Johnson v Mackinnon (No 2)

[2022] NSWCA 22

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Johnson v Mackinnon (No 2) [2022] NSWCA 22

Hearing dates:

Written submissions 30 August 2021; 13 September 2021; 23 September 2021

Date of orders:

24 February 2022

Decision date:

24 February 2022

Before:

Macfarlan JA, Brereton JA and Simpson AJA at [1]

Decision:

Motion dismissed, with indemnity costs.

Catchwords:

JUDGMENTS AND ORDERS – Court of Appeal – Review of previous decision of the Court of Appeal – Application to set aside decision pursuant to UCPR r 36.16 or court’s inherent jurisdiction – No identified matter raised in appeal overlooked – No misconception, misapprehension, oversight or inadvertence – Application dismissed

COSTS – Party/Party – Unmeritorious application seeking to reargue unsuccessful appeal – Indemnity costs awarded

Legislation Cited:

(NSW) Partnership Act 1892, ss 34, 60, 67

(NSW) Uniform Civil Procedure Rules 2005, r 36.16

Cases Cited:

Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300; [1993] HCA 6

Barrell Enterprises, Re [1973] 1 WLR 19; [1972] 3 All ER 631

Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (No 2) (2013) 87 ALJR 1159; [2013] HCA 44

Clifford v Timms [1908] AC 12

Commonwealth v Murray (1988) Aust Torts Reports 80-207

Elliott v The Queen (2007) 234 CLR 38; [2007] HCA 51

Fuller v Albert (No 2) [2021] NSWCA 183

Government Insurance Offıce (NSW) v Rosniak (1992) 27 NSWLR 665

Harvey v Phillips (1956) 95 CLR 235; [1956] HCA 27

Hill v Clifford [1907] 2 Ch 236

HudgellYeates & Co v Watson [1978] QB 451

Johnson v Mackinnon [2021] NSWCA 152

Lawrence v Ciantar (No 2) [2020] NSWCA 186

Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as “STC Sports Trading Club” (No 3) [2018] NSWSC 86

Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as “STC Sports Trading Club” (No 4) [2018] NSWSC 147

Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as “STC Sports Trading Club” (No 5) (Supreme Court (NSW), Stevenson J, 22 February 2018, unrep)

Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones,Miraleste Pty Ltd t/as USG Partner and Johnson, t/as “STC Sports Trading Club” (No 7) [2019] NSWSC 103

Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones,Miraleste Pty Ltd t/as USG Partner and Johnson, t/as “STC Sports Trading Club” (No 8) [2019] NSWSC 1658

Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as “STC Sports Trading Club” (No 9) (Supreme Court (NSW), Stevenson J, 13 December 2019, unrep)

Murray v Figge (1974) 4 ALR 612

New South Wales Bar Association v Smith [1991] NSWCA 215

Power v Deputy Commissioner of Taxation (No 2) [2014] NSWCA 77; (2014) 98 ATR 75

R v Kupfer [1915] 2 KB 321

Raybos Australia Pty Ltd v Tectran Corp Pty Ltd [1993] NSWCA 226

Smith v New South Wales Bar Association (1992) 176 CLR 256; [1992] HCA 36

St Nazaire Co, In Re (1879) 12 Ch D 88

State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (1982) 150 CLR 29; [1982] HCA 51

Stoll v Paterson [1915] 18 WALR 42

The Texas Company (Australasia) Ltd v The Federal Commissioner of Taxation (1940) 63 CLR 382; [1940] HCA 9

Waterhouse v Independent Commission Against Corruption (No 2) [2015] NSWCA 362

Watson v Metropolitan (Perth) Passenger Transport Trust [1965] WAR 88

Wentworth v Rogers (No 9) (1987) 8 NSWLR 388

Wentworth v Woollahra Municipal Council (1982) 149 CLR 672; [1982] HCA 41

Winrobe Pty Ltd v Sundin’s Building Co Pty Ltd (No 2) [1992] NSWCA 278

Category:

Consequential orders

Parties:

Leigh Diane Johnson (Appellant)
Ian Henry Mackinnon as representative plaintiff of 152 plaintiff group members (Respondents)

Representation:

Counsel:
P Argy (solicitor) (Appellant)
T J Dixon (Respondents)

Solicitors:
Philip N Argy (Appellant)
Nelson McKinnon Lawyers (Respondents)

File Number(s):

2020/7219

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Equity Division

Citation:

[2018] NSWSC 86; [2019] NSWSC 103; [2019] NSWSC 1658; (Supreme Court (NSW), Stevenson J, 13 December 2019, unrep)

Date of Decision:

06 February 2018

Before:

Stevenson J

File Number(s):

2015/332497

HEADNOTE

[This headnote is not to be read as part of the judgment]

In an earlier judgment (“the first judgment”), this Court dismissed with costs the appellant’s appeal. The decision in the first judgment was unanimous except in relation to one ground of appeal (ground 12) which Brereton JA would have upheld, although his Honour noted that this would not have affected the ultimate conclusion that the appeal should be dismissed. By motion the appellant applied to have the first judgment set aside pursuant to UCPR r 36.16 or the court’s inherent jurisdiction, and that the appeal be allowed or reheard by the Court differently constituted.

Held (per Macfarlan JA, Brereton JA and Simpson AJA), dismissing the motion with indemnity costs: [95]-[96].

1. The power to reconsider under UCPR r 36.16 is subject to the significant limitation imposed by the public interest in maintaining the finality of litigation, which requires great caution in its exercise, and is to be exercised only in special circumstances, such as where the existing judgment or order is shown to be affected by some relevant irregularity (such as a failure to afford a party a proper opportunity to be heard), or by a misapprehension of law or fact or of a party’s evidence or submissions, which cannot be solely attributed to the neglect or default of the party seeking a reopening, and not to provide a backdoor method by which an unsuccessful appellant can re-argue their appeal. In the context of appeals, it is not the purpose of r 36.16 to provide an avenue to raise new grounds of appeal that were not advanced in the appeal, to reagitate arguments that have already been considered by the Court, or to complain of wrong decisions by the appellate court: [5].

2. The numerous grounds raised in the application involve:

1. attempts to re-agitate issues which were argued and resolved adversely in the appeal. The proper remedy for a complaint that this Court’s conclusions were wrong, other than by oversight or misapprehension, is an appeal, not reconsideration under r 36.16: [18]; [49]-[51]; [59]; [61]; [68]; [70]; [92].

2. attempts to agitate new grounds which were not raised in the appeal. The Court cannot be said to have overlooked issues that were never raised before it. The Court is not required to deal with grounds which though included in a notice of appeal are not pressed in written or oral submissions. An application under r 36.16 is not an occasion to articulate, belatedly, submissions on an issue which could have been, but was not, advanced on the hearing of the appeal: [25]; [37]; [45].

3. No such irregularity oversight or misapprehension as would justify reconsideration under r 36.16 is apparent: [28]; [59]; [61]; [67]; [70]; [89]; [95].

4. Applications under r 36.16 which are no more than an attempt to reargue an unsuccessful appeal should not be made and applicants should not expect that in future this Court will address plainly unmeritorious applications such as the present in the detail that is contained in this judgment. The lack of merit in the appellant’s application warrants the appellant being ordered to pay the respondent’s costs of the motion on an indemnity basis: [96].

Judgment

1. THE COURT: In a judgment delivered on 21 July 2021 (“the first judgment”), ^[1] the Court dismissed with costs the appellant Ms Johnson’s appeal from judgments of Stevenson J in the Equity Division, Commercial List, by which she was held liable to the respondent Mr Mackinnon for damages in the sum of $200,000 for misleading and deceptive conduct. ^[2] Brereton JA’s conclusions were summarised as follows: ^[3]

   1. Johnson v Mackinnon [2021] NSWCA 152.

   2. Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as “STC Sports Trading Club” (No 7) [2019] NSWSC 103; Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as “STC Sports Trading Club” (No 8) [2019] NSWSC 1658; Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as “STC Sports Trading Club” (No 9) (Supreme Court (NSW), Stevenson J, 13 December 2019, unrep).

   3. First judgment at [290]-[298].

[290] No error is apparent in the primary judge’s conclusion that Mr Mackinnon’s decision to invest was a result of the Proposal Representations and of the Foster Representation. Grounds 16, 27, and 28 fail.

[291] The primary judge did not err in permitting the amendment, on the second day of the trial, to [20] of Mr Mackinnon’s ACLS, to specifically refer to Ms Johnson as one of those who made the representations complained of, and to plead the Foster Representation (being a representation by silence that Foster was not involved in STC). Grounds 5 and 6 fail.

[292] His Honour did not err in concluding that the effect of [23] of the FACLS was to plead that each of the representations alleged in [20] and [21] were false. Grounds 7 and 8 fail.

[293] Applying the Briginshaw standard, it was not open to conclude, as his Honour did, that Ms Johnson knew the contents of the Proposal. I would therefore uphold ground 12, but that does not affect the ultimate judgment, because his Honour was right to conclude that, as one of the partners in STC, Ms Johnson made the Proposal Representations to the actual and potential investors to whom the Proposal was provided, including Mr Mackinnon. Ground 26 therefore fails. The result is that though I would not accept that she knew that the contents of Proposal were false, Ms Johnson is liable for the Proposal Representations.

[294] His Honour did not err in holding that Ms Johnson: knew that Foster’s involvement could not be publicly revealed; knew that Foster was using the alias “Mark Hughes”; knew that Foster was in control of STC; strongly suspected that investors’ funds were being misappropriated; actively represented to the recipients of the 5 April 2013 Pike & Verekers letter that Foster was not involved in STC; and knew of Foster’s criminal record, notoriety, and modus operandi. Grounds 10, 11, 13, 14, 15, and 17 therefore fail.

[295] Objectively judged, in the context that investment in STC was represented to be risk free and reputable, the involvement of Foster was material to a decision to invest in STC; there was a reasonable expectation on the part of members of the public invited to invest in STC that the fact that Foster was involved would be disclosed; and the promotion of STC, via the Proposal or otherwise, without disclosing Foster’s involvement, was conduct which was misleading and deceptive. That suffices to render Ms Johnson, as a partner in STC, liable for the contravening conduct, regardless of her knowledge. However, insofar as Ms Johnson’s actual knowledge of contextual matters is relevant, even if she did not know the form and contents of the Proposal, she knew that there would have to be marketing material of some sort; she knew that her name and image were being used in connection with marketing; she knew that Foster’s involvement was material to investors and could not be disclosed; and she at least ought to have known that actual and potential investors would expect it to be disclosed. Moreover, even if it were necessary to show that she deliberately did not disclose Foster’s involvement, that requirement would be satisfied. Indeed, she took positive steps to conceal it, in connection with the instructions given to Pike & Verekers for the 5 April 2013 letter. His Honour therefore rightly concluded that Ms Johnson engaged in misleading and deceptive conduct, essentially by not disclosing to the public (or that section of the public constituted by potential investors), and actively concealing, the involvement of Mr Foster in STC. Grounds 19 to 25 fail.

