Chen v Chu

Solicitors: Antunes Lawyers (Plaintiffs) Hyde Park Lawyers (Defendant) File Number(s): 2020/00344380 Publication restriction: Nil

JUDGMENT JUDGMENT WHAT THIS CASE IS ABOUT The parties and other relevant persons Ralan Teresa Mrs Lan Tim Amy Said Jahani Gary RELEVANT STATUTORY ENACTMENTS Australian Consumer Law ASIC Act Civil Liability Act FACTUAL BACKGROUND 28/10 Drovers Way Lindfield Gold Coast "Ruby" and "Sapphire" projects 3 Norfolk Avenue Surfers Paradise (Ruby 2) 2 Birt Avenue Surfers Paradise (Ruby 3) 3 Pine Avenue Surfers Paradise (Sapphire) Table A 8 Townsend Place Arncliffe (Arncliffe) Table B Stability of Ralan Reliance Ralan Collapses THE PARTIES' POSITIONS The Plaintiffs The Defendant CONSIDERATION Representations Mere Conduit Loss The Proportionate Liability Defence Limitations Defence OBSERVATIONS ABOUT THE FORM OF THE AFFIDAVITS CONCLUSION

WHAT THIS CASE IS ABOUT

1. This case is about a thoroughly unscrupulous real estate agent.
2. The plaintiffs are members of one family. The defendant is a real estate agent who acted as a senior consultant to a property developer.
3. The plaintiffs were looking to buy an apartment in Sydney to live in, and they had enough money to buy it without finance. He introduced them to a penthouse apartment, in a partly constructed development being sold by the developer. They paid a substantial deposit.
4. The defendant then induced them to release their deposits on unsecured loan to the developer at a high interest rate. The plaintiffs had to take out a mortgage to complete. [1] He then induced them to purchase 28 apartments off-the-plan from the developer, using the deposit and further deposits they paid. The defendant earned a commission on every sale. He induced them to release those deposits to the developer on unsecured loan for its own use. They ultimately spent over $7 million on these deposits.
5. The developer was insolvent throughout and used their money as a part of a Ponzi scheme [2] (or a variation of it).
6. Inevitably the developer collapsed. The plaintiffs lost all the money they had released.
7. The plaintiffs say that the agent engaged in conduct that was misleading or deceptive or likely to mislead or deceive or made false or misleading representations because of which they suffered damage. They sue him. They succeed.

The parties and other relevant persons

1. Where it is not necessary to distinguish between individual plaintiffs, I will refer to them collectively as the plaintiffs.
2. Where I refer to individual plaintiffs or the defendant by their first names, I intend no disrespect.

Ralan

1. Ralan Group Pty Ltd (now in liquidation) (Ralan) was a private apartment developer which was founded in 1998. Ralan collapsed on 30 July 2019, when it went into voluntary administration and later was placed into liquidation, owing creditors and investors some $306 million.
2. Its managing director Mr William O'Dwyer (O'Dwyer), was subsequently bankrupted and convicted of fraud. He is in prison.
3. Where I refer to Ralan or the Group, this includes associated entities which operated under the Ralan banner. Unless it is material to do so, no distinction is drawn between Ralan itself and those entities.
4. Ralan (or associated entities) were in the habit of selling apartments "off-the- plan", that is, apartments which were planned to be, but at the time of sale had not been, built. Ralan sold many apartments to the plaintiffs in buildings which it never built, and never will.
5. Ralan had a scheme, dubbed the "Released Deposit Scheme", which entailed offering purchasers a high interest rate if their deposit was released and lent to Ralan for its own use. It is not in dispute that at least part of the released deposits were used to fund losses and interest payable to other participants in the Released Deposit Scheme.
6. The interest was to be paid by crediting the purchaser upon settlement of the purchase. This meant that if there was no settlement there would be no credit. Any benefit to be obtained by the purchaser from the loan was thus contingent on Ralan building the apartments.

Teresa

1. The first plaintiff is Su-Hui (Teresa) Chen. Teresa has a degree from Griffith University in international business. She is plainly intelligent. There was evidence about her business experience and activities in which she had been involved. Teresa has a reasonable but manifestly imperfect command of spoken English. I accept her evidence that when reading English documents, she ordinarily uses a dictionary.
2. The second plaintiff is the trustee of Teresa's superannuation fund.
3. Teresa gave affidavit evidence and was cross-examined at length. An entirely unjustified and ineffective attack on her credit was made, based largely on an assertion that she underplayed her proficiency in English and her business experience.
4. Teresa was a truthful witness and I accept her evidence.

Mrs Lan

1. The third plaintiff, A-Kan Chen Lan (Mrs Lan), is Teresa's mother. She lives in Taiwan, and I infer, is a senior person. She did not testify and there was no evidence as to her proficiency, if any, in English, although, I am prepared to infer that she has little or no English.
2. Most of the transactions pertinent to Mrs Lan personally were entered into on her behalf by Teresa acting under a General Power of Attorney, signed by Mrs Lan on 10 March 2018.
3. Her husband (Teresa's father), Wen Chin Chen, was referred to in the proceedings as Uncle Chen. In a note he describes himself as elderly. He too resides in Taiwan and was apparently financially successful there. He appears to have been the ultimate source of a significant part of the money which was lost. I shall refer to him as Mr Chen. I am prepared to infer that he has little or no English.

Tim

1. The fourth plaintiff, Xueying Ke (Tim) Edstein, is Teresa's son.
2. At the time of the events which give rise to these proceedings, he was a law student. He is now a solicitor of this Court. He is proficient in spoken Mandarin but does not read the language.
3. Tim gave affidavit evidence and was cross-examined at length. In the end (and in something of a shift in position), counsel for Gary described him as an honest witness (which he plainly was). However, counsel sought to impeach his evidence about all of the raft of representations he says Gary made, on the footing that his memory of the specific things he says Gary said has "confused with time and thereby become more partisan against the defendant and more favourable towards the interests of his family". Given the specificity of Tim's evidence about what Gary said, it is difficult characterise this submission as anything other than going to Tim's integrity. There was no legitimate basis for the attack. In any event, I reject it.
4. Tim was a truthful witness and I accept his evidence.

Amy

1. The fifth plaintiff, Amy Chu Yan (Amy) Edstein, is married to Tim. In her affidavit she describes herself as an event planner. Her participation in the relevant events was limited but not immaterial.
2. Amy gave affidavit evidence and was cross-examined briefly. Amy was a truthful witness and I accept her evidence.

Said Jahani

1. Said Jahani (Jahani) is a registered liquidator who was appointed as one of the voluntary administrators, and later as one of the liquidators, of Ralan. He provided an expert report in which, amongst others, he opined that Ralan was insolvent from 4 February 2014 and that the entity which in each case sold property to the plaintiffs was insolvent at the time of each sale.
2. He was briefly cross-examined. His evidence was not challenged, and I accept it.

Gary

1. The defendant, Koon Tung (Gary) Chu, is a real estate agent. He reads and writes Mandarin and English. He holds a Bachelor of Business from the University of Technology Sydney. For some limited time, he worked as a mortgage broker. He has been licensed as a real estate agent in both this State and in Queensland for some years.
2. Gary provided services to Ralan, he says, as a contracted agent in his capacity as a director of other companies and, for a short time, as a sole trader. He has been unable to find the retainer agreements he says he had with Ralan. He is clearly intelligent and commercially astute. He has a good command of English for a person for whom it is a second language.
3. I observed him in the witness box for an extended period. He was an unsatisfactory witness and by his own admission passed on significant information to the plaintiffs which was false. His excuse was that he was told by Ralan to tell them this. His evidence sits uncomfortably with his own contemporaneous conduct and the inherent probabilities.
4. I do not accept his evidence other than where it is corroborated by objective contemporaneous material, or the evidence of the plaintiffs, or it is against his own interests.
5. In contrast, the evidence of each of the plaintiffs was entirely plausible and consistent with the objective contemporaneous material and inherent probabilities. Inevitably there were minor differences and inconsistencies between plaintiffs.
6. Gary's only affidavit in the proceedings was affirmed on 2 December 2021.

Australian Consumer Law

1. The following sections of the Australian Consumer Law (ACL) are pertinent: 4 Misleading representations with respect to future matters (1) If: (a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and (b) the person does not have reasonable grounds for making the representation; the representation is taken, for the purposes of this Schedule, to be misleading. (2) For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by: (a) a party to the proceeding; or (b) any other person; the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary. (3) To avoid doubt, subsection (2) does not: (a) have the effect that, merely because such evidence to the contrary is adduced, the person who made the representation is taken to have had reasonable grounds for making the representation; or (b) have the effect of placing on any person an onus of proving that the person who made the representation had reasonable grounds for making the representation. (4) Subsection (1) does not limit by implication the meaning of a reference in this Schedule to: (a) a misleading representation; or (b) a representation that is misleading in a material particular; or (c) conduct that is misleading or is likely or liable to mislead; and, in particular, does not imply that a representation that a person makes with respect to any future matter is not misleading merely because the person has reasonable grounds for making the representation. … 18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. … 29 False or misleading representations about goods or services (1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services: … (b) make a false or misleading representation that services are of a particular standard, quality, value or grade; or … 236 Actions for damages (1) If: (a) a person (the claimant) suffers loss or damage because of the conduct of another person; and (b) the conduct contravened a provision of Chapter 2 or 3; the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention. (2) An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.
2. Sections 18 and 29 are in Chapters 2 and 3 respectively.
3. Section 131(1) of the Competition and Consumer Act 2010 (Cth) provides that the ACL only applies as a law of the Commonwealth to the conduct of corporations, not individuals. However, s 28 of the Fair Trading Act 1987 (NSW) provides that the ACL applies as a law of New South Wales. Section 32 of that Act extends the application of the ACL from only corporations to: 1. persons carrying on business within NSW; 2. persons ordinarily resident in NSW; and 3. persons otherwise connected with NSW.

ASIC Act

1. The following sections of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) are pertinent: 12BAB Meaning of financial service When does a person provide a financial service? (1) For the purposes of this Division, subject to paragraph (2)(b), a person provides a financial service if they: (a) provide financial product advice (see subsection (5)); or … (5) For the purposes of this section, financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that: (a) is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or (b) could reasonably be regarded as being intended to have such an influence; but does not include anything in: (c) a document prepared in accordance with requirements of Chapter 7 of the Corporations Act, other than a document of a kind prescribed by regulations made for the purposes of this paragraph; or (d) any other document of a kind prescribed by regulations made for the purposes of this paragraph. … 12DA Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive. … 12DB False or misleading representations (1) A person must not, in trade or commerce, in connection with the supply or possible supply of financial services, or in connection with the promotion by any means of the supply or use of financial services: (a) make a false or misleading representation that services are of a particular standard, quality, value or grade; or … 12GF Actions for damages (1) A person who suffers loss or damage by conduct of another person that contravenes a provision of Subdivision BA (sections 12BF to 12BM), Subdivision C (sections 12CA to 12CC), Subdivision D (sections 12DA to 12DN) or Subdivision DA (sections 12DO to 12DZA) may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention. … (2) An action under subsection (1) may be commenced within 6 years after the day on which the cause of action that relates to the conduct accrued. … 12GP Application of subdivision (1) This Subdivision applies to a claim (an apportionable claim) if the claim is a claim for damages made under section 12GF for: (a) economic loss; or (b) damage to property; caused by conduct that was done in a contravention of section 12DA. (2) For the purposes of this Subdivision, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind). (3) In this Subdivision, a concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim. (4) For the purposes of this Subdivision, apportionable claims are limited to those claims specified in subsection (1). (5) For the purposes of this Subdivision, it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died.

Civil Liability Act

1. The following section of the Civil Liability Act 2002 (NSW) (CLA) is pertinent: 34 Application of Part (1) This Part applies to the following claims (apportionable claims) - … (b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act (as in force before its repeal by the Fair Trading Amendment (Australian Consumer Law) Act 2010) or under the Australian Consumer Law (NSW) for a contravention of section 18 of that Law. (1A) For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind). (2) In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim. (3) For the purposes of this Part, apportionable claims are limited to those claims specified in subsection (1). … (4) For the purposes of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died.
2. Equivalent provisions are contained in pt 2 of the Civil Liability Act 2003 (Qld).

FACTUAL BACKGROUND

1. I have endeavoured so far as is practicable, to recount the relevant events, including conversations, in chronological sequence.
2. After buying an apartment from Ralan in a partly constructed development, the plaintiffs purchased off-the-plan in three different proposed developments in Queensland and in one development in Sydney. Relevant events pertaining to different developments sometimes occurred in parallel. For ease of understanding, I have recounted events pertinent to each development separately. This means sacrificing strict chronology to some extent.
3. Many conversations recounted by the parties were in, or partly in, the Mandarin language. Significant relevant dealings were via a Mandarin messaging system called Line Chat. Translations of both voice recordings and written messages are in evidence.
4. Although it contributes to the prolixity of this judgment, it is necessary to set out the entirety or large parts of many alleged conversations because the false, misleading and deceptive conduct complained of consists of oral representations made by Gary.
5. The plaintiffs' affidavits set out conversations in direct speech, in compliance with the long-standing practice in this State to do so (I have made some observations about the practice below). Each of the conversations is prefaced with the words "to the following effect". In recounting those conversations, I have omitted those words.
6. Gary disagrees with the plaintiffs' "description of events" in their affidavits and the conversations and communications they say they had with him. Gary's affidavit of 2 December 2021 does not traverse or respond to particular paragraphs of, or conversations recounted in detail, in the plaintiffs' affidavits.
7. What follows recounts the numerous purchase contracts entered into and deposits released by the plaintiffs under the Released Deposit Scheme. As things progressed, deposits or parts of deposits paid for some properties were "transferred" and used as deposits for other properties. I have not detailed these transfers because it is not necessary to do so. Ultimately, the plaintiffs lost all the deposits they paid and released.

