Davsul Pty Limited v Double 8 Media Pty Limited

[2023] NSWDC 513

District Court

New South Wales

Medium Neutral Citation:

Davsul Pty Limited v Double 8 Media Pty Limited & Anor [2023] NSWDC 513

Hearing dates:

26 October 2023

Date of orders:

23 November 2023

Decision date:

23 November 2023

Jurisdiction:

Civil

Before:

Acting Judge I Coleman SC

Decision:

(1) There be a verdict and judgment for the Plaintiff against the Defendants in the sum of $113,302.85.

(2) Any party seeking an order other than an order that the Defendants pay the Plaintiff’s costs as agreed or assessed on the ordinary basis file and serve submissions in writing not exceeding 7 pages in length within 14 days of Judgment, and a party resisting any such application file and serve written submissions not exceeding 7 pages in length in opposition to such order within 14 days thereafter.

(3) Exhibits retained for 28 days.

(4) Liberty to apply on 3 days’ notice.

Catchwords:

CONTRACTS – whether defendants made false or misleading and deceptive representations – whether plaintiff relied on representations – whether defendants had reasonable grounds for making representations – whether defendant director jointly and severally liable with corporate defendant

Legislation Cited:

Australian Consumer Law (Cth), ss 2, 4, 18, 236 and 237

Competition and Consumer Act 2010 (Cth), Schedule 2

Fair Trading Act 1987 (NSW), Part 3

Trade Practices Act 1974 (Cth), s 52

Cases Cited:

Adler v ASIC [2003] NSWCA 131

Australian Competition and Consumer Commission v Employsure Pty Limited (2021) 392 ALR 205; [2021] FCAFC 142

Australian Competition and Consumer Commission v Google LLC (No 2) (2021) 391 ALR 346

Australian Competition and Consumer Commission v Telstra Corporation Ltd (2007) 244 ALR 470; [2007] FCA 1904

Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54

Australian Competition and Consumer Commission v Woolworths Group Limited [2020] FCAFC 162

Awad v Twin Creeks Properties Pty Limited [2012] NSWCA 200

CA Henschke & Co v Rosemount Estates Pty Limited [1999] FCA 1516

Campbell v Back Office Investments Pty Limited (2009) 283 CLR 304

Concrete Constructions (NSW) Pty Limited v Nelson (1990) 169 CLR 594; [1990] HCA 17

Fasold v Roberts [1997] 70 FCR 489

Fletcher v Nextra Australia Pty Limited [2015] FCAFC 52

Fortescue Metals Group Ltd v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39

Global Sportsmen Pty Limited v Mirror Newspapers Pty Limited (1984) 2 FCR 82

Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435; [2013] HCA 1

Lin v Zheng [2023] NSWCA 174

Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28

QVB Pharmacy Pty Limited v Le [2022] NSWSC 1612

Razdan v Westpac Banking Corporation [2014] NSWCA 126

SAS Trustee Corporation v Miles [2018] HCA 55

Shape Shopfitters Pty Ltd v Shape Australia Pty Ltd (No 3) (2017) 124 IPR 435; [2017] FCA 865

Sportsbet Pty Ltd v Crownbet Pty Ltd [2018] FCA 1045

Sykes v Reserve Bank of Australia (1998) 88 FCR 511; [1998] FCA 1405

Yorke v Lucas (1985) 158 CLR 661

Category:

Principal judgment

Parties:

Plaintiff: Davsul Pty Ltd (ACN 154 913 596)
First Defendant: Double 8 Media Pty Ltd (ACN 620 862 428)
Second Defendant: Nicholas Gerard Esmond Williamson

Representation:

Counsel:
Plaintiff: Ms E O Jardine

Solicitors:
Plaintiff: Strategic Legal

Second Defendant appeared in person and on behalf of the First Defendant

File Number(s):

2022/361228

Publication restriction:

None

Judgment

1. By Statement of Claim filed 30 November 2022, Davsul Pty Limited (Plaintiff) sought declarations that each of the Defendants, Double 8 Media Pty Ltd (Double 8) and Nicholas Gerard Esmond Williamson, engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law, Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL), and an award of damages pursuant to s 236 of the ACL or, in the alternative, an order that the Defendant compensate the Plaintiff for likely loss or damage pursuant to s 237(1) of the ACL. The Plaintiff also sought interest and costs. Part 3 of the Fair Trading Act 1987 (NSW) invests the Court with jurisdiction to determine the Plaintiff’s ACL claims.

2. The Plaintiff’s pleaded claim was for the sum of $120,225.44, of which $117,100.94 was claimed pursuant to the provisions of the ACL. In opening the Plaintiff’s case it was, properly, conceded that the ACL claims should be reduced by the sum of $14,739, being funds subsequently received by the Plaintiff with respect to the transactions between the parties which gave rise to the present proceedings.

3. By their Defence filed 9 March 2023, and further Defence filed 1 May 2023, the Defendants denied that the Plaintiff was entitled to the relief claimed against either of them or, if the plaintiff proved its case, that relief should only be granted against the First Defendant.

4. At the commencement of the hearing of the proceedings, Counsel for the Plaintiff provided a helpful outline of the Plaintiff’s case and submissions in support of it.

5. Mr Williamson represented himself and Double 8 during the proceedings. Mr Williamson clearly was at a forensic and legal disadvantage as a result. The Court endeavoured to provide a “level playing field”, acknowledging that doing so was limited to providing procedural fairness. In the circumstances of the case, given that a number of significant issues were admitted by the Defendants whilst they were legally represented, and that the relevant evidence is almost entirely constituted by emails which speak for themselves, the Defendants’ forensic disadvantage was limited. The principles governing the proceedings are not in doubt, and were summarised by the plaintiff in the case outline provided to the Court and the Defendants. The issue is the application of the principles to the findings of fact made by the Court in the proceedings. Although undoubtedly disadvantaged, the Court is not persuaded that the Defendants were thereby unfairly disadvantaged, or materially prejudiced by the absence of legal representation in the circumstances of this case.

6. In opening the case for the Defendants, Mr Williamson, made clear that, without conceding that either Defendant had engaged in conduct which was misleading or deceptive pursuant to s 18 of the ACL, the Defendants maintained that each had a reasonable basis for such conduct pursuant to s 4 of the ACL. Mr Williamson, asserted that he should not be held liable for any misleading or deceptive conduct which was found proved against Double 8.

7. The Plaintiff relied upon Affidavits by Mr David Hill of 16 May 2023 (Court Book 157-175), and 9 June 2023 (Court Book 619-629). Exhibited to Mr Hill’s first Affidavit was a substantial bundle of source documents (Court Book 176-618).

8. The Defendants relied upon Affidavits of Mr Williamson attached to their Defence of 9 March 2023 (Court Book 19-110), their further Defence of 1 May 2023 (Court Book 111-148), Mr Williamson’s Affidavit of 12 June 2023 (Court Book 630-646), and his Affidavit of 19 June 2023 (Court Book 647).

Background

9. The background to the proceedings emerges largely, and uncontroversially, from chronologies prepared by the Plaintiff and the Defendants.

10. Mr Hill has at all relevant times been the sole Director of the Plaintiff. Mr Williamson has at all times been the sole shareholder in and Director and Managing Director of the First Defendant.

