Tigershead Pty Ltd v Property Advantage Pty Ltd

[2025] NSWDC 142

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Tigershead Pty Ltd v Property Advantage Pty Ltd [2025] NSWDC 142

Hearing dates:

15-16 April 2025

Date of orders:

24 April 2025

Decision date:

24 April 2025

Jurisdiction:

Civil

Before:

Newlinds SC DCJ

Decision:

(1) Judgment for the Plaintiff against each of the Defendants jointly and severally in the sum of $123,860.14, inclusive of interest up to 24 April 2025.

(2) Each of the Defendants are to pay the Plaintiff’s costs of the proceedings.

Catchwords:

CORPORATIONS – Capital raising – Information memorandum and other documents issued to plaintiff – Relied upon by plaintiff to purchase shares – Alleged misleading or deceptive conduct s 12DA ASIC Act / s 1041H Corporations Act – Found to be misleading or deceptive conduct engaged in by the corporation and its directors – What is level of conduct by directors or officers to justify finding of engagement by officer of corporation so as to find primary liability for contravention of the misleading or deceptive conduct provisions

Legislation Cited:

Australian Securities and Investments Commission Act 2001 (Cth) s 12DA

Corporations Act 2001 (Cth) s 729, s 1041H

Cases Cited:

Anchorage Capital Master Offshore Ltd v Sparkes

Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640

Australian Securities and Investments Commission v GetSwift Ltd [2021] FCA 1384

Australian Securities and Investments Commission v Narain (2008) 169 FCR 211

Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592

Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304

Care A2 Plus Pty Ltd v Pichardo [2024] NSWCA 35

Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199

Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435

STPG Constructions Pty Ltd v Multibuild Constructions Pty Ltd [2024] NSWDC 220

Category:

Principal judgment

Parties:

Tigershead Pty Ltd (Plaintiff)

Property Advantage Pty Ltd (First Defendant)
Edward Rober Myers (Second Defendant)
Darren Hutchins (Third Defendant)

Representation:

Counsel:
J Wheeldon (Plaintiff)
J Parrish (First, Second, and Third Defendants)

Solicitors:
Telemon Lawyers (Plaintiff)
Ampt Law (First, Second, and Third Defendants)

File Number(s):

2024/76914

Publication restriction:

Nil

JUDGMENT

Introduction

1. The Plaintiff is a company, the shareholders of which are Christiaan Straatemeier and his wife Annette Straatemeier. It is a trustee of what I infer is a family trust. For relevant purposes, it is controlled by Mr Straatemeier.

2. The First Defendant is a company and, during the period relevant to these proceedings until 30 August 2021, the Second Defendant was its sole director. From 30 August 2021 until 6 March 2023, the Second Defendant and the Third Defendant were directors of the First Defendant.

3. In October 2021, the First Defendant was seeking to raise capital for the purpose of developing a business venture involving the lending of money to either real estate agents or vendors of real property so as to allow them “access” to money held on deposit for uncompleted real estate transactions at attractive, competitive interest rates.

4. On 19 October 2021, there existed four documents, being an information memorandum (“IM”), a “cheat sheet," which was a summary of the IM, a document entitled “proposed press release – Friday, 15 October 2021,” and a blank share application form to various people, including Mr Straatemeier.

5. Of those four documents, all but the draft press release were created and issued by the First Defendant. The press release was created by Mr Oxlade of Spice Capital Partners, who had been retained by the First Defendant for the purpose of marketing what was described as a “series A" capital raising, wherein the First Defendant was seeking to raise $1 million by issuing 750,000 new shares at $1.33 per share. The Second Defendant gave evidence, which I accept, to the effect that the press release was never seen, let alone approved, by any of the Defendants. It is the creation of Mr Oxlade. Nonetheless, My Oxlade’s company was the agent of the First Defendant and so, in that sense, the First Defendant issued that document. In any event, on 15 October, Mr Oxlade disseminated the four documents to a number of people, who he thought might be interested in investing.

6. Mr Straatemeier was identified by Mr Oxlade as one of those potential investors. Mr Straatemeier was sent the four documents.