28/10 Drovers Way Lindfield

1. In 2013, Gary and Teresa were introduced for the first time. She was looking to purchase an apartment for herself and Tim to live in and for her parents to use when they visited from Taiwan. She was referred to Gary by her friend Jessica.
2. Gary says he understood that Teresa's ability to speak and read English was very good. I observed Teresa giving evidence and being cross-examined in English. She is reasonably proficient, but I have no doubt that she would not understand, without assistance, the terms of a legal document in English (especially a disclaimer written in legalese), or technical or legal speak. In the end result, the level of her English proficiency has little, if any, role to play because she no doubt understood what Gary told her in Mandarin.
3. Gary was later introduced to Tim. During 2013 and 2014, Gary would pick Teresa up from her house in Roseville (a suburb on the Upper North Shore of Sydney) and drive her to properties. Gary showed Teresa and Tim various apartments including in Killara and Gordon (both Upper North Shore suburbs), but Teresa and Tim did not consider them suitable. At Gary's suggestion, Teresa and Tim began considering purchasing "off-the-plan". Gary says that when they told him that they did not like the apartments he showed them he said: That's ok, it is up to you and I respect whatever decision you want to make. What I can do is provide you with information from the Ralan Group about properties that are available and Ralan Group's offers. Personally, I think buying off-the-plan is a good option. In my experience it is very common in Sydney to buy apartments off-the-plan. You don't have to settle now, and you settle say 1 or 2 years later when it is finished. You only pay 10% deposit then you wait for the settlement and have time to organise your finance and your settlement. If you buy in a good location, for long term, you can get capital gains. But I always respect each buyers' decision and I expect my buyers to have their own opinion, do their own research and make their own decisions. It is up to you what you want to do. If you do not want off-the-plan I will show any already built apartments that come up with Ralan Group.
4. Teresa says that Gary said: Gary: Buying off the plan is a better option and it allows you to negative gear. It is very common in Sydney to buy off-the-plan. If you buy in a good location, you get good capital gains. Me: So it is better to buy off-the-plan? Gary: Yes, it is better for investment to buy off-the-plan. If you choose a good location, you can easily rent it out and get a good rental income. Sydney has increased in price recently and the annual rent is very good.
5. In 2013 and 2014, Teresa went to Gary's office in Chatswood (also on the North Shore) where he showed her leaflets with the name "Ralan Group", which depicted properties being developed and being sold. Some of these leaflets are in evidence. They show building activity. It is fair to say that they paint a rosy picture of property prospects in Australia and, in particular, of property on the Queensland Gold Coast.
6. Under cross-examination, Tim gave evidence about his own research into purchasing real estate in NSW in 2014. He looked at websites and went to some inspections. He was also cross-examined about the Ralan newsletters. He gave evidence that he received a newsletter every second or third month. He gave evidence that he quickly skimmed them and would have talked to Teresa about what was in them. He was asked about disclaimers which are contained in the newsletters and accepted that Ralan was saying, in simple terms, that "you couldn't rely on things said about investing in apartments". He did not agree that he could not rely on anything said by sales representatives, like Gary, about loans to Ralan. He correctly, in my view, characterised the newsletters as talking about property and construction, and mostly about what was happening on the Gold Coast without mentioning the viability or financial stability of Ralan. Whatever else may be said about these disclaimers, they had no effect on Tim's trust in or reliance on Gary.
7. In 2015, Gary introduced Tim to a penthouse apartment in a Ralan development at 28/10 Drovers Way, Lindfield (Lindfield), also on the Upper North Shore, which was then under construction. He said that Gary told him it would probably be finished in about 12 months, that the price and property were good and that if he purchased it that day, he would "make 10% profit in an instant." Gary denies that he said these words and says that it is not his practice to tell purchasers that they can make a profit buying a property, let alone make a profit "in an instant". I prefer Tim's evidence. There are various other instances of Gary holding out that the plaintiffs would make (indeed certainly make) a capital gain.
8. Tim phoned Teresa who was in Taiwan at the time, and they made a decision to buy Lindfield immediately. Tim says that after reading through the proposed contract, he asked Gary whether they needed a lawyer to look at the contract. He says that Gary said: No, these contracts all look the same. It is up to you but getting a lawyer would be wasting time and money. Lawyers don't even need to read the whole contract because it is standardised. You will only need a lawyer for settlement. We can refer you to a conveyancer when the time comes.
9. Gary denies that he said this and maintains that he told them on multiple occasions to get independent legal and financial advice. I do not believe him.
10. A recurring theme in Gary's evidence is that he never gave any advice or made any statement without caveating it with words such as "Ralan Group says" or "Ralan Group informs me", "William O'Dwyer said", "it's up to you to make your own mind up", and "you need to take your own advice", and that the plaintiffs were given multiple disclaimers which they read. He takes the position that he was a mere conduit for Ralan.
11. As to words such as "Ralan Group says", not only is it implausible that he used them at all, let alone invariably, but his evidence is contradicted by contemporaneous objective evidence in the form of what he himself wrote and what he said on voice messages. There did not appear to be a single instance where he caveated any statement he wrote or made on a voice message in this way.
12. Another example is Gary's evidence that whenever he gave a contract to the plaintiffs (and other purchasers) he said words to the effect "This is the sale contract documents. You need to read all of them carefully and get your lawyer to explain the documents to you." His evidence was that every time Tim and Teresa bought in a new development, he said words to the effect "the sale contracts and the deposit loan agreements recommend that you get independent legal advice and financial advice. You should do that." I find it inherently implausible that he would have told them this over 25 times. I believe the plaintiffs that what Gary said was that the contracts were all standard and a lawyer was not needed until settlement.
13. In support of his denial that he discouraged the plaintiffs from hiring lawyers, Gary gave evidence that he referred Teresa to a lawyer to prepare her will and to lawyers to act on the settlement of Lindfield. Preparation of a will is an entirely different exercise to the exchange of "standard contracts" and reference to a lawyer for settlement of Lindfield is consistent with the plaintiffs' evidence that Gary said they only needed a lawyer on settlement.
14. Teresa says Tim called her, told her about Lindfield and they agreed that he should buy it. They discussed whether they had enough money in the bank to cover a deposit and Teresa said they did. They intended ultimately to move in, and they did so.
15. On 2 February 2015, Tim signed a contract with Ralan Beaconsfield Pty Ltd for $1,430,000. He paid a deposit of $216,000. The contract for Lindfield may well have been accompanied by (and I proceed on the basis that it was) a document entitled "Client Details" which included the following disclaimer: Any information provided by employees of Ralan Property Services Pty Ltd is provided as illustrations only and should not, under any circumstances, be construed as specific investment, financial or legal advice. Whilst every care has been taken to ensure the accuracy of material provided, Ralan Property Services Pty Ltd or any of its representatives will not bear any responsibility or liability for action taken by any person on the basis of the information provided to them. It is up to the purchaser to seek their own independent legal and investment advice.
16. I also proceed on the basis that the contract was accompanied by an "Information Sheet" which included the following notation (although Tim did not accept that this was part of the Lindfield contract - the material in evidence did not establish the position either way): Financial and Investment Advice Notice Any financial or investment advice provided by the Agent is of a general nature only, whose preparation does not take into account the individual circumstances, objectives, financial situation or needs of the person. You are advised to consult with your own independent financial and/or investment adviser.
17. At this point began the trouble.
18. Prior to this, the plaintiffs had only been interested in acquiring a property to live in. They had the money to pay for it without borrowing. Gary saw that the plaintiffs had a significant amount of cash and took the opportunity to exploit the situation for his own gain.
19. Tim says that on the day the Lindfield contract was signed the following conversation between him and Gary took place: Gary: Ralan is giving a benefit to our customers, if you are interested. This Lindfield purchase was a large purchase. We have this program that will assist in covering stamp duty. The clients that get this benefit get a deal of 15% interest on any deposit released. Some of our clients deposit extra money so that the interest covers the stamp duty. You can only release 10% of the purchase price of the property, but we can do something special for you, because your first purchase was big and close to completion. By releasing the deposit and getting the 15% interest on that money, the interest itself can help cover the stamp duty at completion. Customers who have done this and invested early have made money through this deal. I advise and recommend that you do this because stamp duty is very high in Australia. It is estimated to be $60,000 to $70,000. It's a great deal and the project will be completed soon anyway. If you want to know more and you are interested, I can ask my boss if we can give you this deal. Tim: I will need to speak to Teresa. What does Ralan Group use the released funds for? Gary: The funds that are released by our clients are used to meet the costs of construction of the development and as working capital for Ralan Group. We have completed 30 developments up to this point and we have been very successful.
20. I interpolate that Gary says that what he said was "William O'Dwyer has said the loans are to be used as part of the funds for development of Ralan Group projects." He gave evidence that he was at a sales meeting where O'Dwyer said "the loans are to be used as part of the funds for development of Ralan Group projects". To the extent that there is a difference in meaning between this and what Tim says Gary said, I prefer Tim as to what was conveyed. Once again, I consider it implausible that Gary would have used such prefatory words.
21. Tim says he then called Teresa and they had the following conversation: Tim: Mum, I have signed the contract. Ralan is offering a benefit to their customers. Gary explained that the offer is that we can gain 15% interest on the deposit of Lindfield if we release the deposit paid to Ralan. Apparently, some of the other VIP customers deposit extra money so that it will cover the stamp duty because the stamp duty could be over $60,000. If we release the deposit, we will get 15% interest on that money and the interest itself will cover the stamp duty. Gary advised that we do this because stamp duty is very high in Australia. If we want to do this, Gary will ask his boss at Ralan. Teresa: I think we should do it, that sounds pretty good. If Gary says it is a great deal then let's do it. Did we need a lawyer to look at the contract? Tim: No, Gary said the contracts are standard and we don't need a lawyer. I have signed the contract already anyway. We will only need one on settlement. Gary said that he will refer a conveyancer to us. Teresa: Ok, let Gary know we will do it.
22. Teresa's version of this conversation is: Tim: Mum, Gary called me today. Ralan is offering a benefit to their VIP customers. The offer is that we can gain 15% interest on the deposit of Lindfield if we release the deposit paid to Ralan. Apparently, some of the other VIP customers deposit extra money so that it will cover the stamp duty because the stamp duty can be anywhere from $65,000 to $70,000. If we release the deposit, we will get 15% interest on that money and the interest itself will cover the stamp duty. If we want to do this, Gary will ask his boss. Gary says it is a great deal. Teresa: Yeah that's good. Sure, if we can receive the 15% interest and it covers the stamp duty means we pay less. What will Ralan use the money for though? Tim: For the cost of the land or for the construction of the building. It is good to receive the 15% interest income.
23. Tim says that Gary phoned to ask whether they wished to release their deposit and get the 15% interest. He was no doubt trying to move things along in that direction. Tim agreed to release the deposit paid on Lindfield to Ralan in return for 15% interest per annum. The transaction for the release of this and other deposits was in the form (mutatis mutandis) of the following letter from the purchaser to O'Dwyer (prepared by Ralan): Dear Mr. O'Dwyer, My purchase from Ralan Beaconsfield Pty Ltd Property: 28/10 Drovers Way, Lindfield I agree to release the deposit I have paid in connection with my purchase of the above property on the following terms: 1. The Contract for Sale between you as the vendor and myself as the purchaser in relation to the above property dated 10th February, 2015. 2. The Contract Price is $1,430,000.00 and the further deposit paid is $50,000.00. 3. Interest, at the rate of 15% per annum, is to be calculated on the Deposit from the date the Deposit is released to you and will accrue in arrears on each anniversary of the release date and then be paid by you as a deduction from the purchase price on completion of the Contract. 4. In accordance with the Contract, the Deposit will become your property on completion of the Contract. 5. The Deposit (and any interest accrued) is repayable by you on demand if the Contract is rescinded or terminated by me as per the conditions in the contract of sale. 6. I acknowledge that you have advised me of the following matters. 6.1 You advised me to obtain financial, taxation, legal and any other advice in connection with the release of the Deposit on these terms from my own independent advisors; 6.2 You have not provided me with any financial, taxation, legal or other advice in connection with the release of the Deposit on these terms; 6.3 The release of the Deposit to you is in the form of an unsecured loan and I have made my own assessment of the risk that may entail; and 6.4 You have not given me any promise or representation as to your intended purpose, use or application of the Deposit the only restriction on the released Deposit funds is that they be used for the purpose of funding Ralan development projects. To signify your acceptance of these terms, please sign the form of acceptance below. Yours faithfully, [Signature] Timothy Wayne Edstein … ACCEPTANCE Ralan Beaconsfield Pty. Limited acknowledges and accepts the above terms for the release of the Deposit in this matter. GUARANTEE I, WILLIAM O'DWYER of Level 6, 282 Victoria Avenue, Chatswood guarantee the due and punctual payment of interest on the Deposit, and if Item 5 above applies, the repayment of the Deposit. [Signature of guarantor and witness]
24. As can be seen, the letter incorporates a personal guarantee from O'Dwyer.
25. The named borrower varied, but mostly it seems to have been Ralan Capital Investments Pty Ltd.
26. Tim says that later in February 2015, Gary called him, and the following conversation took place: Gary: The Lindfield project will be settled soon. Do you wish to deposit more money into the trust account and get the most out of the 15% interest? The more money you put in, the more you will have to cover the stamp duty costs. Some clients put 10% to 20% deposits in. Ralan is a stable company and currently has many projects. This one is close to completion. You can earn a lot of capital gains here. William (O'Dwyer) only selects great locations, mostly in the north shore, close to public transport and good schools. Ralan earns a lot of money from these developments. Tim: How much more money can we deposit to Ralan? Gary: If you wish to release more than 20% of the deposit, I will need to ask my boss for approval. It will be easier for me to convince my boss (William O'Dwyer) to let you deposit more than 20% if you purchase more apartments.
27. Tim says that after this he and Teresa had the following conversation: Tim: Mum, Gary has called me again. The Lindfield property is going to settle in a year. Gary has asked if we want to put in more money as a deposit which we can then release to Ralan to earn more interest at 15% to pay stamp duty. Teresa: How much more? Tim: Gary is asking his boss, he is confident that we will be able to deposit more money. Teresa: Yeah let's do it.
28. Teresa said that she also had the following conversation in February 2015 with Tim: Tim: Mum, Gary called me again. The Lindfield property is going to be constructed in one and a half years. Gary asked if we wanted to put in more cash in as a deposit, which we can then release to Ralan to earn more interest at 15% to pay stamp duty. Teresa: I will ask my father about that.
29. Consistent with the recurring theme of his evidence, Gary says that whenever he was asked by any potential purchaser, including Teresa and Tim, about releasing deposits to Ralan he only ever said words to the effect "the interest the developer offers will be" and then said the percentage interest rate. I do not accept his evidence. It is inherently unlikely that he would have used this type of terminology. In any event, I believe Teresa, Tim and Amy as to what Gary said.
30. Between February 2015 and June 2015, Tim paid and signed authorities to Ralan for the release of further "deposits" of $83,000 and $50,000. Each time, a fresh loan agreement was executed.
31. Teresa says that in July 2015, she spoke to her father about releasing further money and he told her that she could release the full purchase price to get the 15% interest benefit as detailed by Gary in relation to the purchase of Lindfield.
32. After this (but before Lindfield settled), Teresa met Gary at his office in Chatswood where she says Gary advised her to put Lindfield into her own name rather than into Tim's. She says he told her "It is not good for your son to know too much otherwise the children get spoilt and lazy. They need to learn to go out and earn their own money." Teresa agreed to do this. She asked him if she needed a lawyer and he said no, it was a simple document, and he would arrange for a lawyer he knew to prepare the document. She just needed to sign. She paid him $400 in cash for the document. She never met the lawyer.
33. Gary's version of this is that it was Teresa's suggestion and that she said she was worried about the future marriage relationship of Tim and Amy. His version is that he said he respected her decision, but that she would need to work it out with Tim. Gary says he spoke with Louise Johnson, a manager at Ralan, who said Ralan would agree to the change.
34. In her affidavit dated 15 March 2022, Teresa deposed that she did not say anything to Gary regarding having any reservations about Tim and Amy's relationship as they were not engaged at that time. However, in her affidavit of 9 August 2024, she says Gary started a discussion on the topic, and it is possible she also said she was concerned because Tim was living with Amy at the time, and she understood that under Australian law there is a concept of a de facto relationship. Under cross-examination she accepted that she did not want Tim to be the owner because she did not know what would happen in the future in this relationship with Amy. Teresa was criticised as having given inconsistent evidence. If there was an inconsistency it is inconsequential, and openly disclosed by Teresa. She was not challenged on it. In any event, an original intention to have the apartment in her name is not inconsistent with the existence of the supposed concern.
35. On 7 September 2015, the contract for Lindfield was rescinded by agreement with Ralan. Teresa was substituted as the buyer. Tim says that he originally signed because Teresa was in Taiwan and there was time pressure to buy. He says that it was always intended that Teresa would be the purchaser. This no doubt reflects his understanding. There was no controversy about the change.
36. In September 2016, Gary travelled to Taiwan where he met with Mr Chen and Teresa. After a restaurant lunch, they went to Teresa's home. Mrs Lan was present. Teresa says that Gary said: Everything is going well. The Lindfield project is a good project, a good opportunity and a great investment. If you want to put more money than 20% to get a better benefit in interest which will help in covering the stamp duty when the property settles, I will ask my boss, William (O'Dwyer) and my manager, Geoff. It will be easier for me to convince William (O'Dwyer) for you to pay more money to get the benefit of the 15% if you purchase more apartments.
37. Mr Chen responded that he would pay the full amount.
38. Gary says that before they left, Teresa asked him to explain to her father what Ralan was planning in Surfers Paradise. She said that she was investing money he had given her and would like Gary to explain it to him. He says she mentioned a friend in Taiwan who might be interested in buying a Ralan apartment and suggested that if she bought from Gary, they could share the commission as a reward. As it happens, the friend did not buy.
39. Between 7 September 2015 and 14 September 2016, Teresa signed authorities to release further deposits (including "interest" received on prior deposits) paid to Ralan on Lindfield, totalling over $1,000,000.
40. On 7 December 2016, Lindfield settled. Teresa received $84,542.67 in "interest" by way of a reduction of the sum payable on settlement.
41. Lindfield was the one and only sale contract and loan with any of the plaintiffs which Ralan fulfilled.