11. On 6 December 2021, Sanam Group of Investments (Sanam Group), an entity domiciled in the United Arab Emirates, issued to the “Managing Director” of Double 8, an “irrevocable loan investment approval and acknowledgement on the electronic due diligence report”. The document acknowledged “receipt of the abovementioned electronic due diligence report and irrevocably give our approval per [sic] funding Double 8 Media Pty Limited project in the loan investment of $47 million for a period of ten years with one year grace period”. The document recorded that Sanam Group had issued “this irrevocable approval based on the credible report/analysis with regard to internal due diligence conducted on your business plan and all the information supplied in your filled Application Form”. The document concluded by stating that it presented Double 8 “with a non-disclosure, non-circumvention investment management memorandum of understanding for your kind perusal”.

12. On 5 January 2022, Mr Williamson placed an advertisement on the ADS.finance website seeking a loan of $100,000 and a business partner for a property development project, and offering financial returns on the loan (repayment, equity in a business, and a salary). The precise terms of the advertisement read:

“Loan requirements: I am looking for a loan of $100,000 for a duration of 4 months maximum. I am looking for a Private Lender to join me as a Financial Business Partner for my 10-Year Australian Residential Real Estate Property Development project in Melbourne, Australia.

My preferred Financial Business Partner will be passionate about Real Estate Property Development and remain committed for a minimum period of 10 years. I have the Business Funding I require for my 10-Year Australian Residential Real Estate Property Development project conditionally approved and contractually signed off on. In return for supplying the 100K Seed Funding, I am offering my Financial Business Partner 20% Equity in the new Start Up Company plus a salary of $156,000 per annum plus Superannuation, increasing at 3% per annum guaranteed for the 10 year project tenure, with the possibility of extension for a further 5 years. I do not have equity in Real Estate to offer as security for the Seed Funding loan but I do have current Business Software Assets worth approximately $600,000 and am prepared to sign a legal Business Partnership Contract as security.

Contact me, Nicholas, directly via my business email address [redacted] for a confidential discussion.”

13. On 25 January 2022, Mr Hill emailed Mr Williamson in response to the advertisement. The men spoke by telephone the same day, and discussed a number of matters – the advertisement seeking the loan of $100,000, Mr Williamson’s business plan to obtain funding from Sanam Group for the purpose of a property development project in Melbourne, and the terms of the loan and financial returns Mr Williamson was offering in return for the loan. By email to Mr Hill the same day, Mr Williamson summarised the matters discussed during the phone call in substantially the terms of their earlier conversation.

14. On 26 January 2022, Mr Williamson emailed Mr Hill providing documents concerning the approval of the Sanam Group loan and his business plan. The documents comprised a notarised copy of Mr Williamson’s identity documents, a copy of his Business Registration document, the Project Business Plan, the Project Executive Summary and the 10 year “Worst Case” Cashflow Analysis, Profit/Loss Statement and Summary. Later on the same day Mr Williamson forwarded additional documents to Mr Hill by email, and concluded the email by stating “I look forward to further discussing my project with you soon”.

15. On 26 January 2022 Mr Williamson emailed Mr Hill the “Double 8 Media Pty Limited Property Development Management Project Business Plan” (Business Plan), a document of 80 pages, inclusive of attachments. In his introduction to the Business Plan Mr Williamson stated that:

“Whilst I have had vast prior experience in running Businesses and Companies since 2000, both in Australia and in the United Kingdom, I have no prior Real Estate Agent or Property Management experience in the Australian Real Estate Industry. However, I have twice in the past worked in Appointment Setting Roles, contacting Australian Residents and establishing if they are qualified to purchase Investment Properties and then booking appointments for the Investment Property Consultants of the Companies I worked with to visit the Australian Residents for a Consultation with a view of selling them investment properties. During this time, I obtained a great deal of knowledge and experience as to how the Australian Real Estate and Investment Property Industries operate. I have also made several very experienced and respected contacts in the Australian Real Estate industry and have over 17,000 Business Contacts on my (LinkedIn account) the majority being Australian business and company owners.”

16. The Business Plan contained detailed calculations of projected expenses and returns, how investments were to be structured, “Property Development as an Investment Vehicle”, a chart showing the 14 steps pursuant to which the project proposed in the Business Plan would be implemented and, (step 15) the “Profit Distribution” on completion of the project, which was suggested to take 10 years.

17. The “Management Summary” named a number of people who Mr Williamson suggested that he intended to involve in the project, and qualifications that were potentially relevant in that regard. There is no evidence that any of those persons knew or was involved in, or likely to become involved in, the Business Plan.

18. The Executive Summary (Court Book 320) contained many of the representations appearing in the original Business Plan, as did the “Supplementary Notes” to the Business Plan.

19. The “Property Development Investment Project Supplementary Notes” found at Court Book 385 stated “I have now decided to replace PCL Lawyers as the preferred law partner for this business plan with (CBP Lawyers) (website provided) as they are highly experienced in Middle East legal issues”. There followed details about CBP Lawyers which in oral evidence Mr Williamson stated he had extracted from the firm’s website. Mr Williamson further stated “I will use the services of (CBP Lawyers) for the development of the required Promissory Note, overseeing of the Close Out fee of USD $48,700 payment and all other required Legal services throughout the period of the 10 year Australian Residential Real Estate Property Development project”.

20. There is no evidence that PCL Lawyers was, at any time, retained by Mr Williamson or Double 8 in relation to his proposed development project. In oral evidence Mr Williamson confirmed that he first spoke to anyone from CBP Lawyers on or about 23 or 24 February 2022, and that he had never retained CBP Lawyers to act in relation to his proposed venture.

21. On 27 January 2022 Mr Williamson emailed Mr Hill, and advised him that he had “revised the 10 year cashflow analysis, profit/loss statement and summary now to reflect your $3,000 per annum plus 10.00% GST payments, increasing at 3% per annum, 2% Surety Bond Payment and presumed $125,000 repayment of the Seed Funding to you by Month 4 of the Business Plan”. He concluded the email by saying that the “Business Plan is still very lucrative”.

22. On 28 January 2022 Mr Hill and Mr Williamson spoke via Teams to discuss the Sanam Group funding and Mr Williamson’s Business Plan in more detail. Mr Williamson stated that he wished to be actively involved in the business as an investor and shareholder. Neither Mr Williamson nor Double 8 ever invested any money in the proposed venture, or had any money which either could have invested in it.

23. On 29 January 2022 Mr Hill emailed Mr Williamson and said “I have done some DD on Sanam Investments from my contacts in UAE – they check out. Can you send me some email correspondence from your main contact there – so I can see this”. It is not in doubt that “DD” referred to “due diligence”. Shortly after that email Mr Williamson emailed Mr Hill and said “I am happy for your [sic] have done your own independent due diligence on Sanam Group of Investments through your own contacts in the UAE”. Mr Williamson stated that he “can confirm that there is no requirement to offer a Personal Guarantee on your behalf”, and stated that “I do need to have the Law Firm prepare a Promissory Note within 3 business days of receiving the funding in the SPV Bank Account as our assurance we will repay the full Loan Capital after the 10 year tenure and 2.5 interest per annum”.

24. In oral evidence Mr Williamson agreed that the 2% insurance premium required by Sanam Group, which he said was payable “upfront” once only, would cost approximately USD $940,000, which he said would be taken out of the USD $47,000,000 loan. No document to which the Court has been referred supports the latter assertion. 2.5% interest per annum on USD $47,000,000 would approximate USD $1,175,000 per annum.