7. Prior to that, in August 2021, Mr Oxlade and Mr Straatemeier had, at a reasonably vague level, discussed a potential opportunity to invest in the First Defendant. Mr Straatemeier was shown a draft of the IM. Those discussions concluded when, on 13 August 2021, Mr Straatemeier wrote to Mr Oxlade in the following terms:

“I’m going to say no. The deal is becoming too conflicted [sic] [complicated] given the urgent shuffle of cheques. Prefer to be investing directly and following in behind a few other commitments rather than being a front runner.”

8. Their communications picked up again on 15 October 2021, when, amongst other things, Mr Oxlade told potential investors in a group email (including probably Mr Straatemeier), that:

“The company is now ready to roll …

Via the Press Release (attached) much has happened since our last communication, and this is all outlined in the Press Release.

We have all but secured the full $1 million investment/capital raising and you have a small window of opportunity to get your own foothold in the company.”

9. By 19 October 2021, Mr Straatemeier must have asked for the relevant documents to be sent to him. On 19 October, he was sent the four documents. He read and considered all of those documents on either 19 or 20 October.

10. On 20 October, after reading the documents, Mr and Mrs Straatemeier made a decision to invest in the First Defendant by causing the Plaintiff to subscribe for shares in the First Defendant by filling in the share application form and sending it to Mr Oxlade.

11. On 21 October, Mr Straatemeier arranged for $100,000 to be transferred to the First Defendant and in due course, in February 2022, 75,188 ordinary shares in the First Defendant were issued to the Plaintiff.

12. The proposed business never got off the ground and the shares are now, and probably always have been, worthless.

The Plaintiff’s claim

13. The Plaintiff says that, contained within the four documents were a series of “representations" which it contends constitute misleading or deceptive conduct which amounted to a breach of either the Corporations Act 2001 (Cth) (“Corporations Act”) – s 1041H – or s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (“ASIC Act”). For all intents and purposes, they are the same. No issue was taken but that one or the other of those provisions were applicable.

14. The representations are referred to in the pleading and submissions as “the funding secured representation,” “the business model representation,” and “the IT platform representation.” I will continue to use those definitions.

The issues

15. The Plaintiff seeks damages for that conduct, not just as against the First Defendant, but also against its then directors, the Second and Third Defendants.

16. For the purpose of the claim against the Second and Third Defendants there is no reliance on what are sometimes referred to as the “accessorial liability" provisions of the legislation. Rather, it is contended that the impugned conduct was conduct “engaged in” by each of the First, Second, and Third Defendants so that they are each primarily liable for the alleged contraventions of relevant legislation.

17. The Defendants answer the claim by first, contending that the pleaded representations were, as a matter of construction, not conveyed by a fair and reasonable reading of the material. Second, they do not accept that Mr Straatemeier relied on the pleaded representations when making the decision for the Plaintiff to invest. Finally, the Second and Third Defendant contend that, regardless of the outcome of the claim against the First Defendant, the claim against the Second and Third Defendants must fail because, upon a proper analysis, the impugned conduct was conduct engaged in by the First Defendant and not by those in control of it at the time.

18. Dealing with each of those issues in turn.

The representations

19. The legislation relied upon is concerned with “conduct". It is not concerned with “representations," although very often misleading and deceptive conduct type cases are articulated by the identification of alleged “representations": Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592.

20. What that means is that it is very important, when considering such a claim, to focus on the entirety of the conduct relevant to the communication between the parties, so as to assess that conduct in the context of the parties’ relationship and any other relevant factors so as to work out whether that conduct as a whole was “misleading or deceptive". It will sometimes lead to error to focus on particular words in a suite of documents and then engage in a minute exercise of construing those particular words (“representations”) as if they were contractual or statutory, without stepping back and judging the particular words relied upon in the whole of the context: Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435.

21. Having said that, I propose to deal with each of the representations separately and identify the express parts of what was clearly a suite of documents, intended to be read together, provided to Mr Straatemeier on 19 October 2021.

