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EX TEMPORE Judgment

1. In these proceedings, the plaintiff seeks to recover loans he made totalling $180,000 which he says he made to the first defendant at the request of the second defendant. Judgment has already been entered against the first defendant, which is now in external administration. The evidence is that the second defendant was the sole director and shareholder of the first defendant.
2. The plaintiff originally obtained default judgment against the second defendant. That default judgment was set aside and the second defendant filed a defence in the proceedings on 2 November 2021. There was, however, no appearance by the second defendant today, although I am satisfied that he was on notice of the proceedings. In particular, in an email dated 30 May 2022, the second defendant said, in response to an email that the plaintiff's solicitors had sent to him: Thank you for your email. As previously noted, I am unable to provide any representation for this matter and will not be in attendance myself.
3. The plaintiff is a retired painter who is seventy-seven years old. His first language is not English. In about late 2019 he and his wife sold their home in Nowra, New South Wales and after renting for a period of time were looking at buying in the Campbelltown area to be closer to their daughter. In order to buy a house that the plaintiff had identified as being suitable, he needed to borrow approximately $150,000. He and his wife had savings of approximately $280,000 at the time. The plaintiff had applied for loans to at least two banks, but perhaps unsurprisingly was unsuccessful. The vendor of the property which the plaintiff was interested in buying referred the plaintiff to the second defendant. Subsequently, the plaintiff and the second defendant met.
4. The plaintiff's deposes in his affidavit to the following conversation he had with the second defendant: Neil: I'm a mortgage broker, I work for Perception Wholesale Lending Solutions, and assist people to secure finance for a range of purposes. Here is a copy of my business card which has my details on it. You mentioned you were wanting to secure finance to purchase a property, do you want to tell me some more details about that? Me: We need your assistance with getting a loan to purchase a property, it's going to be an investment property which we might live in eventually. We have about $280,000.00 in savings to contribute to the purchase. It might be a bit less than that now as we have brought [sic] some furniture. I am looking to borrow about $150,000.00. Neil: Can you tell me a bit more about your financial situation, do you have any liabilities? Me: We have no debs except our daughters [sic] car, in Anna's name, the loan is about $7,000.00. Neil: It would be good if that could be paid off. I have a customer who can't complete settlement, if you lend him some money for a few days you will get interest to repay the $7,000.00. You need to be able to borrow more money to get the loan for the purchase, and to do that you need to clear the debt. Other than that, it shouldn't be an issue getting you loan approval.
5. The plaintiff agreed with the second defendant's proposal and on 19 August 2020 he signed a loan agreement with the first defendant under which he agreed to advance the sum of $100,000 which was to be repaid by 26 August 2020, together with interest of $5,000. The plaintiff advanced that money.
6. In all, at the request of the second defendant, the plaintiff made five loans. The first I have already referred to. The second loan, in the amount of $55,000, was also in writing. Shortly before that loan was made, the plaintiff deposes to a conversation which appears to have occurred in his presence on or about 26 August 2020 between the plaintiff's wife and the second defendant to the following effect: Anna: How can we trust you? You aren't giving us a receipt for all this money. Neil: I wouldn't jeopardise my name or my license for $50,000.00, if anything happens you can sue and come after me.
7. The remaining three loans were oral. The first of those three was arranged on or around 3 September 2020 in a conversation between the plaintiff and the second defendant to the following effect: Neil: I have another client I need to lend some funds to for a few days, if you lend me some money I might be able to get you some more money in interest for your stamp duty. Me: Okay I can meet you at ANZ. That loan was for the sum of $58,000.
8. The next loan was arranged in a conversation on or about 17 September 2020 in which the second defendant said to the plaintiff words to the effect of: Can you lend me a further $52,000.00, I will get you more money for stamp duty.
9. The last of the loans was arranged on or about 12 October 2020 in a conversation between the plaintiff and the second defendant to the following effect: Neil: Steve, have you checked your account? Me: No. Neil: The $55,000.00 has been repaid, do you think you could lend me another $70,000.00 for a few days? I can meet you at the bank today, I will get you another $1,000.00 in interest. Me: I can meet you later today.