25. In another email on the same day Mr Williamson stated that the $100,000 “buy in” was to be used to:

1. Pay the “Closing Out Fees” of USD $48,700 (AUD $69,689.70);

2. To pay for legal fees – allow AUD $5,000;

3. Register a private company – allow AUD $1,500;

4. Pay for ordinary company shares 80% ownership to “myself” 20% ownership to “yourself” – AUD $1,000;

5. Pay for potential airfares, accommodation and expenses in Abu Dhabi for “myself” if required.

26. Mr Williamson reiterated that Mr Hill would be repaid the principal amount of the loan (AUD $100,000) plus $25,000 “within 4 months, which will probably more likely be with [sic] 4 to 6 weeks”.

27. On 30 January 2022, Mr Williamson emailed Sanam Group, copying Mr Hill into the email, confirming that the Close Out fee of USD48,700 would be paid to Sanam Group to secure funding for Mr Williamson’s property development project.

28. On 2 February 2022, Mr Hill sent Mr Williamson an executed copy of Double 8’s “Property Development Management Project Shareholders Contract”.

29. On 4 and 5 February 2022, Mr Hill and Mr Williamson had an exchange of emails. At 9.02am on 4 February 2022 Mr Williamson emailed Mr Hill stating that he could “issue you an invoice from Double 8 Media Pty Limited and include a breakdown as to how your $100,000 “Capital Contribution” is to be used”. Mr Hill responded stating his “intention” that he pay “Double 8 Media the Closing Out costs once we have confirmation from Sanam, including there are no further costs to be paid!! I need comfort here – so keen to see what they send us”. The words from “including” to the end of the message were highlighted. Mr Williamson responded shortly thereafter stating “I fully agree on point 1. I have already asked regarding total costs payable to Sanam and have received confirmation via email that the total costs are USD48,700”. He further stated that “If I am required to sign a certificate in Abu Dhabi as part of the close out proceedings, I may require having a lawyer from (CBP’s) Dubai office present with me which will incur a cost too.” Mr Williamson further stated that he would email an invoice from his company “with a general breakdown of costs” later that day or on the weekend. Shortly thereafter Mr Hill emailed Mr Williamson and stated “I need to see the invoice from Sanam, confirming all that is required/timings etc. – this is the key! I would suggest they will do this as a matter of course … so we both need to be comfortable with this”.

30. Later still on 4 February 2022, Mr Williamson emailed Mr Hill and attached a “taxation invoice” from Double 8 to the Plaintiff. The taxation invoice itemised the AUD $100,000 which the Plaintiff was to invest, being the closing out fees of AUD $68,965.02, acquisition of a shell company $1,925, purchase of shares in the shell company $1,100, legal fees to CBP estimated $11,000, business class airfares for Mr Williamson to Abu Dhabi estimated $3,588, 12 nights accommodation in Abu Dhabi for Mr Williamson estimated $2,270 and living expenses estimated for Mr Wiliamson of $11,151.98.

31. Mr Hill responded to that email stating “We need an invoice from Sanam for final closing out fees and confirmation this is all that is required to be paid to receive the funds. Will you email them and cc me … so we get this direct from them please”. Mr Williamson responded stating that he had “already emailed them and cc’d you on it on Thursday 4^th of February 2022 at 4.53 p.m”, and said “As we are now ready to proceed I am emailing to request to receive an invoice for payment of the closing out fees to the loan facilitator”. Mr Williamson did not suggest in his email that he had received the confirmation which Mr Hill sought.

26. Mr Hill responded to Mr Williamson’s email, stating “Sorry to be painful”. Mr Williamson replied “I have learnt the hard way in the past that it pays to tick all the boxes and be cautious in business. That is why I went to the trouble of also sourcing (CBP) lawyers as an added layer of security as they can assist us in Australia and the UAE”.

27. Mr Williamson never retained CBP, and confirmed in oral evidence that he had intended to engage them, and, to that end, first made a telephone call to the firm on or about 23 or 24 February 2022. At its highest, any contact Mr Williamson made with CBP was in the nature of a preliminary inquiry.

28. On 16 February 2022, the Plaintiff paid $80,000 to the Double 8’s bank account. The Plaintiff paid $5,000 to the Double 8 on or about 5 March 2022, and paid a further $13,000 on or about 9 March 2022.

29. On 18 February 2022, Custodial Homes Pty Limited was registered with ASIC. It assumes no significance in these proceedings.

30. On 22 February 2022, Mr Williamson emailed Mr Hill what he said was the “final version” of the Business Plan. The document reiterated most of what had been represented in earlier iterations of the Business Plan. The Court has not been drawn to any material differences between the final and earlier Business Plans.

31. Mr Williamson contended that on 23 or 24 February 2022 he contacted CBP to seek assistance with the closing out process in the UAE. Other than Mr Williamson saying that he did so, there is no evidence that Mr Williamson spoke to anyone at CBP or, that, if he did, understandably, he obtained any advice from CBP, other than perhaps a suggestion that he should go through the process of formally retaining the firm. Other than that alleged conversation, there is no evidence that Mr Williamson ever engaged, or took steps to engage CBP, or was given legal advice by that firm.

32. On 27 February 2022, Mr Williamson travelled to the UAE. Mr Williamson’s travel to, accommodation and sustenance in the UAE was paid for out of monies provided by the Plaintiff. Other than some minor incidental expenses, Mr Williamson contributed no monies to the trip. Mr Williamson’s oral evidence makes clear that, just as he was unable to make any monetary contribution to his proposed development project, Mr Williamson was unable to make any monetary contribution to the cost of his UAE trip.

33. On 28 February 2022, as requested by Mr Williamson, Mr Hill paid $1,361 to Bridgepoint Group Accounting for the cost of registration of Custodial Homes Pty Limited.

34. Between 1 and 3 March 2022, Mr Williamson and Mr Hill exchanged emails with respect to delays and further costs in the closing out process with Sanam Group.

35. On 1 March 2022, Mr Williamson emailed Sanam Group advising of his arrival in the UAE. Later the same day Mr Williamson emailed Mr Hill and advised him that he “finally had a long chat to Dr Abdulla on the phone”. Dr Abdulla is the person with whom Mr Williamson purported to deal. Whether they ever met in person is unclear. Whether Dr Abdulla exists is unclear. Mr Williamson stated that “things are proceeding slowly but smoothly enough”, and added that he knew “from previous dealings with Arab business people that they are very diligent with a high level of attention to detail, so need to be crystal clear on all aspects prior to commencement”. It is not in dispute that Mr Williamson had never previously dealt with “Arabic business people”.

36. On 2 March 2022 Mr Williamson emailed Mr Hill and advised that he was still “waiting” for Sanam’s “next update”, but hoped that Dr Abdulla “has managed to clarify what their appointed Local Facilitator needs to do on his side”. Mr Williamson suggested that he was likely to need to remain longer in the UAE and requested that Mr Hill transfer funds to Double 8 in order for him to do so. Mr Hill replied to Mr Williamson’s email. In his response, Mr Williamson reiterated his need for more funds from Mr Hill. Mr Hill emailed Mr Williamson asking “Is today the day at court – and we get the UAE SPV”. Mr Williamson replied that he was “still waiting” on Sanam Group’s “feedback”, but that he would “start pushing (Dr Abdulla) hard today as he must direct the facilitator’s actions, not me”. Mr Hill emailed Mr Williamson replying “Okay great”.

37. On 3 March 2022, Mr Williamson emailed Mr Hill and advised that “It appears there is a delay as the documentation needs to be translated from English to Arabic for the documents to be able to be accepted by the UAE system”. Mr Williamson asked Mr Hill to “at least fast transfer 5K” to the Double 8 bank account, as he needed funds “to ensure I can safely extend my time in the UAE – without running the risk of running out of $s”.