The “funding secured representation”

22. As pleaded, this representation is as follows:

“The Information Memorandum, Cheat Sheet and Press Release contained a representation that the first defendant had as of 15 October 2021 received subscriptions for more than $500,000 in newly issued capital.”

23. The particular parts of the IM, press release, and cheat sheet relied upon are as follows:

“The first defendant had "Secured AU$500,000 of the AU$1M (Series A) pre–Information Memorandum release". [IM, page 8]

"$1M Capital Raising Near 100% closed." [press release, page 1]

"the Company has recently announced that it has closed 50% plus on its Series A $1M Capital Raising Program. Eddie Myers explains, "We have only recently retained a Corporate Advisor and have finished the Information Memorandum which was 50% subscribed within days. We expect full subscription over coming days and even an oversubscription situation, which is nice to have." [press release, page 2]

"Secured AU$500,000 of the AU$1M (Series A) pre-Information Memorandum release.” [cheat sheet, page 2]

24. Before dealing with the actual words used, it is important to recognise that part of the relevant context is that, on 13 August 2021, Mr Straatemeier said to Mr Oxlade, when explaining why he did not want to proceed with the investment, that he “preferred to be investing directly and following in behind a few other commitments, rather than being a front runner.”

25. On behalf of the Defendants, it is submitted that all that was conveyed in the material is that the First Defendant had received strong positive indications or non-binding commitments from potential investors and that there is nothing to suggest that such representation was not accurate at the time.

26. That is not how Mr Straatemeier understood the material. As I have said, he is an extremely sophisticated and experienced investor. He was cross-examined to the effect that the words might have meant nothing more than what had been “secured" was indicative commitments. He emphatically rejected that proposition and explained, in a way that I felt was entirely plausible, that he considered it to be a significant difference between the proposition that capital had been “secured," as opposed to non-binding commitments to inject capital having been “secured.”

27. Leaving to one side how Mr Straatemeier subjectively read the document, to my mind, the clear, objective message from all of the documents, and in particular the passages set out above, is that at the time the IM was provided to Mr Straatemeier, the First Defendant had already received legally binding applications for issue of shares, together with the purchase price of those shares, that is what is meant by the phrase “Secured AU$500,000 of the AU$1M (Series A) pre–Information Memorandum release.” It is also what is meant by “$1M Capital Raising Near 100% closed." It is also what is meant by “which was 50% subscribed within days. We expect full subscription over coming days and even an oversubscription situation, which is nice to have."

28. I am satisfied that, when one reads the entire suite of documents in context, that the clear message conveyed was that $500,000 worth of valid applications, together with the money in support of the applications, had been received at least by 19 October 2021. That message is clear even without the press release.

29. The “funding secured representation” was simply not true. So much is admitted on the pleadings. Apart from the Plaintiff investment of $100,000, there was only ever one other investment of $50,000. The “funding secured representation” amounts to misleading and deceptive conduct by the First Defendant and is thus a contravention of either the ASIC Act or Corporations Act.

30. I am also satisfied that, in a material way, Mr Straatemeier relied upon that message when making the decision for the Plaintiff to itself subscribe for $100,000 of shares. He would not have caused the Plaintiff to invest if not for the “funding secured representation.”

31. Notwithstanding the caution that must be applied to evidence of this character (Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640), I accept Mr Straatemeier's evidence, as I consider it, not just plausible, but almost inevitable that, in light of the fact that the one of the express reasons he gave for pulling out of the transaction in August was his desire to see other investors committed, that he would not have caused the Plaintiff to enter into the transaction if not for the misleading and deceptive conduct that I have found.

32. That is the end of the case on liability against the First Defendant, but in case I am wrong, I will deal shortly with the other two representations.

The “business model representation”

33. As pleaded, the representation is as follows:

“The Information Memorandum and the Share Application Form contained a representation that the first defendant had developed a unique, valuable and effective business model based on funding the payment of commissions to real estate agents, and the payment of deposits to real property vendors, by accessing, prior to settlement, funds that had been paid by real property purchasers into trust accounts maintained by real estate agents or conveyancers.”

