Stuart Klees v M101 Holdings Pty Ltd - [2021] NSWSC 182

Supreme Court

New South Wales

Medium Neutral Citation: Stuart Klees v M101 Holdings Pty Ltd [2021] NSWSC 182
Hearing dates: 8, 9 and 25 February 2021
Decision date: 05 March 2021
Jurisdiction: Equity - Commercial List
Before: Hammerschlag J
Decision:
Summons dismissed

Catchwords:
CONSUMER LAW – FINANCIAL SERVICES – Australian Securities and Investments Commission Act 2001 ss 12DA(1), 12GF – Corporations Act 2001 ss 79, 917E – claim for damages for misleading or deceptive conduct by the first, second and third defendants consisting of misrepresentations allegedly made in connection with the issue of unsecured redeemable promissory notes issued by the first defendant that the notes were secured, would be repayable after 3 months and the plaintiff could have early repayment if he wanted it – claim that the fourth defendant was a person involved in the contravention because he had actual knowledge of the falsity of the representations and intentionally participated in the misleading or deceptive conduct
HELD – that misrepresentations not established or established to be misleading or deceptive – that allegations against fourth defendant not made out
HELD – no damages established because the plaintiff did not show that he would not have invested in the notes otherwise and that it is more probable than not that he would have anyway
HELD – plaintiff did not establish quantum of his loss
PRACTICE AND PROCEDURE – observations on the proper pleading of misleading or deceptive conduct – application to reopen to lead further evidence and to amend to claim different relief – application declined

Legislation Cited:
Australian Securities and Investments Commission Act 2001 (Cth)
Corporations Act 2001 (Cth)
Evidence Act 1995 (NSW)

Cases Cited:
Adams v Morellini [2010] WASC 61
Australian Securities and Investments Commission v M101 Nominees Pty Ltd [2020] 147 ACSR 537
Cackett v Keswick [1902] 2 Ch 456
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304
Chappel v Hart (1998) 195 CLR 232
Ellis v Wallsend District Hospital (1989) 17 NSWLR 553
HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640
Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281
March v E. & M.H. Stramare Pty Limited (1991) 171 CLR 506
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357
Morellini v Adams [2011] WASCA 84
Potts v Miller (1940) 64 CLR 282
Rosenberg v Percival (2001) 205 CLR 434
Sidhu v Van Dyke (2014) 251 CLR 505
Stewart v The Australian and New Zealand Banking Group Limited [2020] NSWSC 1787
Swiss Re International SE v Simpson (2018) 354 ALR 607
Travel Compensation Fund v Tambree (t/as R Tambree and Associates) and Others (2005) 224 CLR 627
Troulis v Vamvoukakis [1998] NSWCA 237
Wallace v Kam (2013) 250 CLR 375

Category: Principal judgment
Parties: Stuart John Klees – Plaintiff
M101 Holdings Pty Ltd – First Defendant
Australian Income Solutions Pty Ltd trading as Mayfair Wealth Partners Pty Ltd – Second Defendant
Quattro Capital Group Pty Ltd –…

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: [2021] NSWSC 182
Decision Date: 05 March 2021

CaseChat Overview and Summary

Stuart Klees commenced proceedings against M101 Holdings Pty Ltd, along with three other defendants, seeking damages for alleged misleading or deceptive conduct. The claims arose from the issuance of unsecured redeemable promissory notes by M101 Holdings, where the plaintiff alleged that the defendants had misrepresented the notes as being secured, promising repayment after three months and the possibility of early repayment. Additionally, the plaintiff claimed that the fourth defendant was complicit in the contraventions due to his knowledge of the falsity of the representations and intentional participation in the alleged misleading conduct.

The legal issues before the court involved determining whether the alleged misrepresentations were indeed misleading or deceptive under the Australian Securities and Investments Commission Act 2001, and whether the fourth defendant had participated in the contraventions. The court had to assess whether the plaintiff had established a causal link between the alleged misleading or deceptive conduct and his decision to invest in the notes, as well as whether the plaintiff could quantify his loss.

The court found that the alleged misrepresentations were not established or, if established, were not misleading or deceptive. The allegations against the fourth defendant were also dismissed as the plaintiff failed to demonstrate that he had actual knowledge of the falsity or that the defendant intentionally participated in the conduct. Furthermore, the plaintiff did not establish that he would not have invested in the notes if not for the alleged misrepresentations, nor could he demonstrate the quantum of his loss. The court declined the plaintiff's application to reopen the case to lead further evidence and to amend the claim for different relief, finding that the plaintiff had not made out a case for damages.

The final orders of the court were that the plaintiff's claims against all defendants were dismissed and that the plaintiff was to pay the costs of the proceeding.

Orders