[296] The Notice of Contention should be upheld, at least insofar as concerns the claim in deceit, in respect of the Foster representation. As that suffices to found liability to Mr Mackinnon on a non-apportionable claim, it is not necessary further to consider the Notice of Contention.

[297] His Honour did not err in assessing Mr Mackinnon’s damages at $200,000. Ground 29 fails.

[298] It is inherent in upholding Ms Johnson’s liability on the basis of deceit that she caused the relevant loss intentionally or fraudulently, and it follows that her liability would not be reduced by a defence of apportionment, if it were permitted to be raised. For that reason, although I might have taken a different view in respect of leave to rely on a defence of apportionment to the statutory misleading and deceptive conduct claims, His Honour’s approach did not affect the correctness of the ultimate judgment. On that basis, grounds 9 and 30 fail.

2. Macfarlan JA and Simpson AJA agreed, with the presently important exception that their Honours did not agree with the conclusion summarised in [293] insofar as Brereton JA would have upheld ground 12. While Brereton JA was of the opinion that, applying the Briginshaw standard, it was not open to conclude, as his Honour did, that Ms Johnson knew the contents of the Proposal, Simpson AJA, with whom Macfarlan JA agreed, upheld the primary judge’s finding that Ms Johnson was aware of the proposal and the falsity of some, at least, of its contents. ^[4] Thus the majority of the Court upheld the finding that Ms Johnson knew the contents of the Proposal, and that they were false. The ultimate judgment of the Court therefore did not depend on Brereton JA’s reasoning that Ms Johnson was in any event liable for the Proposal Representations, on the basis that as one of the partners in STC, she made the Proposal Representations to the actual and potential investors to whom the Proposal was provided, including Mr Mackinnon. Further, the appellant’s liability did not rest only on the Proposal Representations: her liability was upheld also on the basis of the Foster Representations.

   4. First judgment at [301]-[302] (Simpson AJA).

3. By motion filed on 4 August 2021, Ms Johnson seeks that the judgment of 21 July 2021 be set aside pursuant to UCPR r 36.16 or the court’s inherent jurisdiction, and that the appeal be allowed, or reheard by the court differently constituted. The court directed written submissions on the motion. Ms Johnson’s submissions (of 8 pages) were lodged on 30 August 2021; Ms Mackinnon’s (of 13 pages) on 13 September 2021, and Ms Johnson lodged submissions in reply on 23 September 2021.

4. This judgment assumes familiarity with the first judgment and uses the same defined terms.

Application to recall and reopen

5. Uniform Civil Procedure Rules 2005 (NSW), r 36.16, provides for the setting aside of a judgment upon a motion filed before, or within 14 days after, it is entered, or if it is a default judgment or one given in the absence of a party. The judgment of this Court was neither a default judgment nor given in the absence of a party. The present motion was filed within the relevant 14-day period. However, that does not of itself entitle the applicant to a reconsideration of the judgment. The power to reconsider on such an application is subject to the significant limitation imposed by the public interest in maintaining the finality of litigation, which requires great caution in its exercise, especially where what is sought would have the practical effect of re-opening the proceedings to enable a significant rehearing. ^[5] The power is to be exercised only in special circumstances, such as where the existing judgment or order is shown to be affected by some relevant irregularity (such as a failure to afford a party a proper opportunity to be heard), or by a misapprehension of law or fact or of a party’s evidence or submissions, which cannot be solely attributed to the neglect or default of the party seeking a reopening, and not to provide a backdoor method by which unsuccessful appellants can re-argue their appeal. ^[6] And while the scope of any re-opening will depend on the nature of the error or misapprehension, generally the power ought not be exercised to permit a general re-opening of the case; in particular, it is not the purpose or scope of r 36.16 to provide an avenue to raise new grounds of appeal that were not advanced in the appeal, to reagitate arguments that have already been considered by the Court, or to complain of wrong decisions by the appellate court. ^[7] In this respect, there is a distinction between the court acting upon a misapprehension as to the facts or the relevant law, on the one hand, and, on the other, the court reaching a conclusion which, in the view of the applicant for reconsideration, involves error. ^[8]

   5. Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300; [1993] HCA 6; Wentworth v Woollahra Municipal Council (1982) 149 CLR 672; [1982] HCA 41; Wentworth v Rogers (No 9) (1987) 8 NSWLR 388; Re Barrell Enterprises [1973] 1 WLR 19; [1972] 3 All ER 631; Watson v Metropolitan (Perth) Passenger Transport Trust [1965] WAR 88; Murray v Figge (1974) 4 ALR 612; Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (No 2) [2013] HCA 44; (2013) 87 ALJR 1159.

   6. Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 at 301-303; [1993] HCA 6; Elliott v The Queen (2007) 234 CLR 38 at 48; [2007] HCA 51 at [32]; Power v Deputy Commissioner of Taxation (No 2) [2014] NSWCA 77 at [3]; (2014) 98 ATR 75 at 77; Lawrence v Ciantar (No 2) [2020] NSWCA 186 at [6]-[8].

   7. Smith v New South Wales Bar Association (1992) 176 CLR 256; [1992] HCA 36; State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (1982) 150 CLR 29 at 38, 45; [1982] HCA 51; The Texas Company (Australasia) Ltd v The Federal Commissioner of Taxation (1940) 63 CLR 382 at 457; [1940] HCA 9; In Re St Nazaire Co (1879) 12 Ch D 88; Harvey v Phillips (1956) 95 CLR 235; [1956] HCA 27; Winrobe Pty Ltd v Sundin’s Building Co Pty Ltd (No 2) [1992] NSWCA 278; Raybos Australia Pty Ltd v Tectran Corp Pty Ltd [1993] NSWCA 226; Government Insurance Offıce (NSW) v Rosniak (1992) 27 NSWLR 665; Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (No 2) [2013] HCA 44; (2013) 87 ALJR 1159 at [17].

   8. Waterhouse v Independent Commission Against Corruption (No 2) [2015] NSWCA 362 at [17]; Fuller v Albert (No 2) [2021] NSWCA 183 at [1].

6. The court’s inherent powers to set aside judgments in certain circumstances are subject to at least the same constraints, imposed by the public interest in the finality of litigation, as is the statutory power to re-open on an application made on motion filed within 14 days after entry of judgment, which has been addressed above. Accordingly where, below, it is stated that no basis for reconsideration under r 36.16 has been identified, the same conclusion applies to the inherent jurisdiction.

7. The appellant’s submissions on the motion were collected under three headings: miscarriage of justice/procedural unfairness; legal errors; and factual errors. However, the issues raised in the submissions do not necessarily fit the description of the headings under which they reside. Moreover, many issues were to a greater or lesser extent repeated under different headings. The alleged “legal errors” and “factual errors” are often expressed discursively and do not, as one might have expected, clearly identify any alleged error, in the manner that might for example be stated in a Notice of Appeal. Moreover, it is not always clear whether these are said to be errors of the trial judge, or of this Court. The appellant’s reply submissions conveniently collected in three columns and enumerated her submissions in chief, together with the respondent’s submissions, and then the appellant’s submissions in reply. However, the submissions in reply were much more extensive than the submissions in chief, and raised many new issues which were not properly in reply at all.

5. As a result it is difficult to distil and analyse in a systematic way the appellant’s complaints. To avoid repetition and to assist in understanding, this judgment does not deal seriatim with each submission, but consolidates repeated or related issues, and endeavours to arrange them in a logical sequence. For convenience, it adopts the enumeration of the consolidated submissions to identify where the relevant submission can be found; the suffix “R” indicates that the relevant submission is to be found in the “Reply” column. In the text (but not the footnotes) paragraphs of the first judgment are referred to by J followed by the paragraph number, for example, “J12” denotes the first judgment at [12].

Issues relating to the case pleaded against the appellant

9. The appellant’s overarching and often repeated complaint was that there was no pleading against her personally; that the amendments allowed by the primary judge did not permit a case to be run against her wider than that which had been pleaded; and that this Court overlooked its own conclusion (in J79) as to the effect of the pleading. ^[9]

   9. Consolidated Submissions [2], [3], [4], [6], [7], [23R], [24R], [30R].

The effect of the amended pleading against the appellant

10. The argument was put in various different ways: under the heading “Misinterpretation of Pleading Amendments”, it was submitted that the court erroneously concluded at J89 “that by doing no more than specifying the previously unspecified agents” in ACLS par 20, the pleading was converted from a pleading against Foster alone to one by which it became part of the pleaded case that Ms Johnson had by silence misrepresented that Foster was not involved with STC; ^[10] that the appellant never understood that merely by naming the previously unspecified agents, the pleading was converted into one in which she was alleged to have made the representations (including the added representation by silence) that prior to the amendment had only been alleged against Foster; ^[11] and that the Court overlooked what it had determined in J79 and proceeded contrary to that holding. ^[12] Although initially it appeared to be submitted only that the “misrepresentation by silence” case was never pleaded against Ms Johnson, and that the amendments were ineffective to articulate such a pleading, by the submissions in reply it appeared to be argued that no case was pleaded personally against the appellant at all, including in deceit. ^[13]

    10. Consolidated submissions [2].

    11. Consolidated submissions [3].

    12. Consolidated submissions [6].

    13. Consolidated submissions [7R], [27R].

11. In the first judgment it was said, in respect of the ACLS as it was before the amendments allowed by the trial judge (emphasis added):

[79] It may be observed that this pleading:

(1) purported to treat the first defendant, a partnership, as if it were a corporation with legal personality;

(2) did not allege that Ms Johnson, the fifth defendant, made the representations referred to at [20], which did not propound an allegation against anyone other than the twelfth defendant, Foster; in effect, it was pleaded only that he made the relevant representations, by himself or by his (unspecified) agents;

(3) did not contain any allegation of a representation by silence, or non-disclosure, that Foster was not involved in STC;

(4) did allege that Ms Johnson was one of those who made the “Proposal Representations” referred to at [21];

(5) did not allege (in [33]) that Ms Johnson, the fifth defendant, as distinct from the partnership, the first defendant, had engaged in misleading and deceptive conduct;

(6) did not plead deceit against Ms Johnson specifically, as distinct from the partnership; and

(7) did not allege that Ms Johnson was liable as an accessory as having been “knowingly involved” in contravening conduct by Foster or anyone else. Indeed, no such pleading was ever propounded.