38. Mr Hill replied by email stating:

“I know we both want this thing to happen – but we need to chat. Look at the below – you will see the sign offs in the email are exactly the same as Hamdan I want this to work/but if we look at the facts:

1 Haven’t met Hamdan.

2 Facilitator has changed see below scam (website detail given) – I have been doing a lot of research online/and with my friend in Dubai. I really want to believe this is not a scam … and our deal is going to work. But I’m also freaking out that I have lost $80,000 with nothing to show for it.”

45. Mr Williamson’s emailed response to Mr Hill stated that, prior to his arrival in the UAE “everything was very positive and (there was) no apparent reason for any concern”. He said that he had a few “linkedin.com contacts check out the standard protocol in the UAE and Sanam themselves and all reported everything seems to be aboveboard”. Other than Mr Williamson’s assertion, there is no evidence that such enquiries were made, of whom, or what the responders advised Mr Williamson. For the reasons which he outlined, Mr Williamson stated that “everything has changed” and that he was “struggling” to close out “due to apparent unforeseen events from their (Sanam Group) side”. Mr Williamson stated that he would that day contact a legal firm named Al Tamimi & Co who he had been told were “very experienced, including in the area of financial crimes”. Mr Williamson proposed deferring the team meeting which Mr Hill had sought with him to discuss progress. Other than Mr Williamson’s assertion, there is no evidence that he ever consulted any lawyer at the legal firm named Al Tamimi & Co.

46. On 6 March 2022, Mr Williamson emailed Mr Hill asking him to pay the UAE equivalent of AUD $3,452.40 to a translation agency and to transfer $5,000 to Double 8. The Plaintiff paid the sum to the translation service.

47. On 7 March 2022, Sanam Group advised Mr Williamson by email, a copy of which email was also forwarded to Mr Hill, that it was necessary for a different translator to be retained to translate the contractual documents. Mr Hill replied to Mr Williamson that he was “not sure if we really have a choice here – apart from going forward”. He stated that it would “be great if you could actually meet this guy – Dr Abdulla”.

48. Mr Hill stated that it “looks like we will go over my 100,000K … so we need to discuss what this means”. Mr Williamson replied to Mr Hill’s email stating “This is not a scam unless we can prove it is a scam”. He further stated “If Sanam do not have an office at Al Gaith Tower, they may have had an office there prior to the pandemic outbreak and now work mostly remotely, … that does not prove this is a scam”. Mr Williamson stated that he would “try to arrange to meet Mahomed Abdulla tomorrow” and that “if he refuses, I will progress no further with him”. Mr Williamson added that “When we get the business loan funds, then money is not a problem. I propose for every dollar we go over budget, you receive back 2 dollars from the Company”.

49. Mr Williamson’s evidence at the hearing with respect to whether he had sought to attend Sanam Group’s office, but found that they did not have one at the address he expected, was unconvincing. It is clear that as at 7 March 2022 Mr Williamson had never met Dr Abdulla.

50. On 9 March 2022, in response to a further request for money by Mr Williamson, the Plaintiff paid a further $13,000 to the bank account of Double 8. On 10 March 2022 the Plaintiff paid a further AUD $14,519.57 to the UAE loan facilitator.

51. Between 19 March 2022 and 30 March 2022 by email Sanam Group advised Mr Williamson that an “earnest money deposit” of USD $255,000 had to be paid before Sanam Group would disburse any funds pursuant to the $47,000,000 finance facility. Mr Hill was cc’d into that email.

52. Mr Hill emailed Mr Williamson on 21 March 2022 stating “This is encouraging!” to which Mr Williamson replied “Are you being sarcastic?” Mr Hill responded “No … he states at no extra cost I’m hoping it comes from loan amount?” Mr Williamson replied stating that the USD $255,000 was a “good faith deposit to enable the bank account to be activated after it has been opened, thereby enabling the USD $40,000,000 business loan funds to be transferred into the account”. Mr Williamson stated that he would make further approaches to Sanam Group.

53. On 30 March 2022, Mr Williamson emailed Sanam Group remonstrating with respect to the unilateral imposition of the requirement to pay USD $255,000 “earnest money deposit”. It is not in doubt that Sanam Group expected that payment to be “upfront” and did not intend to deduct it from the USD $47,000,000 loan.

54. On 4 April 2022, Sanam Group advised Mr Williamson and Mr Hill that funding would be cancelled unless the earnest money deposit was paid within 10 working days. Sanam Group offered two options to avoid termination of the proposed loan, neither of which Mr Williamson was able to take up.

55. On 5 May 2022 Mr Hill emailed Mr Williamson and outlined four options, the last of which was that he “come to a payment arrangement with you – where you pay some of the costs incurred. This can be over a period of time”. Mr Hill expressed his wish to explore that option.

56. Mr Williamson replied to the options raised by Mr Hill and said with respect to the fourth option, “I have no liquid assets right now as drained from no income for the past 4 months and advertising income due to the pandemic has been nothing much. I cannot assist with option 4. Not even over a period of time as we have been scammed and I have also suffered loss in income, not just yourself”. Mr Williamson said in his opinion the best option was to “take legal action against Sanam”. Any such action would clearly have to have been funded by the Plaintiff or Mr Hill.

57. On 19 May 2022, Mr Hill emailed Mr Williamson and stated that he had spoken to “Mahomed last night” regarding the “refund process”, and that he proposed to follow up on endeavouring to get his company’s money back, and assumed that Mr Williamson “will assist me with this with what I need, once we know more”. Mr Williamson replied confirming that he now had “confirmation that Sanam Group of Investment do not have an office at the building address listed on their document and in fact, no people, such as security at that building, have any knowledge of Sanam Group of Investment ever having an office at that building”. Mr Williamson confirmed that during his three weeks in the UAE he did not meet “once” with any representative of Sanam Group. Mr Williamson stated in clear and unequivocal terms that he would not authorise Mr Hill to take any steps in the name of Double 8 to seek to recover money lost by Mr Hill or his company.

58. Other than to the extent indicated at the commencement of these reasons, the Plaintiff has recovered nothing of its investment, either from Sanam Group or either of the Defendants.

The evidence of Mr Hill and Mr Williamson

59. Mr Hill was cross-examined by Mr Williamson. Mr Hill was asked about the “feedback” he received in response to his enquiries with respect to Sanam Group and stated that the feedback had come from a “friend” in the UAE. Mr Hill acknowledged that the feedback from the friend “helped” him make his decision “but”. Mr Williamson did not pursue what the “but” was. In re-examination Mr Hill clarified that he had asked two questions of the friend, firstly, whether there was a Sanam Group and, secondly, whether the address he had been advised of for Sanam Group actually physically existed. Both questions were answered in the affirmative. Mr Hill further clarified that he relied “99.9% on what Mr Williamson told him” about the proposal. That assertion was not challenged.

60. Mr Hill confirmed that, at the time he agreed to Mr Williamson’s proposal he believed the documents Mr Williamson had sent him were bona fide, and that the proposal was reasonable. Mr Hill agreed that Mr Williamson had not tried to pressure him to sign the documents, or acted aggressively in that regard. Mr Hill was not otherwise cross-examined.

61. Quite apart from the admissions made by the Defendants in their pleadings, nothing raised with Mr Hill in cross-examination establishes that, in deciding to invest his company’s money with Mr Williamson, he had not predominantly relied on Mr Williamson’s representations, or that his doing so involved a degree of naivety or gullibility which could provide any comfort for the Defendants.