Gold Coast "Ruby" and "Sapphire" projects

1. Surfers Paradise is on the Queensland Gold Coast.
2. Ralan developed a high-rise apartment-hotel development there known as Ruby 1 which opened in November 2018. Ralan had the idea to develop a further three high-rise blocks, to be known as Ruby 2, 3 and 4 respectively, on the site of the Paradise Resort Hotel. It also had plans to develop two further residential apartment towers near Budds Beach in Surfers Paradise, to be known as Sapphire. No construction on Ruby 2, 3 and 4 or Sapphire had begun when Ralan failed. Needless to say, it never did begin.
3. Tim says that in about April or May 2015, Gary called him, and the following conversation took place: Gary: Do you remember the units from the Gold Coast project? They were amazing apartments. Tim: Yes. Gary: Ralan is using the same architects, DBI Architecture, designing the Gold Coast projects and they are one of the top architecture firms, though they are cost-effective. Do you know the Jewel Project on the Gold Coast? It's being developed by Wanda, China's largest developer. There is also another project called the 'Spirit' being built by a major Chinese developer. The Ralan project in the Gold Coast is going to be just as good as the Jewel project, it will be the same quality of design and construction but a better price, cheaper, and the capital gain is going to be more. The Gold Coast is rising up at the moment, and a couple of the largest property developers in China are investing and developing there, using the same architects as Ralan. There is a massive block of land there. Due to the interest of Chinese developers in the Gold Coast the value of everything is being lifted and it will be an awesome tourist area. With these big Chinese players coming in, it means it will be very successful, we just need to follow their trend. William made a really good decision expanding to the Gold Coast before these bigger players came in and drove the land value up. Ralan also has a far better value for money, a lot of room for capital growth. You and Teresa should come in to discuss this investment opportunity.
4. Tim then had a conversation with Teresa: Teresa: I met with Gary recently to learn more about the investment opportunities in Ralan's Gold Coast projects. The Gold Coast is a tourist centre and there are many hotels due to the great location. There is a rental guarantee for 5.2% for 8 years after the construction is complete. We will have good capital gains after 5 to 7 years and the price of the apartments will double. Gary offered the same 15% interest benefit, like we received for the Lindfield property. We should meet Gary together to discuss this. Tim: This all sounds good. Let's meet with Gary and discuss it together.
5. Teresa says that between February and May 2015, Gary called her to talk about the Gold Coast projects. He told her that it was a great opportunity to invest. He invited her to his office to talk more about it.
6. On one occasion, Gary picked her up from her house and took her to his office, where she says they had the following conversation: Gary: The Gold Coast is a tourist centre and in 1 year, 20 million people visit. They need many hotels. It is a great location and it's a fantastic project. The project is very close to the beach which is beautiful. Overseas tourists will come every year. The construction is going to have a lot of potential and it will be a great investment. There is a rental guarantee for 5.2% for 8 years after the construction is complete. The vendor will also furnish the property. If you purchase one or more apartments, I will make sure that after settlement you will receive rental income for 52 weeks. Many of our clients have signed contracts for this project. In 6 weeks, we have sold 250 apartments and that's without advertisements or outgoing information. Ralan has a very good track record with these developments and is a stable company. You will have a good capital gain after 5 to 7 years and the price will double. Teresa: I will think about that. Gary: Why buy in Sydney? The purchase price is high but the rental return is the best in the Gold Coast. Sydney is too expensive, these apartments on the Gold Coast will sell very quickly because it is affordable. Because of the rental guarantee, you don't need to worry about it at all. You won't even need to find a tenant yourself. Because of the great location and weather, your property will always be occupied. No other developers do it the way we do. Only my company does it this way. We will also offer you the same 15% interest benefit like we did for Lindfield. The 15% is small money but the big money is the capital gains that you can make. It's the easiest way to get a rental return. You will be the last batch of VIP clients to receive 15% interest because you have followed me. The 15% interest deal is closed off to new clients. Teresa: I want to do this because what you are saying sounds really good but I will have to talk to my father about it first. Gary: If you want to purchase in the Gold Coast, you can use the funds you released from the Lindfield purchase to purchase the Gold Coast apartments. You know how good the Gold Coast project is. The project is very famous, William is working with the mayor of the Gold Coast. I have told you how good it is. You have money from the Lindfield project, the capital gain will be good and you will only need to make a 10% deposit. If you release the deposit, every day the interest will compound. You will be the last VIP customers and you will be able to receive 15% interest because you purchased in Lindfield before. William wants to reward his clients who have followed his projects and supported Ralan. New clients of Ralan will not be offered this deal. I have invested in property. My clients have signed contracts and received a lot of capital gains over 3 years. I used to also be a mortgage broker in Sydney and then I became a sales agent for Ralan. The property prices in Sydney are priced high but Ralan gave me good properties. From my own investments with Ralan I have received a lot of capital gains and I have been able to do so because Ralan is a really stable company. This is how I made my money. My father gifted me more than $100,000 to start investing in Australia because he knew it was a good market. I chose very good properties from Ralan. 3 years to settle and I got a lot of capital gains.
7. Gary denies that he ever said to any of the plaintiffs that an apartment would achieve a guaranteed return. His evidence is that on occasion he said to Tim and Teresa the following words: If the property market rises or keeps rising between now and when you complete your purchase you can make capital gains. If prices keep doubling every 7 years or so then you can make good money. Real estate in Australia is a good investment. But you need to make your own investigations and you need to get your own advice. There are people who have made good money on investing in apartments but nothing is guaranteed. Ralan Group in their sale contracts point out that they do not give any advice, you need to get your own legal and financial advice and you do not rely on Ralan Group in making your decision. Of course, you make your own choice.
8. I feel no actual persuasion that Gary hedged what he told the plaintiffs in this manner. His conversation does not sit comfortably with what he wrote and what he said in voice messages.
9. Tim says that in about April or May 2015, he and Teresa met with Gary to discuss the possibility of buying properties on the Gold Coast. He says they had the following conversation: Gary: If you want to purchase in the Gold Coast, you can shift the funds you released from the Lindfield purchase to purchase the Surfers Paradise apartments. You know how good the Gold Coast project is. I have told you how good it is. This is a good investment. Ralan has good margins for construction because we are doing this at scale and selling very fast. There is also the 5.2% rental guarantee, as well as CPI, and the apartments will be furnished. You have money from the Lindfield project, the capital gain will be good and you will only need to make a 10% deposit. If you release the deposit, every day the interest will compound. You will be the last VIP customers and you will be able to receive 15% interest because you purchased in Lindfield before. William closed it off to new customers because the interest rates are going down. He doesn't need to give this benefit anymore. My boss wants to reward his clients who have followed his projects and supported Ralan. New clients of Ralan will not be offered this deal. Ralan has a good track record. They have finished 33 projects in Sydney, all satisfactorily completed. William is a very hard worker, he is not going to go to the casino and spend all this money. I have invested in property. I have primarily invested in real estate with Ralan and I have a lot of clients through Ralan. Everyone has made a money. My clients have signed contracts and received a lot of capital gains over 3 years. The property prices in Sydney are high and Ralan gave me good properties. From my own investments with Ralan I have received a lot of capital gains. I have brought multiple apartments with Ralan and the one in St Leonards I bought has doubled in value due to the harbour views, it is now valued at $1.4 million. Everyone is cashing in rich with Ralan. I have been able to do so because Ralan is a really stable and successful company. This is how I made my money. My father loaned me $100,000 to start investing in Australia because he knew it was a good market. An off the plan purchase is very good. You only need to deposit 10% and there is no need to pay a lot of cash straight away. You have time to get the rest of the money before settlement. If it's great location, you can get a bank loan quite easily and then you can settle the purchase later on. You should pick units that are higher up in the complex. The view from the ocean from this project is beautiful. The price difference in the apartments higher up is not a great difference when you are buying off the plan but after you buy them, the capital growth is better. The higher the unit, the better. You should pick units which are higher up. I have been allotted certain number of apartments but if one of my colleagues has the unit you want, I have to negotiate with him to get that unit. The apartments with views over the city and ocean are more valuable for future capital gains. You should pick units on the higher level because the price difference is not that significant but after settlement those units will grow more in capital gain. I am one of the top salesman for Ralan so I have a certain number of units to sell compared to my other colleagues. I am able to negotiate with my colleagues to get units. I suggest you buy unit 2908 on a higher floor, the view is beautiful. The city it is located in is what drove the purchase price higher. Also all these major Chinese players are coming in for a reason, they see the future potential of Gold Coast. You should purchase unit 2908. It is the best one that I have to sell right now. It has good views of the city and the ocean. The capital gain potential is good and the value is great. Tim, you should sign an authority to transfer the Lindfield money to the Gold Coast project. The money is being held in an account for Ralan and you're getting 15% on that money. Tim: Ok, that is a good idea. Teresa: That sounds great, let's purchase it then. Tim: Do we need a lawyer to look at the contracts or for the rental guarantee. Gary: No, the format is the same. You will only need a lawyer for settlement.
10. Teresa's version of what Gary said is: An off the plan purchase is very good. You only need to deposit 10% and there is no need to pay a lot of cash straight away. Some clients prefer to deposit 10% - 20%. You have time to get the rest of the money before settlement. If it's a great location, you can get a bank loan quite easily and then you can settle the purchase later on. You should pick units that are higher up in the complex. The view from the ocean from this project is amazing. The price difference in the apartments higher up is not a great difference when you are buying off the plan but after you buy them, the capital growth is better. The higher the unit, the better. You should pick units which are higher up. I have been allotted certain amount of apartments but if one of my colleagues has the unit you want, I have to negotiate with him to get that unit. The apartments with views over the city and ocean are more valuable for future capital gain. You should pick units on the higher level because the price difference is not that significant but after settlement those units will grow more in capital gain. I am one of the top salesmen for my company so I have more units allotted to me and I am able to negotiate with my colleagues to get units. I suggest you buy unit 2908, it has two bedrooms and the view is beautiful. The city it is located in is what drove the purchase price higher but it is not an expensive apartment. The value of this apartment will double if you sign. Remember, if you buy in this project you are not just earning money on the 15% interest, but also the capital gains. If you don't sign, you will regret it.
11. Teresa says that as a result of these conversations she believed that there was a great investment opportunity on the Gold Coast and that the 15% interest on the deposits released was a good offer so that they could earn money while the development was being completed. Based on what Gary told her she believed that Ralan was stable and was a good company and she had no reason to disbelieve him.
12. Tim says he considered what Gary had said and believed that purchasing apartments in the Gold Coast developments and releasing the deposits for 15% interest was a good investment and that Ralan was a good company on a very successful path.

