Chu v Chen

Medium Neutral Citation: Chu v Chen [2025] NSWCA 76

Hearing dates: 26 March 2025

Date of orders: 16 April 2025

Decision date: 16 April 2025

Before: Stern JA at [1];
Ball JA at [63];
Price AJA at [64]

Decision: (1) Appeal dismissed.
(2) Appellant to pay the respondents’ costs.

Catchwords: CONSUMER LAW — Application of the Australian Consumer Law — whether primary judge was required to, but did not, make a finding as to whether the representations made were “false or misleading” and fell within the ambit of s 29(1)(b) of the Australian Consumer Law and s 12DB(1)(a) of the Australian Securities and Investments Commission Act 2001 (Cth)

Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth), ss 12BB, 12DA, 12DB, 12GP
Civil Liability Act 2002 (NSW), s 34
Competition and Consumer Act 2010 (Cth), sch 2, ss 4, 18, 29
Fair Trading Act 1987 (NSW), ss 28, 32

Cases Cited: Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2020) 278 FCR 450; [2020] FCAFC 130
Chen v Chu [2024] NSWSC 1139
Curtis v Curtis [2024] NSWCA 136
Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560; [2019] HCA 32
Mitchell v Cullingral Pty Ltd [2012] NSWCA 389
Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd (2023) 277 CLR 186; [2023] HCA 8
Wass v DPP (2023) 111 NSWLR 210; [2023] NSWCA 71

Category: Principal judgment

Parties: Gary Chu (Appellant)
Su-Hui Chen (First Respondent)
Teresa Chen Pty Ltd as Trustee for the Teresa Chen Superannuation Fund (Second Respondent)
A-Kan Chen Lan (Third Respondent)
Timothy Wayne Edstein (Fourth Respondent)
Amy Chu Yan Edstein (Fifth Respondent)

Representation: Counsel:
R D Marshall SC, M J Wells (Appellant)
D L Cook SC, N D Riordan (First, Second, Third, Fourth and Fifth Respondents)
Solicitors:
Swaab (Appellant)
Antunes Lawyers (First, Second, Third, Fourth and Fifth Respondents)

File Number(s): 2024/00343923

Publication restriction: Nil

HEADNOTE

[This headnote is not to be read as part of the judgment]

The respondents are members of one family and the trustee for a super fund for the benefit of one family member. The appellant provided services to a property developer known as the Ralan Group (Ralan). He first met one of the respondents in 2013 when she was looking to purchase an apartment for herself and her son to live in. Ralan had a “Released Deposit Scheme” which entailed offering purchasers a high interest rate per annum if their deposits (paid for apartments not yet built) were released and lent under a loan agreement to Ralan for its own use, with the interest to be paid by crediting the purchaser on settlement of the purchase. As the primary judge described it, this was a Ponzi scheme (or a variation of one), whereby the deposits were used (at least in part) to repay other investors.

When two of the respondents decided to buy an apartment off-the-plan from Ralan in 2015 in Lindfield, the appellant informed one of them of the Scheme and made various representations including that this was a “great deal”, that the 15% interest was only available to some clients and that the funds would be used to cover construction of the development and working capital for Ralan. The same two respondents ultimately released the entirety of the purchase price under the Scheme, receiving interest on settlement by way of a reduction of the sum payable.

Thereafter, from 2015 to 2018 the appellant induced one or other of the respondents to purchase a further 28 apartments off-the-plan from Ralan under the Scheme. Noting that some deposits were withdrawn and used for later purchases, a total of $7,438,548 was released by the respondents to Ralan for apartments that were never built. The appellant made further representations to the respondents over this period, including that the Scheme was only available to VIP clients, that the respondents were the last batch of VIP clients to receive the 15% interest deal, that Ralan was a really stable and successful company, and that this was a good (or stable) investment. On occasion the appellant told the respondents that they were making money on the deposits released. In multiple instances deposits released by the respondents were reassigned to further sales, on each of which the appellant received commission.

In July 2019, Ralan collapsed and went into voluntary administration. It was placed into liquidation in March 2020 owing creditors and investors $306 million. Its managing director was subsequently bankrupted, convicted of fraud, and was in prison as at the date of the primary judgment. Save as regards the apartment in Lindfield, none of the sale or loan contracts with the respondents were fulfilled and they lost all of the money they had released to Ralan as deposits on the properties. It was not in dispute that they would not recover any money from Ralan. The unchallenged evidence of one of the liquidators of Ralan was that Ralan was insolvent from February 2014 and that the Ralan entity which in each case sold property to the respondents was insolvent at the time of each sale.