62. Mr Williamson was cross-examined. Making all due allowance for the reality that Mr Williamson was both a party and the advocate for the Defendants, his evidence in cross-examination revealed Mr Williamson to be an unreliable witness, with selective recollection of material events.

63. Cross-examination of Mr Williamson revealed that the representations in the Business Plan, in reliance upon which the Plaintiff entered into the transactions which gave rise to these proceedings, contained, most charitably, very considerable exaggeration with respect to Mr Williamson’s business experience and achievements. Mr Williamson had prepared two previous business plans, neither of which apparently came to fruition. He had never taken out a business loan of any magnitude, much less a business loan involving USD $47,000,000 from an overseas lender. Prior to his representations to the Plaintiff upon which the Plaintiff relied, despite his lack of relevant experience or expertise, Mr Williamson took no legal, financial or other advice with respect to any aspect of his business plans, or in relation to the practical or legal meaning and effect of the loan documentation which he had received from the Sanam Group.

64. It became apparent during his oral evidence that Mr Williamson had given no thought to how the “upfront” insurance premium or bond costing approximately USD $940,000 could, or would be paid. As events subsequently confirmed, Mr Williamson did not, prior to making the representations on which the Plaintiff relied, take any steps which could be considered to constitute due diligence on his part with respect to Sanam Group. Mr Williamson’s evidence does not establish that Dr Abdulla even existed.

65. Mr Williamson’s evidence with respect to the representation to the Plaintiff about the retaining of CBP Lawyers was knowingly dishonest. It is readily apparent that his representation that the solicitors had been or would be retained to provide an “added layer of security” by having gone to “the trouble of also sourcing” CBP, when it was not until some weeks later that Mr Williamson spoke to someone from that firm, was intended to influence the Plaintiff to invest in Mr Williamson’s scheme. Mr Williamson’s own email makes that quite clear. Mr Williamson’s inability to admit that inescapable conclusion damages his credibility. Not unreasonably, the representation had the desired impact on Mr Hill.

66. Cross-examination of Mr Williamson with respect to his attempts to dissuade Mr Hill from making enquiries, or taking steps to try to recover some of the Plaintiff’s lost monies in the UAE after matters ceased to be proceeding as planned, was unconvincing, particularly as Mr Williamson himself had put no money into the project, all such money as was paid towards it which was lost being the money of the Plaintiff. In circumstances where Mr Williamson was doing nothing to try to salvage his Business Plan, or, at least, seek to recover the close-out fee which had been paid using the Plaintiff’s money, his obstruction of Mr Hill’s attempts to do so was unreasonable. Mr Williamson advanced no logical or credible reason for his obstruction.

Joint and several liability of the Defendants

67. The Plaintiff asserts that Mr Williamson was involved in Double 8’s contravention of s 18 of the ACL and seeks a declaration to that effect. Section 18 of the ACL provides:

“18 Misleading or deceptive conduct

(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2) Nothing in Part 3-1 (which is about unfair practices) limits by implication subsection (1).

Note: For rules relating to representations as to the country of origin of goods, see Part 5-3.”

68. Mr Williamson denies that any liability established against Double 8 by the Plaintiff should also attach to him. The ACL provides that if a claimant suffers loss or damage by reason of a contravention of s 18, the claimant may recover damages from the person who engaged in the conduct or a “person involved” in the contravention (s 236(1)(b)), and that the Court may make such orders as are appropriate against the person who engaged in the conduct or a “person involved” in the conduct. For the purpose of ss 236(1) and 237(1) of the ACL, a person is “involved in a contravention” if they have procured or directed the contravention or have “been in any way, directly or indirectly, knowingly concerned in, or party to the contravention” (s 2 of the ACL).

69. At all relevant times, Mr Williamson was the sole Director of Double 8. Mr Williamson was the author of every one of the representations upon which the Plaintiff relied. Almost without exception, Mr Williamson expressed the representations in the first person. Mr Williamson was the only person with authority to make representations on behalf of Double 8. Mr Williamson does not suggest that any other person did so on its behalf, with or without his knowledge or consent. The representations themselves further evidence Mr Williamson’s involvement in the making of Double 8’s representations. The qualifications and experience which were represented to influence potential investors related only to Mr Williamson.

70. It cannot be successfully suggested that Mr Williamson was other than an intended participant with knowledge of all of the representations made on behalf of Double 8 upon which the Plaintiff relies pursuant to s 18 of the ACL.

71. It is unnecessary for the Plaintiff to establish that Mr Williamson knew, or ought to have known, that the representations had the capacity to mislead or deceive, or that they may have contravened s 18 of the ACL (Yorke v Lucas (1985) 158 CLR 661; Adler v ASIC [2003] NSWCA 131). Were it necessary to make findings in those terms, the Court would find that Mr Williamson should have known that his representations had the capacity to mislead or deceive a potential investor in his Business Plan.

72. The Court is satisfied that, if the Plaintiff makes out its claim against Double 8, it also does against Mr Williamson. Conversely, and although Mr Williamson disputes it, if established, the liability of Double 8 is referable solely to the conduct of Mr Williamson.

Did the Defendants engage in misleading or deceptive conduct?

73. Section 18 provides that a “person must not, in trade or commerce engage in conduct that is misleading or deceptive or is likely to mislead or deceive”. Section 2 of the ACL defines “person”.

74. Although Double 8 did not deny that it had “engaged” in conduct which could enliven the provisions of the ACL, Mr Williamson denied that he had done so. For the reasons recorded above, the Court rejects Mr Williamson’s contention. The Cambridge Dictionary definitions of “engage” include “to become involved”. There is no reason in this case to not afford “engage” its ordinary meaning in the context in which it finds expression (Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28). Mr Williamson, and, through him, Double 8 were integrally “involved” in the conduct upon which the Plaintiff relies.

73. The words “trade or commerce” are not “terms of art but are terms of common knowledge of the widest import” (Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594; [1990] HCA 17 at [6]). The words “in trade or commerce” refer to activities or transactions which, of their nature, bear a trading or commercial character (Concrete Constructions (NSW) Pty Limited v Nelson). Placing advertisements or making statements designed to encourage others to invest, or continue to invest are activities or transactions in trade or commerce (Fasold v Roberts [1997] 70 FCR 489).

74. The Defendants do not dispute that each of the representations upon which the Plaintiff relies were made in the context of a commercial transaction, thereby potentially enlivening s 18. The Court is comfortably satisfied that the representations were made in trade or commerce. The documents pursuant to which the representations were made leave no room for doubt in that regard. Mr Williamson’s advertisement for a “Financial Business Partner”, and all the documents which he provided to the Plaintiff were consistent with his doing so in trade or commerce.

75. It is necessary for the Court to undertake a two stage analysis in order to determine whether the Defendants engaged in misleading or deceptive conduct within the meaning of s 18 of the ACL (Australian Competition and Consumer Commission v Telstra Corporation Ltd (2007) 244 ALR 470; [2007] FCA 1904). The first determination is whether the impugned representations were made and, the second determination is, if they were, whether the representations were misleading or deceptive within the meaning of s 18 of the ACL.