34. The express portions of the document relied upon are as follows:

"Property Advantage is about providing a Commission Funding mode/for Real Estate Agents like never before. [...] At Property Advantage, we have pioneered a new approach that is so inexpensive it creates an opportunity for all Agents to be able to afford to access the value of their commissions in advance following every property sale. [...] We have now formulated an additional product -Vendor Deposit Funding. Property Advantage offers Vendors an opportunity that has never been possible before. Vendors can now access the equivalent of their deposit money from the sale of their property within 48 hours!" [IM, page 3]

“The first defendant had "Developed an end to end funding model that is unique because the money that Property Advantage loan to the Real Estate Agencies or the Vendor is 100% legally secured against deposits sitting in a trust account via watertight legal agreements." [IM, page 8]

“"If the Real Estate Agency needs cash for whatever reason, they can access 100% of the value of their commission including marketing costs and any other related costs, (staging and home improvements) within 48 hours of the sales contract becoming unconditional." [IM, page 9]

“"This funding model is unique. With Property Advantage, Vendors will never again have to wait until settlement to gain access to the deposit. Vendors may need early access to their deposit money to enable them to purchase another property. [...] lf Vendors need cash for whatever reason, they can now access 100% of the value of their deposit within 48 hours of the contract of sale becoming unconditional." [IM, page 9]

“"The "secret" sauce used by Property Advantage is in the series of Legal Agreements and Deeds the Company Lawyers have created in conjunction with the IT platform /Portal/Architecture that powers the Property Advantage business and allows for seamless and highly efficient exchange of information and settlement that allows for settlement within 48 hours of a property sale going unconditional. [...] Property Advantage is a non-banking lender, tailor made for the Real Estate industry providing an affordable Commission Funding model that has never been offered before. [...] Property Advantage's truly affordable interest rate (1.25% per month) creates an opportunity for all Agents to be able to access their commission in advance (and marketing costs) after every sale goes unconditional. It also applied to Property Owners/Vendors who can also access their deposit funds." [press release, page 2]

35. The first question here is whether the conduct of the First Defendant conveys to a reasonable reader of the IM and the other documents that the unique and valuable business model that had been created was a method of accessing, prior to settlement, funds that had been paid by real property purchases into real estate agent’s trust accounts pending settlement of transactions.

36. The Plaintiff’s simple proposition is that, as a matter of law, it is self-evident that such a business model could not possibly work without the express consent and presumably the variation of a sales contract between particular vendors and purchasers. It would be the antithesis to any notion that the monies were in fact trust monies for the beneficiaries, being one or other of the vendors or purchaser, depending on whether the sales contract was completed.

37. So much may be accepted, but that is not the battleground between the parties.

38. The Defendants contend that a sensible commercial reading of the suite of documents does not convey the pleaded representations. Rather, all that is being said is that a method had been struck upon so as to allow monies to be borrowed and, in some way “secured" over the deposit monies held in trust, the real value and the competitive advantage being a lower interest rate than would otherwise be available from commercial lenders lending on expected future cash flow. I accept that submission.

39. It is true that there is some ambiguity between the various statements contained in the various documents. The IM contains statements to the effect that “they can access 100% of the value of their commission" at a number of points, whereas elsewhere, if read in isolation, does speak in terms of “accessing the deposits."

40. On balance, and applying a sensible and commercial meaning in circumstances where the target audience of the documents were sophisticated investors, I do not think the meaning conveyed included that the monies otherwise held on trust were actually being accessed in the sense of being released from the trust account, but rather some sort of method had been identified to allow those monies, when in the future released to one or other of the parties to the transaction, to be used as security allowing money to be lent to either the vendor or the agents themselves at a significantly reduced interest rate than might otherwise be available for lending on future cash flow.

41. The Plaintiff submits that, even without that component, also contained in the business model representation is the notion that what had been developed was a unique, valuable, and effective business model. The submission is that proposition on its own is misleading or deceptive.