12. It is to be noted, from (4), that it was already alleged that Ms Johnson was one of those who made the Proposal Representations. This is entirely overlooked in the appellant’s submissions on the present application.

13. After describing the amendments which were permitted by the primary judge on the second day of the trial, the first judgment continued:

“[89] Thus it first became part of the pleaded case that Ms Johnson had, by silence, misrepresented that Foster was not involved with STC (or, alternatively put, that she did not disclose that he was associated with STC). As it transpired, this allegation, on which Mr Mackinnon ultimately succeeded, was fundamental to its case. I take his Honour’s reference to the “corollary” as indicating that his Honour thought that the issue was already, in substance, in play. For myself, I would think that this amendment, introducing for the first time an allegation of misrepresentation by silence or omission, was more than a mere corollary of the alleged misrepresentation that “Mark Hughes” was an alias adopted by Foster for the purpose of his scheme, and that it potentially opened up new issues. In particular, in a case of non-disclosure, questions typically arise as to the context, and as to the occasion which called for disclosure, which do not arise in the same way on an express misrepresentation case.”

14. The appellant submitted that having regard to subpars (2), (5), (6) and (7) of J79, the conclusion at J89 that “by doing no more than specifying the previously unspecified agents in [FACLS] par 20, the pleading was converted from a pleading against Foster alone to one by which it ‘first became part of the pleaded case that Ms Johnson had by silence misrepresented that Foster was not involved with STC’” was erroneous. However, the first judgment explained that the effect of the amendments was not only to specify the previously unspecified agents of Foster referred to in FACLS par 20, and to add the new pleaded misrepresentation by silence in FACLS par 20(c)(i) (the Foster Representation), but also to clarify – through the reference to her in FACLS para 33 by the amended FACLS par 7A – that it was alleged that Ms Johnson personally had engaged in misleading and deceptive conduct by making the representations pleaded in FACLS par 20 (including the Foster Representation), in which she was now specifically mentioned, as well as those in FACLS par 21, in which she had always been mentioned:

“[90] Moreover, the effect of the amendments was to clarify that it was alleged that Ms Johnson (now referred to in [33] via the amended [7A]) had engaged in misleading and deceptive conduct, by making the representations pleaded in [20] (in which she was now specifically mentioned) as well as [21] (in which she had always been mentioned); and that deceit was pleaded against her in [35] (in which she was now specifically mentioned).”

15. Thus, contrary to the thrust of the appellant’s submission, the first judgment did not proceed on the basis that merely by adding an express reference to the fifth defendant in the chapeau to ACLS par 20, the pleading now referred to her in her own right: that amendment had to be seen in the context of the allegation at FACLS par 33, as amended, to the effect that as a partner in STC she had thereby engaged in misleading and deceptive conduct. The appellant’s submissions on the present application do not really engage with the function and effect of ACLS par 33 as amended, merely asserting, purportedly in reply, that this amendment was “wholly inadequate” to convey that the pleading was thus converted into one in which she was sued personally. ^[14] The first judgment was to the contrary – not by oversight or misapprehension, but as a considered conclusion.

    14. Consolidated submissions [2R].

16. Whether the amended pleading articulated a case against the appellant personally in respect of the Foster non-disclosure, and whether she appreciated that there was such a case, were considered in the first judgment (emphasis added, footnotes omitted):

[98] The complaint that the amendments were “bad in form” because they did not set out particulars of the Foster Representation or why Ms Johnson ought to be liable for it is without substance. The pleading, as amended, explicitly stated that the alleged representation was made by silence. From its context (in [20]), it is apparent that it was alleged to have been made concurrently with the express representations referred to in [20] of the pleading, by omission. That plainly sufficed to assert the relevant material facts. The basis of Ms Johnson’s alleged liability was provided by the assertion in the chapeau of [20], as amended, that she was one of those by whom the pleaded representations were made, and by the allegation at [33], as amended, to the effect that STC, in which she was a partner, had thereby engaged in misleading and deceptive conduct. It may be that further particulars could have been sought and provided, but they were not. No objection as to the insufficiency of the pleading was raised at the time, in opposition to the amendments. Ms Johnson has not identified what, if any, further particulars were required in order to enable her to meet the case.

[99] From the outset, [21] pleaded the Proposal Representations specifically against Ms Johnson. There is force in his Honour’s observation that Ms Johnson’s 4 March 2016 request for particulars, including particulars of the representations alleged in [20], was indicative of her appreciating that the allegation in [20] may have been intended to be directed to her; and that the 19 May 2016 response to that request made quite clear that it was so directed; with the consequence that Ms Johnson had long understood that the allegations in [20] were directed to her, amongst others. …

[100] There was no proper basis for Ms Johnson as fifth defendant to seek those particulars unless she believed that the representations pleaded in [20] and [21] might be relied on to establish that she was liable to the plaintiff. Moreover, the relevant response in the particulars provided on 19 May 2016 explicitly identified Ms Johnson as one who was alleged to have made the representations pleaded in [20]:

…

[101] In any event, at the latest from the time the amendments were made, it was transparently clear that Ms Johnson was being sued personally in respect of misrepresentations allegedly made by STC when she was a partner.

17. Contrary to Ms Johnson’s submissions, the first judgment did not overlook in J89, J98 and J101, what had been said in J79. Subject to the effect of the condition imposed by the primary judge, to which we shall return, there is no inconsistency between the statement in the first judgment at J79(2) that the representations in ACLS par 20 were not (prior to the amendments) propounded against anyone other than Foster, and the subsequent conclusion that as a result of the amendments it became part of the case that Ms Johnson personally had made and was liable for the Foster Representation. All J79 did was to summarise the relevant effect of the pleading, before the amendments; it was not a finding as to the effect of the pleading after the amendments. The statement in J99, “From the outset, [21] pleaded the Proposal Representations specifically against Ms Johnson”, is entirely consistent with J79(4), which recorded that the earlier form of the pleading (emphasis added) “(4) did allege that Ms Johnson was one of those who made the “Proposal Representations” referred to at [21]”. Otherwise, J99 refers to Ms Johnson’s request for particulars as indicative of a belief on her part that the representations in ACLS pars 20 and 21 might be relied on to establish that she was liable to the plaintiff, a matter which was made express by the response to the particulars. The first judgment observed that the primary judge was satisfied that Ms Johnson had long understood that the allegations in par 20 were directed to her, amongst others,^[15] and this Court saw force in that observation. ^[16] Contrary to the appellant’s submissions, there is nothing in J99 which is inconsistent with what is stated in J79.

    15. First judgment at [87].

    16. First judgment at [99]-[101].

18. The first judgment appreciated that the amendments were “no minor matter”,^[17] and explained how, through the vehicle of FACLS par 33, the pleading articulated the basis of the appellant’s liability, and concluded that she had not been denied a fair and reasonable opportunity to deal with the issues raised. The appellant’s present complaints are ultimately no more than a contention that this Court’s considered conclusions were wrong. If those conclusions be wrong, it is not as a result of inadvertence, misapprehension or oversight, but by a deliberate process of reasoning, for which the proper remedy is an appeal. They are not amenable to reconsideration under r 36.16.

    17. First judgment at [91].

The effect of the condition

19. The appellant contends that the amendments permitted by the primary judge could not have had the effect of propounding a case that she was personally liable, because of the condition imposed by the primary judge “that it did not give the respondent a new cause of action which he had not up until then pleaded”, ^[18] or “that the respondent would not be permitted to contend that the appellant had a greater liability than she would have had as a limited partner of a limited partnership” – which is to say, her liability should have been limited to the amount referred to in respect of a limited partner in Partnership Act 1892 (NSW), s 60, which in the circumstances was nil. ^[19]

    18. Consolidated submissions [2R], [9R].

    19. Consolidated submissions [23].

20. First, the appellant’s submission misstates the condition which his Honour imposed. It is not correct that the condition of the amendments was that the respondent would not be permitted to contend that the appellant had a greater liability than she would have had as a limited partner of a limited partnership. In the course of the application for leave to amend, the following transpired in argument (emphasis added): ^[20]

    20. Tcpt p69.32-70.29

“Argy: The difficulty is this, your Honour, the case is – and until I popped up and put my hand up and said as an officer of the court do you realise everyone’s been running this case on a mistaken assumption of fact, because I was the one who raised it almost against my own interest because the consequences are – will be significant, the liability, as your Honour pointed out yesterday, is vastly different between a limited and unlimited. The really important thing is the lens through which your Honour receives the evidence in the light of –

His Honour: She’s not being sued, even in – pleading, is she, as an unlimited partner?

Argy: She must be if the word limited is taken out.

His Honour: There’s no pleading of liability – there’s no cause of action that I can see against Ms Johnson saying, leaving aside whether you misrepresented things, leaving aside deceit, leaving aside anything else, you’re liable as an unlimited general partner.

Argy: With respect, your Honour, the submissions of my friend in opening, were, and I think it’s in the written submissions, the defendants, undifferentiated, are indebted to the plaintiffs in the sum of $5.5 million.

His Honour: On the basis of the causes of action in the List Statement not on the basis of any asserted unlimited liability of Ms Johnson by reason of the fact that she was an unlimited partner. I think the way to protect your client’s position is to allow the amendment – it may be that the correct approach is to allow the amendment but to say it’s on the condition that the plaintiff is not entitled thereby to mount an argument that a basis upon which Ms Johnson is liable is as an unlimited general partner. I don’t see any such allegation in the pleading, but I think that would protect –

Argy: I think that would be a proper protection, and this of course is independent of the technical issue that D1 can’t be there in the first place. I’ve understood your Honour as saying to me that she should have read it as if it was an allegation against her as one of the partners rather than D1 being a –

His Honour: I think my preliminary view is a bit stronger than that. She must be taken to have understood any reasonable reader of this – must be taken to have understood that the infelicitous assertions against the first defendant were in substance assertions against the members of the first defendant as they are pleaded to be.”

21. Subsequently, his Honour said: ^[21]

HIS HONOUR: Further to what Mr Dixon says, I will add that condition to the amendment that it doesn't thereby give the plaintiff a new cause of action which is not pleaded.

21. Tcpt p70.44-46.

22. And (with reference to the word “limited”): ^[22]

“I’m not going to let the plaintiff’s case expand by reason of that word being deleted.”

