The representations were, in context, misleading or deceptive
- As Mr Crutchfield's submissions acknowledged, what must be analysed is not just the representations but the whole of the conduct (including, where relevant, what was not said as well as what was said) which formed the context within which those representations were made.
- It is impossible to accept that an intelligent and experienced businessman, as Mr Porges appears to have been, could have thought that the information summarised at [115]-[142] above was of no importance to APE, as a possible purchaser of some of Mr Porges' shares in APE. The only basis on which Mr Porges might have thought so would be that he believed, for reasons that objectively were reasonable, that APE was desirous of purchasing the shares regardless of the prospects of SecureOne's performance. Since Mr Porges did not give evidence, there is no basis on which I could conclude that he held such a belief. Nor is there any evidence on which I could conclude that such a belief, if held, was reasonably based.
- The overwhelming impression that one gets from the events of June to December 2014, as I have summarised them above, is that Mr Porges had become disenchanted with his investment in SecureOne, had fallen out with the management of (and, perhaps, other investors in) SecureOne, and, in the vernacular, "wanted out". Mr Porges could not have failed to understand that if the Play Proceedings succeeded, SecureOne would be wiped out. Even if Mr Porges believed, on reasonable grounds, that the lawsuit would fail (and again, there is no evidence of belief nor of grounds), he must have understood that the cost of defending the proceedings would be a crippling burden for SecureOne to carry. The expense of defending the proceedings would have diverted SecureOne from its primary function of completing the development of its product and bringing it to market.
- In my view, Mr Porges' conduct in making the Profit Representations but in failing to disclose the matters to which I have referred at [115]-[142] above was misleading or deceptive, or at the very least likely to mislead or deceive. It ought be so characterised because it withheld from the recipient of those representations, APE, information that any purchaser considering an investment in SecureOne shares would have thought material to its decision whether to proceed, and if so on what terms. There is no need for expert evidence on that point; the bright light of common sense illuminates a sure path to the conclusion.
- Further, in my view, those matters falsify the Reluctant Seller Representations. Mr Porges was not reluctant. On the contrary, for the reasons I have given, he wanted to sell.
- There is another, although secondary, reason for thinking that the Profit Representations were misleading or deceptive. Mr Porges' email of 23 March 2015 (see at [38] above) referred to "subsequent raisings that have occurred at the USD 750 level". In fact, at that time, there had been no capital raising at that level. It is correct to say that SecureOne hoped to raise capital at USD 750 per share; that was the subject of the Investor Brief. Mr Porges did not have the investor brief when he sent the email of 23 March 2015 (he received the document the next day). There is no evidence to suggest that any investor had subscribed for shares at USD 750. Nor is there any other evidence that could have founded a reasonable belief that this had happened.