The primary judge found that by various conversations, considered in context, the appellant had made a series of representations to the respondents, including those replicated above. The key issue to be determined was whether the primary judge was required to, but did not, make a finding as to whether the representations made were “false or misleading” and fell within the ambit of s 29(1)(b) of the Competition and Consumer Act 2010 (NSW), sch 2 (ACL) and s 12DB(1)(a) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

The Court (Stern JA, Ball JA and Price AJA agreeing) held, dismissing the appeal:

(1) The primary judge was correct to record that apart from in certain limited respects the appellant did not put in issue the falsity or misleading or deceptive nature of the representations, with the result that it was unnecessary for his Honour to deal with that issue in relation to each representation: at [32]. His Honour addressed the issue in relation to representations where it was raised: [35]-[54].

(2) The primary judge rejected all key elements of the appellant’s evidence and found that each of the representations was made and that the representations were misleading or deceptive: at [48], [53].

Mitchell v Cullingral Pty Ltd [2012] NSWCA 389; Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560; [2019] HCA 32, cited; Wass v DPP (2023) 111 NSWLR 210; [2023] NSWCA 71, referred to.

(3) To the extent that the representations as to the stability of Ralan were not found to fall within s 29 of the ACL or s 12DB of the ASIC Act, it was clear from a reading of the primary judge’s reasons as a whole that his Honour found that they fell within s 18 of the ACL or s 12DA of the ASIC Act: at [58].

(4) The only significance in the proceedings of the representations falling within s 18 as opposed to both ss 18 and 29(1)(b) of the ACL (or within the ASIC Act analogues of these sections) was as regards the availability of proportionate liability, which was of no practical consequence given his Honour’s rejection of the appellant’s contentions as to proportionate liability. As such, the primary judge had dealt with all matters in issue before him on the question whether the representations were false or misleading for the purpose of s 29(1)(b) of the ACL or s 12DB(1)(a) of the ASIC Act, and the appellant’s single ground of appeal was not made out: at [59]-[60].

JUDGMENT

1. STERN JA: On 6 September 2024, the primary judge gave judgment for the respondents against the appellant for $7,438,548 plus pre-judgment interest: Chen v Chu [2024] NSWSC 1139. The respondents had alleged that the appellant, an estate agent, had made a number of representations which were misleading or deceptive or likely to mislead or deceive contrary to s 18(1) of the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law), sch 2 (the ACL) or s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act), or false or misleading representations that services were of a particular standard, quality, value or grade contrary to s 29(1)(b) of the ACL or s 12DB(1)(a) of the ASIC Act. The respondents said that they relied upon these misrepresentations and thereby suffered loss (the quantum of which was not put in issue). The primary judge upheld their claim and on 12 September 2024 ordered also that the appellant pay the respondents’ costs.

2. The appellant now appeals against that judgment on what is essentially only one ground. He contends that the primary judge failed to make a finding that any particular representation made by the appellant was a false or misleading representation for the purposes of either s 29(1)(b) of the ACL or s 12DB(1)(a) of the ASIC Act. He contends that the primary judge thus erred and asks this Court to set aside the orders made below and instead order that there be judgment for the appellant with costs. Whilst he frames this as two grounds of appeal, senior counsel for the appellant confirmed in oral submissions that the second ground of appeal simply reflects the first.

3. For the reasons set out below the appeal should be dismissed.

Background

4. Given the very limited ambit of this appeal, it is unnecessary to delve into the background facts in any detail. The brief summary below derives from the unchallenged findings of the primary judge.

5. The respondents are members of one family and the trustee for a super fund for the benefit of one family member. The individual respondents were referred to respectively by the primary judge as Teresa, Mrs Lan, Tim and Amy, and where appropriate to distinguish between individual respondents, I will do the same.

6. The appellant provided services to a property developer known as the Ralan Group (Ralan): J [31]-[32], [100]. He first met Teresa in 2013 when she was looking to purchase an apartment for herself and Tim (her son) to live in: [50].

7. Ralan had a “Released Deposit Scheme” which entailed offering purchasers a high interest rate per annum if their deposits (paid for apartments not yet built) were released and lent under a loan agreement to Ralan for its own use, with the interest to be paid by crediting the purchaser on settlement of the purchase: [13]-[15]. As the primary judge described it, this was a Ponzi scheme (or a variation of one), whereby the deposits released were used (at least in part) to repay other investors: [5].