22. Tcpt p72.01-02.

23. In the No 3 judgment, dealing with the application for leave to amend, his Honour said (emphasis added): ^[23]

“I granted Mr Mackinnon leave to amend the Amended Commercial List Statement to reflect these matters, but upon the basis that such amendment was not to be taken as permitting Mr Mackinnon to advance a cause of action against Ms Johnson beyond those already pleaded in the Amended Commercial List Statement. In particular, the amendment is not to be taken to enable Mr Mackinnon to allege, separately to the causes of action already pleaded, that Ms Johnson is jointly and severally liable for the debts of the partnership by reason of her status as a general or unlimited partner.”

23. Mackinnon as plaintiff representative of 153 plaintiff group members v The partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as "STC Sports Trading Club" (No 3) [2018] NSWSC 86 at [12].

24. In essence, what was intended – and apparently understood – was that the removal of the word “limited” was not to expose Ms Johnson to liability as a general partner on a cause of action which had not already been pleaded against her, and in particular for the debts of the partnership on the basis that all the partners are liable for its debts; but this condition was not to affect her liability on the causes of action for misrepresentation and deceit that were already pleaded against her. The condition was not intended to, and did not, have the effect that the appellant could not be personally liable on those causes of action. It was intended to preclude the respondent from mounting a new case, based on liability as a general partner for the debts of the partnership.

25. Secondly, at no stage in the appeal did the appellant contend – in the notice of appeal, written submissions or oral submissions – that the basis on which she was held liable by the primary judge was contrary to the condition, or that the condition required that her liability be limited to nil. She complained that the judge misinterpreted the pleadings, and that the amendments ought not have been permitted, but not that the condition precluded her being held liable on the causes of action in respect of which she was, nor for the amount for which she was. Thus, save insofar as it relates to the alternative basis of liability for the Proposal Representations on which Brereton JA relied, which is addressed below, this is an attempt to agitate new grounds which were not raised in the appeal.

26. In purported reply, on a quite different issue, ^[24] the appellant made a submission to the effect that to hold her responsible for the Proposal Representations on the basis that she was a partner (as Brereton JA did in finding her liable for the Proposal Representations notwithstanding that he would have upheld ground 12, being unsatisfied that Ms Johnson was aware of the existence and contents of the Proposal and that they were false) was impermissible, in contravention of the Condition (and also because the effect of Partnership Act1892 (NSW), s 67, was not taken into account – an issue dealt with later). Even if this submission be correct, it would not avail Ms Johnson. First, quite independently of the Proposal Representations, the Court unanimously upheld her liability on the basis of the Foster Representation. Secondly, the majority of the Court did not allow ground 12, and did not need to rely on the alternative basis on which Brereton JA did for upholding Ms Johnson’s liability on the basis of the Proposal Representations.

    24. Consolidated submissions [30R].

24. However, the submission is not correct. Brereton JA’s reasoning was not that as a general partner, Ms Johnson was liable for the liabilities of the partnership (which would have been a cause of action not already pleaded against her, on the basis that she was a general partner, and would have been precluded by the condition); rather, she was considered liable on the basis that she, as one of the partners who constituted STC, must be regarded as one of those responsible for the Proposal, on a cause of action already pleaded in FACLS pars 3, 7, 7A, 21 and 33. In particular, par 21 always pleaded that the first to fifth defendants and twelfth defendant made the Proposal Representations, and par 33 pleaded that the first (later defined as including the fifth) defendant thereby engaged in misleading and deceptive conduct. As the primary judge said, in the passage extracted above, was his preliminary view, “She must be taken to have understood – any reasonable reader of this must be taken to have understood that the infelicitous assertions against the first defendant were in substance assertions against the members of the first defendant as they are pleaded to be”.

25. No such oversight or misapprehension as would justify reconsideration under r 36.16 is apparent.

The respondent’s opening

29. The appellant submits that “the respondent should not have been permitted to run a case that went well beyond the way his case was opened. In particular, the respondent’s case was opened on the basis that he would not have loaned his money if he had known that what Mr Foster was doing in STC was the same as what he was alleged to have done in the newspaper articles”. ^[25] As elaborated in her submissions in reply, ^[26] Ms Johnson contends that in opening submissions at the trial, the respondent’s counsel, in responding to an observation of his Honour that though he had heard of the Sensaslim litigation “I can’t take that into account here”, said: ^[27]

“Dixon: No, except for this, your Honour, we rely on them for two reasons. There was notoriety that if people had known that Foster was doing the very same thing as he was doing in those cases –“

25. Consolidated submissions [10].

26. Consolidated submissions [10R].

27. Tcpt p8.11-12.

30. The appellant submits that this somehow had the consequence of confining the case to one in which her liability depended on it being established that Mr Foster was doing in STC the same as what he was alleged to have done elsewhere. However, it is not a statement limiting the case in that way at all, but simply an explanation of the potential relevance of the Sensaslim litigation. Moreover, although some grounds of appeal alleged errors in relation to causation, none complained that the respondent was not confined to a case opened in this way. This Court did not overlook any such complaint, because none was raised before it.

Amendment of pleadings

31. The appellant submits that the amendment of the pleadings permitted on day two of the trial was a denial of natural justice and amounted to trial by ambush, and in particular that the amendments were opposed by her solicitor advocate, who is said to have “expressly reserved the appellant’s position so that the already commenced cross-examination of the respondent could continue”; that the trial judge should not have taken advantage of the solicitor advocate’s inexperience, given that he had announced at the pre-trial case management hearing that he was appearing solely to make a no case submission; and that Ms Johnson’s mental health precluded her from continuing to represent herself, and her solicitor had been involved in the matter for less than a month before trial. ^[28] In her submissions in reply, Ms Johnson contended that the solicitor advocate who appeared for her “made clear to the trial judge that a twenty minute adjournment was not sufficient for him to form a considered view of the ramifications of the respondent’s amendments” and that “he indicated to the trial judge that to proceed was essentially a gamble that was unfair for him to feel forced to take”. In fact, Mr Argy sought an adjournment of “perhaps twenty minutes at least to get instructions”, ^[29] which was granted, and subsequently said: ^[30]

“I don’t want to take up a lot of time, but it does have consequences and I don’t want to pretend that in the space of twenty minutes I’ve had the opportunity to think it through to all its dimensions, so I’m just being cautious in my client’s interests. Frankly, your Honour, I’m reluctant to make concessions that might prejudice her when the honest answer is I haven’t thought it through enough, and I don’t want to hold up the whole thing because I think I can deal with it, but I don’t want to take the gamble as it were.”

28. Consolidated submissions [23].

29. Tcpt p68.45.

30. Tcpt p71.04-10.

32. In substance, this appeared to be a complaint about the grant of leave to amend, which was an issue in the appeal, and was considered in detail in the first judgment, in which this Court recognised that the amendments were of significance,^[31] but determined that there was no error in permitting them, not least because no claim of unfair prejudice was made at the time. ^[32] This conclusion was reached notwithstanding recognition that it was possible that permitting the amendments might have required Ms Johnson to reshape her case and potentially call additional evidence. ^[33] Ultimately, the Court was unpersuaded that Ms Johnson was deprived of a fair and reasonable opportunity to meet the case against her, first because no such objection was taken at the time, and secondly because she did not show that the amendments had that prejudicial effect. ^[34] Notably, despite the claims that she did not understand that such a case was pleaded against her personally, it has not been shown – or even suggested – that Ms Johnson’s defence would have been conducted any differently, or that she was deprived of the opportunity of adducing or submitting anything in opposition to the causes of action on which she was found liable. The evidence she adduced and the submissions made on her behalf at trial tell to the contrary. She filed an affidavit of 980 paragraphs. The hearing commenced on 5 February 2018; the amendments were allowed on 6 February; the hearing continued until 9 February when it was adjourned until 14 March, and then until 13 June when it continued until 15 June, then on 12 to 13, 26 and 27 July, concluding on 10 September 2018. There was no lack of time for Ms Johnson to advance appropriate defences, after the pleading had been amended.

    31. First judgment at [91].

    32. First judgment at [97].

    33. First judgment at [96].

    34. First judgment at [96].

33. To this point, this complaint appeared to be no more than an attempt to reagitate the grounds on which the appellant had unsuccessfully impugned the grant of leave to amend. However, in submissions in reply, Ms Johnson said that her present complaint was that in disposing of the grounds of appeal concerning the grant of leave to amend, this Court misinterpreted the amended form of FACLS par 20, so ultimately, this became another emanation of the submission that the Court erroneously took the view that Ms Johnson was sued in her own right, when no such case was pleaded. That there was no such misinterpretation has been explained, above. ^[35]

    35. Above at [10]-[17].

Issues relating to Partnership Act “defences”

34. Another repeated theme of Ms Johnson’s complaint is that this Court overlooked that:

1. if unlawfulness were established, the partnership was immediately dissolved pursuant to Partnership Act, s 34, the consequence that Ms Johnson could have no liability as a partner; and

2. even if she did, it was capped at zero by reason of Partnership Act, s 60, given the condition imposed on leave to amend “that essentially preserved the appellant’s protection as a limited partner”.

35. The appellant submitted that the effect of sections 34, 60(1) and 67 of the Partnership Act were not considered, at all, or in the context of paragraphs 47 and 48 of the Amended Commercial List Response, which pleaded:

47. Further or in the alternative the fifth defendant says that, if any of the plaintiff's allegations against any other defendant herein are found proven and constitute an event which made it unlawful for the business of a partnership of which the fifth defendant is found to have been a member to be carried on, or for the members of that firm to carry it on in partnership, that firm was automatically dissolved by force of s. 34 of the Partnership Act 1892.

Particulars of unlawful events in the Statement of Claim

(a) The making of any of the "Representations" referred to in paragraph C22;

(b) Any act or omission constituting a breach of contract referred to in clause C30;

(c) Any act of fraud referred to in paragraph C31;

(d) Any act of conversion referred to in paragraph C38;

(e) Any act referred to in subparagraphs C39(c) or (d);

(f) Any receipt of loan amounts as referred to in paragraph C41, or any knowing assistance therein; or

(g) Any omission to register as a managed investment scheme as alleged in paragraph C45.

48. The fifth defendant says that by reason of any such dissolution she has no liability, as a partner of the firm, to the Plaintiff, or to any group member:

(a) to pay any of the amounts claimed in paragraphs A3, A4 and AS of the Statement of Claim;

(b) to pay restitution as claimed in paragraph C31 of the Statement of Claim; or

(c) for the loss and damage claimed in paragraph C40 of the Statement of Claim.

