Lee v Westpac Banking Corporation

BACKGROUND 1 These proceedings were commenced on 26 April 2013. They are constituted as a class action. The claims are complex, as is the existing version of the statement of claim. There have been many earlier iterations. On 15 May 2015 I dismissed an application to amend, giving reasons. The existing causes of action are outlined in those reasons. I concluded that, if the proposed amendments were allowed, the statement of claim would have been defective in the following respects: the applicants would impute to Westpac, knowledge obtained by certain employees at numerous meetings and seminars, without attributing any aspect of such knowledge to a particular employee, or identifying the occasion or occasions on which such knowledge was acquired (reasons, [25]-[29]); no express basis for the aggregation of such knowledge would be pleaded (reasons, [29]-[45]); the pleading would not adequately identify the factual basis on which the knowledge of certain employees was attributable to Westpac (reasons, [45]); references in the pleading to "Storm Liaison Officers" would be misleading, inconsistent and lacking in any factual basis (reasons, [40]); the applicants would not plead the facts material to establishing Westpac's conduct in connection with the Storm Model, or the connection between such conduct and the applicant's loss (reasons, [51]-[55]); the pleading would fail adequately to identify the scope of the duty of the diligent and prudent banker (reasons, [56]); and with regard to the unconscionable conduct claim, the applicants would not plead the "counter factual" (reasons, [58]).

further proposed amendments 2 I am now considering a further application for leave to amend and to add a further cause of action. At the hearing of the application, the respondent opposed numerous aspects of the application. After the hearing, I was advised that the parties had reached agreement as to some of the matters in dispute. I understand that the respondent now relies on paras 1-4, 16-32 and 34-41 of its outline. Paragraphs 1-4 are either formal in nature or address only matters which are largely non-controversial. 3 At the hearing, the respondent addressed three aspects: first, the proposed pleading of the respondent's alleged knowledge; second, the proposed pleading of the applicants' case pursuant to s 73(14) of the Trade Practices Act 1974 (Cth) (the "Trade Practices Act"); and third, the proposed pleading of a further cause of action namely, that the respondent was involved in certain breaches of s 12GF(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (the "ASIC Act") and s 1041H of the Corporations Act 2001 (Cth) (the "Corporations Act"), the alleged principal contravener in each case being Storm Financial Ltd ("Storm"). 4 The agreement between the parties, reached after the hearing, means that I need not consider the first aspect.

section 73 - a linked credit provider 5 Section 73(1) of the Trade Practices Act provides: (1) Where: (a) a corporation (in this section referred to as the supplier) supplies goods, or causes goods to be supplied, to a linked credit provider of the supplier and a consumer enters into a contract with the linked credit provider for the provision of credit in respect of the supply by way of sale, lease, hire or hire-purchase of the goods to the consumer; or (b) a consumer enters into a contract with a linked credit provider of a corporation (in this section also referred to as the supplier) for the provision of credit in respect of the supply by the supplier of goods or services, or goods and services, to the consumer; and the consumer suffers loss or damage as a result of misrepresentation, breach of contract, or failure of consideration in relation to the contract, or as a result of a breach of a condition that is implied in the contract by virtue of section 70, 71 or 72 or of a warranty that is implied in the contract by virtue of section 74 of this Act or section 12ED of the Australian Securities and Investments Commission Act 2001, the supplier and the linked credit provider are, subject to this section, jointly and severally liable to the consumer for the amount of the loss or damage, and the consumer may recover that amount by action in accordance with this section in a court of competent jurisdiction. 6 In s 73(14) the terms "credit provider" and "linked credit provider" are defined as follows: credit provider means a corporation providing, or proposing to provide, in the course of a business carried on by the corporation, credit to consumers in relation to the acquisition of goods or services. linked credit provider, in relation to a supplier, means a credit provider: (a) with whom the supplier has a contract, arrangement or understanding relating to: (i) the supply to the supplier of goods in which the supplier deals; (ii) the business carried on by the supplier of supplying goods or services; or (iii) the provision to persons to whom goods or services are supplied by the supplier of credit in respect of payment for those goods or services; (b) to whom the supplier, by arrangement with the credit provider, regularly refers persons for the purpose of obtaining credit; (c) whose forms of contract or forms of application or offers for credit are, by arrangement with the credit provider, made available to persons by the supplier; or (d) with whom the supplier has a contract, arrangement or understanding under which contracts or applications or offers for credit from the credit provider may be signed by persons at premises of the supplier. 