8. When Teresa and Tim decided to buy an apartment in Lindfield off-the-plan from Ralan in 2015 (the Lindfield Property), the appellant informed Tim of the Released Deposit Scheme and made various representations (considered below) including that this was a “great deal”, that the 15% interest was only available to some clients and that the funds would be used to cover construction of the development and working capital for Ralan: [68]. He also said that the contracts were all standard and that a lawyer was not needed until settlement: [70]-[71]. Tim agreed to release the deposit under the Released Deposit Scheme and a loan agreement was executed in the form of a letter: [72]. The appellant then suggested that Teresa and Tim release further money to Ralan under the Released Deposit Scheme. They ultimately released the entirety of the purchase price under the Released Deposit Scheme (executing further loan agreements) and, on settlement on 7 December 2016, received interest by way of a reduction of the sum payable: [79], [88]-[89].

9. Thereafter, from 2015 to 2018 the appellant induced one or other of the respondents to purchase a further 28 apartments off-the-plan from Ralan under the Released Deposit Scheme: [4]. Twenty-three of these were in the Gold Coast, Queensland: [104]-[134]. Five were in Arncliffe, New South Wales: [161]. Noting that some deposits were withdrawn and used for further purchases, a total of $7,438,548 was released by the respondents to Ralan for apartments that were never built: [4], [270]. As is discussed in more detail below, the appellant made further representations to the respondents over this period, including that the Released Deposit Scheme was only available to VIP clients: [120], that the respondents were the last batch of VIP clients to receive the 15% interest deal: [96], that Ralan was a really stable and successful company: [96], [99], [137], [143] and that this was a good (or stable) investment [99], [141], [153]. On occasion the appellant told the respondents that they were making money on the deposits released: [144], [163].

The representations

14. The primary judge found at [191] and [210], and there is no appeal against this finding, that by various conversations, considered in context, the appellant 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;

(2) if they released their deposit, they would receive 15% interest per annum on any deposit monies;

(3) the option to release their deposit and earn 15% per annum was a great deal;

(4) by releasing their deposit and obtaining 15% interest on that money, the interest would cover the stamp duty at completion;

(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;

[representations (1)-(5) were contended to be representations as to a future matter which were made without reasonable grounds (and were thus misleading: s 4 of the ACL)]

(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;

(7) Ralan was stable with a lot of projects which were good investment opportunities;

(8) Ralan had a stable cash flow;

(9) Ralan was highly profitable;

(10) the principal of Ralan, O’Dwyer, was an honest person;

[representations (7)-(10) were said to imply that the respondents had reasonable grounds for holding the opinions and to be misleading because the appellant did not have reasonable grounds for making them]

(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;

(12) the contracts were of a standard or conventional character and as such did not warrant the obtaining of independent legal advice;

(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:

(a) the acquisition of an apartment in the specific development was a good investment;

(b) if the deposit were released, they would receive 15% interest per annum on it;

(c) Ralan had a good track record and was a stable company;

(d) Teresa and Tim would be the last Ralan VIP clients to receive the offer of earning 15% per annum on released deposits.

[whilst it is not entirely clear, and the pleadings are far from a model of clarity, representations (13)(a), (b) and (d) were alleged, at least in part, to be representations as to a future matter which were made without reasonable grounds (and were thus misleading: s 4 of the ACL or s 12BB of the ASIC Act)]”

The relevant provisions

15. As is well known, s 18(1) of the ACL provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive. Section 12DA of the ASIC Act contains the same prohibition, but as regards “conduct in relation to financial services”.

16. Where a representation is made “with respect to any future matter” and the person does not have reasonable grounds for making the representation, it is taken to be misleading: ACL, s 4(1); ASIC Act, s 12BB(1). The person is taken not to have had reasonable grounds for making the representation unless evidence is adduced to the contrary: ACL, s 4(2); ASIC Act s 12BB(2).

17. Section 29(1)(b) of the ACL provides that 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, make a false or misleading representation that services are of a particular standard, quality, value or grade. Section 12DB(1)(a) of the ASIC Act contains the same prohibition, but 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.

18. As Kiefel CJ, Gageler, Gordon, Edelman and Gleeson JJ held in Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd (2023) 277 CLR 186; [2023] HCA 8 (Self Care) at [84], the prohibitions in ss 18 and 29 of the ACL are “similar in nature” and, as in that case, the proceedings below were conducted on the basis that there is “no relevant meaningful difference between the words ‘misleading or deceptive’ in s 18 and ‘false or misleading’ in s 29”. Having regard to this authority, and for convenience, I will use the expression ‘misleading or deceptive’ to cover the form of words in both prohibitions.

