Skinner v Redmond Family Holdings Pty Ltd

The appeal concerned allegations of misleading and deceptive conduct under the *Trade Practices Act 1974* (Cth) (now the *Competition and Consumer Act 2010* (Cth)). The appellants, Skinner and another party, were found by the primary judge to have engaged in misleading and deceptive conduct by failing to disclose to the respondent, Redmond Family Holdings Pty Ltd, that certain creditors of companies in which the respondent was a prospective investor had a unilateral right to convert their debts into equity. This non-disclosure occurred before the respondent acquired its shareholding, and the subsequent conversion of debts to equity significantly diluted the respondent's shareholding.

The central legal issues before the Court of Appeal were whether the failure to disclose the creditors' right to convert their debts to equity constituted misleading and deceptive conduct, and whether there was a reasonable expectation on the part of the respondent, as a prospective investor, that such a right would be disclosed. The court also considered whether this non-disclosure was causative of the respondent's decision to acquire shares in the companies and whether the primary judge erred in apportioning responsibility for the conduct equally between the appellants.

The Court of Appeal affirmed the primary judge's findings. It reasoned that the non-disclosure of the creditors' unilateral right to convert their debts into equity was a material fact that a reasonable prospective investor would expect to be disclosed. The court held that the failure to disclose this right was misleading and deceptive conduct, as it created a false impression about the nature of the investment and the respondent's future shareholding. The court found that this non-disclosure was causative of the respondent's decision to invest. Furthermore, the court dismissed the appellants' application to adduce further evidence, finding that the evidence was available at trial with reasonable diligence and did not meet the threshold for admission on appeal.

Consequently, the appeal was dismissed, and the appellants were ordered to pay the respondent's costs. An extension of time was granted for the second appellant to file an amended notice of appeal.