76. The Defendants admitted with respect to the Plaintiff’s claim (SOC [13], Defence [13]) that between 25 January 2022 and 16 February 2022 they made the following “Investment Representations” (see paragraph 13 of the Statement of Claim) to Mr Hill and the Plaintiff:

1. Within four months of Double 8 receiving the Business Loan funds from Sanam Group, Davsul would be paid $125,000 return on the Investment;

2. In return for payment of the Investment by Davsul, Mr Hill would receive an annual salary of $156,000 plus superannuation, increasing at 3% per year over a guaranteed period of ten years and Davsul would receive a final dividend of 20% of the net profit and taxes for Custodial Homes on completion of the Project;

3. The Business Loan was, as at the time, conditionally approved by Sanam Group on the basis the Closing Out Costs were paid by Double 8 to Sanam Group in advance; and

4. Double 8 had, as at the time, engaged the services of Colin Biggers & Paisley Lawyers to assist Double 8 to complete the closing out process and pay the Closing Out Costs.

79. The Defendants admit that between 4 and 7 March 2022, by Mr Williamson on its behalf, Double 8 made further representations (collectively referred to as “Further Loan Representations” at paragraph 19 of the Statement of Claim) to the Plaintiff and Mr Hill (SOC [19], Defence [19]) to the effect that:

1. Sanam Group required Double 8 to pay additional fees to translate, notarise, and legalise certain documents to complete the Business Loan closing out process;

2. Sanam Group would cancel the Business Loan forever if Double 8 did not pay additional fees before the end of March 2022; and

3. When Double 8 received the Business Loan Funds from Sanam Group, Custodial Homes would pay to Davsul two dollars for every one dollar over the Initial Investment of $100,000.

80. The Defendants deny that between 25 January 2022 and 16 February 2022 they represented to the Plaintiff and Mr Hill that they had engaged the services of CBP Lawyers to assist Double 8 to complete the Closing Out process for the Sanam Group loan. That is the only material representation which the Defendants deny. The Court has earlier referred to the evidence of Mr Williamson in this regard which, in summary, is that on or about 26 January 2022 the Defendants represented that Mr Williamson had “now decided” to use CBP for the proposed business venture. The evidence is clear that, apart from having recorded details from CBP’s website, Mr Williamson had had no contact with CBP at that time and, on his own evidence, first had any contact with CBP, by way of informal enquiry, on or about 23 February 2022.

81. On 4 February 2022, the Defendants represented that CBP was engaged to act in relation to the Closing Out process with respect to the Sanam Group loan. That representation was false, and known to Mr Williamson to be false. Mr Williamson knew that representation was likely to influence Mr Hill to invest in his Business Plan – that was why he made it.

82. The representation by Mr Williamson on 5 February 2022 that legal fees of $10,000 plus GST were likely to be payable to CBP was without foundation. Mr Williamson’s email of 5 February 2022 stating that he “went to the trouble of sourcing (CBP) as an added layer of security as they can assist us in Australia and the UAE” was clearly a representation that CBP had been retained by the Defendants, and that their doing so was, as stated, intended to convey to the Plaintiff “an added layer of security” with respect to the Defendants’ proposal.

83. Mr Williamson’s oral evidence during the hearing makes it quite clear that, at the very earliest, Mr Williamson first informed Mr Hill that CBP had not been engaged on 25 February 2022. The Court is comfortably satisfied that the representations upon which the Plaintiff relied were made by the Defendants. To the extent that there is any challenge in that regard, the Court is comfortably satisfied that the Plaintiff relied upon the representations and that the Defendants intended the Plaintiff would rely upon them, and knew that the Plaintiff had done so.

Was the Defendants’ conduct misleading or deceptive?

84. Making a false representation of fact is sufficient to constitute a contravention of s 18 of the ACL (Fletcher v Nextra Australia Pty Limited [2015] FCAFC 52; see Global Sportsmen Pty Limited v Mirror Newspapers Pty Limited (1984) 2 FCR 82 at [17] for principles concernings a contravention of s 52 of the Trade Practices Act 1974 (Cth)).

85. The Defendants’ representations with respect to CBP were false, and known to them to have been false, when they were made. As the terms of Mr Williamson’s email of 5 February 2022 made clear, that false representation was intended to influence the Plaintiff to invest in the Defendants’ business proposal.

86. Conduct is misleading or deceptive if it has a tendency to lead a person into error (Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54).

87. The disconnect between the Defendants’ representations and their conduct had the tendency to lead a person into error, and did lead the Plaintiff into erroneously investing in their Business Plan.

88. The relevant time for testing the character of the impugned representations is the date upon which they are made, and without the benefit of hindsight (CA Henschke & Co v Rosemount Estates Pty Limited [1999] FCA 1516). The Defendants’ representations with respect to CBP were false in the material respects identified earlier, and known to be false, at the time they were made. The absence of relevant objective knowledge, experience or research at the time the representations in the Business Plan were made was known to them at that time, or should have been known to them at that time.

89. Determining whether conduct is misleading or deceptive, or likely to mislead or deceive, is an objective question of fact which is determined by reference to all the circumstances of the conduct, considered as a whole (Campbell v Back Office Investments Pty Limited (2009) 283 CLR 304).

90. In this case, the objective evaluation of the allegedly misleading or deceptive conduct is assisted by the “paper trail” which provides all of the evidence of primary fact, and, given the nature of the paper trail, does not permit factual disputation. Nor does the paper trail invite significant uncertainty or speculation as to the characterisation of the course of conduct undertaken by the Defendants.

91. To be likely to mislead or deceive there needs to be a real or not remote chance or possibility that a person would be misled or deceived (Australian Competition and Consumer Commission v Employsure Pty Limited (2021) 392 ALR 205; [2021] FCAFC 142 at [89]). The fact that the Plaintiff was misled is not the test. The question is whether, at the time the relevant representations were made, there was a real chance or possibility that a person would be misled.

92. The Defendants’ representations with respect to Mr Williamson’s experience, linked with the source documents provided with respect to the Sanam Group loan facility and the very considerable detail in Double 8’s Business Plan, which was authored by Mr Williamson, was such as to create a real and not remote chance or possibility that a person would be misled. Such is the nature and extent of the detail in the Business Plan and the asserted knowledge and experience of its proponent.

93. The Court is not required to analyse the separate effect of each of the Defendants’ various representations (Australian Competition and Consumer Commission v TPG Internet Pty Ltd). The Defendants made a series of representations, commencing with the Business Plan and, as events transpired, and the Sanam Group loan was not materialising, made the further representations to which reference has been made. The clear impression created by the representations is that the Defendants made such further representations as they considered were necessary or likely to influence the Plaintiff to continue to invest in the Business Plan. The terms of those further representations, and increasingly questionable commercial viability of them, support drawing that inference.

94. The evidence establishes that, as Mr Hill’s apprehension increased, particularly when his company was being asked to provide significant further funds, the Defendants responded by making express representations of further benefits and, implicit in them, representations that, unless the Plaintiff made those further payments, the monies which the Plaintiff had already paid would be lost. The evidence establishes that, to those ends, the Defendants engaged in a course of conduct which commenced with the initial representations and included the further representations to which reference has previously been made.

95. Conduct is assessed by reference to the class of persons affected, and determining whether conduct is misleading or deceptive is by reference to the effect of the conduct upon ordinary and reasonable members of the class of persons to whom the representations were made (Australian Competition and Consumer Commission v Google LLC (No 2) (2021) 391 ALR 346).

96. The Defendants’ representations were made to the public or a significant proportion of the public, Mr Williamson suggesting that he had 17,000 contacts on “LinkedIn”, the medium by which the initial representations were made. There is no evidence that the representations made by Mr Williamson through the medium of ADS.finance were to other than ordinary and reasonable members of the public. There is no evidence that Mr Hill was other than an ordinary and reasonable member of the public. The Defendants did not suggest the contrary.