3 Norfolk Avenue Surfers Paradise (Ruby 2)

1. The vendor of apartments in Ruby 2 was Ralan Paradise No. 2 Pty Ltd.
2. Teresa says that in about early May 2015, Tim and she met with Gary about purchasing on the Gold Coast and Gary said: You should purchase Lot 2908. It is the only one I have available now. I can show you the floor plans. It has good views of the city and the ocean. The capital gain potential is good and value is great. Tim you should sign an authority to transfer the Lindfield money to the Gold Coast project. The money is being held in an account for Ralan and you're getting the 15% interest on that money. If you sign the authority you can transfer the 10% deposit from Lindfield to the Gold Coast property.
3. Teresa responded that they wanted to go ahead and asked if, when they signed, they should have a lawyer. Gary replied that the format of the contract was the same, they would just be spending money and would only need a lawyer for settlement.
4. On 1 May 2015, Teresa signed a contract for the purchase of Lot 2908 Ruby 2 for $870,000, paying a deposit of $87,000. The Reference Schedule to the contract, makes provision for the insertion of details of the "Buyer's solicitors". The words "Represent herself" were written in, presumably by Gary. All in all, she paid deposits on this Lot totalling $441,988 and (save for $100) released it all to Ralan under the Released Deposit Scheme.
5. I proceed on the basis that this, and each subsequent sale contract entered into between the plaintiffs and Ralan for the apartments on the Gold Coast, was accompanied by: 1. a document stating that: "[b]y signing below, the Buyer acknowledges having received and signed this cover page and all of the accompanying documents in the order outlined above"; 2. a document entitled 'Project Statement' stating: SELLER'S RECOMMENDATION OF INDEPENDENT ADVICE The Seller recommends that the Buyer makes its own inquiries about buying the Lot in [description of development] and seeks professional legal and financial advice about entering into the Contract.
6. Each contract (cl 1.1) contained the following acknowledgment: By signing this Contract Acknowledgement, you acknowledge that, before you entered into the Contract: (a) you received, read and signed this Contract Acknowledgement; and (b) your attention was drawn to the important matters set out below.
7. In addition, each contract (cl 6.1(a)) made provision for the purchaser to write in details of any representation or warranty relied on. The space was in each instance struck through with a line. Each contract (cl 6.1(b)) contained acknowledgments from the purchaser of having obtained, or having had the opportunity to obtain, independent advice about the project, the contract and all disclosed materials, and income tax matters. Each contract contained (cl 6.1(c)) an acknowledgement that the purchaser relied on their own independent investigations and advice.
8. Each contract (cl 31.1) also contained warranties from the purchaser that it had not relied on or been induced to enter into the contract by any representation or warranty made by the seller, the agent or any other person, it had obtained or had the opportunity to obtain independent advice, and it had relied entirely on its own independent investigations and advice.
9. On 11 May 2015, after the contract for Lot 2908 in Ruby 2 was signed, Gary told Teresa that he had another apartment for sale on the Gold Coast. He invited her to his office. She says that he said: The capital gain investment is good and you already have so much cash deposited with Lindfield. You have signed the contract and you are earning 15% interest every day. Why don't you sign one more apartment contract, they sell up very quickly. They are very popular. It is a great project. My manager, Geoff started really poor. He was a student from China, but now stays in Sydney. He has worked really hard for William for 20 years. He has invested and became really wealthy and now owns 50 properties. He drinks a bottle of red wine worth $800 every day. He knows how to invest with Ralan. Geoff says that this project is very good project and will have good capital gains in future. I followed what Geoff did and now I am rich too. I have bought an apartment in 3 Norfolk Avenue as well. If you have extra cash, I suggest you put it in the account and earn the 15% interest. A lot of our customers have done this. Our clients are very happy with Ralan and the 15% interest they are earning constantly earns them capital gain. Our clients make far more money investing in real estate rather than in their businesses. Investing in property is far safer than investing in the stock market. You have paid so much cash for Lindfield. You should use some to purchase this one (Lot 5104). You are earning 15% interest every day. Why don't you sign the contract? It is a very good opportunity and real estate is the safest way to invest your money. A lot of our customers have put a lot of money in and released those deposits in order to cover the stamp duty.
10. On that day, she signed a contract to purchase Lot 5104 Ruby 2 for $905,000. In the Reference Schedule, under "Buyer's solicitor" the handwritten words "Represent myself" appear. She paid a total of $510,488 and agreed to release $419,888. Subsequently, the amount released and interest earned (at least notionally) of $49,802 was transferred to the purchase of another property.
11. Gary denies that he told them that he was rich, but he did not deny having told them about Geoff. Gary did invest in one Ruby 2 apartment, but it emerged (at the end of the hearing) that he had paid a deposit of $25,000, of which he paid only $4,000. The balance was set off against his 2015 sales bonus. The evidence did not reveal what part, if any, of this bonus was derived from sales to the plaintiffs. This was the only off-the-plan purchase in Queensland Gary made. It is to be contrasted with the some 23 apartments in Queensland which the plaintiffs bought.
12. Gary denies ever having described the Released Deposit Scheme as being available to VIP customers. He says that the VIP scheme was one which gave repeat investors discounts on purchases. Ralan did have a VIP scheme which operated in this way, and it is agreed that Ralan's records show the plaintiffs having received a Discount Amount with a notation "VIP discount".
13. Gary also denies having offered the plaintiffs to put in more than 10% deposits. His evidence is that Teresa asked him on several occasions whether she could do so because she wanted to earn 15% interest on more money because she thought it was an excellent return.
14. Teresa records that Gary told her on multiple occasions that: This is an exclusive deal offered only to our VIP clients. You are the last clients to receive this offer of 15% interest on your released deposits. Do not tell this to other people and do not tell new clients about it as they are not being offered this opportunity.
15. I believe Teresa, Tim and Amy that Gary referred to the Released Deposit Scheme as being available to VIPs. Their evidence is not undermined by the fact that there might have been a VIP scheme under which discounts on purchase prices were given. Teresa, Tim and Amy were cross-examined on the significance, if any, to them of the Released Deposit Scheme being available to VIP customers only (if that was the case), with a view presumably to establishing that the VIP description played no part in their decision to invest. Tim gave the following plausible evidence as to why it was of significance: Because if everyone is available to get it, that would indicate to me that the - the Ralan Group's exposure to this 15% earning scheme is a lot greater than if it's only a limited amount of people. Because if the payout is only, let's say, 10 per cent of - if, hypothetically, if there's - if there's 100 million total deposits in these departments, and only 10% of people release their money, let's say 10% amount, he's only paying 15% interest on that 10 million. Not 15% interest on 100 million. That - that's the completely different risk profile for a company
16. Teresa's equally plausible response was: Well, if everybody get the 15%, one day, there's too much cost - too much cost for the develop company. This is common sense. I think even for primary school student understand that.
17. Amy's response was that it would probably matter but she did not elucidate why.
18. I find that Gary did describe the Released Deposit Scheme as being available to VIP customers only and that Tim and Teresa were, in part, motivated by that misrepresentation in their decision to participate.
19. In support of his version that the plaintiffs asked him to ascertain whether Ralan would agree to more than 10% deposits, Gary said he checked with Louise Johnson at Ralan who said they could do that if they wanted, and he told Teresa what Louise had instructed him. However, Louise Johnson was not called and his checking with Louise is equally consistent with him wanting to offer more than 10%.
20. I also find, as Tim says, that Gary, in connection with Lindfield raised the possibility of depositing more money into the trust account to get the most out of the 15% interest and that he raised it with Teresa and Mr Chen in Taiwan. I also accept, as Teresa says, that, on 11 May 2015, Gary suggested she put extra cash into the account and earn 15% interest. There is no doubt that Tim, Teresa and Mr Chen were attracted by the high interest rate promised.
21. Gary made the point that he did not receive any commission from purchasers releasing their deposits and that the same commission was paid by Ralan even if the purchaser did not release their deposit. This overlooks the fact that in numerous cases deposits paid were reassigned to other sales on which he did receive commission.
22. In or around August 2015, a friend of Tim, Daniel Hsieh, was intending to buy Lot 4204 Ruby 2. Gary had already prepared the documents for sale, but Hsieh decided not to proceed. Tim and Teresa decided to buy it. On 12 August 2015, Tim signed a contract to purchase Lot 4204 Ruby 2 for $903,000, paying a deposit of $92,000 of which $91,900 was released to Ralan.
23. I interpolate that on 8 May 2018, Teresa, acting under the General Power of Attorney from Mrs Lan, entered into contracts on her behalf with Ralan to buy Lots 3902, 3505 and 5606 Ruby 2 paying deposits totalling $799,976, all (save for $300) of which was released to Ralan.
24. On about 24 November 2015, Tim says he and Teresa met with Gary at Ralan's office where the following conversation took place: Tim: This is the biggest project of your company; how do you obtain the loan from the banks? Gary: The 15% interest released from our client's money is released into Ralan, but the banks are not aware of this. The bank sees that Ralan has a stable cash flow. The banks see that Ralan has this cash flow and it is far easier for them to lend money. The released money in Ralan's account is what we show the banks. We are also selling a lot of units which is what the banks care about. Tim: So the banks can see lots of cash on the Financial Statement of the company? Gary: The banks turn a blind eye to all this, they see the cash flow of the deposits made and the banks won't ask any questions. The company has no problem obtaining loans, the Big 4 banks, ANZ, CBA, NAB and Westpac, fight for the business that William gives with a 7.5% loan interest rate and often come to Ralan's office to take his business. William does not want to give the 15% offer anymore as financing costs are getting cheap for him, only to the existing VIPs. You are the last clients who will receive the 15% interest, so do not tell anyone. Tim: What are your thoughts on the Gold Coast then? How is your company going with these projects? Gary: Ralan already has a good track record in Sydney, and we have already sold a number of apartments. All is going well and we have a high pre-sales number and construction is underway. This is a $1.6 billion project, no one is stuffing around and this is Australia. William and the mayor of the Gold Coast opened the construction site together for Ruby. Unless there is an Armageddon, or if Australia and China have a war, nothing will impact the project. The Gold Coast will be successful. There will be direct flights to the Gold Coast from Wuhan and Japan. These direct flights give an opportunity to middle class from China to come to Australia. These big Chinese players know about this and that's why they're launching big projects. My manager Geoff has sold his $5 million home to purchase 6 massive 3-bedroom apartments in the same project (Ruby) on the Gold Coast. I have a partnership with my brothers [term for close friends] in Shenzhen and they are buying into this as well. I have a good friend in Shenzhen and he is helping me sell Ralan apartments in China We have sold 150 units in Shenzhen. (the November Conversation).

