the third defendant has not filed a Defence, much less put on any evidence. The plaintiff's evidence remains entirely untested, and again, I discern no reason why I should not accept it. As was the case with the first defendant, it is appropriate to draw a "Jones v Dunkel " inference by reason of the fact that nothing has been advanced to explain the failure of the third defendant to adduce evidence. 160I should record that the plaintiff has, as a matter of fairness, drawn my attention to several cases in which the court has declined to make a finding that the defendant in question was liable as an accessory to misleading and deceptive conduct. Nonetheless, I accept the submission that each of those cases turned on their own facts: Crocodile Marketing v Griffith Vintners (1989) 28 NSWLR 539; Kaye (supra); Motor Trade Finances Prestige Leasing Pty Ltd v Elderslie Finance Group Corp Ltd [2006] NSWSC 1348; WesTrac Pty Ltd v Eastcoast OTR Tyres Pty Ltd [2009] NSWSC 728. 161In all the circumstances, I am prepared to infer that the only rational inference is that the third defendant had the requisite knowledge of "the essential elements of the contravention[s]" by TLC of the relevant legislation. At the very least, he exhibited a measure of "wilful blindness" in the sense in which that expression is explained in the authorities. Findings 162Accordingly, I make the following findings: (a) Between 1 March 2003 and 3 August 2009, TLC engaged in conduct which was misleading or deceptive, or likely to mislead or deceive within the meaning of s 52 of the TPA and s 42 of the FTA . It also engaged in conduct which was unconscionable within the meaning of s 51AB of the TPA and s 43 of the FTA ; (b) The first defendant from 12 March 2007 was directly or indirectly, knowingly concerned in or a party to, the said contraventions of TLC within the meaning of s 75B of the TPA and s 61 of the FTA ; (c) The third defendant was directly or indirectly, knowingly concerned in or a party to, the said contraventions of TLC within the meaning of s 75B of the TPA and s 61 of the FTA . ********** Amendments 18 May 2011 - Category changed on coversheet 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: 18 May 2011