36. Partnership Act, s 34, provides that a partnership is dissolved by the happening of any event which makes it unlawful for the business of the firm to be carried on. This issue was addressed by the primary judge in the No 7 judgment, as follows:^[36]

“[822] Mr Argy did not develop a submission as to whether, and if so when, an event had occurred which made it ‘unlawful’ for the STC business to be carried on.

[823] However, assuming that it was ‘unlawful’ for a fraudulent scheme to be carried on, and assuming that STC partnership of which Ms Johnson was a member was, at some point during 2013 dissolved by operation of s 34 of the Partnership Act, I do not see how it could affect Ms Johnson’s liability on the bases that I have found.

[824] My conclusion that Ms Johnson made the representations to which I have referred does not depend upon whether a partnership in fact existed.

[825] I find the point to be irrelevant.”

36. Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as "STC Sports Trading Club" (No 7) [2019] NSWSC 103.

37. The issue was not raised in the appeal. No complaint concerning his Honour’s conclusion, set out above, was made in the Notice of Appeal. No ground of appeal, nor any written or oral submission, referred to s 34, nor to s 60 or s 67. So far as we have been able to ascertain, there was no reference in the pleadings to s 60 or s 67. The Court cannot be said to have overlooked issues that were never raised before it. This is an attempt to raise on reconsideration new complaints that were not advanced in the appeal. That would suffice to dispose of these grounds, but we will nonetheless address them.

38. The appellant submits that the operation of the partnership as an instrument of fraud was unlawful, and that the STC partnership was dissolved pursuant to s 34 the moment any activity commenced that was proscribed by law, and that thereafter she was no longer a person to whom the misleading and deceptive acts of Larter could be imputed. In reply submissions, this was said to be “another example of how the misinterpretation of [ACLS par 20] has tainted the other issues”, and it was submitted that “if the appellant was liable only as a partner then the point of amending her defence [presumably, by inserting pars 47 and 48, set out above] was to have the court accept that if the partnership engaged in unlawful conduct, the partnership was thereupon dissolved so that the appellant could not have been liable qua a partner”. ^[37]

    37. Consolidated submissions [24R].

39. These submissions misconceive the effect of s 34, which is that partnerships which are legally constituted at inception for the purpose of carrying out a business which at that time is lawful, may become illegal at a later date either because of a change in factual circumstances, or because of a change in the law. One example of a change in factual circumstances is the outbreak of war between the host nation of the partnership and that of an alien partner, rendering partnership with an enemy alien illegal. ^[38] Another is if a partner becomes disqualified (for example, a partner is struck off the relevant register of practitioners). ^[39] There is a distinction between “the happening of any event which makes it unlawful for the business of the firm to be carried on”,^[40] and the carrying on of the partnership business in an unlawful manner. Illegalities in the course of the conduct of a partnership’s business do not bring about dissolution under s 34. No circumstances or law rendering the business of the partnership illegal per se has been identified.

    38. Stoll v Paterson [1915] 18 WALR 42; R v Kupfer [1915] 2 KB 321.

    39. Hill v Clifford [1907] 2 Ch 236; affirmed sub nom Clifford v Timms [1908] AC 12; Hudgell Yeates & Co v Watson [1978] QB 451.

    40. Hill v Clifford [1907] 2 Ch 236 at 255.

40. Partnership Act, s 60(1), provides that the liability of a limited partner to contribute to the liabilities of the partnership is “subject to this Part” not to exceed the amount shown in relation to the limited partner in the register. Section 67 relevantly provides as follows:

67   Limited partner not to take part in management of limited partnership

(1)  A limited partner must not take part in the management of the business of the limited partnership and does not have power to bind the limited partnership.

(2)  If a limited partner takes part in the management of the business of the limited partnership, the limited partner is liable, as if the partner were a general partner, for the liabilities of the partnership incurred while the limited partner takes part in the management of that business.

(3)  A limited partner is not to be regarded as taking part in the management of the business of the limited partnership merely because the limited partner—

(a)  is an employee or an independent contractor of the partnership or of a general partner, or is an officer of a general partner that is a corporation, or

(b)  gives advice to, or on behalf of, the limited partnership or a general partner in the proper exercise of functions arising from the engagement of the limited partner in a professional capacity or arising from business dealings between the limited partner and the partnership or a general partner, or

(c)  gives a guarantee or indemnity in respect of any liability of the partnership or of a general partner, or

(d)  participates in any action by other limited partners for the purpose of enforcing their rights or safeguarding their interests as limited partners, or

(e)  if authorised by the partnership agreement, participates in general meetings of all the partners, or

(f)  exercises any power conferred on the limited partner by subsection (4).

(4)  A limited partner or a person authorised by the limited partner may at any time—

(a)  have access to and inspect the books of the partnership and copy any of them, and

(b)  examine the state and prospects of the business of the partnership and advise and consult with other partners in relation to such matters.

(5)  The provisions of this section may not be varied by the partnership agreement or the consent of the partners.

41. Ms Johnson was not held liable to contribute to, or for, liabilities of the partnership, but personally liable for misleading and deceptive conduct in which she as one of the partners engaged. Section 60 does not apply. Moreover, although it was submitted (purportedly in reply) that Ms Johnson was “obsessive about s 67 to the point where she studiously avoided taking any step that would risk her limited liability”, ^[41] this is not consistent with the various acts taken by her in providing her image for advertising purposes, instructing solicitors, and engaging with Mr de Klerk, which appear to involve taking part in the management of the business, as a result of which she would not be entitled to rely on s 60, even if it otherwise applied.

    41. Consolidated submissions [30R].

Issues relating to the conduct of the trial

42. The appellant’s submissions advanced a number of complaints which were, in substance, complaints about aspects of the conduct of the trial.

43. First, the appellant complains that the substitution of Mr Mackinnon for the previous representative plaintiff Mr Baker “occurred in suspicious circumstances”, and that the primary judge did not allow whether Mr Baker had been engaged in promoting the scheme to be explored in cross-examination of the respondent. ^[42] Then, in expansive submissions purportedly in reply, it was submitted that “The circumstances in which the Respondent became the representative plaintiff were not known to the appellant’s solicitor and are only with hindsight seen to be sufficiently suspicious that the Court would want to see ventilated the matters the appellant sought to draw to the trial judge’s attention as a possible attempt to pervert the course of justice by concealing a key factor that led to the respondent and other class members investing”, and for the first time elaborated on that submission at length. ^[43]

    42. Consolidated submission [8].

    43. Consolidated submissions [8R].

44. Next, the appellant complains that this Court overlooked how cross-examination of the respondent was curtailed by the primary judge, in the context of a finding that the respondent was not challenged on his understanding of the proposal, and related interventions. ^[44] Elsewhere, it is submitted that the primary judge curtailed cross-examination of the respondent on his understanding of the proposal and reliance on it, depriving the appellant of an opportunity to make good a defence of those allegations; and declined to recuse himself. ^[45] These appear to be complaints of error by the primary judge. ^[46]

    44. Consolidated submissions [11].

    45. Consolidated submissions [25].

    46. Consolidated submissions [25R].

45. Insofar as the complaint is that this Court overlooked these issues, that is because they were not raised before it. The order for substitution was made well before the trial, and was not the subject of any appeal. The primary judge gave reasons for declining the application that he recuse himself, ^[47] and that decision was not impugned in the appeal. Although ground 31 in the Notice of Appeal was that “his Honour erred in unduly intervening in the conduct of the hearing by interrupting cross-examination of the respondent’s witnesses and thereby causing a miscarriage of justice”, that ground was not referred to, let alone elaborated, in the appellant’s written submissions, or orally. It is therefore not surprising that this Court did not address it, particularly given that such a ground would have required close and detailed reference to those passages in the transcript where the interruptions complained of occurred. The court is not required to deal with grounds which though included in a notice of appeal are not pressed in written or oral submissions. An application under r 36.16 is not an occasion to articulate, belatedly, submissions on an issue which could have been, but was not, advanced on the hearing of the appeal.

    47. Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones,

Issues relating to fact finding

46. A number of complaints are made in the appellant’s submissions about aspects of the fact-finding process which resulted in conclusion adverse to her. It is often far from clear whether these complaints are directed at the primary judge or at this Court.

46. The crucial findings of fact adverse to Ms Johnson which were upheld by this Court were that:

1. (by majority) Ms Johnson knew of the Proposal and its contents and that at least in part they were false; ^[48]

2. (unanimously) Ms Johnson knew that Foster was using the alias “Mark Hughes”; ^[49] by September 2013, “strongly suspected” that investors’ funds were being misappropriated; ^[50] participated in steps to conceal Foster’s involvement; ^[51] and knew that his involvement could not be revealed. ^[52]

   48. First judgment at [3] (Macfarlan JA), [301]-[302] (Simpson AJA); cf [121]-[141] (Brereton JA).

   49. First judgment at [190].

   50. First judgment at [198].

   51. First judgment at [206].

   52. First judgment at [235].

Standard of satisfaction

48. The appellant submitted that application of the principles in Briginshaw, in the circumstances of the appellant’s position as a solicitor and officer of the court, should have precluded the Court from being comfortably satisfied of her guilt, in particular having regard to the circumstance that no other defendants appeared, the circumstances in which Mr Mackinnon was substituted for Mr Baker as representative plaintiff, allegedly inconsistent statements made by Mr de Klerk about reliance, the ‘objective reasonableness’ of the appellant’s understanding of the business, and ‘the antipathy between the appellant and Foster’ making it ‘unsafe to conclude that she had conspired with Foster to conceal his involvement’. ^[53] In reply, the appellant supports Brereton JA’s (minority) view that she was not shown to have had knowledge of the contents of the Proposal. ^[54]

    53. Consolidated submissions [26].

    54. Consolidated submissions [26R].

49. In the first judgment, the Court plainly had regard to the Briginshaw standard. Applying that standard, Brereton JA would have upheld ground 12; applying that standard, Macfarlan JA and Simpson AJA would not. In both cases, however, those were plainly considered conclusions having reviewed the evidence. They were not the result of irregularity, misapprehension or oversight. Indeed, the difference of opinion on this issue shows that this was not a matter of inadvertence or oversight but reflected considered albeit differing views of the Court. It is simply not apparent how the circumstance that no other defendant appeared, or the circumstances of the substitution of Mr Mackinnon for Mr Baker as representative plaintiff, or supposed inconsistencies in statements made by Mr de Klerk on the (irrelevant) question of reliance by him, could bear upon the critical factual conclusions referred to above.