97. As suggested to Counsel for the Plaintiff in submissions, Mr Hill’s conduct in response to the Defendants’ representations involved a degree of naivety. Counsel for the Plaintiff referred the Court to the decisions of the Federal Court in Shape Shopfitters Pty Ltd v Shape Australia Pty Ltd (No 3) (2017) 124 IPR 435; [2017] FCA 865 at [102], in which it was said:

“It should be noted that within this relevant class or “section of the public”, the effect of the impugned conduct must be considered on “reasonable members” of that class, which includes “the inexperienced as well as the experienced, and the gullible as well as the astute”, but does not include “persons who fail to take reasonable care of their own interests”: see Puxu at 199 (Gibbs CJ). The question is then “whether a not insignificant number within the class or cohort have been misled or deceived or are likely to be misled or deceived by the respondent’s alleged conduct, whether in fact or by inference”: see Hansen Beverage Company v Bickfords (Australia) Pty Ltd [2008] FCAFC 181; 171 FCR 579 at [46] (Tamberlin J) and [66] (Siopis J), affirmed in Peter Bodum A/S v DKSH Australia Pty Ltd [2011] FCAFC 98; 280 ALR 639 at [205] (Greenwood J, with whom Tracey J agreed) (cf Finkelstein J’s view in Domain Names and in Hansen Beverage Company at [55]).”

98. Counsel for the Plaintiff also referred the Court to Sportsbet Pty Ltd v Crownbet Pty Ltd [2018] FCA 1045 at [85], in which it was said:

“It is necessary to consider the effect of the conduct or representations upon ordinary and reasonable members of the relevant class: see Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at [102]-[103]; Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 at [7]. The “reasonable members” of a class include the inexperienced as well as the experienced, and the gullible as well as the astute: Shape Shopfitters Pty Ltd v Shape Australia Pty Ltd (No 3) [2017] FCA 865 at [102]. The question is whether a not insignificant number within the class have been misled or deceived or are likely to be misled or deceived: Shape Shopfitters at [102].”

99. There is no evidence that the Plaintiff was experienced in business arrangements of the kind which the Plaintiff entered into with Double 8. Nor is there any evidence that Mr Hill was experienced in that regard. The evidence establishes that Mr Hill was gullible. The evidence does not establish that he was so gullible as to preclude his being an ordinary and reasonable member of the class of persons to whom the Defendants’ representations were made.

100. A not insignificant number of persons within that class were likely to have been misled or deceived. As recorded earlier, the detail in Double 8’s Business Plan, both with respect to the plan itself and the unfounded representations with respect to Mr Williamson’s business experience and acumen were reasonably able to be relied upon by Mr Hill and the Plaintiff in all the circumstances to which the Court has referred. Not insignificant in that context were the representations with respect to the “added layer of security” arising from the false representation that solicitors had been engaged by the Defendants to assist with the business project, and the names and descriptions of persons referred to in the Business Plan as proposed participants in it.

101. It is unnecessary for the Plaintiff to prove that the Defendants intended to mislead or deceive (Australian Competition and Consumer Commission v TPG Internet Pty Ltd). A person acting honestly and reasonably may engage in misleading or deceptive conduct (QVB Pharmacy Pty Limited v Le [2022] NSWSC 1612).

102. The evidence before the Court does not establish that the Defendants intended to mislead or deceive the Plaintiff. Having regard to the financial circumstances of each of them, it is clear that the Defendants were very desirous of the Plaintiff’s investment of funds in their Business Plan. It is clear that, without the funds from the Plaintiff or someone else, the Defendants’ Business Plan had no prospect of “getting off the ground”. The Defendants did not act honestly in relation to the non-retainer of CBP. Although this will be further considered later in these reasons, the Court does not find that, in all the circumstances, the Defendants acted reasonably in engaging in the conduct upon which the Plaintiff relied.

103. Although the Court does not understand that the Defendants assert that they merely passed on misleading information supplied by others (Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435; ; [2013] HCA 1), the evidence is clear that the correctness or accuracy of any misleading information supplied by the Defendants was information which the Defendants endorsed or adopted and advanced. It would be readily apparent from the terms of the representations to ordinary and reasonable members of the community that the Defendants adopted or endorsed any representations by others which they advanced in the course of or in support of the representations upon which the Plaintiff relied.

104. The Court must make an evaluative judgment of the overall message conveyed to an ordinary and reasonable member of the audience. In Fortescue Metals Group Ltd v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39, the High Court said, at [69] of allegedly misleading or deceptive representation is that “what message is conveyed to the ordinary or reasonable member of the intended audience cannot be determined without a close and careful analysis of the facts”. The Court is satisfied on the facts of this case that it was not unreasonable or involved an unacceptable level of naivety or gullibility for the Plaintiff to rely upon the Defendants’ representations. To the extent that it could be said that closer study of, or research or enquiry with respect to the Defendants’ representations should, or may, have led the Plaintiff not to rely upon them, which the Defendants have not seriously advanced, the evidence does not support a finding in those terms (Australian Competition and Consumer Commission v Employsure Pty Limited).

105. The evidence establishes that the representations of the Defendants did, and not unreasonably, entice the Plaintiff to erroneously believe that their Business Plan was sound and worthy of investing in.

106. There is no issue that Mr Williamson made representations and provided documents to the Plaintiff in full knowledge that the Mr Hill and the Plaintiff were relying on that information. Although the Court does not understand the Defendants to seriously assert it, to the extent that the Defendants seek to be absolved from liability on the basis that the Plaintiff or Mr Hill were expected, or could reasonably have been expected, to have made their own enquiries, the evidence does not assist the Defendants. The Defendants have not, in evidence or cross-examination of Mr Hill, suggested that they assumed that Mr Hill was relying upon his own due diligence or enquiries. To the extent that Mr Hill did so, there is no reason to reject his contention, and considerable contemporaneous documentation issued by the Defendants supporting his evidence that he was overwhelmingly influenced by the representations of the Defendants.

107. In Razdan v Westpac Banking Corporation [2014] NSWCA 126 at [31], the Court of Appeal accepted that:

“The failure to check the accuracy of a misleading representation does not deprive the representee of a remedy. An untrue statement will be actionable if a reasonable person in the position of the person to whom it was made would have regarded it as a serious statement intended to influence his or her behaviour and the latter has in fact relied on it, whether or not acting carelessly in doing so.”

108. The evidence does not establish that the Plaintiff or Mr Hill was careless, or careless to the requisite extent. As the evidence referred to earlier establishes, Mr Hill made not infrequent and appropriate enquiries of Mr Williamson. In each instance prior to it becoming apparent that the Plaintiff’s funds had been lost, Mr Williamson provided what amounted to plausible explanations for the difficulties which were being encountered with the “close-out” of the loan from Sanam Group.

Were the Defendants’ representations as to future matters?

109. Section 4(1) of the ACL provides that, if a person makes a representation with respect to a future matter and the person does not have reasonable grounds for making the representation, the representation is taken to be misleading for the purpose of s 18 of the Act.

109. Section 4 of the ACL provides:

“4 Misleading representations with respect to future matters

(1) If:

(a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and

(b) the person does not have reasonable grounds for making the representation;

the representation is taken, for the purposes of this Schedule, to be misleading.

(2) For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by:

(a) a party to the proceeding; or

(b) any other person;

the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary.

