Porges v Adcock Private Equity Pty Ltd

The appeal in *Porges v Adcock Private Equity Pty Ltd* concerned a dispute arising from the sale of shares in a company. The vendor, Porges, represented to the purchaser, Adcock Private Equity, that the company was a good and profitable investment. However, Porges was aware of significant risks, including potential litigation against the company, and was disillusioned with its management. Adcock alleged that Porges' failure to disclose these material risks constituted misleading or deceptive conduct. The matter was heard in the Court of Appeal of the Supreme Court of New South Wales.

The central legal issue before the Court of Appeal was whether the primary judge had erred in finding that the vendor's silence, specifically the failure to disclose material risks and concerns about the company's management and potential litigation, amounted to misleading or deceptive conduct under the relevant statute. This required the court to consider the scope of silence as a form of misleading conduct, particularly in the context of a commercial transaction involving the sale of shares.

The Court of Appeal affirmed the primary judge's finding, reasoning that silence can constitute misleading or deceptive conduct where there is a reasonable expectation of disclosure. In this instance, the vendor's positive representations about the company's profitability and investment potential created such an expectation. The failure to disclose significant adverse information, including the risk of litigation and disillusionment with management, rendered the overall impression conveyed by the vendor misleading. The court applied the principle that a party is not required to disclose every piece of information, but where representations are made, silence on material matters that contradict or undermine those representations can be misleading.

The appeal was dismissed, and the appellant was ordered to pay the respondent's costs.