2 Birt Avenue Surfers Paradise (Ruby 3)

1. The vendor of Ruby 3 was Ralan Paradise No. 3 Pty Ltd.
2. On 28 September 2015, Teresa signed and exchanged contracts to purchase Lot 3008 Ruby 3 for $940,000, paying a deposit of $94,000. She paid a total of $589,700 of which $500,000 was released. She says that Gary told her that this project was of high quality, was in a good location, the price was cheaper than what other developers would be offering and there would be luxury retail stores on the ground floor.
3. In about November 2015, according to Teresa, the following conversation took place: Teresa: How are you certain that this is a good project? Gary: The Gold Coast will always be viable. There will be direct flights to the Gold Coast from Wuhan. These direct flights would bring in a lot more middle class people to Australia. I have a company with a good friend in Shenzhen, and he is helping sell Ralan apartments in China. The Gold Coast projects are selling really well for us, we even sold 250 units in just 6 weeks. That was done without any advertisements, outsource sales and we have saved on costs which can be returned to our clients. The banks will continue to provide loans to Ralan because we've sold more than 80% of units.
4. Gary denies having said that the Gold Coast will always be viable. He admits having mentioned direct flights from Wuhan and that Ruby had sold more than 80%. He denies the remainder.
5. I prefer Teresa's evidence.
6. On 24 November 2015, Tim bought Lot 4309 Ruby 3 for $950,000 and paid a deposit of $95,000 of which $94,900 was released.
7. On 8 April 2016, Teresa bought Lot 4108 Ruby 3 for $973,000. She paid a total of $507,300 of which $409,900 was released.
8. On 5 April 2018, Teresa, acting under the General Power of Attorney, entered into contracts on behalf of Mrs Lan for the purchase in Ruby 3 of Lot 3710 for $1,930,000 and Lot 3708 for $675,000. Ultimately, over $2,000,000 was paid and released on these Lots.

3 Pine Avenue Surfers Paradise (Sapphire)

1. The vendor of Sapphire was Ralan Budds Beach No. 1 Pty Ltd.
2. Teresa, Tim, Amy and Mrs Lan bought apartments in Sapphire as follows:

Table A Date Purchaser Property Price Deposit Released 18.01.17 Teresa Lot 6004 $1,480,000 $500,100 $500,000 7.02.17 Teresa Lot 6006 $1,540,000 $500,000 $499,900 3.04.17 Tim & Amy Lot 5410 $1,150,000 $115,000 $114,900 21.04.17 Teresa Lot 4610 $1,120,000 $628,000 $627,900 10.05.17 Teresa Lot 4809 $1,145,000 $114,500 $114,400 4.10.17 Teresa Lot 4807 $1,290,000 $661,463.15 $654,840 21.12.17 Teresa Lot 5707 $1,740,000 $174,000 $173,900 8.02.18 Teresa Lot 5506 $1,430,000 $143,000 $142,900 15.03.18 Teresa Lot 5704 $1,640,000 $168,000 $167,900 26.04.18 Mrs Lan (POA) Lot 5504 $1,630,000 $745,988 $791,531.56 2.05.18 Mrs Lan (POA) Lot 5507 $1,730,000 $1,141,451.15 $1,215,766.59 30.06.18 Teresa's Super Lot 908 $950,000 $400,000 $399,900

1. By March 2017, Tim and Amy had become interested in purchasing an investment property together. Tim, Teresa and Amy had a discussion at home about investing on the Gold Coast. Teresa said she could organise a meeting with Gary. Amy met Gary with Tim, she went to Gary's office. She says Gary said: I have invested in a lot of property, so I know the market. I have worked in this industry for a number of years with Ralan. I have sold a lot of property and my clients have signed contracts and received a lot of capital gains over the years. The property prices in Sydney are high but Ralan gave me good properties. From my own investments with Ralan I have received a lot of capital gains and I have been able to do so because Ralan is a really stable company, been building for many years. I will be able to get you a good property through Ralan.
2. Amy says Gary presented her with a folder containing a number of articles regarding the property market on the Gold Coast. She says they had the following conversation: Amy: So, tell me about the Gold Coast. Gary: The Gold Coast is a great up and coming area. It attracts both domestic and international tourism. The location is close to the beach and not far from the main shops, so prime location. The new light rail will run near there too. For the next 8 years the property would run like a serviced apartment. It will run sort of like a hotel, there will be high and low seasons, but there is a guarantee that people will always be staying. We also know this because there is a kids waterpark/family hotel there at the moment and it is doing very well, always busy. So, there is a lot of potential here and a lot of people are investing in the Gold Coast and Brisbane. How many bed rooms are you considering? Amy: We are thinking 3 as it would be more popular for families. Gary: This project is very popular. A lot of properties being sold at the moment, there aren't as many options. There aren't many 3-bedroom apartments left. I have only two options to choose from. There are many more one and two-bedroom apartments.
3. She and Tim decided to buy Lot 5410 Sapphire. On or around 3 April 2017, they went to Gary's office. She says the following conversation, mainly in English, took place: Gary: Here is the contract. Amy: Can you tell me about the term deposit again? Gary: When you pay your deposit for the purchase, you can also get 15% interest on it. There will be a 15% return on the deposit paid by Ralan, if you agree to release it. It is something we are no longer offering to new clients, but because you are family to Teresa, I will take care of you and extend this to you.
4. Sometime in April 2017, Teresa went to the Gold Coast to have a look at Ruby 1.
5. On 6 September 2017, Teresa's parents arrived in Australia from Taiwan. Together with Teresa they met Gary. She says the following conversation about the Gold Coast Investments being developed by Ralan took place: Gary: It's a very stable investment. Mr Chen: I trust you. I want to be your friend. I will follow you. You have the investments in Ralan and you told me it is very good and I will invest on your advice. I am old and I have put in a lot of money in Australia and this is my retirement money. Are you sure there is no risk? I need to know this is stable, the company is stable and the investment is stable. Gary: Ralan is a stable company and William has a very good relationship with the four big banks which give him a lower interest rate. It is a great investment and opportunity. You will receive a rental guarantee of 5.2% and good capital gain. Once the project has settled, we will make sure you receive a rental guarantee of 52 weeks. You've made a good decision.
6. Mr Chen took notes of the conversation. They are in evidence. Teresa says that Gary offered Mr Chen tax advice. Mr Chen's notes corroborate this. Gary also took notes. They are in evidence. Gary's notes have numerous figures in them, but they were not referred to during the trial.
7. On 16 December 2017, Teresa attended Gary's office in Chatswood where she says the following conversation took place in relation to Lot 5707 Sapphire: Gary: You have made very good decisions to purchase (with Ralan). You will be very wealthy in future. It is stable and you have made the right decision to invest. We are releasing our next lot to sell. We will be selling it in stages, not all the units at the same time. It is the Pine Avenue project. Not only will you earn a lot but you will make good capital gains. Teresa: I am happy to hear that, that's very good news for us. We have made the right decision for investment. Gary: This one is a good price, so you will make good capital gains. Our company makes our clients rich. Many clients follow us for many years and they are rich. They don't just buy one or two apartments, they buy more because of the status of the project. William is very successful, he even owns a small hotel there. The location is very good. He receives $5 million in income. Remember, there are a few cities in mainland China that have direct flights to the Gold Coast. The Gold Coast gets about 20 million tourists a year. The Gold Coast needs more hotels and projects like Ruby and Sapphire. These projects will become a landmark on the Gold Coast which will affect and control the property market and rental prices.
8. On 2 February 2018, the following line and voicemail messages were exchanged between Teresa and Gary: Teresa: [Message at 12:18pm] Is the property we bought making money every day? Gary: [Voice Message at 12:19pm] Yes, yes, at the same time while the property appreciates, you are making money on the money deposited here. I will make some more precise calculations as to how much it makes daily in a moment, but you're not just making money but a lot of money. Gary: [Voice Message at 12:19pm] There definitely will be capital gain, you look at it reversely, especially those apartments bought in stage 2 and 3, the $800,000 and $900,000 apartments. When you see it in reverse it's always correct. The 5th stage is even more so, it's a higher standard with 6-star quality. That will certainly increase when it's finished in 4-5 years, you will see that. Right now, in stage 2 and stage 3, I find it too cheap. Gary: [Voice Message at 12:19pm] I made an approximate calculation, your Dad's money deposited here in Australia earns about $2,000 a day. That's $720,000 per year in interest.
9. Gary's unqualified statement that "[t]here definitely will be capital gain" is worthy of note.
10. Gary's position on this exchange is that he was comparing the plaintiffs' Gold Coast properties with other developers' projects on the Gold Coast which were selling for higher prices than for what Teresa contracted to buy. It is difficult to reconcile this with what he actually said. There is no reference to other developments.
11. On 30 March 2018, there was the following message exchange between Teresa and Gary: Teresa: [Message at 5:25pm] Is it possible to transfer all the investments made by my parents back to my mother's name? There are too many taxes. Gary: [Message at 5:48pm] Sure, but you can't use your name for settlement. Teresa: [Message at 5:49pm] Then there's no way. Gary: [Message at 5:50pm] I've thought about it. Teresa: [Message at 5:50pm] Haha, we're on the same page. Teresa: [Message at 6:15pm] Is the tax rate 45% for an annual income above 180,000? Gary: [Message at 6:28pm] Yes, but only in stage 5. Gary: [Message at 6:29pm] It's 45% tax on income above 180,000. Teresa: [Message at 6:33pm] Stage 5 involves paying a huge amount of tax, which is a good thing, a sign of high income, haha. Gary: [Message at 6:34pm] and by then, most of the previously purchased properties will have been sold. Gary: [Message at 6:35pm] They can be used for tax deductions. Teresa: [Message at 6:35pm] Sure. So we need to plan our investment loans carefully. Gary: [Message at 6:38pm] Sure.
12. Also, in about March 2018, by which time the plaintiffs had bought some 19 apartments off-the-plan in Surfers Paradise, Gary called Teresa and they had the following conversation: Gary: Teresa, you need to put money in the other apartments, as one apartment cannot have too much cash tied to it otherwise the bank will not allow it. I am going to prepare more contracts for purchase of property and you need to sign them. You won't actually need to purchase the properties when settlement comes around if you don't want to, but it is a good project so in the meantime you can think about it. Teresa: OK, if the bank won't accept it, I will sign those contracts. Gary: Remember, once construction has finished and you get to settlement and you don't want to go ahead with the purchase, you can simply rescind the contract. (the March Conversation).
13. On 15 and 16 May 2018, the following exchange of messages and voicemails took place between Teresa and Gary: Teresa: [Message at 3:48pm on 15 May 2018] Say if $7 million cash are prepared, invest in your GC property, what would be estimated profit in 10 years' time conservatively speaking? Gary: [Voice Message at 3:52pm on 16 May 2018] Teresa, Teresa, sorry I was with the client until late yesterday so didn't reply to your message immediately. I conservatively estimate it can easily be doubled so $7 million becoming $15 million of assets. Teresa: [Message at 3:52pm on 16 May 2018] Thanks for your trouble, thanks. Queensland population now 5 million people, son's message. Have good feeling about GC, good buy! Gary: [Voice Message at 3:54pm on 16 May 2018] This is for sure, for sure, we will not be mistaken in our view. Also, the population in Gold Coast is the highest in all of Queensland, therefore it will soon become a city with population over 1 million.
14. Gary's position is that he was expressing his opinion as to what he thought was the potential outcome of the investment and also on his and his family's investments on the Gold Coast which was based on the history of land values rising in Australia (as a general rule of thumb of property doubling every several years), as well as population growth reports about the Gold Coast, tourism and land prices. His expression, "this is for sure, for sure, we will not be mistaken in our view", leaves little room for doubt as to what he was saying.
15. In June 2018, Gary suggested to Teresa that she establish her own private managed superannuation fund and referred her to Mr Panbo Ye, a tax advisor and financial planner. Teresa says Gary said to her: I want to arrange a financial planner for you. You should see Panbo for an assessment so you can establish a super fund. I can arrange another apartment for you to buy through the superfund account. The money that you invest in this apartment will be doubled after 5 years when you invest and receive the 15% interest per annum.
16. As appears from Table A, she bought Lot 908 Sapphire though her superannuation fund.
17. On 10 September 2018, Teresa, her parents and Gary, met at her home in Sydney. She says that the following conversation took place between Gary and Mr Chen: Gary: You have chosen very good apartments to purchase. You will earn capital gains from these properties as the Gold Coast is a very popular tourist city, good weather and good beaches. This project will be very famous. Mr Chen: I trust you Gary, I know you have investments in Ralan and I will invest on your advice. Gary: This is a very stable investment. Mr Chen: I am old and I have put a lot of money in Australia. This is my retirement money. We need to ensure that there is no risk, I need to know that the company and the investment are stable even with the rental guarantee of 5.2%. Gary: You can be at ease, don't worry, there is also a rental guarantee. You don't even have to find a tenant. We have found a very good strata company that charges reasonable fees. There are great capital gains to be made here. You have made the right decisions.
18. Gary denies that this conversation happened. His evidence is that he explained what properties were available for sale and that the 15% interest deposit release was available to all purchasers. He maintains that he said words to the effect "you will have to make your own investigations and form your own opinion about whether it is a good investment for you." I do not believe him. Mr Chen lives in Taiwan and was plainly looking to Gary for guidance. The suggestion that Gary told him to make his own investigations is implausible.
19. In November or December 2018, Gary informed Teresa that the interest rate on released deposits would be reduced to 12% in future.