(3) To avoid doubt, subsection (2) does not:

(a) have the effect that, merely because such evidence to the contrary is adduced, the person who made the representation is taken to have had reasonable grounds for making the representation; or

(b) have the effect of placing on any person an onus of proving that the person who made the representation had reasonable grounds for making the representation.

(4) Subsection (1) does not limit by implication the meaning of a reference in this Schedule to:

(a) a misleading representation; or

(b) a representation that is misleading in a material particular; or

(c) conduct that is misleading or is likely or liable to mislead;

and, in particular, does not imply that a representation that a person makes with respect to any future matter is not misleading merely because the person has reasonable grounds for making the representation.”

111. Counsel for the Plaintiff conceded that the combined effect of ss 4(2) and 4(3) was not to impose on the Defendants the onus of proving on the balance of probabilities that they had reasonable grounds for making the representation, but rather that the Plaintiff bore the onus of establishing that, on the totality of the evidence, the representor did not have reasonable grounds for making the representation. In view of the terms of s 4(3) of the ACL, that appears to be the preferable construction of s 4(2).

112. In SAS Trustee Corporation v Miles [2018] HCA 55, Edelman J said at [64] reiterated that “the task of statutory construction must begin and end with the text of the statute”, which “means only that the interpretation of a statute, like any other legal instrument, is an interpretation of its words” in the context in which they find expression, and in the “light of their purpose”. Interpreting ss 4(2) and 4(3) in the way the Court does is consistent with that approach.

113. There are thus two issues requiring determination. Whether the representations related to a future matter, and whether the Defendants lacked reasonable grounds for making the representations.

114. A representation as to a future matter is one which expressly or impliedly conveys predictions, projections or promises about something that will happen in the future (Australian Competition and Consumer Commission v Woolworths Group Limited [2020] FCAFC 162; Lin v Zheng [2023] NSWCA 174).

115. The Plaintiff submitted that all but one of the Defendants’ representations related to a future matter. The one which the Plaintiff conceded, which was false, was the representation that Mr Williamson had engaged CBP Lawyers to assist Double 8 to complete the closing out process for the Sanam Group loan. Save in one instance, all of the other representations upon which the Plaintiff relied, and which the Defendants admitted, were future matters. If the Court accepted Mr Williamson’s evidence with respect to the representations concerning CBP Lawyers, that representation would also have related to a future matter. The requirement that the representations be with respect to future matters is satisfied by the evidence in this case.

116. The representation identified at [78(c)] was arguably a mixture of past and future matters. The most material representation was that, upon payment of the “Closing Out costs” fixed in the sum of USD $48,700, Sanam Group would advance Double 8 the sum of USD $47,000,000. That representation related to a future matter.

117. Whether the Defendants had reasonable grounds for making the representations upon which the Plaintiff relied is judged at the date of the representations (Sykes v Reserve Bank of Australia (1998) 88 FCR 511; [1998] FCA 1405). There will not be reasonable grounds for making a representation if, at the time it is made, the representor did not have facts sufficient to induce, in the mind of a reasonable person, a basis for making the representation (Lin v Zheng).

118. The Defendants did not, at the time the relevant representations were made, have sufficient facts to satisfy in the mind of a reasonable person a basis for making the representations. Why the Court so finds has earlier been referred to. Despite the detail and apparent research which Mr Williamson put into formulating his Business Plan, the evidence reveals that he failed to obtain sufficient facts with respect to the most important matter with respect to its potential success – how the Business Plan could be funded to provide a reasonable basis for the representations in the Business Plan.

119. Pivotal to the Defendants’ resistance to the Plaintiff’s claim is that, at all relevant times, Mr Williamson, and thus Double 8, believed in the existing and future states of affairs to which they referred in their representations. As is not in doubt, such a subjective belief does not necessarily mean that the Plaintiff cannot establish that the Defendants did not have reasonable grounds for that belief. The sufficiency of the facts possessed by the Defendants when the representations were made is determined objectively.

120. The Court accepts that the Defendants genuinely believed the representations they made, on which the Plaintiff relied when they made them. Until Sanam Group made the request for the USD $255,000 earnest payment, Mr Williamson genuinely believed that the loan would be granted on the terms and conditions previously offered by Sanam Group, and that accepting the loan would enable a project which he genuinely believed would be successful to proceed. The Court accepts that until it was too late to do so, Mr Williamson intended to do what he represented that he and Double 8 would do with respect to his Business Plan. Viewed at the time the representations were made, a reasonable person in Mr Williamson’s position would have realised that the Defendants lacked sufficient facts to have made them (Awad v Twin Creeks Properties Pty Limited [2012] NSWCA 200; Lin v Zheng).

121. Mr Williamson entered into an agreement with an entity based in the UAE, the precise legal identity of which he did not know. Mr Williamson took no advice prior to making the representations with respect to whether any agreement he or Double 8 had made with Sanam Group was likely to be enforceable, and if it was, where, or against whom, or how that might be. Even with the best of intentions, Mr Williamson’s own evidence establishes that he had no ability to perform the representations, and that his ability to do so was entirely in the hands of Sanam Group.

122. In the Plaintiff’s written submissions at paragraph 57, by reference to the evidence, the Plaintiff advanced a number of contentions with respect to the absence of a reasonable basis for the Defendants making the representations. Each of those contentions finds a sound foundation in the evidence. The evidence of the Defendants does not create any obstacle to the Court finding that, whatever their subjective beliefs, the Defendants did not have a reasonable basis for making the representations upon which the Plaintiff relied to its detriment.

123. For the foregoing reasons, the Court is satisfied that the Plaintiff has made out each of the matters which it needed to in order to be successful. Liability being established, it is necessary to determine the relief which is appropriate to be granted to the Plaintiff.

Causation and damages

124. Sections 236 and 237 of the ACL articulate the remedies which may be available to a person who is found to have suffered loss or damage because of conduct of another person which offends s 18. The Plaintiff must establish a causal connection between the representations and the loss they seek to recover. In Lin v Zheng at [53] Payne JA said that:

“In a claim for misleading or deceptive conduct constituted by representations, acts done by the person to whom the representation is made in reliance upon the misrepresentation will “constitute a sufficient connection to satisfy the concept of causation”.”

125. In this case there can be no suggestion that the loss or damage suffered by the Plaintiff was other than caused by the combined effects of the Investment Representations and the Further Loan Represtations made by the Defendants. Determining the quantum of the relief to which the Plaintiff is entitled is not difficult in the circumstances of this case. As is not in doubt, and the Plaintiff’s Schedule of Damages confirms, apart from interest, the Plaintiff seeks only to recover its losses totalling $101,300.94, together with interest calculated as set out in the Plaintiff’s Schedule of Damages, filing fees and service fees, a total of $113,302.85. The Plaintiff has not alleged any consequential or other loss or damage and is entitled to the relief sought. The Plaintiff’s direct and consequential loss or damage was caused by the conduct of the Defendants.

Orders

126. The orders of the Court will be that:

1. There be a verdict and judgment for the Plaintiff against the Defendants in the sum of $113,302.85.

2. Any party seeking an order other than an order that the Defendants pay the Plaintiff’s costs as agreed or assessed on the ordinary basis file and serve submissions in writing not exceeding 7 pages in length within 14 days of Judgment, and a party resisting any such application file and serve written submissions not exceeding 7 pages in length in opposition to such order within 14 days thereafter.

3. Exhibits retained for 28 days.

4. Liberty to apply on 3 days’ notice.

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Decision last updated: 23 November 2023