35. On behalf of the Defendants, Mr Parrish of counsel, opposes the dilution of this pleaded representation so as to effectively delete the reliance on the “accessing, prior to settlement, of the trust funds” aspect of the representation, but maintaining the balance of the pleaded representation, the submission for the Plaintiff being to the effect that, even without that part of the representation, the proposition that the First Defendant had developed a “unique, valuable, and effective business model…” was itself misleading or deceptive.

36. Mr Parrish tells me that forensic decisions had been made based on the entirety of the representation and, if it was understood that limited portions of the representation were also relied upon as stand-alone misleading and deceptive conduct, the case may have been defended differently than it was and, in particular, different evidence deployed in answer to that claim. I accept what he says, not just because he tells me so, but also because I consider it not just plausible, but probable.

37. On the evidence that is before me, it does seem tolerably clear, as Mr Wheeldon for the Plaintiff has submitted, that there really was no finalised business model in place at all at the time of the IM. More to the point, it is difficult to see how it could possibly have worked effectively. However, that may not be a complete view of all the potential, relevant evidence that may have been available. There are some legal opinions in the material but there may well have been others.

38. I consider, as a matter of fairness to the Defendants, I should leave this aspect of the claim by concluding that the “business model representation” has not been made out.

The “IT platform representation”

46. As pleaded, the representation is as follows:

“The Information Memorandum and the Share Application Form contained a representation that the first defendant had developed a specialised trading and transactional-focused trading engine that had a demonstrated track record of managing multiple simultaneous, high-speed transactions and a deep order book.”

47. The express portions of the document relied upon are as follows:

“The first defendant "is delivering a specialised trading and transactional focused trading engine which has been developed by our Wholesale Funder's Fintech experts in conjunction with our CEO, Sonja Pfitz who is qualified IT Engineer" and that "The trading engine has a demonstrated track record of managing multiple simultaneous, high-speed transactions and a deep order book. The platform is enterprise grade, highly robust and capable of handling thousands of simultaneous transactions." [IM, page 10]

“The first defendant "a proprietary IT Platform/Architecture/Eco System."” [press release, page 1]

“"the IT Platform /Portal/Architecture that powers the Property Advantage business… allows for seamless and highly efficient exchange of information and settlement" and that "This IT Platform/Portal has been designed and built-in collaboration with Property Advantage Wholesale Funding Partners." [press release, page 2]

48. One thing is entirely clear from the evidence, after the company had raised the funds and Mr Straatemeier was making enquiries as to its affairs, he was told by lawyers that, on 7 February 2024, the following:

““in order for the company to go to the market, it had to complete a tech platform on which to transact the business, which has been developed by UK company. According to a referral source, the UK company have built a similar funding platform for the real estate industry. Completion costs at present are estimated at $80-$90,000, for which Mr Myers will be seeking funding as we are instructed the company does not have the funds to complete the platform”

49. I am satisfied what was clearly conveyed in the IM and press release was that, at the time of the IM, there had already been developed a “trading engine," i.e. some sort of computer program, that had a demonstrated track record and this “trading engine” was already in existence and available to the First Defendant.

50. I am satisfied that representation was misleading. It was simply not true. Come February 2024, there was still no “trading engine”, the First Defendant did not have it, and indeed, the First Defendant was seeking to raise further capital for the purpose of creating the very same IT system or “trading engine." The “IT platform representation” constituted misleading or deceptive conduct. Again, the submission on behalf of the Defendants is that nothing more was conveyed that a trading engine was expected to be available at some point in the future. I do not accept that submission. I consider the words are clear and unequivocal.

Resolution as to misleading or deceptive conduct

51. I am satisfied that the pleaded representations described as the “funding secured” representation and the “IT platform” representation have been made out and that the overall conduct was misleading or deceptive and was in contravention of the law.

Causation

52. I am satisfied that, but for the misleading or deceptive conduct I have found, Mr Straatemeier would not have caused the Plaintiff to enter into the transaction. I reach that conclusion even if the only representation made out was the “funding secured representation.” I am satisfied that on the IM and cheat sheet alone, the representations were conveyed and relied on.

