Tredmore Pty Ltd v Atlas Advisors Australia Pty Ltd

The disposition of the appellants' claims by the primary judge

1. At the commencement of the hearing below, the appellants abandoned their pleaded claims in relation to any conduct of the respondents in 2019, when their monies were alleged to have been reinvested. The appellants' finally pleaded claim alleged misleading or deceptive conduct by Atlas and Ms Zhuang in April and May 2017; unconscionable conduct by Atlas and Ms Zhuang between July 2015 and May 2017; and, alternatively in relation to Ms Zhuang, that she was a person 'involved' in the misleading or deceptive conduct and unconscionable conduct of Atlas.
2. The primary judge upheld the appellants' claim of misleading or deceptive conduct in relation to the representation made in the 4 May 2017 WeChat exchange that "the Steller Fund is very safe", and otherwise dismissed their claim in respect of representations made in that exchange (J[167]-[209]). His Honour found that this representation was falsified by the uncontroversial fact that "the properties which were to be developed by Steller Developments were not… owned by Steller Developments, nor were contracts in place for their acquisition or development by Steller Developments" (J[195]). His Honour found the making of that representation (in Mandarin and using the term "anquan") was misleading or deceptive in contravention of s 1041H (J[195], [219]). His Honour found that conduct was causative of the appellants' losses in respect of their investments of $2 million and $800,000, each made on 26 May 2017 (J[219]).
3. His Honour did not consider or dismissed the appellants' remaining claims with respect to the May 2017 WeChat exchanges (J[220]). He also rejected the appellants' claims as to misleading or deceptive conduct by Atlas in April 2017 (J[69]-[166]). The consequence of the rejection of those earlier claims was that Tredmore's claim to damages in respect of its first investment of $2 million on 8 May 2017 failed.
4. The primary judge rejected the appellants' claims against Ms Zhuang, which alleged that her participation in the conduct in relation to which they had succeeded against Atlas also constituted misleading or deceptive conduct on her part (J[248]). His Honour also dismissed their separate claims made against her for 'involvement' in Atlas' contravening conduct (J[249]). Finally, his Honour dismissed the appellants' unconscionable conduct claims against Atlas and Ms Zhuang (J[237], [238]).
5. On 30 June 2022, judgment was entered in favour of Tredmore for losses in respect of its second $2 million investment, and in favour of Ms Lili Xue for losses in respect of her $800,000 investment. The amounts of those judgments, including interest, and taking into account distributions received (J[66]), were respectively $2,061,925 and $824,770.

