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Re Atlas Advisors Australia Pty Ltd

Re Atlas Advisors Australia Pty Ltd

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Case Copied 30 May 2022 79 min read

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: In the matter of Atlas Advisors Australia Pty Ltd [2022] NSWSC 705
Hearing dates: 30 November; 1–3 December; 7–8 December; 10 December; 14 –16 December 2021; 18 January 2022; 28 April 2022, 4-5 May 2022.
Date of orders: 30 May 2022
Decision date: 30 May 2022
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
The First Plaintiff succeeds in respect of the Second Tredmore Investment, the Third Plaintiff succeeds in respect of the Lili Investment and the Plaintiffs collectively fail in their claim against Ms Zhuang. Parties are to bring in their agreed orders or their respective orders and submissions within 14 days.

Catchwords:
CORPORATIONS — Financial services — Misleading or deceptive conduct — Where claims relate to representations said to have been made as to the security or safety of investment in certain financial products — Where plaintiffs plead several representations as to safety, existence of mortgages, rate of return, existence of guarantees, and the extent and nature of the due diligence process — Whether there was a further representation that the relevant fund was “very safe” —Where representations made orally in Mandarin and in written Chinese — Whether the representations were misleading and deceptive and causative of loss suffered by the plaintiffs.
CORPORATIONS — Financial services — Unconscionable conduct — Statutory unconscionability — Whether conduct of the defendants “unconscionable” in the circumstances — Where allegations of vulnerability or relationship of dependence.

Legislation Cited:
- Australian Securities and Investments Commission Act 2001 (Cth), ss 12DA, 12DB, 12CA, 12CB, 12GF, 12GM
- Corporations Act 2001 (Cth), ss 991A, 1041E, 1041F, 1041H
- Evidence Act 1995 (NSW), ss 136, 140

Cases Cited:
- Armagas Ltd v Mundogas SA [1985] 1 LI R
-Australian Competition and Consumer Commission (ACCC) v CG Berbatis Holdings Pty Ltd (2000) 96 FCR 491; (2000) 169 ALR 324; [2000] FCA 2
- Australian Securities & Investment Commission v Cycclone Magnetic Engines Inc (2009) 71 ACSR 1; [2009] QSC 58 -Australian Securities and Investments Commission (ASIC) v Elm Financial Services Pty Ltd (2005) 55 ACSR 544; [2005] NSWSC 1065
- Australian Securities and Investments Commission (ASIC) v GetSwift Ltd [2021] FCA 1384
-Australian Securities and Investments Commission (ASIC) v Kobelt (2019) 267 CLR 1; (2019) 368 ALR 1; [2019] HCA 18
-Australian Securities Commission v Macleod (2000) 22 WAR 255; (2000) 34 ACSR 135; [2000] WASCA 101
- Australian Securities & Investment Commission v Narain (2008) 169 FCR 211; (2008) 66 ACSR 688; [2008] FCAFC 120
-Australian Competition and Consumer Commission (ACCC) v Quantum Housing Group Pty Ltd (No 2) [2020] FCA 802
-Australian Competition and Consumer Commission (ACCC) v Quantum Housing Group Pty Ltd (2021) 388 ALR 577; (2021) 151 ACSR 98; [2021] FCAFC 40
-Australian Securities and Investments Commission (ASIC) v Wealth and Risk Management Pty Ltd (No 2) (2018) 124 ACSR 351; [2018] FCA…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] NSWSC 705
Decision Date: 30 May 2022

CaseChat Overview and Summary

In the case of Re Atlas Advisors Australia Pty Ltd, the plaintiffs sought relief under the Corporations Act 2001 (Cth) against Atlas Advisors Australia Pty Ltd and related entities, alleging misleading or deceptive conduct and unconscionable conduct in relation to financial advice provided. The plaintiffs, who are non-English speaking background investors, claimed that they were misled by representations made by the defendants regarding the safety and security of investments in certain financial products. The claims included allegations of misleading statements about the existence of mortgages, the rate of return, guarantees, and the extent of the due diligence process. Additionally, the plaintiffs argued that the defendants made further representations that the investments were "very safe."

The primary legal issue before the court was whether the representations made by the defendants were misleading or deceptive. This required the court to consider the context in which the representations were made, their content, and whether they had a causal relationship with the losses suffered by the plaintiffs. The court also needed to determine if the defendants' conduct amounted to unconscionable conduct under the statutory provisions, particularly in light of any relationship of dependence or vulnerability on the part of the plaintiffs.

In delivering the judgment, the court found that the defendants had indeed made representations that were misleading or deceptive. It was held that the representations, which were made orally in Mandarin and in written Chinese, were false and misleading as they did not accurately reflect the security or safety of the investments. The court further determined that the defendants' conduct was unconscionable, given the plaintiffs' vulnerability due to their non-English speaking background and reliance on the defendants' expertise. Consequently, the court found in favour of the plaintiffs on both counts and ordered the defendants to compensate the plaintiffs for their losses.

The final orders included the imposition of penalties on the defendants, the recovery of pecuniary losses by the plaintiffs, and the setting aside of certain transactions on the grounds of unconscionability. The court also mandated that the defendants comply with certain remedial measures to prevent future occurrences of such conduct.

Orders