Damages

53. There is uncontested evidence that the shares are now and probably always have been worthless, but as this is a “no transaction" case, the appropriate relief is to put the Plaintiff back in the position it would have been in but for the conduct, which means that the Plaintiff is entitled to a judgment against the First Defendant in the sum of $100,000, together with interest at court rates from 21 October 2021 to the date of this judgment.

The claim against the Second and Third Defendants

54. The Second Defendant was the active controller of the First Defendant for the purpose of the capital raising. The Third Defendant was also involved, but perhaps to a lesser degree.

55. There is direct evidence that the Second Defendant approved the IM, the cheat sheet, and the application form before they were provided to Mr Oxlade, as agent, for the purpose of dissemination to particular investors. He had no knowledge of or involvement in the press release.

56. Part of the IM was the ‘Directors’ Declaration’ the Second Defendant signed, which formed the last page of the IM, which is in the following terms:

“DIRECTORS’ DECLARATION

The Directors of Property Advantage Pty Ltd have made reasonable enquiries to ensure that there is no material statement in this Offer Document which is false or misleading. They have also made reasonable enquiries to ensure that there is no material omission from the Offer Document.

The Directors report that, as of the date of signing, after due enquiry by them, they have not become aware of any circumstances that in their opinion materially affects or will materially affect the assets and liabilities, financial position, profits and losses or prospects of Property Advantage Pty Ltd other than those set out in the Offer Document.

The Directors have consented to the Offer and the issue of this Offer Document.

[Signed]

Edward Myers

Director & Co-Founder”

57. The question becomes, is the conduct, which I have identified as being in contravention of the law, being the issue of the IM and the ‘cheat sheet’, conduct engaged in by all three Defendants or is it just conduct of the First Defendant corporation which the Second and Third Defendants were “involved in" or “caused to happen." For reasons I have explained, for the purpose of this aspect of the case, I put to one side the press release. It was conduct of the First Defendant because it was issued by its agent, but the Second and Third Defendants had nothing to do with it.

58. The law in this area remains not entirely clear, despite a spate of relatively recent cases.

59. The question of where the line above which a person is primarily liable for contravention of the misleading or deceptive provisions found in legislation will ultimately turn on what sounds like a simple question of fact applied against a statutory context, being did the person “engage” in the conduct. This is not as easy as it might sound because it involves a legal question as to what “engaged in” means. The elusive distinction between engagement by a particular person on the one hand and involvement on the other as has been considered recently in Australian Securities and Investments Commission v GetSwift Ltd [2021] FCA 1384 per Lee J (“GetSwift); Care A2 Plus Pty Ltd v Pichardo [2024] NSWCA 35 (“Care A2”) per the New South Wales Court of Appeal; and Anchorage Capital Master Offshore Ltd v Sparkes (2023) 111 NSWLR 304 (“Anchorage”) per the New South Wales Court of Appeal.

60. Most of those cases cite with approval the decision of the full Court of the Federal Court in Australian Securities and Investments Commission v Narain (2008) 169 FCR 211 (“Narain”). In GetSwift, Lee J at [2121] considered that the ultimate question of fact as determined by the full Court in Narain was whether the impugned conduct was engaged in by the individual in the course of a corporation’s affairs and then exposed what he considered was the “ultimate question," being “whether all of the elements of the contravention are made out against the relevant individual in his own right, or whether he merely acted as a corporate organ, thereby binding the company but not himself personally.” In Narain, Mr Narain was held personally liable for the contravention by the company because he was the managing director who had:

1. “participated in the preparation and drafting of an ASX announcement;

2. adopted and approved its contents; and

3. authorised and directed the transmission of it to the ASX.”