The appeal

1. The appellants rely only on grounds 1 to 4 of their Notice of Appeal filed on 30 August 2022. In a note dated 7 March 2023, provided to the Court in response to an inquiry as to whether grounds 5 to 10 were pressed, it was said: The Appellants press grounds 1 to 4 of the Notice of Appeal… These grounds concern, effectively, whether the primary judge erred in not finding that a representation was made in a conversation on 6 April 2017 that investments in the Steller Fund were 'safe'.
2. Grounds 1 and 2 do not identify any error relied on in challenging that finding. They are in very general terms, each contending that the primary judge erred in omitting "to evaluate the misleading and deceptive content" of representations made in April 2017, ground 2 adding "some of which representations were admitted… and revealed by other evidence".
3. Grounds 3 and 4 are: 3. The primary judge, having found that in the 4 May 2017 WeChat exchange, the Second Respondent had stated that the First Investment was "very safe", erred in not finding that that statement was a logical corroboration of the oral communication in April 2017. 4. The primary judge erred in omitting to evaluate the content of the oral conversation in April 2017, deposed to by the Second Respondent wherein the Second Respondent admitted that she had communicated her view to the Second Appellant in the context of the "safety" of the First Investment, and at the time held the view that the First Investment was "very safe".
4. The Further Amended Statement of Claim relevantly alleged: 40 In about April 2017, Ms Xue had a meeting with Ms Zhuang at Atlas' offices, during which Ms Zhuang made the following oral representations to Ms Xue: … 40.4 Investing in the Steller Fund was a safe investment; … 40C The Representations were false and misleading in the following respects: … (c) As to paragraph 40.4 above, the [appellants'] investment in the Steller Fund was not safe because: (i) no mortgage security was taken or given by way of security over or with respect to the Properties or to secure the [appellants'] investment; … (iii) the Properties (which were to be developed by [Steller] Developments) were not all owned by [Steller] Developments, nor were contracts in place for their acquisition and/or development by [Steller] Developments; … (viii) the [respondents] had no knowledge of the terms of the personal guarantees in relation to the investments in the Steller Funds, nor of the net assets of the persons or entities providing those guarantees.
5. The appellants' note, to which reference was made in [14] above, contends that the oral "safe investment" representation was false and misleading for the following reasons: i. … the properties which were to be developed by Steller Developments were not all owned by Steller Developments, nor were contracts in place for their acquisition or development by Steller Developments. This introduced a real risk into the investment where it raised a real risk that, in the event of financial difficulty within the company which owned the relevant property or other companies within the Steller Group, the property would be realised for the benefit of creditors of that company and not for the benefit of investors in the Steller Fund; ii. There was also no relevant mortgage over the subject properties in favour of the First Respondent… which added to this structural risk, in that in the event of financial difficulty, Atlas again had no recourse against the properties, despite the Steller Investment being in 'secured commercial property debt investments' and 'backed by real property'; iii. The guarantees provided… were only enforceable by Steller Developments, not the First Respondent… (emphasis in original).
6. The first of these matters (not all of the properties to be developed were owned by Steller Developments or subject to any contract for their acquisition or development) is the subject of a finding by the primary judge (at J[119]). That finding is that whilst this matter introduced "real risk" into the investment, it only had the result of falsifying a representation in Mandarin using the term "anquan" which was translated by Ms Zhuang as equivalent to "very safe", unqualified by a reminder of the risks disclosed in the information memorandum. That finding is not the subject of any ground of appeal, and does not, on its face, falsify or make misleading a representation in Mandarin which was that the investment was "safe", in the sense of having little or no risk.
7. The second matter (no relevant mortgage in favour of Atlas) was pleaded, and was the subject of a finding (at J[116]) that it did not, either "alone or together with other matters", falsify the "safe investment" representation. That conclusion is not the subject of any ground of appeal.
8. The third of these matters (the enforceability of the guarantees) is not pleaded in the Further Amended Statement of Claim as a matter falsifying the "safe investment" representation. Nor was the enforceability of those guarantees pleaded as falsifying the pleaded representation that there were "personal guarantees from the developers in relation to investments in the Steller Fund". The matter said to falsify that pleaded representation was that the respondents had no knowledge of the terms of those guarantees or of the net assets of the persons providing them. The primary judge found that this matter would not have falsified the "safe investment" representation because any such want of knowledge did not increase the risk or reduce the security of the appellants' investment (J[134]). That finding is not challenged.
9. Finally, the abandonment of grounds of appeal 5 to 10 meant that the appeal from the orders dismissing the claims against Ms Zhuang was not maintained. For that reason, at the conclusion of oral argument, an order was made dismissing the appeal against the second respondent with costs.

The cross-appeal

1. Ground 1 is the only substantive ground of cross-appeal, and is: 1. The primary judge erred (at J[195]) in finding that the representation that was found to have been made by the Cross-Appellant (at J[191]) was falsified by the fact that: (a) the properties which were to be developed by Steller Developments Pty Limited were not all owned by that company; and (b) Steller Developments Pty Limited did not have in place contracts for the acquisition or development of all those properties.
2. The relevant representation, made in the WeChat exchange, and the respect in which it was alleged to be misleading or deceptive, were as follows: 40 … And on 4 May 2017, Ms Xue and Ms Zhuang exchanged communications in which Ms Zhuang represented to Ms Xue, in writing, as follows: 40.18 The Steller Fund is very safe; … 40C The Representations were false and misleading in the following respects: … 42 As to paragraph 40.18, the Steller Fund was not very safe for the reasons set out at sub-paragraphs 40C(c)(i)-(viii) above. [thus including (iii) as extracted in [17] set above]