19. Sections 28 and 32 of the Fair Trading Act 1987 (NSW) provide that the ACL applies as a law of New South Wales and covers, relevantly, persons carrying on business or ordinarily resident in New South Wales.

20. Only claims under s 18 of the ACL or s 12DA of the ASIC Act are apportionable claims. Claims under s 29 of the ACL and s 12DB of the ASIC Act are not apportionable: Civil Liability Act 2002 (NSW), s 34; ASIC Act, s 12GP.

The appellant’s contention of error

21. The appellant’s key contention is that the primary judge was required to, but did not, make a finding as to whether or not the representations were “false or misleading” and fell within the ambit of s 29(1)(b) of the ACL and s 12DB(1)(a) of the ASIC Act. This, he contends, is a necessary step having regard to the judgment of Kiefel CJ, Gageler, Gordon, Edelman and Gleeson JJ in Self Care at [80]:

“The principles are well established. Determining whether a person has breached s 18 of the ACL involves four steps: first, identifying with precision the ‘conduct’ said to contravene s 18; second, considering whether the identified conduct was conduct ‘in trade or commerce’; third, considering what meaning that conduct conveyed; and fourth, determining whether that conduct in light of that meaning was ‘misleading or deceptive or … likely to mislead or deceive’.” (footnotes omitted)

22. The appellant also relies on the observation of the court in Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2020) 278 FCR 450; [2020] FCAFC 130; (TPG Internet) at [22(c)] (Wigney, O’Bryan and Jackson JJ) that one subsidiary principle that has been developed in respect of the overarching question whether impugned conduct, viewed as a whole, has a sufficient tendency to lead a person exposed to the conduct into error, is that:

“The question whether conduct is misleading or deceptive is objective and the Court must determine the question for itself”. (footnote omitted).

23. As the respondents have not contended for additional findings of fact to be made curing this alleged error, the appellant says that the appeal should be allowed and judgment given for the appellant with costs.

24. By way of subsidiary submission (advanced in written reply submissions), the appellant relies upon the respondents’ contention in writing that the trial was conducted on the basis that the real matter in issue was whether the representations were likely to mislead or deceive, not whether the representations amounted to contraventions of s 29(1)(b) of the ACL and s 12DB(1)(a) of the ASIC Act. The appellant says that it follows from this that the primary judge erred in making a finding that those provisions were contravened. That contention can be summarily rejected. As is apparent from the discussion below, the trial was clearly conducted by both the respondents and the appellant on the basis that the respondents contended that s 29(1)(b) of the ACL and s 12DB(1)(a) of the ASIC Act were contravened.

25. The appellant also contends that the primary judgment cannot be maintained simply on the basis of breaches of s 18(1) of the ACL and s 12DA of the ASIC Act. This is because, he contends, the primary judge did not make any finding of breaches of those provisions. Again, that contention can be rejected at the outset. On a fair reading of the primary judgment it is beyond doubt that his Honour found that the representations breached s 18(1) of the ACL and, to the extent relevant, s 12DA of the ASIC Act. In any event, the primary judge’s orders are wholly supportable on the basis of the contraventions of s 29(1)(b) of the ACL and s 12DB(1)(a) of the ASIC Act as found by his Honour.

26. For their part, the respondents say that the appellant effectively conceded that the representations, if made, were misleading or deceptive and in those circumstances it was not incumbent upon his Honour to make determinations as to this. In any event, they say, the primary judge made findings as to the falsity of the representations which, in context, were sufficient to support his Honour’s orders. They say that it was not put in issue below (and the trial was conducted on the basis) that, if made, and if misleading and deceptive, the representations fell within s 29(1)(b) of the ACL and s 12DB(1)(a) of the ASIC Act. As to disposition if they are wrong, the respondents say that the only proper course is to remit the matter to the primary judge for further determination.

27. In order to resolve these issues, it is necessary to pay close attention both to the way in which the case was advanced below and to the structure of the primary judge’s findings. Given that it is only the primary judge’s findings in relation to whether the (now unchallenged) representations were misleading or deceptive, and whether they fell within s 29(1)(b) of the ACL or s 12DB(1)(a) of the ASIC Act, that are in issue, it is unnecessary to look at the conduct of the proceedings below, or the primary judge’s findings, beyond this limited ambit.

