Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Gan v Xie [2023] NSWCA 163 Hearing dates: 7 February 2023 Decision date: 17 July 2023 Before: White JA at [1];
Simpson AJA at [126];
Basten AJA at [127]Decision: (1) If and to the extent necessary, extend the time for service of the notice of appeal to 24 May 2022.
(2) Allow the appeal.
(3) Set aside the orders and judgment of the District Court of 25 February 2022.
(4) Order that the proceedings be remitted to the District Court for a new trial before the Court, differently constituted.
(5) Order that the respondent pay the appellant’s costs of the appeal.
(6) Order that the costs of the proceedings in the District Court be reserved for consideration of the judge determining the new trial.
Catchwords: CONSUMER LAW – Unfair practices – Pyramid schemes – Characteristics of pyramid schemes – Virtual platform involving exchange of legitimate currency for variety credits – Where new members of scheme required to purchase from existing members of scheme – Where recruitment of new members resulted in payment of bonuses to other members of scheme – Where primary judge found scheme not to be pyramid scheme because new members received virtual benefits and recruitment benefits were conferred by mechanics of platform – Whether scheme bore statutory characteristics of pyramid scheme – Held that scheme meets description of pyramid scheme in Australian Consumer Law, s 45(1)
CONSUMER LAW – Where respondent alleged to have made series of misrepresentations to recruit appellant and others into investing in scheme – Where misrepresentations said to have conveyed legitimacy, profitability, and safety of scheme – Where respondent acted as conduit for investments in scheme
EVIDENCE – Tendency evidence – Civil proceedings – Tendency to make misrepresentations about legitimacy, profitability, and safety of investing in pyramid scheme – Where appellant sought to lead evidence at trial from other investors in pyramid scheme recruited by respondent – Where evidence of respondent making similar misrepresentations to other investors as those alleged to have been made by respondent to appellant – Where primary judge ruled evidence inadmissible on grounds that no tendency notice had been served and tendency evidence lacked significant probative value – Whether lack of service of tendency notice ought to have led to rejection of evidence – Whether evidence from other investors had significant probative value – Held that tendency evidence ought to have been admitted by primary judge
APPEALS – Evidence – Credibility findings – Basis and scope for appellate intervention upon primary judge’s findings of fact and credit – Where primary judge’s credit findings based on witnesses’ inability to recall verbatim conversations said to have occurred years earlier – Where witnesses only professed to recall substance or gist of conversations – Whether appellate court entitled to infer error from manner in which primary judge treated evidence – Held that new trial required by reason of primary judge’s treatment of evidence and credit findings
Legislation Cited:
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- AGLC
- Gan v Xie [2023] NSWCA 163
- Case
- [2023] NSWCA 163
- Decision Date
CaseChat Overview and Summary
The legal issues before the Court of Appeal were twofold. Firstly, the court had to determine whether the virtual platform, which required new members to purchase from existing members and conferred bonuses through member recruitment, met the statutory characteristics of a pyramid scheme as defined in section 45(1) of the Australian Consumer Law. Secondly, the court considered whether the primary judge erred in ruling inadmissible certain tendency evidence from other investors, which Mr. Gan sought to lead to demonstrate Ms. Xie's alleged pattern of making similar misrepresentations about the scheme's legitimacy, profitability, and safety.
The Court of Appeal held that the scheme did indeed bear the statutory characteristics of a pyramid scheme. Regarding the admissibility of the tendency evidence, the court found that the primary judge erred in excluding it. The court reasoned that the lack of a tendency notice should not have automatically led to the rejection of the evidence, and that the evidence from other investors possessed significant probative value in establishing the alleged pattern of conduct. Furthermore, the court found that the primary judge's credit findings were based on an insufficient assessment of the witnesses' ability to recall conversations from years prior, leading to an inference of error in the treatment of evidence.
Consequently, the Court of Appeal allowed the appeal, set aside the District Court's orders and judgment, and remitted the proceedings to the District Court for a new trial before a differently constituted judge. The respondent was ordered to pay the appellant's costs of the appeal, with the costs of the District Court proceedings to be reserved.
Orders
Orders of the court
(1) If and to the extent necessary, extend the time for service of the notice of appeal to 24 May 2022.
(2) Allow the appeal.
(3) Set aside the orders and judgment of the District Court of 25 February 2022.
(4) Order that the proceedings be remitted to the District Court for a new trial before the Court, differently constituted.
(5) Order that the respondent pay the appellant’s costs of the appeal.
(6) Order that the costs of the proceedings in the District Court be reserved for consideration of the judge determining the new trial.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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