8 Townsend Place Arncliffe (Arncliffe)

1. The vendor of Arncliffe was Ralan Arncliffe Pty Ltd.
2. In September or October 2017, Gary picked up Teresa from her home and they went to his office in Chatswood where they had the following conversation: Teresa: Does your company have any Sydney projects? If I have a chance, I should invest in Sydney as well. Gary: Yes, we have a project in Arncliffe. It is a great location and it is close to the airport, the city and amenities. It's an area where you will receive high rental income and it will be easy for you to find a tenant. This is the last project Ralan has in Sydney. Ralan will not be heading any other projects in Sydney because it is expensive to buy the land in a good location. That is why William (O'Dwyer) decided to have projects in the Gold Coast.
3. Teresa conveyed this conversation to Tim.
4. Tim says that in about October 2017, him and Gary had the following conversation: Gary: I convinced your mum to invest in an apartment in a one-bedroom apartment for you in Arncliffe. This project will complete soon, similar to what happened for Lindfield. The price is at the stamp duty exemption so you won't need to prepare any extra money, but I can arrange the same 15% deal for you since you're a VIP. Tim: Sure, and thanks Gary, that sounds a good idea. Please prepare the documents.
5. In November 2017, Teresa says she and Gary had the following conversation about Arncliffe: Gary: You should put 10% more deposit on the properties because you can cover the stamp duty at settlement this way. For each home unit, put that 10% more. It is better. The 15% interest you will earn will give you extra money on settlement to pay stamp duty. Also, in order not to incur further tax, you should use your mother's name to purchase the properties. I have already checked with my accountant, Ben. You should use your mother's name because she is a foreigner and she will only pay 10% tax on interest. Teresa: OK.
6. Teresa, Tim and Mrs Lan bought apartments in Arncliffe as follows:

Table B Date Purchaser Property Price Deposit Released 8.11.17 Tim Lot 170 $870,000 $90,593.56 S90,593.56 8.11.17 Teresa Lot 93 $870,000 $92,756.30 $92,756.30 8.11.17 Teresa Lot 286 $870,000 $92,756.30 $92,756.30 14.12.17 Mrs Lan Lot 81 $830,000 $229,858.66 $299,758.66 14.12.17 Mrs Lan Lot 292 $880,000 $199,358.66 $199,258.66

Tax Advice

1. Gary denies Teresa's assertion that he gave her tax advice. He says that he merely referred her to a financial planner and gave no advice himself. He did, with respect to the establishment of her private superannuation fund, refer her to a financial planner, but his own contemporaneous writings gainsay his position that he never gave any advice.
2. For example, on 2 February 2018, the following line and voicemail messages were exchanged between Teresa and Gary: Teresa: [Message at 12:18pm] Is the property we bought making money every day? Gary: [Voice Message at 12:19pm] Yes, yes, at the same time while the property appreciates, you are making money on the money deposited here. I will make some more precise calculations as to how much it makes daily in a moment, but you're not just making money but a lot of money. Gary: [Voice Message at 12:19pm] There definitely will be capital gain, you look at it reversely, especially those apartments bought in stage 2 and 3, the $800,000 and $900,000 apartments. When you see it in reverse it's always correct. The 5th stage is even more so, it's a higher standard with 6-star quality. That will certainly increase when it's finished in 4-5 years, you will see that. Right now, in stage 2 and stage 3, I find it too cheap. Gary: [Voice Message at 12:19pm] I made an approximate calculation, your Dad's money deposited here in Australia earns about $2,000 a day. That's $720,000 per year in interest.
3. Another example, he left the following voice message for Teresa on or about 20 June 2018: Gary: [Voice Message at 9:08] I have been thinking about the issue of avoiding tax, yes, and now have worked out a very good method to avoid tax. You can give it some thought too. You can have a look in due course. Tomorrow, if you are free tomorrow afternoon, get a lift and come over here, I'll tell you a novel idea.
4. Gary also left the following voice messages for her between 19 and 22 February 2019: Gary: [Voice Message at 11:14 on 19 February 2019] Why don't you put the money into the property that is under your mum's name first? Then just before the settlement, we'll distribute the money to other properties. Ok? Gary: [Voice Message at 11:17 on 19 February 2019] Yeah, that's fine too it's just for tax minimisation. Mainly, why putting it into Mum's property? Well…you can tell him this, well…it's Gary who wants to put it in the other place. You…I think it will be a bit better that way, that is, considering it from the perspective of money. Gary: [Voice Message at 13:26 on 22 February 2019] Well…this money, put it into your mum's place, that property, that way, the tax rate will be minimum. Then do you think it is ok? If yes, I'll fill that in.
5. Gary nevertheless resolutely stuck to his guns.

Stability of Ralan

1. As to statements about the stability of Ralan attributed to him by the plaintiffs, Gary says he never made "any of those sorts of comments". He says that he: …only ever told the purchasers, including the Plaintiffs, the information on the documents provided to me by Ralan Group which the purchasers were given or which the purchasers signed and referred to it as "Ralan Group says" or "Ralan Group write" or "I am told by Ralan Group".
2. He asserts that he said to prospective purchasers, including Teresa and Tim, words to the effect: In my experience, long term property investment in Australia is generally safe and the capital gains from real estate in the longer term are more than the interest you earn in a bank. But nothing is certain and you would need to get your own advice.
3. He says that over the same period that the plaintiffs were buying properties from Ralan, he and his relatives also signed contracts to buy apartments in Arncliffe and on the Gold Coast. As mentioned earlier, it transpired that Gary himself bought only one apartment on the Gold Coast. He also apparently bought one apartment in Arncliffe. There is material which suggests that he paid $85,000 as a deposit on Arncliffe but what is equally clear is that the sale did not complete. Whether he released the deposit or what happened to it was not revealed.
4. Gary maintains that he did not say anything along the lines that Ralan or O'Dwyer were financially stable, shrewd, or making money, and until Ralan went into external administration, he was unaware of Ralan being in any kind of difficulty. He says that had he known Ralan would be in financial difficulty or in liquidation he would not have acted as an agent selling their properties and would not himself have bought any. He would also have warned his relatives not to buy. He denies that he said he looked at the accounts or financial statements of Ralan and he says that he never made any comments about the financial strength or viability of Ralan. He agrees that he did say that Ralan had done many projects and was working on many more.
5. Gary gave evidence that the following factors were part of the reason he had no suspicion that Ralan was in trouble: 1. completion of Ruby 1; 2. Arncliffe was almost 80% constructed; 3. in March 2019, O'Dwyer told a sales meeting that Ralan would start building stages 2-4 shortly; 4. on 15 July 2019, Ralan sponsored a piano competition on the Gold Coast; 5. Ralan's newsletters did not indicate any financial difficultly; and 6. over the years, Ralan built and completed many blocks of apartments.
6. It is appropriate at this point to make specific reference to the November Conversation and the March Conversation.
7. The November Conversation reveals that Gary knew that there was a disconnect between the truth and what Ralan was revealing to its banks. The banks were not being told that trust money was being used. As Mr Jahani's report reveals, Ralan concealed the Released Deposit Scheme from its secured lenders from its commencement. Ralan falsified trust account ledgers to show that the deposits remained in the trust account full and did not disclose this information to lenders when seeking funding for new projects.
8. On Gary's behalf it was sought to deploy this conversation as showing that Tim was on notice that Ralan was engaged in questionable activities, which it was put, was a factor negativing his asserted reliance on later representations made by Gary. Counsel for Gary went so far as to suggest that Gary made Tim aware of criminal behaviour of Ralan. After the Court pointed out that this was in effect putting that Gary was aware of criminal behaviour counsel put the proposition in ameliorated terms.
9. Tim was cross-examined at some length about what he took from this conversation, including whether he would not have thought that Gary was involved in some "dodgy" business dealings and would have been cautious to rely on what Gary said initially. I have no difficulty in accepting Tim's evidence that he did not appreciate the possible significance of the disclosure at the time and that it did not necessarily cause him to think that Ralan was not financially stable. After all, Gary conveyed that the banks were fighting for Ralan's business (in Mandarin "grab business"). As to the Gold Coast, he conveyed that Ralan had already sold a number of apartments, all was going well, there was a high pre-sales number and construction was under way. The Gold Coast would be successful.
10. Seen in context, this conversation was more about conveying optimism about Ralan's prospects than about disclosure of its questionable and illegal activities. The disclosure part would have largely been drowned out by the background noise made by Gary. What it does reveal (somewhat disturbingly) is that Gary had knowledge of these things and was content to go along with them.
11. As to the March Conversation, Gary did not dispute it. As an ex-mortgage broker and an experienced real estate agent, he would have known that what he was telling her was a lie. His excuse was that he was told by Ralan to say what he did. Either way the conversation reveals that he, to put it mildly, is indifferent to the truth.
12. I am prepared to accept that until Ralan collapsed Gary did not have any real suspicion that it would collapse and that he believed it was stable, even though his own investment off-the-plan was minimal and he knew Ralan was acting improperly. This enhances the probability that he conveyed to the plaintiffs what they say he conveyed about Ralan's stability, prospects, success and profitability, and the qualities of O'Dwyer. It also provides support for Tim's evidence that he did not see what Gary said in the November Conversation as setting off alarm bells.
13. At the same time, however, Gary maintained that he never saw Ralan's accounts and was never privy to its financial information. In the circumstances, it can hardly be said that he had a reasonable basis for conveying anything about Ralan's profitability, stability, prospects of it or its off-the-plan projects, or trustworthiness. He had no reasonable basis for asserting that O'Dwyer was honest.

Reliance

1. Tim says that: 1. following the meetings with Gary and Teresa in April and May 2015 he considered what Gary had told them about the stability of Ralan, the viability of the investments on the Gold Coast, and the success of the purchase of Lindfield; 2. he was relieved to have finally purchased a property in Sydney. He felt comfortable with Gary, and he trusted his endorsement of Ralan as a developer that was experiencing growth and success by expanding their development projects to the Gold Coast; 3. he believed that purchasing apartments in the Gold Coast developments and releasing the deposits to obtain the 15% interest benefit was a good investment and that Ralan was a good company on a very successful path; 4. following his conversation with Gary in October 2017 about Arncliffe, he believed that it would be a good opportunity and good investment to purchase a property in the Arncliffe development. He was convinced that releasing the deposit for the purchase of the Arncliffe property to obtain the 15% interest benefit was a good investment decision because it was with Ralan, and he was very confident in Ralan based on what Gary had told him about it; and 5. in reliance on what Gary told him about Ralan developments and the stability of Ralan, he purchased properties on the basis that there would be 15% interest return.
2. Teresa says that: 1. in February 2015 Gary's statements regarding purchasing off-the-plan properties and the investment opportunity that purchasing Lindfield offered, made her feel like Gary was trustworthy and that his company, Ralan, was stable. Those representations made her feel like Ralan was a good company; 2. she believed, from what Gary had told her, that purchasing Lindfield was a good investment based on the 15% interest return that was offered to her; 3. as a result of her conversations with Gary between February and May 2015 in relation to the Gold Coast developments, she believed that there was a great investment opportunity on the Gold Coast and that the 15% interest on the deposits released was a good offer so that they could earn money while the development was being completed. Based on what Gary told her, she believed that Ralan was stable and was a good company; 4. she says that relying on what Gary told her about the viability of the Gold Coast for investments she continued to invest in Ralan's Gold Coast projects; 5. she relied upon Gary's representations that Sapphire was a good project to invest in, and that she would have the benefit of earning 15% interest on released deposits. She purchased Lot 6004 and continued to purchase other apartments in the project in reliance on Gary's representations; 6. on each occasion on which she agreed to invest in different apartments, to release the deposits, or transfer deposits, she did so because she believed what Gary had told her about the investments; 7. she would never have invested had she known that Ralan was in financial difficulties at any time, or that Mr O'Dwyer was not the kind of shrewd and honest developer that Gary described to her; and 8. in reliance on what Gary told her about the stability of Ralan and the success of the developments, she purchased properties off-the-plan with the promise of a 15% interest return on the deposits released.
3. Amy says that it was her understanding the money that was being released was for the purpose of a term deposit in which 15% interest would be earned each year. Further, it was her understanding that the money released and the interest earned would contribute to the purchase price at settlement.

Ralan Collapses

1. On 30 July 2019, Ralan went into voluntary administration. Phillip Campbell-Wilson, Graham Killer and Said Jahani were appointed joint and several administrators to the Group. They reported to creditors on 28 November 2019.
2. On 10 March 2020, Ralan went into liquidation. The administrators were appointed as liquidators. The liquidators reported to creditors on 16 March 2020.
3. Jahani's report contains detailed information about Ralan and what it had been up to. Jahani opines that, as at 4 February 2014, Ralan, Ralan Capital Investments Pty Ltd and each of the vendors referred to above were trading while insolvent.
4. O'Dwyer proposed a Deed of Company Arrangement (DOCA) which involved purchasers buying apartments from another developer and receiving credit for some of what they had paid. Remarkably, Gary supported him in this endeavour. His faith in O'Dwyer did not seem to be shaken. The DOCA did not ultimately proceed.
5. On 25 May 2020, Gary sent Teresa the following messages: Gary: [Message at 8:13am on 25 May 2020] Uncle Chen, hello this is Gary from Sydney. I am sorry for the past half year because of issues arising from the Ralan company and your trust in me. I caused you and your family to take on this stress. The new company now has a way to try and help clients recover their loss. If there is anything you want to clarify, we can discuss anytime. I will do my best to help you guys recover your loss. I apologise again for my blind trust in my boss which caused clients to suffer loss. Gary: [Message at 8:14am on 25 May 2020] Please send this to your father on my behalf.
6. The reference to the new company is apparently to another developer with which O'Dwyer and Gary had become associated.
7. It is not in dispute that the plaintiffs will not recover any money from Ralan.