Conduct of the proceedings below

28. The respondents contended below that the representations (set out at [14] above) were misleading or deceptive, were either in relation to services or financial services, and were to the effect that the services were of a particular standard, quality, value or grade, in contravention of both ss 18 and 29(1)(b) of the ACL or alternatively both ss 12DA(1) and 12DB(1)(a) of the ASIC Act: see the respondents Amended Commercial List Statement filed 1 May 2024 at [108]. They contended that the representations, if construed as representations of fact, were demonstrably false, but that they were also false if construed only as reflecting the appellant’s personal opinions because he did not in fact hold, or had no reasonable basis for holding and then expressing, those opinions. In oral submissions below, senior counsel for the respondents submitted that “no one takes issue with that, that they’re all false”.

29. The respondents contended that their claims under ss 18 and 29 of the ACL (and by implication the analogous claims under the ASIC Act) overlapped such that “your Honour will find [s] 29 if you find [s] 18”.

30. As for the appellant, in his written opening submissions below, he opposed relief being granted to the respondents on five grounds:

31. That the appellant did not make the representations such that what the appellant actually said was not misleading or deceptive;

32. That the appellant was a mere conduit;

33. That there was no reliance;

34. That the claims were statute barred; and

35. To the extent that there was liability under s 18 of the ACL or s 12DA of the ASIC Act, there should be apportionment of liability.

36. In the appellant’s written closing submissions below (explained further in oral submissions) he contended that the respondents’ claims should be dismissed for the same five reasons (erroneously described as six reasons).

37. As is clear, these grounds for opposing relief did not include any contention that the representations were not false, nor that they did not have the requisite character to fall within s 29(1)(b) of the ACL or s 12DB(1)(a) of the ASIC Act.

38. The appellant also contended that the primary judge would not find that the representations, if made, fell within s 29(1)(b) of the ACL or s 12DB(1)(a) of the ASIC Act. Having made this general assertion, and after an interchange with the primary judge, ultimately he only made two submissions on this issue. First, he contended that the representations as to stability and profitability (representations (7), (8) and (9)), if construed as going to Ralan rather than its services, did not fall within these provisions, but alternatively that if these were found to be representations that the chance of recovery was high, then they went to an attribute or standard of the service. Second, he accepted that the representation that the 15% offer (in representations (1) and (6), and by implication also (13)(b)) was limited to VIPs went to the nature of the loan as an attribute or special feature, effectively accepting it came within s 29(1)(b) of the ACL or s 12DB(1)(a) of the ASIC Act.

“In the short term those deposits were not at high risk but in the medium to long term those deposits were at high risk.”

45. It is thus apparent that the appellant’s defence was heavily dependent upon the court accepting his evidence and making the findings of fact he sought. If the court did not make those findings of fact, and found that the alleged representations were made, the appellant contested the alleged falsity of the representations in only very limited respects (and made multiple significant concessions). Moreover, the submission that the representations did not fall within the ambit of s 29(1)(b) of the ACL or s 12DB(1)(a) of the ASIC Act ultimately was limited to the representations about stability and profitability, and turned, as is clear from [30(5)] above, on the proper characterisation of the representations. Thus, the assumption underlying the respondents’ submission below that it was not in issue that the misrepresentations, if made, fell within s 29 of the ACL and s 12DB of the ASIC Act (see [29] above) was largely well founded.

Did the primary judge err as alleged?

46. As Allsop P stated in Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 at [2] (McColl JA agreeing), in a passage to which Leeming JA recently referred in Curtis v Curtis [2024] NSWCA 136 at [91] (Mitchelmore JA and Basten AJA agreeing), “central controversies put up for resolution by the parties must be dealt with”, and “[t]he competing evidence directed or relevant to such controversies must be analysed and resolved”. Whilst both of these cases involved complaints that judicial reasons were inadequate, the force of what Allsop P held is equally apparent here where it is alleged that the primary judge failed to make a necessary finding. As to this, the primary judge was not required to do more than adopt “the standard common law judicial technique of deciding no more than what needs to be decided”: Mann v Paterson Constructions Pty Ltd (2019) 267 CLR 560; [2019] HCA 32 at [76] (Gageler J, as his Honour then was), as applied by Leeming JA in Wass v DPP (2023) 111 NSWLR 210; [2023] NSWCA 71 at [19] (Bell CJ and Kirk JA agreeing).

47. To the extent that there were numerous matters that were not put in issue, there was no need for the primary judge to deal with them. The statement of principle in TPG Internet (at [22] above) relied upon by the appellant does not require the court to determine whether a representation is misleading or deceptive when that is not something that was in issue in the proceedings.