50. Purportedly in reply on a different issue, ^[55] the appellant submitted that the majority was mistaken in referring to “conversations” between Ms Johnson and Mr and Mrs Mackinnon, ^[56] because the unchallenged evidence was that the appellant had never spoken to Mr Mackinnon, and had only one brief conversation with Mrs Mackinnon in November 2014 (more than a year after they had invested). That reference was in the context of Simpson AJA considering whether it was sufficiently established that Ms Johnson was aware of the Proposal and the falsity of at least some of its contents – not in the context of any question of “proximity” (as is suggested in the appellant’s reply submissions). The conversation with Mrs Mackinnon, which followed a call from Mr Mackinnon, on 3 November 2014, was relevant because in it, Ms Johnson said “she had asked Ms Larter to take her name off the Proposal and she would be following up” – an admission that she was aware of the Proposal, and that her name was on it. Mr Mackinnon had initiated the conversation by making an earlier call. ^[57] To the extent that her Honour’s reference to “conversations” with both did not precisely reflect this, it was immaterial.

    55. Consolidated submissions [22R].

    56. First judgment at [302] (Simpson AJA) with which Macfarlan JA (at [3]) agreed.

    57. No 7 judgment at [683]-[685].

51. Otherwise, this ground in substance is a complaint that, applying the correct standard of proof, this Court ought not have been satisfied that the appellant had engaged in misleading and deceptive conduct, or deceit. It is, therefore, not a complaint of irregularity, misapprehension or oversight such as might warrant relief under r 36.16, but of error, for which the remedy is an appeal.

The appellant

52. The appellant made four submissions pertaining to the evaluation of her own evidence:

1. there was a “failure fairly to assess the appellant’s credit in the context of her mental breakdown and a failure to appreciate her understanding of the difference between Mr Foster’s intended and actual investment in STC …”. ^[58] This is elaborated in submissions in reply, which assert that the appellant’s mental state “underpins the exceptional circumstances surrounding the trial” and that “the primary judge was fully conversant with the appellant’s frail mental state and failed to afford her any consideration, especially when making findings on credit”; ^[59]

2. there was a “failure to appreciate that the business of the partnership was being carried on in Qld and that the appellant had no role in the operation and could not be expected to know who was employed there or their roles, including whether there was a person called Mark Hughes, and who the investors or potential investors were”; ^[60]

3. there was a “failure to consider the reasonableness of the appellant’s belief that there was a legitimate business being carried on by STC …”; ^[61] and

4. the Court failed to take into account, in assessing the reasonableness of Ms Johnson’s attempts to persuade Ms Larter to reinstate Mr Holmes as trader to recover any losses before any liability to investors matured, that the terms of Mr Mackinnon’s loan were that the principal was not repayable for three years; and failed to consider the reasonableness of her view that Foster had engaged in no more than unauthorised trading of partnership funds, and that Mr Holmes’ reinstatement would be able to ameliorate the adverse consequences. ^[62] In purported reply, this was said to be probative of her lack of knowledge that investors’ money was being stolen and misappropriated. ^[63]

   58. Consolidated submissions [12].

   59. Consolidated submissions [12R].

   60. Consolidated judgment [16].

   61. Consolidated submissions [17].

   62. Consolidated submissions [28].

   63. Consolidated submissions [28R].

53. The effect of these submissions is that they ought to have resulted in the court being unsatisfied that Ms Johnson knew that Foster was using an alias, or that investors’ moneys were in jeopardy.

54. It is not always clear whether these are said to be failures by the primary judge or by this Court. If the former, they are attempts to agitate grounds of complaint that were either not previously advanced or were rejected. As observed in the first judgment, the primary judge formed an adverse view of Ms Johnson’s credibility and reliability as a witness. ^[64] No ground of appeal impugned his Honour’s credit findings. An application of the present kind is not a vehicle for impugning adverse credit findings which were not the subject of the appeal.

    64. First judgment at [112]-[114].

55. As to the first submission, the first judgment referred to the burden facing an appellant seeking to overturn findings of fact based in substantial part on the evaluation of her credit. ^[65] Notwithstanding those difficulties, upon rehearing Brereton JA would have concluded that it was not open on the evidence to be “comfortably satisfied” that Ms Johnson actually knew of the existence and contents of the proposal at least before early 2014, and that the primary judge erred in holding otherwise”. ^[66] However, the majority of the Court disagreed, being unpersuaded that that finding was not open to the primary judge. ^[67] That was plainly not a matter of misapprehension or oversight, but a considered conclusion having reviewed the evidence. This Court’s rejection of Ms Johnson’s challenges to the primary judge’s findings that she knew that Foster’s role could not be publicly revealed was substantially founded on her own evidence. ^[68] It is not apparent how any allowance for her mental health would affect those conclusions. Moreover, the submission that the primary judge failed to afford her any consideration in respect of her mental health is quite unfair: on 14 February 2018, after six hearing days, the primary judge on her application adjourned the proceedings part-heard to 14 March, because of her mental health, because “notwithstanding the unsatisfactory nature of this evidence, I concluded that it may impose undue hardship on Ms Johnson to compel her to resume her cross-examination this week”; ^[69] on 14 March, on her application, a further adjournment until 12 June was granted.

    65. First judgment at [115].

    66. First judgment at [141].

    67. First judgment at [301] (Simpson AJA), [3] Macfarlan JA.

    68. See, for example, first judgment at [189].

    69. Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones,

56. As to the second submission, reference was in fact made in the first judgment to Ms Johnson’s position that “STC is in fact operated from Peter’s Gold Coast home where Peter holds all the [associate members’] contracts”. ^[70] However, the question was not whether she could not be expected to know if there was a person called Mark Hughes, but whether she knew that Foster was using an alias and why. In its essence, this complaint merely seeks to reagitate the appellant’s denials that she knew that Foster was using “Mark Hughes” as an alias, which were rejected, after careful consideration, both by the primary judge and on appeal.

    70. First judgment at [223].

57. As to the third submission, this is in substance an attempt to reagitate the Court’s considered conclusion, upholding the primary judge’s finding, that by September 2013, Ms Johnson “strongly suspected” that investors’ funds were being misappropriated – in circumstances where her own correspondence reveals that she was “extremely concerned” that “STC may be being operated as a Ponzi scheme by Peter and hence is being illegally and fraudulently managed and operated”. ^[71]

    71. First judgment at [191]-[198].

58. Similarly, as to the fourth submission, the primary judge’s relevant finding was that by September 2013, Ms Johnson “strongly suspected” that investors’ funds were being misappropriated, and as explained in the first judgment, ^[72] that conclusion was well-founded in evidence, including in particular an email sent by Ms Johnson to Ms Larter on 10 September 2013 which expressed her concerns that “fraud may be being committed by STC” and “that the moneys of [associate members] may both be in danger and being improperly used”.

    72. First judgment at [191]-[198].

59. These submissions are in substance attempts to reargue the factual issues which were resolved adversely to Ms Johnson in the appeal. They do not identify any material oversight on the part of this Court of the kind that would attract relief under r 36.16.

Foster’s emails

60. The appellant submitted that “The Court’s reliance on self-serving emails from Foster were tantamount to taking the untested evidence of a convicted fraudster”. ^[73]

    73. Consolidated submissions [20].

61. This repeats a submission that was made in the course of the appeal. The appellant has not identified what emails are said to have been erroneously relied upon, or in what respects. Generally, the significance of Foster’s emails was not as evidence of the truth of their contents, but for what matters they brought to Ms Johnson’s notice, and for providing context for Ms Johnson’s responses and acts. It is not apparent how it is said that this Court incorrectly relied on them. In any event, this is no more than a complaint about the weight which this Court might have attributed to particular evidence in reaching a considered conclusion. No such oversight or misapprehension as might justify reconsideration has been identified.

Mr de Klerk

62. The appellant submits that there was a “failure to note that the appellant was invited to the 30 May 2013 meeting with Mr de Klerk to deliver STC branded mugs as a sample of merchandise he might consider for South Africa”; ^[74] a “failure to note that on 14 March 2013 at Catalina Mr de Klerk only asked the appellant ‘3 or 5 questions’ based on a scrap of paper in his pocket … there being no basis for the appellant to have had any appreciation that her answers were being relied upon …”; ^[75] and a “failure to consider Mr de Klerk’s disavowal of reliance on the appellant in relation to his STC loan”^[76] , referring to his evidence: ^[77]

Q. --and so the $100,000 that you're talking about on 21 March in paragraph 25 had been pre-committed as it were, this is simply honouring the previous commitment to put in that final $100,000?

A. That's correct.

Q. This is not the result of any decision made, for example, after you met Ms Johnson?

A. No, no, that was a decision made prior.

74. Consolidated submissions [13].

75. Consolidated submissions [14].

76. Consolidated submissions [14].

77. Tcpt 7 Feb 2018 185.16-23.

63. In submissions in reply, the first limb is elaborated as a contention that it was overlooked that this was indicative of the appellant not being an intended substantive participant in the meeting, and that the same was true of the Catalina meeting; ^[78] and the balance – expansively – to suggest that being oblivious to any reliance on the part of de Klerk, the appellant had no obligation to tell him anything.

    78. Consolidated submissions [13R].

64. It is not entirely clear whether these are complaints of failures on the part of the primary judge or of this Court. If the latter, the Court did in fact refer to her evidence that she had been asked to bring the coffee mugs,^[79] and considered and analysed the evidence of what transpired. ^[80] And, in the context of scrutinising Mr de Klerk’s evidence of the Catalina meeting, the first judgment referred to the circumstances that Mr de Klerk had with him only “a couple of notes”,^[81] and that until re-examination, Mr de Klerk did not attribute any specific representation to Ms Johnson. ^[82]

    79. First judgment at [173].

    80. First judgment at [172]-[177].

    81. First judgment at [135].

    82. First judgment at [135]-[137].

65. However, just why Ms Johnson attended the 30 May 2013 meeting, or the Catalina meeting, is tangential. The relevance of Ms Johnson’s participation in the 30 May meeting, was not why she was there, but the circumstance that while she was there she heard the voice of Foster on the computer, from which it was implicit that she must have known that he was using the alias “Mark Hughes”. ^[83] Her reason for being there is beside the point.

    83. First judgment at [177].

66. Moreover, reliance by Mr de Klerk, who was not the plaintiff, was not relevant. De Klerk was not the representative plaintiff; reliance by him was not a necessary issue in the proceedings. The significance of the Catalina meeting was not to evidence any relevant misrepresentation by Ms Johnson or reliance by Mr de Klerk, but to establish her knowledge that Mr Foster was using “Mark Hughes” as an alias. ^[84] It was also relevant to establishing whether she had knowledge of the Proposal and its contents. ^[85]

    84. First judgment at [169].

    85. First judgment at [132]-[138].

67. There was no such oversight such as to attract r 36.16; this Court did not overlook the matters referred to, to the extent that they were relevant.