7 Section 73 was enacted by the Trade Practices Revision Act 1986 (Cth). That legislation was originally introduced in 1985 but was not enacted until 1986. There were two explanatory memoranda, one issued in 1985 and one, in 1986. Concerning s 73, the 1986 explanatory memorandum states: 142. The existing s. 73 absolves a finance company from all liability under the Act for the defective condition of goods it has provided in certain circumstances. The section ensures that the dealer who actually handles the goods, rather than a company that finances the transaction, is responsible under the conditions and warranties implied by Division 2 for the quality of goods supplied by way of hire-purchase or lease. 143. However, in some cases the credit provider must carry some fault. If he has an arrangement with the supplier to provide credit in respect of purchases from the supplier, he is aiding the supplier's business. He is then in a better position to know of the solvency of the supplier and depending on the connection he may be able to exercise some control over the supplier's business conduct. 144. Under the credit legislation recently introduced in New South Wales, Victoria, Western Australia and the Australian Capital Territory, where a credit provider who is linked to the supplier provides credit to a consumer in respect of a purchase from the supplier, the credit provider and the supplier are liable jointly and severally for any breach of the contract of sale, misrepresentation or failure of consideration. 145. The existing s. 71 is being repealed and replaced with a section modelled on and consistent with the linked credit provider provisions in the State Credit legislation (see e.g. s. 24 Credit Act 1984 (NSW), s. 24 Credit Act 1984 (Vic.)). Sub-s. (1) provides that a "linked credit provider" (as defined in sub-s. (l4)) is liable jointly and severally with the supplier for any misrepresentation, failure of consideration or breach of the contract of sale. However, where judgment is given against a supplier and a linked credit provider, the consumer must first demand payment from the supplier and may exercise his rights against the credit provider only to the extent that the judgment was not satisfied by the supplier. It is a defence if the credit provider establishes that the credit provided was not as a result of an approach from the consumer induced by the supplier, or that he was satisfied by due enquiry before becoming a linked credit provider of the supplier's financial standing and good business conduct and subsequently he had no reason to suspect that a consumer might be entitled to recover loss against the supplier (sub-s. (3)). 146. Where the credit provider is not linked to the supplier, sub-s. (2) makes clear that the credit provider is not liable for breaches of the conditions and warranties implied by Division 2. In these circumstances the consumer can seek redress from the supplier. 8 The applicants seek to recover, pursuant to s 73, losses allegedly incurred as the result of breaches of contract and misrepresentations by Storm. As to the claims in contract, the applicants plead that they entered into two contracts with Storm, the "Storm Advice Retainer" and the "Step Agreement". They allege that the group members entered into similar contracts with Storm. The "group members" are the persons, other than the applicants, whom the applicants claim to represent in this class action. In paras 67 and 70, the applicants plead that each contract contained two implied terms. In para 68 they plead that another term was "included". It seems that this term may have been, on the applicants' case, either express or implied. The applicants allege breaches of such terms by Storm, and that they and the group members have suffered damage. 9 As to the claimed misrepresentations, at paras 75-81, the applicants plead that: ten representations were made by Storm; such representations were untrue, misleading or deceptive, or were made without any reasonable basis, or without the exercise of due care and skill (the "fault pleading"); such representations were not corrected or qualified at any later stage; Storm thereby contravened s 12DA of the ASIC Act and/or s 1041H of the Corporations Act; such representations were relied upon by the applicants; and as a result the applicants suffered loss. 10 In the interests of simplicity, I have omitted some of the pleaded facts. At paras 83-88, similar allegations are pleaded on behalf of the group members. For present purposes, the respondent raises no issue concerning the pleading of these causes of action against Storm. 11 At paras 89-92, the applicants plead the circumstances which are said to demonstrate that the respondent was a linked credit provider of Storm. That proposition, and the facts pleaded in para 93, are said to lead to the conclusion that Storm and the respondent are jointly liable to the applicants and the group members for losses suffered as a result of Storm's alleged breaches of contract and/or misrepresentations. 12 At para 92 the applicants plead: 92. In the premises pleaded at paragraphs 89-91 above, Westpac was a "linked credit provider" in relation to Storm, within the meaning of section 73(14) of the TPA, during the Relevant Period, in that: (1) Westpac and Storm, in the premises pleaded at paragraphs 90-91, had a contract, arrangement or understanding relating to: (a) the business carried on by Storm of supplying the Services to its clients; (b) the provision to Storm's clients of credit in respect of payment for the Services; (2) in the premises pleaded at paragraph 91, Westpac was a corporation to whom Storm, by arrangement with Westpac, regularly referred persons, being its clients, for the purpose of obtaining credit; (3) in the premises pleaded at paragraph 91, Westpac was a corporation whose forms of contract or forms of application or offers for credit were, by arrangement with Westpac, made available to persons, being Storm's clients, by Storm; (4) in the premises pleaded at paragraph 91, Westpac was a corporation with whom Storm had an understanding or arrangement under which contracts or loan application or offers for credit from Westpac may be signed by persons at premises of Storm. 