48. Here, the primary judge rejected all key elements of the appellant’s evidence. This led to the primary judge finding that each of the representations set out at [14] above were made. In so finding, the primary judge rejected one key plank of the appellant’s defence to the respondents’ claim. Insofar as is relevant given the limited ambit of this appeal, this left only limited matters in issue, going to the meaning of some of the representations, and as to whether there were reasonable grounds for some future representations.

49. The primary judge made findings as to those limited matters that were in issue. He found that the appellant did not have a reasonable basis for conveying anything to the respondents about Ralan’s profitability, stability, prospects of it or its off-the-plan projects or trustworthiness, nor for asserting that Mr O’Dwyer was honest: [179]. He also found that the appellant had “no reasonable basis for making representations about the future of Ralan or its developments”: [212], nor “for expressing any of his opinions about Ralan’s stability, prospects or financial standing”: [213]. That dealt with, and indeed went beyond, the contention advanced by the appellant below that the representations had a reasonable basis insofar as they were representations as to future matters.

50. The primary judge identified at [196]-[197] that, as to the question whether the representations were misleading or deceptive, the single matter that the appellant had put in issue was the meaning of any representation he was found to have made as to the stability of Ralan. As to this, the primary judge found that the representation that Ralan was stable was a representation both as to the present and as to Ralan’s future prospects: [211].

“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.”

53. The primary judge was clearly satisfied on the evidence before him that the representations were misleading or deceptive.

54. The one matter which the appellant raised in oral (but not written) submissions before the primary judge, but which was not referenced by the primary judge at [196]-[197], was as to whether representation (5), that the funds released would be used in meeting construction costs “and in some instances as working capital for Ralan” included, within the meaning of “working capital for Ralan”, use in repaying loans and interest payable to other investors (discussed above at [38]). Whilst this was not separately identified at [196]-[197], the primary judge found that representation (5) was falsified because “Ralan was using the released deposits not for construction, but to fund losses and pay other lenders interest on their released deposits” (at [206], extracted at [52] above). Implicit in that is a rejection of the appellant’s contention as to the (manifestly strained) meaning of “working capital” in representation (5). In these circumstances, it is of no significance whatsoever that the primary judge did not refer to this at [196]-[197].

55. The primary judge, at [200]-[201] also correctly identified the appellant’s position as to the potential application of s 12DB of the ASIC Act as set out above at [30(5)].

56. Ultimately, however, the primary judge made positive findings that only 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 (being representations (6), (2) and (5) respectively), were representations in connection with the supply or use of financial services and as to the standard, quality or value of those services and contravened s 29 of the ACL and s 12DB of the ASIC Act: [214], [239].

57. His Honour found that these representations, alone, were sufficient, in themselves, for the respondents to have judgment against the appellant: [239]. Contrary to the submission of senior counsel for the appellant on appeal, this finding is not in any way inconsistent with the primary judge’s findings as to loss at [224]-[230]. At [226] the primary judge found that the respondents relied upon each of the appellant’s individual representations, and rejected the contention that representations made in the context of the purchase of the Lindfield Property ceased to have effect at any relevant time. Whilst the primary judge also found that the “cumulative effect [of the representations] was overwhelming”: [226], and that “[t]he representations played a major role in inducing the plaintiffs to buy the apartments and participate in the Released Deposit Scheme”: [228], these are not findings that excluded, or are inconsistent with, the finding at [239] that causation of loss was established even if only representations (2), (5) and (6) were taken into account.

58. In any event, to the extent that the representations as to the stability of Ralan were not found to fall within s 29 of the ACL or s 12DB of the ASIC Act, it is clear from a reading of the primary judge’s reasons as a whole that his Honour found that they fell within s 18 of the ACL or s 12DA of the ASIC Act. In the context of the limited matters put in issue by the appellant below, that necessarily follows from his Honour’s conclusions that the representations were made, that the appellant did not have a reasonable basis for making representations about the future of Ralan or its developments or for expressing opinions about Ralan’s stability, prospects or financial standing and that the representations were falsified: [206], [212]-[213]. It is also apparent from his Honour’s approach to causation, which was predicated upon the cumulative effect of the representations and their falsity: see eg at [226]-[227].

Conclusion

61. The usual order as to costs should follow. No submission was made to the contrary.

62. The orders I propose are:

63. Appeal dismissed.

64. Appellant to pay the respondents’ costs.

65. BALL JA: I agree with Stern JA.

66. PRICE AJA: I agree with Stern JA.