Reliance

68. In purported reply, the appellant submitted that the trial judge erred in finding that the respondent’s claimed reliance on the proposal was reasonable. ^[86] The submission is not elaborated. Reliance was in issue on the appeal: it was raised by grounds of appeal 16, 27 and 28, which were dealt with in the first judgment and rejected. ^[87] This argument merely seeks to reagitate that issue and is not a basis for reconsideration of the judgment under UCPR r 36.16.

    86. Consolidated submissions [25R].

    87. First judgment at [63]-[73].

Issues relating to misrepresentation by silence

69. A number of the appellant’s submissions pertained to her liability in respect of the Forster Representation on the basis that she engaged in misleading and deceptive conduct, essentially by not disclosing to the public (or that section of the public constituted by potential investors) the involvement of Mr Foster in STC, in the context that STC was being marketed to the public as a risk-free and reputable investment using her name, image, and reputation, and where Foster’s involvement would have undermined that impression. The first judgment refers to matters indicating that Foster’s role and involvement was not disclosed, and Ms Johnson’s active participation in concealing it. In the first judgment, these circumstances were summarised as follows:

[239] It is self-evident that Foster’s role and involvement in STC was not disclosed to the public, or to the section of it constituted by investors and potential investors, by Ms Johnson or anyone else. Not only did Ms Johnson merely not disclose Foster’s involvement, she actively participated in concealing it. At the March 2014 meetings with Mr de Klerk, she pretended that “Mark Hughes” was a real person with whom Mr de Klerk had been dealing, when it was in truth Foster. She was involved in giving instructions to Pike & Verekers to send the 5 April 2013 letter, in which it was stated, on her instructions, that the ‘imputation that our clients are operating the Sports Trading Club as a mere front for the notorious conman Peter Foster’ was without foundation. At the 30 May 2013 Skype call meeting with Mr de Klerk, where Foster was to Ms Johnson’s knowledge on the call, when Mr de Klerk addressed him as ‘Mark’, she remained silent. Ms Johnson received calls from a number of potential investors – including Mr Radica and Mr Seng – who inquired about aspects of STC, including, in the case of the former, whether it was a ‘scam’, yet Ms Johnson never referred to Foster’s involvement – even to Mr Seng, who contacted her in April 2014, after she had retired from the partnership; Ms Johnson warned him against investing, but still did not refer to Foster’s involvement. Although Ms Johnson was no longer a partner, and is not sued in respect of this period, this reinforces a consistent pattern of not revealing Foster’s involvement, which supports the inference that she knew that it could not be, and was not to be, revealed, and is inconsistent with her claims to have taken steps at an earlier stage, albeit anonymously, to disclose his involvement.

[240] In October 2013, in response to communications from the journalist Mr Murray, of The Courier Mail, who asked directly whether Foster was involved in STC, Ms Johnson again did not disclose it. On 3 October 2013, in response to communications to STC from Mr Murray, the solicitor, Mr Tassell, again purporting to act on behalf of Ms Johnson and Ms Larter, wrote to The Courier Mail threatening to commence proceedings in relation to ‘grossly defamatory’ allegations ‘[suggesting] that their business [STC] is in some way related to Mr Peter Foster’. Ms Johnson did not recall whether she had any role in giving instructions for that letter. However, Mr Murray then called Ms Johnson, who asked him to put his questions in writing, which he did. Ms Johnson prepared draft answers to these questions, which she sent to the ‘STC desk’. The following day, 5 October 2013, an email was sent, purportedly on behalf of Ms Johnson, from her STC email address (to which Foster had access), stating that Foster had no involvement with the business and no relationship with Ms Johnson. Ms Johnson denied having composed the answers which were sent, and the primary judge appears to have accepted her evidence on this point. However, as his Honour found, Ms Johnson must have known that by sending her proposed answers (which she was not able to produce) through the ‘STC desk’, Foster would become aware of them, leaving open the near certainty that he would edit them before they were released to the journalist.”

70. All of the submissions collected under this rubric suffer from the problem that fundamentally, they seek to reagitate the conclusion referred to above. They are arguments to the effect that that conclusion ought not have been reached. They do not identify any such irregularity, oversight or misapprehension as might warrant intervention under r 36.16. If it is complained that this Court’s conclusion was erroneous, the remedy is an appeal.

71. That is sufficient to dispose of them, but we shall consider them a little further.

Requirement for identified representee?

72. First, the appellant submitted that Ms Johnson could not be liable for “misrepresentation by silence” because there is no duty to disclose to the world at large, or even an inchoate class such as “potential investors”, and the law requires an identified representee to whom a duty is owed by the representor by reason of the former being a known person for whom the significance of the disclosure is appreciated. ^[88] In elaborate submissions purportedly in reply, it was argued that this “Court’s adoption of the primary judge’s assumption that such a duty exists and must be discharged by disclosure to the relevant authorities” was tantamount to constructing a civil misprision, and that there was no such concept known to law. ^[89]

    88. Consolidated submissions [21]-[22].

    89. Consolidated submissions [22R].

73. No submission to this effect was made on the hearing of the appeal.

74. No authority is cited for the proposition that the law requires an identified representee to whom a duty is owed by the representor by reason of the former being a known person for whom the significance of the disclosure is appreciated. Even if it were correct for the law of negligence, about which it is unnecessary to say anything because it was not relied on, the appellant’s liability was founded on the statutory prohibition on misleading and deceptive conduct, and fraud. There is no reason why the specific existence of the respondent as a potential investor had to be known to the appellant. As she must be taken to have authorised the distribution of the prospectus, she potentially incurred liability to anyone into whose hands the prospectus might come. Insofar as the appellant contends that it is illustrative that she had no means of communicating with the alleged representee, that is not so; Foster’s involvement could have been disclosed in the Proposal.

75. Moreover, this Court’s upholding of Ms Johnson’s liability in respect of the non-disclosure of the involvement of Foster was not based on any obligation to report the matter to authorities. As summarised in the first judgment, in the context that an investment in STC was represented to be risk-free and reputable, the involvement of Foster was material to a decision to invest; there was a reasonable expectation on the part of members of the public invited to invest that the fact that Foster was involved would be disclosed; and the promotion of STC, via the Proposal or otherwise, without disclosing Foster’s involvement was conduct which was misleading and deceptive. ^[90] Ms Johnson engaged in misleading and deceptive conduct by not disclosing to that section of the public constituted by potential investors the involvement of Foster in STC, in the context that STC was being marketed to the public as a risk-free reputable investment using her name, image and reputation, where Foster’s involvement would have undermined that impression. ^[91] If that conclusion be erroneous, it was not as a result of inadvertence or oversight but followed a considered analysis of the law relating to misleading and deceptive conduct “by silence”, ^[92] and its application to the facts. ^[93] If it is contended to be erroneous, the proper remedy is an appeal. No basis for reconsideration under r 36.16 is apparent.

    90. First judgment at [257].

    91. First judgment at [259].

    92. First judgment at [244]-[254].

    93. First judgment at [255]-[259].

Insufficient knowledge to require disclosure?

76. The appellant submitted that her knowledge (as distinct from suspicion) was not such as to permit her to defame Larter and Foster until she had something approaching proof, which was not until 30 August 2013, when she informed de Klerk. In reply, the appellant also submitted that her honest and reasonable belief until 30 August 2013 was that Foster’s role was confined to establishing the technology platform and the web portal. It was also submitted in reply that in 2013 Foster was not as notorious as he was in 2018; that the appellant was not aware of the details of his record, notoriety and modus operandi; and that both the primary judge and this Court relied primarily on judgments of Yates J in 2014 and 2016, after the respondent invested, and that this was an unprincipled use of hindsight.

77. These submissions overlook the conclusion of this Court that the primary judge’s finding that Ms Johnson knew that Foster’s involvement in STC could not be publicly revealed was not inferential only, but was firmly founded in Ms Johnson’s own evidence, which confirmed that she held the view that disclosure of his involvement would be destructive of the business; ^[94] the finding that Ms Johnson had engaged in active concealment of Foster’s involvement in STC; ^[95] and that, as Ms Johnson conceded was open to be found, she was aware that he was doing more than setting up a website. ^[96] And the submission that this Court relied chiefly on the judgments of Yates J is quite wrong. This Court’s conclusion that Ms Johnson knew that Foster’s involvement could not be revealed, ^[97] was founded chiefly on Ms Johnson’s own evidence. ^[98]

    94. First judgment at [234].

    95. First judgment at [199]-[206].

    96. First judgment at [205]-[206].

    97. First judgment at [207]-[235].

    98. See first judgment in particular at [210]-[216], [226]-[232], [234].

Duty of disclosure discharged?

78. The appellant submits that “if any legal obligation to disclose to ‘proper authorities’ or ‘bring to public attention’ existed (which is denied), it was discharged by procuring Mr Pieter De Klerk to disclose all material facts to both the NSW Police and to the 60 Minutes television programme in September 2013 – over a month before the respondent ‘invested’.” ^[99] In submissions in reply, it is elaborated that such action was more than sufficient to bring Foster’s involvement to public attention, that had Mr de Klerk’s interview gone to air the whole world would have immediately known about Foster, and that the appellant could not justly be found liable for this not occurring; and that de Klerk’s refusal to be interviewed on air, and the delay in the police taking any action, was sufficient to “break the causal link” between any investor’s loss and any act or omission on her part. ^[100]

    99. Consolidated submissions [18], [29].

    100. Consolidated submissions [18R], [29R].

79. In fact, the appellant’s evidence was only that she told Mr de Klerk on 30 August 2013 that she had resigned and that Foster was involved in STC,^[101] and that de Klerk used that “warning” to good effect by investigating who Peter Foster was and then following up on that. ^[102] To characterise that as procuring him to disclose all material facts to the police and 60 Minutes is an overstatement. There was no evidence that Ms Johnson “procured” these outcomes; a journalist rang Mr de Klerk, after he had spoken to Ms Johnson. In reply, the appellant submits that the court (presumably the trial judge) should have inferred that the only reason for a 60 Minutes reporter to ring Mr de Klerk out of the blue was because the appellant suggested that he do so. Absent evidence from Ms Johnson to that effect it is difficult to see why that inference ought to be drawn.