13 After setting out s 73(14), the respondent submits at paras 17-19 of its outline: 17 If a credit provider satisfies this definition and a consumer enters into a contract with the linked credit provider for the provision of credit in relation to the supply of goods or services by the supplier to the consumer, then the linked credit provider is jointly liable, with the supplier, for the supplier's "… misrepresentation, breach of contract, or failure of consideration in relation to the contract, or … breach of a condition that is implied in the contract by virtue of section 70, 71 or 72 or of a warranty that is implied into the contract by virtue of section 74 of [the TPA] or section 12ED of the [ASIC Act]" (see s. 73(1)). 18 For the contract or arrangement to have this effect, it must have been intended that there would be a direct and immediate connection between it and the supply of credit to the customer, in relation to the supply of goods by the supplier. This interpretation is consistent with the explanatory memorandum to the bill that introduced the linked credit provider provisions. In particular, the explanatory memorandum indicates: ... "… in some cases the credit provider must carry some fault. If he has an arrangement with the supplier to provide credit in respect of purchases from the supplier, he is aiding the supplier's business. He is then in a better position to know of the solvency of the supplier and depending on the connection he may be able to exercise some control over the supplier's business conduct" ([137], emphasis added). 19 For this reason, the requirement, in subsection 73(14)(a), that the contract arrangement or understanding be one "relating to" one of the matters in sub-sub-paragraphs (i)-(iii) should be construed to require a direct and immediate connection. ... (Footnotes omitted.) 14 Section 73 is somewhat complex. I do not propose to express a concluded view as to its proper construction. However I consider that there is an available construction which is more favourable to the applicants than is that urged by the respondent. The first sentence of para 18 of the respondent's submissions seems to mean that for the contract or arrangement (between Storm and the respondent) to result in the respondent's being jointly liable, with Storm, for the consequences of the latter's conduct, the supply of credit by the respondent to Storm's clients must be "directly and immediately" linked to that contract or arrangement (between Storm and the respondent). The respondent submits that the cited passage from para 143 of the 1986 explanatory memorandum supports that proposition. There is no doubt that s 73(1) contemplates a link between the supply of credit (by a supplier's linked credit provider) and the supply of goods or services (by that supplier). In those circumstances, s 73 imposes, upon the linked credit provider, liability for loss suffered by the consumer as the result of the supplier's conduct. There also is no doubt that the cited passage purports to justify the proposed legislation by asserting that in "some cases" a credit provider may be able to exercise control over the supplier's conduct. Whilst it is true that s 73(3) contemplates the linked credit provider having some knowledge of the supplier's business affairs, there is no suggestion that the operation of s 73 is dependent upon the linked credit provider being able to exercise any such control. Nor does the explanatory memorandum suggest that the operation of the section is to be so limited. 15 The respondent refers to some of the authorities concerning the expression "relating to", conceding that the phrase has frequently been construed as "wide and far-reaching". It submits that overall, it must be construed in accordance with the statutory contextual purpose. The respondent then refers to cases in which a direct or immediate connection has been required in order to constitute such a relationship. It is not necessary, at this stage, that I consider those authorities. The respondent submits that: 23 It could not have been intended that the mere fact of any contract arrangement or understanding between a credit provider and a supplier, regardless of its subject matter, would render the former a linked credit provider under s. 73(14)(a), and subject it to the attendant joint liability for the supplier's wrongful acts. Whatever the limits might be, delineating contracts and arrangements that do have this effect from those which do not, it is clear that the "Financial Industry Planning Package" relied upon in paragraph 90 is outside those limits. It has no connection with the offering of credit to customers of Storm. 24 As such, paragraph 90 does not make out an arguable contract arrangement or understanding within the meaning of s. 73(14)(a) of the TPA. Accordingly, no leave should be granted in respect of paragraph 90 of the ASOC. 16 I doubt the correctness of this submission. For present purposes, s 73(1)(a) is not relevant, Storm not having supplied goods. The starting point is s 73(1)(b). That provision is engaged when: a consumer enters into a contract with a linked credit provider of a supplier; for the provision of credit; in respect of the supply by the said supplier to the consumer, of services. 