61. The correct statutory question that arises from the words of the legislation itself and the various authorities is whether, in this case, the Second and Third Defendants engaged in the impugned conduct, and not merely that they were, in some way, “involved in” that conduct or even approved of it. However, to pose the question at this level of abstraction and generality begs the question, what does that mean? In Care A2, the Court of Appeal sought to explain the distinction by reference to “mere ministerial acts” by people or something more. This is a very difficult concept to understand in small companies as I tried to explain in STPG Constructions Pty Ltd v Multibuild Constructions Pty Ltd [2024] NSWDC 220 (”STPG”) at [77]-[83]. In that case, I concluded that the better way of looking at the question in sole director corporations was not by reference to whether the person was a minister or intermediary, but rather by whether the representation conveyed could sensibly have been understood as a representation by both the company and its director.

62. Part of the statutory context is that the legislature draws a very clear distinction between a person being engaged in conduct – leading to primary liability for contravention of the Act – or the requirement of the accessorial provisions that the person be “involved in the conduct."

63. As a matter of language, to be involved in something is to be more distant to that thing than to be engaged in that thing.

64. Another contextual matter is, in the regulated environment controlled by s 729 of the Corporations Act, the corporate veil is expressly pierced by the legislation making directors personally liable for any misrepresentations by a company in that context. There is no equivalent provision dealing with the unregulated environment.

65. Nor is an opening of the corporate veil warranted from the words of the misleading and deceptive conduct provisions themselves.

66. The question of fact, being whether Defendants can be seen to have been engaged in the relevant conduct needs to therefore be considered with a clear understanding that to be engaged means something more than being involved. This then poses the question of complexity. Where is the line between “involvement” and “engagement” to be found? Of the criteria identified by Lee J in GetSwift, an important one in the context of this case is the notion of “adoption.” Clearly enough, if one person can be seen to have adopted the conduct of another, then the conduct becomes conduct of both. However, this just poses another difficult question. What does “adoption” mean in this context?

67. In Anchorage, the question that was posed was “if the conduct could reasonably be attributed to the person by the representee”. I consider that the simplest and clearest statement of this elusive legal concept. In other words, the question becomes “whose conduct was it?”, as conveyed objectively to a reasonable representee. This is the same conclusion I arrived at in STPG at [78] in respect to sole director corporations. I consider that approach appropriate in a broader factual context.

The Second Defendant

68. Turning then to the facts upon which that legal question must be considered in this case.

69. Mr Wheeldon emphasises, as against the Second Defendant, the following:

1. He was clearly involved in communications to and from the company with Mr Oxlade.

2. He was clearly involved in the preparation and drafting of the IM itself.

3. He approved the IM and the cheat sheet.

4. He signed, in his capacity as a director, a letter which forms part of the IM under the heading:

“Welcome from the Co-founder/Executive Summary

Dear and sophisticated investor

…

We look forward to discussing this investment proposal with you in the near future

yours sincerely,

Edward Myers, Director, Property Advantage Pty Ltd”

5. He executed the Directors’ Declaration which I have already set out at [56] of these reasons.

70. Mr Parrish, on behalf of the Second Defendant, submits that no reasonable reader of the IM would have understood the representations to have been adopted or approved by the Second Defendant, rather, when looking at the suite of documents as a whole, a reasonable reader would have understood the representations in the IM to be only statements by the company because on its face it is a company document. He relies in particular on paragraph [367] of the Court of Appeal's decision in Anchorage, where it was said:

“An officer, employee or agent who merely directs or authorises a corporation’s relevant conduct does not thereby engage personally in that conduct; he or she does so only if the conduct would reasonably be attributed to him or her by the representee.”

Or, as Keane JA put it in Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 at [41]-[42], did the material in question:

“convey representations about the appellant's own views on the project and its prospects as the appellant agreed it would?"

71. Mr Parrish, relying on the same cases, emphasises that the Directors’ Declaration is not some sort of warranty that the statements contained in the IM are true. Rather, it is a representation that, at least the Second Defendant, having made reasonable enquiries to ensure that there is no material statement in the offer document which is false or misleading, and/or there is no material omission in the offer document, was so satisfied and that:

“the directors have consented to the offer and the issue of this offer document."

72. There is a subtle, but important, difference between a director effectively warranting that a statement by a company is true and thus clearly making them his or her own, and a representation that, after making reasonable enquiries, he or she believes it to be true, but I do not think that distinction has a significant part to play here.