The Plaintiffs

1. The plaintiffs correctly did not press a claim based on unconscionable conduct and relied only on ss 18 and 29 of the ACL and ss 12DA and 12DB of the ASIC Act.
2. The plaintiffs say that by the conversations recounted above, Gary made the following representations: 1. Tim and Teresa would, by reason of the purchase of Lindfield, be treated as VIP clients which entitled them to release their deposit; [3] 2. if they released their deposit, they would receive 15% interest per annum on any deposit monies; [4] 3. the option to release their deposit and earn 15% per annum was a great deal; [5] 4. by releasing their deposit and obtaining 15% interest on that money, the interest would cover the stamp duty at completion; [6] 5. the funds released would be used in meeting the costs of construction of the building in which the apartment would be located and in some instances as working capital for Ralan; [7] 6. the deposit offer was exclusive and made only to VIP clients and that the offer was a "great deal" and there was a high probability that the plaintiffs would realise the benefits conferred by the offer; [8] 7. Ralan was stable with a lot of projects which were good investment opportunities; [9] 8. Ralan had a stable cash flow; [10] 9. Ralan was highly profitable; [11] 10. the principal of Ralan, O'Dwyer, was an honest person; [12] 11. for the Lindfield transactions they would not need a lawyer or financial advisor to provide them with advice and would only need a conveyancer upon settlement; [13] 12. the contracts were of a standard or conventional character and as such did not warrant the obtaining of independent legal advice; [14] 13. additionally and specifically, in respect of the acquisitions of Lot 2908 in Ruby 2, Lot 3008 in Ruby 3, Lot 6004 in Sapphire and Lot 170 in Arncliffe that: 1. the acquisition of an apartment in the specific development was a good investment; [15] 2. if the deposit were released, they would receive 15% interest per annum on it; [16] 3. Ralan had a good track record and was a stable company; [17] 4. Teresa and Tim would be the last Ralan VIP clients to receive the offer of earning 15% per annum on released deposits. [18]
3. They say: 1. Gary's representations were false, misleading or deceptive or likely to mislead or deceive because: 1. the Released Deposit Scheme was available to all Ralan clients not only to VIPs; 2. the plaintiffs were not, and had no reasonable prospect of being, paid interest, and lending monies to Ralan was not a great deal; 3. the released deposits were not used only in meeting costs of construction of the building in which the apartment being purchased would be located or for working capital, but were used to fund losses and, in some cases, to pay interest to other participants in the Released Deposit Scheme; 4. Ralan was unstable; 5. Ralan's Gold Coast projects were not good investment opportunities; 6. Ralan did not have a stable cash flow and was not highly profitable, but insolvent and was engaged in a fraudulent Ponzi scheme; 7. O'Dwyer was and is dishonest; and 8. the contracts were not standard or conventional, and obtaining independent legal advice was warranted; 1. Gary's representations that the Released Deposit Scheme would yield 15% per year on the loans were representations that services were of a particular standard or quality and were false or misleading because the plaintiffs were not, and had no reasonable prospects of being, paid interest; 2. Gary's representations about the Released Deposit Scheme was conduct in relation to financial services, namely, the acceptance of loan monies in return for 15% interest; 3. with respect to Gary's representations that they were statements of opinion, he had no reasonable basis for holding these opinions or conveying them to the plaintiffs; 4. with respect to Gary's representations that were as to future matters he did not have reasonable grounds for making them and has not adduced evidence to the contrary;
4. The plaintiffs say that because of Gary's representations, they purchased the properties and released their deposits, and thereby suffered damage.
5. I record that the plaintiffs did not lead any expert evidence from a legal practitioner on what advice would likely have been given on the off-the-plan purchases from Ralan or the release of their deposits on an unsecured basis.

The Defendant

1. Gary's primary defence was that the conversations recounted by the plaintiffs did not happen or did not happen in the terms recounted. This entails not accepting the evidence of the plaintiffs and accepting Gary's evidence. He put submissions as to why he, and not they, should be believed.
2. He argued that if he was found to have said that Ralan was stable, this conveyed only that it had a history of delivering projects in the past and bore no relationship to the present state of affairs or to the future and hence, was not misleading or deceptive.
3. Otherwise, Gary did not put in issue that if he were found to have made the representations, they were false, misleading or deceptive.
4. He did not put in issue that the representations were made in trade and commerce.
5. He did not put in issue that the Released Deposit Scheme constituted the supply of financial services or that if he were found to have made the claimed representations in relation to the Released Deposit Scheme, they were in connection with the promotion of it.
6. He accepted that a representation that the 15% interest rate was limited to VIPs was a representation as to "nature", which I took to mean "standard or quality" (under s 12DB of the ASIC Act).
7. He accepted that if there was a representation that the chance of recovery (presumably of the interest) was high, it would be one as to the "standard of the service". But he submitted that the representations pleaded were more about the profitability or stability of Ralan rather than as to the standard, quality, value or grade of the loan services.
8. He argued that he did not engage in conduct within the meaning of the ACL or the ASIC Act because he was a mere conduit for information put out by Ralan and that the plaintiffs would have realised that he was only passing on information as a conduit. He also argued that the transactions took place in the context of disclaimers.
9. He argued that the Court should find that whatever he said to the plaintiffs was not relied on by them and was not causative of their loss and damage. He argued that representations made prior to Lindfield should be held not to have had any effect beyond Lindfield, that is, beyond December 2016 when it settled and that representations made in connection with specific apartments should be held not to have had any effect beyond the particular apartment.
10. He also argued that because of various disclaimers in the sale contracts and loan documents the Court should find that the plaintiffs never relied on his representations. He argued if the Court found that the plaintiffs knew or were indifferent to, Ralan's deceit of its banks or were indifferent to the disclaimers or knew that they should obtain their own independent advice, Gary's conduct was not causative of their loss. He argued that no actionable misrepresentations were made because the provision in the contract for the purchasers to disclose any representations was struck through.
11. Separately, he argued that there was no evidence that Mrs Lan had relied on Gary's representations in entering into the two contracts signed personally by her.
12. Gary did not (nor could he realistically have done so) put in issue that his representations were falsified. Ralan was insolvent, conducting its business dishonestly, unstable, and unprofitable. Ralan was using the released deposits not for construction, but to fund losses and pay other lenders interest on their released deposits. There was no realistic prospect of the plaintiffs ever receiving their interest, not least of all because there was no realistic prospect of the Gold Coast developments being completed, with the consequence that there was no realistic prospect that there would ever be settlement and accordingly that they would receive their interest. They were not good investments and never yielded (nor would they ever have yielded) any capital gain. The Released Deposit Scheme was available to all Ralan purchasers. O'Dwyer was profoundly dishonest.
13. Gary raised a proportionate liability defence, relying on s 34 of the CLA (and the equivalent QLD provision) on the footing that: 1. each of the companies of the "Ralan Group" (an undefined term which was said to have been adopted from the Further Amended Commercial List Statement (FACLS)) and/or Mr O'Dwyer caused, independently of each other or jointly, the plaintiffs' loss and damage by providing marketing documents, brochures and newsletters to the plaintiffs and Gary as to the marketing, sale and progress of construction of Ralan developments and Ralan, and not informing or warning the plaintiffs or Gary about any financial difficulties; 2. the material was misleading because it did not disclose Ralan's insolvency or the Ponzi scheme; and 3. the plaintiffs, in particular Tim, relied on the newsletters in determining to purchase and release deposits.
14. Gary argued that the plaintiffs' claim under s 29 of the ACL and the whole claim under the ASIC Act were statute barred because the Amended Commercial List Statement and the FACLS respectively, were amended to include them after the expiry of the 6-year limitation period. This argument entails the proposition that the amendments only took effect from the date they were made, not from when the proceedings commenced.
15. He did not put quantum in issue.

Representations

1. It follows, from my acceptance of the plaintiffs' evidence, that each of the representations pleaded has been made out.
2. I reject the submission that the representation that Ralan was stable was one only about the past. It was a representation both as to the present and as to Ralan's future prospects.
3. Gary had no reasonable basis for making representations about the future of Ralan or its developments.
4. Gary had no reasonable basis for expressing any of his opinions about Ralan's stability, prospects or financial standing. On his own admission, he never inquired about Ralan's financial position and knew nothing about it. His position is made worse by my finding in relation to the November Conversation.
5. The representations concerning the availability of the Released Deposit Scheme only to VIP clients, as to its yield, and as to how the funds would be used by Ralan were all in connection with the supply or use of financial services and as to the standard, quality or value of those services: see ASIC v Rent 2 Own Cars Pty Ltd (2020) 147 ACSR 598.

Mere Conduit

1. In determining whether Gary acted as a mere conduit purporting to do no more than pass on information supplied by Ralan or O'Dwyer, his conduct must be viewed as a whole. Everything relevant he did up to the time when the plaintiffs purchased each property and released each deposit must be taken into account.
2. In Yorke v Lucas (1985) 158 CLR 661 at 666, the High Court said: That does not, however, mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive. See too Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; CH Real Estate Pty Ltd v Jainran Pty Ltd [2010] NSWCA 37.
3. The mere conduit defence is without merit.
4. It relies heavily on the proposition that an objective person in the position of the plaintiffs would have considered, and that they did consider, that Gary was merely passing on information for what it was worth without adopting it. This in turn necessitates the Court accepting that Gary told the plaintiffs that what he was telling them was what Ralan had said. Not only do I not believe that he told the plaintiffs this, but I do not accept that he was told it by Ralan.
5. In any event, I am not satisfied that Ralan was the source of the information the subject of Gary's representations, including that: 1. the Released Deposit Scheme was available only to VIP clients; 2. Ralan was stable; 3. Ralan had a stable cash flow (in relation to this Gary disavowed knowledge of its cash flow); 4. Ralan was highly profitable (in relation to this Gary disavowed knowledge of its profitability); 5. O'Dwyer was an honest person (in relation to this, Gary did not say that O'Dwyer or Ralan was the source of this information - It borders on the fanciful that O'Dwyer or Ralan told him this); and 6. the plaintiffs did not need a lawyer.
6. Gary was an experienced real estate agent with knowledge of, and experience in, the things he was talking about, and the plaintiffs were not. What he told them was self-evidently intended to aid his selling effort.
7. Outside of the representations, Gary conveyed to the plaintiffs many things which could not conceivably have come from Ralan, such as his tax ideas, that he had invested money, that his family had invested money, and that he was rich. The notion that the plaintiffs would have taken some things he said as being conveyed as a conduit for Ralan and others as coming from him personally is fanciful.
8. I have also found that Gary did not make the statements he says he made that the information he was giving was coming from Ralan or O'Dwyer.
9. The plaintiffs manifestly trusted Gary in his own right and from the perspective of the plaintiffs as the recipients of information from him, Gary was no mere conduit.

Loss

1. The plaintiffs must establish that their loss was suffered because of the conduct complained of. The relevant question is whether or not there is sufficient connection between the conduct complained of (assuming it is made out) and the damage, for the damage to be regarded as because of or by the conduct. Whether or not that connection exists is essentially a question of fact to be determined by reference to common sense and experience and one into which policy considerations and value judgments necessarily enter: March v E & MH Stramare Pty Ltd (1991) 171 CLR 506; Travel Compensation Fund v Tambree t/as R Tambree and Associates (2005) 224 CLR 627 at 639-640; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; Wallace v Kam (2013) 250 CLR 375 at 385-6.
2. They must establish that the conduct complained of caused them the loss they claim they suffered by purchasing the apartments and releasing their deposits. They do not need to establish that the conduct complained of was the sole or predominant cause of what they did, it is sufficient if it was a contributing cause. What they must show is that despite any other contributing factors, they would have adopted a different course, that is, not have purchased and released their deposits, had the conduct complained of not occurred: Sidhu v Van Dyke (2014) 251 CLR 505 at 530-532.
3. The plaintiffs relied on each of Gary's individual representations. But their cumulative effect was overwhelming. I reject the suggestion that the effect of Gary's misrepresentations made in the context of Lindfield, or for that matter, with respect to any other investment the plaintiffs made, ceased to have effect at any time prior to the plaintiffs' last investment.
4. They believed that they were participating in the Released Deposit Scheme throughout because they were VIP clients. They believed that Ralan was stable, profitable, and successful. They believed that they were making good investments and that they would receive the promised return, interest and capital gains. They believed that O'Dwyer had integrity. Out of Gary's own mouth, he persuaded Teresa to invest in Arncliffe.
5. The representations were made as part of Gary's efforts to sell property and that is the effect they had. The representations played a major role in inducing the plaintiffs to buy the apartments and participate in the Released Deposit Scheme, to the extent that, I find, that but for them, the plaintiffs would not have invested beyond Lindfield and would not have released their deposit for Lindfield. They would not have released any of their deposits.
6. But for Gary they would have owned an unencumbered apartment in Lindfield.
7. Because of him they lost their money.
8. So far as Mrs Lan is concerned, the submission that there is no evidence of her reliance on what Gary said is without merit. The plaintiffs are one family. Various members signed various contracts. It borders on the inconceivable that had the other plaintiffs not been induced to buy by Gary's misrepresentations, Mrs Lan would have bought in any event. Conversely, the inference that she was also the victim of Gary's misrepresentations is irresistible even to the extent of not taking legal advice.
9. The presence of disclaimers played no role in the plaintiffs' reliance on what Gary said. They did not have the effect of neutralising Gary's misleading conduct. The disclaimers did not affect the causal link between what he did and the loss they suffered. They suffered loss because they believed Gary.
10. It is apt to observe that the disclaimers are in contractual documents between the plaintiffs and Ralan, to which Gary is not party.
11. I believe Teresa when she said she did not read the disclaimers. She would not have understood them anyway without assistance.
12. Tim was aware of disclaimers in the sale contracts and loan documents. He had trust in Gary. He understood that he was acknowledging in the loan agreements that Ralan had told him to get his own financial, taxation and legal advice which he did not do. Instead, he asked questions of Gary.
13. Amongst others, Gary had told him that no legal advice was warranted because the contracts were standard.
14. There is no evidence that Mrs Lan read any disclaimer or that if she had read it, she would have understood it.