17 Section 73(1)(b) will only be engaged in the present case if the respondent was a linked credit provider of Storm. I do not understand there to be any challenge to the proposition that the respondent was a "credit provider". Pursuant to s 73(14), the respondent would have been Storm's linked credit provider if: (a) Storm had a contract, arrangement or understanding with the respondent, relating to: (i) ... ; (ii) the business carried on by Storm of supplying services; or (iii) the provision to persons to whom Storm supplied services of credit, in respect of payment for those services; or (b) Storm, by arrangement with the respondent, regularly referred persons to the respondent for the purpose of obtaining credit; or (c) the respondent's forms of contract or forms of application or offers for credit were, by arrangement with the respondent, made available to persons by Storm; or (d) Storm had a contract, arrangement or understanding with the respondent, under which contracts, applications or offers for credit from the respondent might be signed at Storm's premises. 18 The applicants need only show that any one of the three alternatives in para 73(14)(a) of the definition, or any one of paras 73(14)(b), (c) and (d) is satisfied in order to establish that the respondent was a linked credit provider. 19 In paras 17-18 of its submissions, the respondent seems to conflate ss 73(1)(b) and 73(14). It submits that if it were intended that the linked credit provider be liable for damage attributable to the supplier of the services, it must have been intended that there would be a direct and immediate connection between it (the contract, arrangement or understanding between the respondent and Storm, referred to in s 73(14)) and the supply of credit to the consumer in respect of the supply of services by Storm, (being the matters referred to in s 73(1)(b)). As I have said, in order that s 73(1)(b) be engaged there must be a relationship between the contract for the provision of credit by the respondent and the supply of services by Storm. There is no express requirement that there be a relationship between the contract, arrangement or understanding mentioned in s 73(14)(a) (between the respondent and Storm) and the transactions referred to in s 73(1)(b). Rather, s 73(3)(a) provides that the respondent will avoid liability if it establishes that the supply of credit to the consumer was the result of an approach to the respondent by that consumer, which approach was not induced by Storm. In other words, the respondent must prove that the approach was not induced by Storm, whether pursuant to any contract, arrangement or understanding between it and the respondent, or otherwise. I presently see no basis for the proposition that there must be a direct and immediate connection as submitted by the respondent. The applicants also rely upon other subsections of s 73(14). See para 92 of the proposed pleading. The respondent has not challenged that aspect of the pleading.

THE RESPONDENT'S ALLEGED INVOLVEMENT IN STATUTORY CONTRAVENTIONS 20 Section 1041H(1) of the Corporations Act provides: A person must not, in this jurisdiction, engage in conduct, in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive. 21 Section 1401(I)(1) provides: A person who suffers loss or damage by conduct of another person that was engaged in in contravention of section 1041E, 1041F, 1041G or 1041H may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention, whether or not that other person or any person involved in the contravention has been convicted of an offence in respect of the contravention. 22 Section 79 of the Corporations Act provides: A person is involved in a contravention if, and only if, the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced, whether by threats or promises or otherwise, the contravention; or (c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention. 23 Section 12DA(1) of the ASIC Act provides: 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. 24 Section 12GF(1) provides: A person who suffers loss or damage by conduct of another person that contravenes a provision of Subdivision C (sections 12CA to 12CC) or Subdivision D (sections 12DA to 12DN) may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention. 25 There is, in the ASIC Act, no provision equivalent to s 79 of the Corporations Act. However s 5(2)(b) provides: an expression that: (i) is used, but not defined, in this Act; and (ii) is not defined in section 761A of the Corporations Act; and (ii) is used in the Corporations Act; has the same meaning in this Act as in the Corporations Act. 26 The term "involved in the contravention" is not defined in s 761A. 27 Section 5(3) of the ASIC Act provides: Except so far as the contrary intention appears in this Act, Parts 1.2 and 1.3 of the Corporations Act apply for the purposes of this Act as if the provisions of this Act were provisions of that Act. 28 Section 79 of the Corporations Act is in Part 1.2 of that Act. Hence, pursuant to both s 5(2)(b) and s 5(3), s 79 regulates the meaning of the term "involved in the contravention" in s 12GF of the ASIC Act, as well as in s 1401(I)(1) of the Corporations Act. 29 The applicants seek to plead, at para 106 of the proposed pleading, that the respondent was involved in Storm's contraventions of S 1041H of the Corporations Act and s 12DA of the ASIC Act, without identifying the only apparent basis for such allegation, namely reliance on one of the legs of s 79. Paragraph 106 relates to the applicants' claimed loss. Paragraph 107 relates to that of the group members. Curiously, in para 106, the applicants seek to plead that the respondent was "involved" in Storm's alleged contravention of each Act. However, in para 107, the applicants seek to plead that the respondent was "knowingly concerned in, or party to" Storm's contravention of s 12DA of the ASIC Act, but that it was "involved" in Storm's contravention of s 1041H of the Corporations Act. 30 The respondent submits that the applicants do not plead: conduct which might constitute involvement in any contravention; or that it had relevant knowledge at relevant times. 