10. The evidence is that each of the loans was advanced and that the first loan of $100,000 was repaid with some interest and that the second loan of $55,000 was repaid without any interest. The remaining three loans have not been repaid at all.
11. The plaintiff puts his case against the second defendant in three ways.
12. First, he submits that as a result of the conversation that occurred in relation to the second loan, between the second defendant and the plaintiff's wife, the second defendant agreed to guarantee the loans.
13. Second, the plaintiff submits that, in seeking the loans, the second defendant engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law (ACL) and that, but for that conduct, the plaintiff would not have advanced any of the three loans in respect of which he makes a claim. He says, therefore, that he is entitled to recover the amount of those loans under ss 236 or 237 of the ACL.
14. Lastly, the plaintiff claims that the second defendant owed the plaintiff fiduciary duties in connection with arranging a loan to purchase the property, and breached those fiduciary duties in seeking and obtaining loans from the plaintiff for the benefit of the first defendant, a company which he controlled.
15. In my opinion it is unnecessary to consider the first and third ways in which the plaintiff puts his claim. I am satisfied on the evidence that the plaintiff has established that the second defendant did engage in misleading and deceptive conduct, and that in reliance on that conduct the plaintiff provided the loans that he did. In particular, the second defendant represented that he held an Australian financial services licence that authorised him to act as a mortgage broker, when the evidence is that he did not have such a licence at the time he met with the plaintiff. Perhaps more significantly, during the first conversation that occurred between the plaintiff and the second defendant, the second defendant gave the plaintiff the impression that the loans that were to be advanced by the plaintiff would be used as short term loans by other clients of the second defendant, that by advancing those loans the plaintiff would be able to put himself in the position where he was likely to be able to obtain a loan to buy the property he was seeking to buy, and that, if he was able to repay the $7,000 in respect of the car loan, he should not have any difficulty in obtaining approval for the loan that he was seeking.
16. None of those representations was true. As I have said, the second defendant did not hold a licence. There was no evidence concerning how the money was used. It would have been open to the second defendant to give evidence on that matter, but he has chosen not to do so; and the evidence, in particular the loan agreements themselves, strongly suggest that the money was to be used by the first defendant for its own purposes and not be lent to other clients.
17. In my opinion the representation concerning the ability of the plaintiff to obtain a loan, if he made the loans as sought by the second defendant, was misleading. That representation was a representation as to a future matter, and it was for the second defendant to lead some evidence that there was a reasonable basis for making that representation: see ACL s 4. The second defendant has led no evidence of that sort and there is nothing in the material before me to suggest that the second defendant took any steps at all to arrange the loan that the plaintiff was seeking.
18. It appears from the defence filed by the second defendant, that his principal defence to the claim based on misleading and deceptive conduct, is that any conduct he engaged in was not engaged in personally, but was conduct of the first defendant. I do not accept that argument. The person actually making the representations was the second defendant. It is apparent that he was the directing mind and will of the first defendant, and that the representations were being made for the second defendant's benefit. The language he used in his conversations with the plaintiff was expressed in the first person, and it seems clear, from the context, that the plaintiff was relying on the second defendant personally in proceeding with the loans. In those circumstances, the second defendant cannot avoid personal liability for misleading and deceptive conduct: see Houghton v Arms (2006) 225 CLR 553; [2006] HCA 59 at [40]; Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177 at [42]. I am satisfied that if the representations had not been made, the plaintiff would not have advanced any of the loans. Accordingly, it is appropriate that he should recover the principal amount of the loans which remain outstanding as damages under s 236 of the ACL.
19. The plaintiff also claims interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW). The amount of that interest is $11,581.32.
20. Accordingly, the orders of the Court are: 1. Judgment in favour of the plaintiff against the second defendant in the sum of $191,581.32; 2. The second defendant pay the plaintiff's costs of the proceedings.