Macfarlan JA at [1]; Brereton JA at [3]; Simpson AJA at [300].
Decision:
Appeal dismissed with costs
Catchwords:
CONSUMER LAW – Misleading or deceptive conduct – Representations – Explicit false representations made in proposal document given to prospective investors in fraudulent betting syndicate scheme masterminded by notorious conman – Appellant a member of partnership promoting scheme – Whether appellant had knowledge of false representations – Whether appellant jointly and severally liable for misrepresentations made in ordinary course of business of partnership – Liability established
APPEALS – From findings of fact and credibility – Function of appellate court – Circumstantial case – Briginshaw standard – Inferences from primary facts – Whether open to be comfortably satisfied various factual findings, including inference that appellant knew of false proposal representations
PARTNERSHIPS AND JOINT VENTURES – Relationship of partners to persons dealing with them – Liabilities of partner – Partnership intended to be limited – Unlimited because limited partnership agreement never registered – Joint and several liability for misrepresentations made by other partner in ordinary course of business of partnership
CONSUMER LAW – Misleading or deceptive conduct – Silence or non-disclosure – Whether appellant represented that conman not involved in scheme – Whether appellant had knowledge of various prerequisite facts such as notoriety, involvement, and alias of conman, and of need to conceal such information – Appellant unable to demonstrate any of these findings as glaringly improbable – Appellant ought to have known of reasonable expectation that conman’s involvement would be disclosed – Appellant did not disclose and deliberately concealed conman’s involvement
CIVIL PROCEDURE – Pleadings – Amendment – Late application for amendment on second day of trial – Amendments added alleged liability of appellant for representation by silence and clarified alleged liability of appellant for explicit proposal representations – Whether appellant deprived of opportunity to make “no case” submission – Whether primary judge failed to consider dictates of justice – Not necessary to recite considerations seriatim – Appellant not deprived of fair and reasonable opportunity to meet case – Pleadings sufficiently clear and specific, and not unfairly open-ended
CIVIL PROCEDURE – Pleadings – Construction of pleadings – Subparagraphs of pleadings not in precise correspondence with each other – Whether prejudicial construction by primary judge in finding that pleadings nevertheless sufficiently clear
CONSUMER LAW – Misleading or deceptive conduct – Causation or reliance – Whether respondent’s decision to invest caused by proposal representations – Whether prospective investor would have been deterred by knowledge of involvement of notorious conman – Gullible investors not disentitled to protection
CONSUMER LAW – Misleading or deceptive conduct – Remedies – Quantification of damages – Whether primary judge failed to account for group members’ prior recoveries and respondent’s trading profits received from scheme – Award of damages below only for…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
Continue reading Johnson v Mackinnon
Sign in free to access the full text
Details
AGLC
Johnson v Mackinnon [2021] NSWCA 152
Case
[2021] NSWCA 152
Decision Date
CaseChat Overview and Summary
The appeal concerned representations made to prospective investors in a fraudulent betting syndicate scheme. The appellant, Johnson, was a member of a partnership promoting the scheme, which was masterminded by a notorious conman. The respondent, Mackinnon, invested in the scheme. The dispute centred on whether Johnson was jointly and severally liable for misleading and deceptive conduct under consumer law, as well as for deceit.
The Court of Appeal was required to determine whether Johnson had knowledge of the false representations made in the proposal document and whether he was jointly and severally liable for misrepresentations made in the ordinary course of the partnership's business. Further issues included whether Johnson had represented that the conman was not involved in the scheme, whether he had knowledge of the conman's notoriety and involvement, and whether he had deliberately concealed this information. The court also considered whether the pleadings had been amended unfairly and whether the respondent's decision to invest was caused by the representations, and if the damages awarded were correctly quantified.
The court found that the partnership, despite intending to be limited, was unlimited because the limited partnership agreement was never registered, rendering the partners jointly and severally liable. The court was comfortably satisfied, based on circumstantial evidence and inferences drawn from primary facts, that Johnson knew of the false representations and had deliberately concealed the conman's involvement. The court held that the amendments to the pleadings were not prejudicial and that the appellant had a fair opportunity to meet the case. The court also found that even gullible investors are entitled to protection and that prior recoveries and trading profits were irrelevant to the quantification of damages for the respondent's unpaid loan. Crucially, the court upheld a notice of contention, allowing the respondent to rely on a claim in deceit, which is not subject to an apportionment defence available for misleading and deceptive conduct.