31 The inconsistencies in paras 106 and 107 to which I have referred relate directly to the respondent's criticisms. As I have said, the applicants' pleading, in paras 106 and 107, must rely upon s 79. Similar provisions were explained by the High Court in Giorgianni v The Queen (1985) 156 CLR 473 and in Yorke v Lucas (1985) 158 CLR 661. In effect those cases establish that one person (the "accessory") cannot be involved in another person's contravention of a statutory provision, unless such contravention is proven as against the accessory. In Yorke v Lucas at 670, Mason ACJ and Wilson, Deane and Dawson JJ offered the following brief summary of the effect of a provision such as s 79(c): In our view, the proper construction of par. (c) requires a party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention. 32 In the present case, the applicants must prove, as against the respondent that: Storm made each of the various representations; and that each representation had one or other of the characteristics pleaded in the fault pleading (at para 79 of the proposed pleading). 33 The applicants must also prove that: the respondent was concerned in, or party to the contravention, meaning that it participated in it; and that at the time of such participation, the respondent knew all essential elements of the contravention, such knowledge being actual and not merely constructive. 34 Authority for these propositions is to be found in the decisions in Giorgianni v The Queen at 487, 495 and 504-505, and in Yorke v Lucas at 666-670 and 676-677. In the present case the applicants initially sought to rely on constructive notice. However they now apparently concede that they cannot do so in order to establish the respondent's relevant knowledge for the purposes of s 79. 35 I should point out that the High Court's view of the relevant section in Yorke v Lucas (which was in virtually identical terms to those of s 79) was based upon its having been derived from the criminal law. However the accessorial liability in question in Yorke v Lucas was civil in nature. In any event there can be little merit in an approach to the section in issue in that case, or s 79 in the present case, which approach attributes to the relevant section different meanings, depending upon whether the contravention in question is criminal or civil. 36 Yorke v Lucas concerned alleged involvement in misleading or deceptive conduct. The effect of the decision is that although it is not necessary, as against a principal contravener, to show that he or she was aware of the misleading or deceptive nature of the relevant conduct, it is necessary to prove that an alleged accessory had such knowledge in order that accessorial liability be established. For present purposes I accept that the relevant conduct by Storm is that pleaded in paras 75-78 of the proposed pleading, and that paras 79-80 allege that each of the ten representations had one of the characteristics identified in the fault pleading. As to the latter question, there may be a need for further particulars, but that matter is not presently under consideration. However the respondent's alleged knowledge of Storm's impugned conduct, and of its character, having regard to the fault pleading, is presently under consideration.

PARTICIPATION 37 The applicants must plead the specific conduct by the respondent which is said to constitute participation in each contravention. As the majority said in Yorke v Lucas at 670, the requirement is that the alleged party be an intentional participant in the contravention. The question of participation did not loom large in either Giorgianni v The Queen or Yorke v Lucas. In the former, the alleged aiding, abetting, counselling or procuring was the conduct of the alleged accessory in causing the principal offender to drive the vehicle. In Yorke v Lucas, the misleading or deceptive conduct was that of the "accessory", although he was not aware of the misleading or deceptive character of such conduct. In each case, the relevant "involvement" was clear. There is no suggestion in the present case that the respondent caused Storm to engage in the relevant conduct, nor any direct allegation that it otherwise participated in each or any of the ten representations. 38 In each of paras 106 and 107 of the proposed pleading, the introductory part seems to go to knowledge rather than to the question of being concerned in, or party to an alleged contravention. The numbered paragraphs (which make up the balance of each paragraph) merely allege involvement, or knowing concern in, or being party to a contravention, without any particulars. In effect, neither para 106 nor para 107 identifies any conduct amounting to participation in the contraventions, let alone knowing participation. It may be that the applicants propose to establish such conduct by reference to the paragraphs identified in the earlier parts of paras 106 and 107, but the proposed pleading does not say so.

