Chen v Chu

In the case of Chen v Chu, the plaintiffs sought damages from the defendant, a real estate agent, for misleading or deceptive conduct and false or misleading representations. The plaintiffs claimed that the defendant's actions led them to purchase real properties off-the-plan from a developer, resulting in the release of their deposits as unsecured loans to the developer at a high interest rate. The developer was insolvent throughout and operating a fraudulent Ponzi scheme. The defendant denied making the alleged misrepresentations, asserting that he merely relayed information from the developer or its CEO and was not responsible for the plaintiffs' losses due to disclaimers in the documents they signed.

The legal issues before the court included whether the defendant's conduct amounted to misleading or deceptive conduct or false or misleading representations, whether the plaintiffs' reliance on the defendant's conduct caused their loss, and if statutory defences raised by the defendant were valid. The court examined whether the defendant was merely a conduit, whether the disclaimers negated the plaintiffs' reliance, and whether the defendant could claim proportionate liability or benefit from statutory defences such as statute of limitations.

The court held that the defendant's conduct was indeed misleading or deceptive and led to the plaintiffs' loss. The disclaimers did not mitigate the reliance on the defendant's conduct or contribute to the plaintiffs' loss. The defendant was not a mere conduit, and the proportionate liability defence was not applicable, among other reasons, because it does not extend to claims under the Australian Consumer Law (ACL) s 29 or the Australian Securities & Investments Commission Act 2001 (Cth) (ASIC Act) s 12DB. The court also found that the defendant's defences were inadequately pleaded and that the limitations defences were not available. The developer, related companies, and CEO were not causes of the plaintiffs' loss.

The court's decision concluded with observations on the practice of deposing in affidavits to conversations using the first person in New South Wales, although this did not directly impact the outcome of the case. The court's final orders were in favour of the plaintiffs, awarding them damages against the defendant for misleading or deceptive conduct and false or misleading representations.