Johnson v Mackinnon

The appeal concerned representations made to prospective investors in a fraudulent betting syndicate scheme. The appellant, Johnson, was a member of a partnership promoting the scheme, which was masterminded by a notorious conman. The respondent, Mackinnon, invested in the scheme. The dispute centred on whether Johnson was jointly and severally liable for misleading and deceptive conduct under consumer law, as well as for deceit.

The Court of Appeal was required to determine whether Johnson had knowledge of the false representations made in the proposal document and whether he was jointly and severally liable for misrepresentations made in the ordinary course of the partnership's business. Further issues included whether Johnson had represented that the conman was not involved in the scheme, whether he had knowledge of the conman's notoriety and involvement, and whether he had deliberately concealed this information. The court also considered whether the pleadings had been amended unfairly and whether the respondent's decision to invest was caused by the representations, and if the damages awarded were correctly quantified.

The court found that the partnership, despite intending to be limited, was unlimited because the limited partnership agreement was never registered, rendering the partners jointly and severally liable. The court was comfortably satisfied, based on circumstantial evidence and inferences drawn from primary facts, that Johnson knew of the false representations and had deliberately concealed the conman's involvement. The court held that the amendments to the pleadings were not prejudicial and that the appellant had a fair opportunity to meet the case. The court also found that even gullible investors are entitled to protection and that prior recoveries and trading profits were irrelevant to the quantification of damages for the respondent's unpaid loan. Crucially, the court upheld a notice of contention, allowing the respondent to rely on a claim in deceit, which is not subject to an apportionment defence available for misleading and deceptive conduct.

The appeal was dismissed with costs.