KNOWLEDGE 39 Rule 16.43 of the Federal Court Rules 2011 (Cth) (the "Rules") requires that the pleader state, in the pleading, the facts relied upon to prove actual or constructive knowledge. The question of constructive knowledge does not arise in this case. As I have said, the applicants must show that the respondent had actual knowledge of the essential elements of each contravention, including the relevant conduct by Storm and the relevant characteristics identified in the fault pleading. Hence they must plead the basis upon which they allege knowledge with respect to each representation. 40 Paragraphs 36-46 and 91 of the proposed pleading deal with the knowledge of various of the respondent's employees, and the ways in which the applicants seek to attribute such knowledge to the respondent for various purposes. Those paragraphs seem not to have been drafted with s 79 in mind. The accessorial case must focus on the ten representations to which I have referred. The applicants must first identify the conduct by the respondent which is said to constitute its involvement in each representation, and then identify the respondent's knowledge concerning each of them. It is not sufficient for the applicants to plead a series of generalized allegations and assert reliance on all of them as proving generalized knowledge. 41 The respondent draws particular attention to the fact that the applicants may have to prove knowledge at particular points in time, depending upon the conduct which is said to constitute its being concerned in, or party to each contravention. It cannot be seriously suggested that the respondent's state of knowledge remained the same throughout the relevant period, whatever that period may be. The proposed pleading suggests that the relevant knowledge was obtained at various times. In the absence of any pleading as to the relevant conduct, it is impossible to identify the points in time at which the respondent's knowledge must be assessed, let alone to identify the state of knowledge at each such point. 42 The applicants assert that the relevant knowledge must have been acquired by the respondent "prior to, or in the course of commission, of the contravention", relying on the decision of Palmer J in Australian Securities and Investments Commission v Australian Investors Forum Pty Ltd (No 2) (2005) 53 ACSR 305 at [114] and that of Gordon J in Digital Cinema Network Pty Ltd v Omnilab Media Pty Ltd (No 2) [2011] FCA 509 at [171]. The applicants seem to suggest that the sum of all knowledge so obtained, at any such time, will be the knowledge of the relevant party for all relevant purposes, and at all relevant times. However Palmer and Gordon JJ, were making the point that knowledge could not relevantly be obtained after the contravention had occurred, simply because the respondent's knowledge must be that at the time of its alleged involvement. The pleading as to knowledge must necessarily identify such knowledge at the time or times of the respondent's involvement. The relevant conduct with respect to a particular representation may involve more than one act, the acts having occurred at different times. 43 The applicants submit that Storm's contraventions began when it made the relevant representations and continued, "and had continuing effect" for so long as the applicants and the group members were clients of Storm. That may be so, although one might expect that the only relevant misrepresentations were those which came to the knowledge of a particular client, and upon which he or she claims to have relied. A relevant client may not have become aware of a representation by Storm, acted upon it, or suffered loss until a later time. However the respondent's involvement must be in the contravention, not in the events following the contravention. It may be, as the applicants submit, that in some cases, a representation may have continued to have effect long after it was made, unless steps were taken to neutralize such effect. However it is difficult to see how the respondent could have been involved in a contravention by virtue of conduct occurring after the contravention had occurred, assuming that it had not previously been so involved. An accessory may have an obligation to neutralize misleading or deceptive conduct in which he or she was knowingly concerned, or to which he or she was a party, but not otherwise. In any event, if the applicants wish to raise such a case against the respondent, they have not done so in paras 106 and 107.

ORDERS 44 The present pleading of involvement pursuant to s 79 is deficient in that it does not plead the facts upon which such involvement is alleged. Such facts are primarily those going to show that the respondent was concerned in, or party to each contravention, and those demonstrating knowledge of the essential elements of each contravention. I refuse leave to amend by adding paras 106 and 107. I shall allow the proposed amendments concerning the s 73 claim. I shall adjourn the matter to allow the parties to settle appropriate orders. I shall hear submissions as to costs. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.