    101. First judgment at [179].

    102. First judgment at [180].

80. In her affidavit the appellant said she “tried to anonymously tip off some people about my concerns. I was also concerned that I would be sued for defamation if I publicised unsubstantiated allegations of wrong-doing” and “I know from my experience as a criminal lawyer that it is not as easy as people think to get the police to act. This is not a criticism but an acknowledgment that the police had their methods, standards and protocols”, and that she endeavoured to “have him arrested” by providing “secretly, whatever information I could. I sent, or I caused to be sent, anonymous emails to the lawyers for ASIC and … Justice Logan's associate”, after he absconded. ^[103] She also gave evidence, in re-examination, that she had sent emails (of which she did not retain a copy) from an internet café in King Street, Newtown to the associates of Yates and Logan JJ, to a solicitor at Corrs who had acted for the ACCC in the two interlocutory matters in which she had acted for Foster, to the New South Wales Police’s media unit, and to A Current Affair. These things she did, she said, in 2014, not long before Mr Foster’s arrest on 28 October 2014. Information allegedly provided included the registration number of Mr Nolan’s wife’s car.

    103. No 7 judgment at [687]-[690].

81. The appellant did not submit in the course of the appeal that she was not liable for misleading and deceptive conduct because she had told Mr de Klerk on 30 August 2013 that she had resigned and that Foster was involved in STC. Although there were grounds of appeal to the effect that she had no obligation of disclosure, no ground of appeal contended that she had discharged any such duty. This is another impermissible attempt to agitate belatedly issues which were not argued on the appeal.

82. But even had the issue been argued on appeal, it would not have affected the conclusion that Ms Johnson had engaged in misleading and deceptive conduct, which had an on-going effect. The relevant question is not whether the appellant discharged a duty of disclosure, but whether she engaged in misleading or deceptive conduct whereby Mr Mackinnon incurred damage. Informing Mr de Klerk that Foster was involved did not mean that the information would necessarily or even probably come to the knowledge of other investors or potential investors who had received the Proposal, including most relevantly Mr Mackinnon. It neither dissipated the misleading and deceptive effect of her conduct, nor fractured any causal chain. Even less could disclosures made in 2014 have dissipated the misleading and deceptive effect of her conduct in 2013, before Mr Mackinnon invested.

Issues relating to deceit

83. The appellant also raised a number of issues pertaining to the decision of this Court to uphold her liability on the alternative basis of deceit.

84. First, she submitted that the Court erroneously upheld the judgment below on a finding of deceit “which the appellant was given no opportunity to negate”, and that deceit requires an intention to deceive of a more overt kind than inadvertent misleading conduct. ^[104] In reply, the appellant further submits that deceit was not pleaded against her personally (and that had deceit been found the partnership was immediately dissolved pursuant to Partnership Act, s 34, so that the appellant would have no liability as a partner – an argument which has been addressed above). ^[105]

    104. Consolidated submissions [19], [27].

    105. Consolidated submissions [19R], [27R].

85. The assertion that deceit was not pleaded against her personally is incorrect. In ACLS par 35, deceit was pleaded against the first defendant (the partnership). The amendments permitted by the primary judge included the insertion of the phrase “including inter alios the second, third and fifth defendants” after the reference to the first defendant in par 35. In allowing these amendments, his Honour said: ^[106]

“The conclusion to which I came was that all of the defendants, and Ms Johnson in particular, must be taken to have understood that the reference in the Amended Commercial List Statement to “the first defendant” was intended to be a reference to the persons named in the Amended Commercial List Statement as being members of that partnership. For that reason, I allowed the amendments directed to this issue.”

106. No 3 Judgment at [15] (Stevenson J).

86. As explained in the first judgment, that meant that deceit was now pleaded against her personally. ^[107] No ground of appeal made this complaint, and no such argument was raised in the appellant’s written or oral submissions at the hearing of the appeal. Indeed Ground 19 of the Notice of Appeal, which was not the subject of any elaboration in argument, contended that the primary judge had erred in holding that silence may amount to misleading or deceptive conduct “because no claim was made against the appellant under the Australian Consumer Law and the only claims made by the respondent against the appellant were in respect of the representations or deceit.” As observed in the first judgment,^[108] this makes clear that Ms Johnson understood that there was a claim in deceit against her personally. It is also apparent in the primary judge’s discussion with Mr Argy, set out above. ^[109] Moreover, in the course of the respondent’s opening, the primary judge observed:

“I am not meaning to suggest I am unsympathetic with this case, but this is a fraud case, and it has to be proven on the balance to the requisite standard, especially against a lawyer who is an officer of the court.

Dixon: Indeed. Your Honour, the case isn’t just a fraud case, it is also a misleading and deceptive conduct case, and a case of misrepresentation, and breach of contract. …” ^[110]

107. First judgment at [90].

108. First judgment at [262].

109. Above at [20].

110. Tcpt p17.07-10.

87. If the complaint that she had no opportunity to negate a finding of deceit is directed to the proceedings in this Court, it is incorrect. It was the subject of the respondent’s Notice of Contention, and of written and oral submissions in this Court. The primary judge made a finding of deceit, relevantly in respect of the representation that Foster was not involved in STC. There was evidence, summarised in the first judgment and referred to above,^[111] that Ms Johnson took positive steps to conceal Foster’s role and involvement. However, his Honour being of the view that that finding did not advance Mr Mackinnon’s case in respect of relief, took the matter no further. Because of the potential impact of the defence of apportionment, this Court upheld the respondent’s Notice of Contention that the judgment should be upheld also on the alternative basis of deceit.

    111. Above at [69].

88. Secondly, the proposition that an intention to deceive is a necessary element of deceit is incorrect; what is required is knowledge of, or recklessness as to, the falsity of the representation. ^[112]

    112. Krakowski v Eurolynx Properties Ltd (1995) 185 CLR 563 at 579-581; see also Commonwealth v Murray (1988) Aust Torts Reports 80-207 at 68,044-7.

89. No irregularity, misapprehension or oversight such as might warrant relief under r 36.16 is apparent.

Issues relating to apportionment

90. The appellant submits that apportionment should have regard to all twelve defendants, while the notional apportionment referred to in the first judgment,^[113] accounts for only three. As the appellant was held liable on the basis of deceit, which is not apportionable, this would arise only if the upholding of the Notice of Contention were set aside. In any event, the evidence did not show that the other alleged wrong-doers (beyond Larter and Foster) had any material role. It is unlikely that they would have had more than a marginal impact on the contingent evaluation in the first judgment, but it is not necessary to resolve this.

    113. First judgment at [282].

Conclusion

91. The appellant complains that she has been left “holding the metaphorical baby” for the actions of others, trapped in a situation not of her own making, in which her eleven co-defendants and other fraudsters not joined all participated in the fraud and benefitted, while she did not even know that a fraud was being perpetrated, let alone participating in or benefitting from it; yet she pays the greatest price, and that this result is a gross injustice. ^[114] In reply she says that she is as much the victim of Foster’s fraud as any investor. ^[115] A complaint that, from the perspective of the unsuccessful party, a judgment produces an unjust result, is not a reason to reconsider it under r 36.16, or in the inherent jurisdiction. Moreover, this argument rather overlooks the conclusions, substantially founded in Ms Johnson’s own evidence and in communications to which she was party, that she knew of Foster’s history, notoriety and modus operandi; knew that he was in practical control of STC; knew that he was using the alias “Mark Hughes” and that his involvement could not be publicly revealed; suspected that investors’ funds were being misappropriated; allowed her image and status to be used in marketing STC; and actively misrepresented to recipients of the Pike & Verekers’ letter that Foster was not involved in STC.

    114. Consolidated submissions [31]

    115. Consolidated submissions [31R].

92. As to the appellant’s chief complaint, that this Court has overlooked or misapprehended the effect of the pleading in ACLS par 20 and its own characterisation of it in J79, the first judgment makes clear that the Court appreciated that the pleading did not originally allege that Ms Johnson made the representations referred to in that par 20; ^[116] that the insertion of the phrase “including inter alios the second third and fifth defendants” clarified that that the pleadings were to be read as if references to “the first defendant” were to be read as referring to Ms Larter and Ms Johnson as members of STC; ^[117] (an amendment which was not challenged by the Notice of Appeal); that the amendments were significant, including because they clarified that it was alleged that Ms Johnson had engaged in misleading and deceptive conduct in respect of the representations pleaded in par 20, as well as those in par 21 which had always been pleaded against her, and that deceit was pleaded against her in par 35; ^[118] that Ms Johnson had always understood that the allegations in par 20 were or at least may be directed to her; ^[119] and that in any event, from the time the amendments were made, it was transparently clear that Ms Johnson was being sued personally in respect of misrepresentations allegedly made by STC when she was a partner. ^[120] Moreover, the appellant has never explained what opportunity she was deprived of, nor how she would have conducted her defence any differently, had the amendments not been permitted and interpreted in the manner in which they were.

    116. First judgment at [79].

    117. First judgment at [84].

    118. First judgment at [90]-[91].

    119. First judgment at [87], [99]-[100].

    120. First judgment at [101].

93. The appellant’s other repeated complaint, that the effect of Partnership Act, s 34, has been overlooked, itself overlooks that s 34 was never raised in the appeal, but in any event misconceives the effect of s 34.

94. Otherwise, the motion amounts to an attempt to reargue the appeal, either on issues that were unsuccessfully raised on the hearing of the appeal, or on grounds and issues that were never raised. Insofar as the motion impugns the Court’s judgment on matters that were argued and were resolved by considered determination of the Court, the proper avenue for a complaint of error is on appeal to the High Court, not an application under UCPR r 36.16. Insofar as the motion seeks to agitate issues not raised by the Notice of Appeal or the submissions on appeal, UCPR r 36.16 is not a vehicle to permit an appeal to be reargued on different or additional grounds.

95. The motion and the submissions in support of it do not identify any matter that was raised in the appeal that was overlooked, nor any other misconception, misapprehension, oversight or inadvertence such as might warrant reconsideration of the first judgment. The motion should be dismissed.

Indemnity costs

96. Applications under r 36.16 which are no more than an attempt to reargue an unsuccessful appeal should not be made and applicants should not expect that in future this Court will address plainly unmeritorious applications such as the present in the detail that is contained in this judgment. The lack of merit in the appellant’s application warrants the appellant being ordered to pay the respondent’s costs of the motion on an indemnity basis.

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Endnotes

Miraleste Pty Ltd t/as USG Partner and Johnson, t/as "STC Sports Trading Club" (No 4) [2018] NSWSC 147.

Miraleste Pty Ltd t/as USG Partner and Johnson, t/as "STC Sports Trading Club" (No 5) at [23].

Amendments

25 February 2022 - Corrected numbering in Headnote

Decision last updated: 25 February 2022