The Proportionate Liability Defence

1. This defence is available with respect to conduct in contravention of s 18 of the ACL, but not of s 29, and available with respect to conduct in contravention of s 12DA of the ASIC Act, but not of s 12DB. [19] For this reason alone, the defence, even if otherwise available, does not assist Gary.
2. Gary's misrepresentations in relation to the availability and qualities of the Released Deposit Scheme contravened s 29 of the ACL and s 12DB of the ASIC Act. Subject to the non-availability of Gary's limitations defence, those representations and the plaintiffs' reliance on them are sufficient, in themselves, for the plaintiffs to have judgment against him.
3. I deal with the limitations defence below. The proportionate liability defence to s 18 of the ACL and s 12DA of the ASIC Act fails in its own right.
4. In his Amended Commercial List Response (ACLR) filed 15 December 2021, Gary pleaded the proportionate liability defence extensively, but ultimately relied only on the following: 111 Each of the following persons are concurrent wrongdoers being persons whose acts and omissions caused, independently of each other or jointly, any loss and damage of the plaintiffs, being: a. each of the companies in the Ralan Group and, further and in the alternative, William O'Dwyer who was its controlling mind, due to: i. paragraphs C7 to C18 of the CLS, if those allegations are true and correct (which the defendant denies); […] iii. providing marketing documents, brochures and newsletters to the defendant and the plaintiffs as to the marketing, sale and progress of construction of the Ralan Group developments and about Ralan Group itself but not informing or warning the defendant or the plaintiffs about any financial difficulties or matters alleged in the CLS by the plaintiffs; […]
5. The reference to 'CLS' is to the Commercial List Statement. Paragraphs C7 to C18 plead facts about Ralan, including its precarious financial position and the operation of the Ponzi scheme.
6. There is an initial difficulty with Gary's pleading because it attributes acts and omissions to each of the companies in the "Ralan Group" without identifying each company. Jahani's expert report reveals the existence of a plethora of companies beyond Ralan Group Pty Ltd and the various vendor companies to the plaintiffs, which have no ostensible connection with the plaintiffs. "Ralan Group" is not a defined term in the ACLR. It was put on behalf of Gary that the pleading had adopted the term "Ralan Group" from FACLS in which it was also not defined. However, that is a different matter because the plaintiffs' claim is not against any company but against Gary and identification of any particular company in the "Ralan Group" was not strictly necessary, whereas it is in pleading a proportionate liability defence, not least of all because s 34(2) of the CLA refers to a person and acts or omissions by that identified person: Ucak v Avante Developments [2007] NSWSC 367 at [35].
7. At the hearing, the plaintiffs moved to strike out the defence so far as it referred to every member of the "Ralan Group". That application was warranted, and it succeeds.
8. The words "each of the companies in the Ralan Group and, further and in the alternative," where they appear in paragraph 111 of the CLR to the FACLS will be struck out.
9. But the proportionate liability defence would fail in any event because the pleaded acts and omissions of Ralan or O'Dwyer did not cause any of the loss or damage to the plaintiffs.
10. Gary argued that Ralan and O'Dwyer were concurrent wrongdoers because: 1. since 2009, Ralan and O'Dwyer falsified Ralan's accounts and ran a quasi-Ponzi scheme but represented to their secured lenders, the general public, and their customers that Ralan was successful and profitable, but for which, Ralan could not have traded during or after 2014; 2. since 2014, Ralan and O'Dwyer traded while insolvent and but for which Ralan would not have traded during or after 2014; and 3. Ralan provided the defendant and the plaintiffs with the information the subject of these proceedings.
11. It is not established that Ralan provided either the defendant or the plaintiffs with the information "the subject of these proceedings" (which I take to comprehend all of the content of all the misrepresentations).
12. The plaintiffs' damage was caused by Gary, and Gary alone. This is a case about what Gary said about Ralan, not about what Ralan said or did not say about itself.
13. It is to be remembered that I have found that Gary knew of Ralan's dishonest practices.
14. It was their investment in Ralan that caused the plaintiffs the loss, not the fact that Ralan was worthless. As Senior Counsel for the plaintiffs aptly put it, "but for [Gary], the plaintiffs would have had a nice unit in Lindfield and could have speculated in property with other developers who weren't running a Ponzi scheme".
15. Finally, I record that Gary put that if the proportionate liability defence succeeded, the appropriate reduction was 50%. Even if the defence had succeeded, any reduction would have been minimal.

Limitations Defence

1. These proceedings were initiated on 4 December 2020. The plaintiffs' claim under s 29 of the ACL were introduced by amendment on 19 July 2022, and their claims under the ASIC Act were introduced by amendment on 1 May 2024.
2. I proceed on the footing that, as at 1 May 2024, more than 6 years had passed since the plaintiffs' causes of action against Gary accrued, although I have significant doubt that this is correct. Ralan collapsed on 30 July 2019, and it is eminently arguable that that is when the plaintiffs suffered their loss and their cause of action arose then: see Wardley Australia Ltd v Western Australia (1992) 175 CLR 514. It is, however, not necessary to decide this.
3. Sections 64(1) and (3) of the Civil Procedure Act 2005 (NSW) provide: 64 Amendment of documents generally (1) At any stage of proceedings, the court may order - (a) that any document in the proceedings may be amended, or (b) that leave be granted to a party to amend any document in the proceedings. […] (3) An order under this section may be made even if the amendment would have the effect of adding or substituting a cause of action that has arisen after the commencement of the proceedings but, in that case, the date of commencement of the proceedings, in relation to that cause of action, is, subject to section 65, taken to be the date on which the amendment is made.
4. Sections 65(1), (2)(c) and (3) provide: 65 Amendment of originating process after expiry of limitation period (1) This section applies to any proceedings commenced before the expiration of any relevant limitation period for the commencement of proceedings. (2) At any time after the expiration of the relevant limitation period, the plaintiff in any such proceedings may, with the leave of the court under section 64(1)(b), amend the originating process so as - […] (c) to add or substitute a new cause of action, together with a claim for relief on the new cause of action, being a new cause of action that, in the court's opinion, arises from the same (or substantially the same) facts as those giving rise to an existing cause of action and claim for relief set out in the originating process. (3) Unless the court orders otherwise orders, an amendment made under this section is taken to have had effect as from the date on which the proceedings were commenced.
5. Gary's argument depends on the amendments introducing the claims under s 29 of the ACL and the ASIC Act taking effect on the date of the amendment and not from the date on which the proceedings were commenced.
6. I confess to having had difficulty understanding the argument. He apparently relies on s 64(3) which provides that when a cause of action which arose after the commencement of the proceedings is added, the amendment takes effect with respect to that cause of action on the date on which the amendment is made. But neither of the amendments under discussion added a cause of action which arose after the commencement of the proceedings. They both arose at the same time as the other causes of action.
7. More importantly, however, it was not in issue that the new causes of action arose from the same or substantially the same facts as those giving rise to the original claims within s 65(2)(c). That being so, under s 65(3), the amendments took effect from the date on which the proceedings were commenced because the Court did not order otherwise. The argument appeared to suggest, contrary to the plain wording of s 65(3), that for the amendment to take effect from when the proceedings were commenced, the Court had to so order.
8. The two sections operate congruently to achieve the policy objective that a party who, by amendment, introduces a statue barred cause of action does not get the advantage of the presumption that the amendment takes effect from when the proceedings were commenced unless the new cause of action arose from the same or substantially the same facts as those giving rise to the original claims.
9. Counsel for Gary volunteered that the Court could now make the order he argued was necessary and could point to no prejudice suffered by Gary which would stand in the way of the Court doing so. No such order is necessary, but I will make it anyway, in case I am wrong. I order that all amendments made by the plaintiffs to their Commercial List Statement take effect from when the proceedings were commenced.

OBSERVATIONS ABOUT THE FORM OF THE AFFIDAVITS

1. In the context of their submissions on credit, the plaintiffs made reference to Kane's Hire Pty Ltd v Anderson Aviation Australia Pty Ltd [2023] FCA 381 which is one of a trilogy of decisions [20] of Jackman J in the Federal Court of Australia in which His Honour criticised the long-standing practice in this State of using direct speech to recount conversations, usually prefaced with the words that the conversation was "to the following effect".
2. His Honour expressed the view that evidence in this form is ethically problematic, as well as concealing the true nature and quality of the witness's memory or conveying a false impression of that memory.
3. Contrary to His Honour, I see nothing ethically problematic about this practice. I consider it to be salutary.
4. As occurred in this case, it conduces to a disciplined approach in the recounting by a witness of what was said. The use of the phrase "to the following effect" makes it clear that what is being recounted is the witnesses' best recollection of what was said, that is the gist, rather than the ipsissima verba.
5. Inevitably, even if indirect speech is used, where the conversation is disputed and material, the deponent will be cross-examined as to what they say were the words used.
6. As in this case also, where a party seeks to rely upon spoken words as a foundation for a cause of action the conversation must be proved to the reasonable satisfaction of the Court. This means that the Court must feel an actual persuasion of its occurrence or its existence. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Helton v Allen (1940) 63 CLR 691 at 712; Rejfek v McElroy (1965) 112 CLR 517 at 521; Watson v Foxman (1995) 49 NSWLR 315 at 319.
7. Having observed two of the plaintiffs in the witness box for a reasonably lengthy period of time, nothing related to the practice adversely affected the cogency and credibility of their testimony. To the contrary, it conduced to my feeling an actual persuasion that the conversations to which they deposed occurred. This was generally consonant with my reasonably lengthy experience as a trial judge.
8. Finally, it is apt to observe that it is a practice, not an irrefrangible rule of law. It does not entail a conclusion that indirect speech is impermissible, inadmissible or inutile. Whether it is will depend on the circumstances and the precise form in which the evidence is given. It is not infrequently the case that indirect speech is of no value in the fact-finding process because it is expressed in vague and conclusionary terms.

CONCLUSION

1. There will be judgment for the plaintiffs against the defendant for a total of $7,438,548. I will stand the matter over for a short period to allow the plaintiffs to bring in short minutes reflecting the judgment amount applicable to each plaintiff, including pre-judgment interest calculated from 30 July 2019, and for the parties to draw my attention to any issues (apart from costs) which require to be dealt with.
2. I provisionally order the defendant to pay the plaintiffs' costs. This order will solidify unless, within seven days of delivery of this judgment, any party notifies, in writing, the opposing parties and my Associate that some other order is sought, specifies what it is and provides brief reasons why. If such notice is given, the order will not take effect and I will make directions for the resolution of costs.
3. The exhibits are to be returned.

Endnotes

1. For $425,698.
2. An investment fraud that pays existing investors with funds collected from new investors, and the process is repeated.
3. See [68], [70], [71], [96] and [99] above.
4. See [68], [75], [76], [96], [99], [100], [104], [111] and [139] above.
5. See [68], [75], [96], [99], [100], [111], [139], [151] and [159] above.
6. See [68], [75], [76], [85], [111] and [159] above.
7. See [68] above.
8. See [68], [96], [111], [116], [139] and [144] above.
9. See [75], [93], [96], [99], [126], [129], [137], [141], [143] and [153] above.
10. See [75], [96], [99], [126] and [129] above.
11. See [93], [99], [126], [129] and [143] above.
12. See [99] above.
13. See [57] above.
14. See [57], [81], [99] and [105] above.
15. See [99], [100], [104], [128] and [157] above.
16. See [99], [100] and [104] above.
17. See [99] above.
18. See [96], [99], [126] and [139] above.
19. Because s 12GP of the ASIC Act does not pick up s 12DB and s 34 of the CLA does not pick up s 29 of the ACL.
20. See Chu v Lin, Gold Stone Capital Pty Ltd [2024] FCA 766 at [11] and Lantrak Holdings Pty Ltd v Yammine [2023] FCAFC 156 at [277].

Amendments 06 September 2024 - [268] Typographical error corrected DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 September 2024