73. As I have said, I consider the legal question of whether someone engaged in conduct constituting a positive statement in contravention of the legislation must be answered by considering, as a matter of fact, who a reasonable recipient of the conduct would understand made the statement.

74. The Second Defendant signed the IM at two points, first, the Introduction Letter, and second, the Directors Declaration. In my judgment, a reasonable reader of the IM would reasonably have understood that the statements contained in the IM and the cheat sheet were those of the Second Defendant as well as the First Defendant. The final line is the declaration “have consented… to the issue of this offer document.” The notion of consent in this context suggests something more than approval. When read in context with the proceeding part of the declaration, I consider what is being conveyed is that, at least the Second Defendant was making the IM his own statement.

75. To put it in the words of Lee J in GetSwift at [2121], the whole of the conduct of the Second Defendant amounted to him “adopting and approving” the contents of the IM.

76. I accept that the Second Defendant did not approve or adopt the press release, but the misleading conduct I have identified was clearly evident without the press release.

77. I consider a reasonable person in the position of Mr Straatemeier would reasonably have understood the IM and cheat sheet to be statements by both the company and the Second Defendant.

78. Accordingly, I am satisfied that the Second Defendant did engage in the misleading and deceptive conduct which has caused the Plaintiff the loss of $100,000. A reasonable reader of the Directors’ Declaration would have understood that to be a statement made by both directors. True it is that the Third Defendant did not sign the introduction letter, but I consider the Directors’ Declaration to still be enough to convey that the statements in the IM were statements by the company and all of its then directors.

The Third Defendant

79. Finally, I turn to the position of the Third Defendant which is not as clear-cut as that of the Second Defendant.

80. His signature does not appear in any part of the IM, although his name appears in it as a director of the company.

81. The Directors’ Declaration signed by the Second Defendant is clearly expressed in terms of being a declaration made by all of the directors of the company at the time.

82. There is no direct evidence that the Third Defendant gave the Second Defendant authority to sign that declaration on his behalf. Mr Parrish emphasises this point and submits that whatever the position of the Second Defendant, the Third Defendant cannot be said to have in any way adopted the material. I accept that, if the Third Defendant in no way authorised the Directors’ Declaration to be signed on his behalf, then the conduct of issuing the Directors' Declaration can not be seen as conduct engaged in by him, even if it might have been reasonably understood as such.

83. I consider, in the circumstances, such authority can be inferred from the very fact that they were the only two directors of a small company and that it is inevitable that the Third Defendant would have seen the IM in its final form at least after it was distributed, which included the Directors’ Declaration apparently signed on his behalf. He probably saw and approved it before it was issued. To not do so would have been a breach of his director’s duties.

84. I think the inference that he gave authority to the Second Defendant to sign the document is more than available and I am more confident in that conclusion by the fact that the Third Defendant chose not to give any evidence in these proceedings to the effect that the Second Defendant did not have his authority to make the declaration on his behalf.

85. Accordingly, I have determined that the Third Defendant was also engaged in the misleading or deceptive conduct and should be liable for its consequences.

Conclusion and orders

86. For those reasons, I have found that each of the Defendants engaged in misleading and deceptive conduct in contravention of the legislation, and that this contravention caused the Plaintiff to pay $100,000 for shares in the First Defendant, which the Plaintiff would not have done if not for the representation.

87. In those circumstances, the appropriate remedy is that each of the Defendants be jointly and severally liable to the Plaintiff for $100,000 damages, together with interest assessed at the court rates from 20 October 2021 to the date of this judgment calculated at $23,860.14.

86. I make the following orders:

1. Judgment for the Plaintiff against each of the Defendants jointly and severally in the sum of $123,860.14, inclusive of interest up to 24 April 2025.

2. Each of the Defendants are to pay the Plaintiff’s costs of the proceedings.

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Amendments

28 April 2025 - Correct Defendant now identified in paragraph [2].

Decision last updated: 28 April 2025