Disposition of appeal (grounds 1 to 4)

1. To succeed in their pleaded claim, the appellants had to establish: first, that the "safe investment" representation was made orally; secondly, that it was misleading or deceptive; and, finally, that it caused Tredmore to make the first investment of $2 million.
2. As French CJ and Kiefel J (as her Honour then was) said in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 at [5], a pleading of misleading or deceptive conduct should clearly identify the conduct said to be misleading or deceptive; and, "where silence or non-disclosure is relied upon, the pleading should identify whether it is alleged of itself to be, in the circumstances of the case, misleading or deceptive conduct or whether it is an element of conduct, including other acts or omissions, said to be misleading or deceptive".
3. Here, that conduct as alleged was statements made by Ms Zhuang to Ms Xue in the meeting in Atlas' office in April 2017. Those statements were made in Mandarin. The witnesses' evidence of what was said is extracted below at [41] and [42]. The context in which those conversations occurred is summarised by the primary judge at J[47] to [57]. As his Honour recorded at J[71], whether the pleaded representations were made rested on what was said at the April 2017 meeting. With one exception, there is no contemporaneous documentary material relied on by the appellants as assisting the resolution of that question in favour of Ms Xue's version of events. The appellants did, however, rely upon the subsequent WeChat exchange as confirming that there were some discussions in this meeting about the safety or otherwise of the investment.
4. The appellants relied on Ms Xue's evidence as establishing that the pleaded representation was made. They also contended that, even if this Court was not satisfied of that on the basis of Ms Xue's evidence, it should nevertheless conclude that an assurance to that effect was given, having regard to Ms Zhuang's evidence of what was said.
5. The grounds of appeal and arguments made in support of them do not significantly or substantially depart from this way of putting the appellants' case. Those arguments consistently maintain that the "safe investment" representation, necessarily a term in English describing the effect of something said in Mandarin, was made by Ms Zhuang and was to be understood as conveying that the investment was safe in the sense of having "zero risk".
6. However, in their reply to the respondents' written submissions, the appellants formulate a case which was not pleaded. It is that Ms Zhuang's conduct at the April 2017 meeting "included an implied representation as to the safety of the investment in the Steller Fund".
7. The respondents submit that the appellants should not be permitted to make any argument founded on an "implied" representation. If the representation is to be implied from conduct extending beyond that relied upon in the appellants' pleaded case, it might give rise to factual questions which in turn might have been the subject of evidence. The relevant principle is clear. In a "case where, had the issue been raised in the court below, evidence could have been given which by any possibility could have prevented the point from succeeding… the point cannot be taken afterwards" (per Gibbs CJ, Wilson, Brennan and Dawson JJ in Coulton v Holcombe (1986) 162 CLR 1 at 7-8; [1986] HCA 33).
8. On consideration, the argument which the appellants describe as depending on an "implied" representation is not materially different from that made to the primary judge in reliance on Ms Zhuang's oral evidence. This argument does not identify any different conduct or contextual circumstance relevant to the question whether there was a representation made in the terms alleged and argued below.
9. As to the pleaded oral representation, it is said that the judge erred in not finding that it was made. Alternatively, it is submitted that, based on Ms Zhuang's own version of the conversation on 6 April 2017, the making of a representation in the pleaded terms was to be implied from what was otherwise said at the meeting, taking account of the context.
10. Although it was not always plain, counsel for the appellants ultimately contended that a representation was made (in Mandarin) that the investment was "safe" in the sense of having little or no risk. Crucially, it was not submitted that this representation was to be understood in the sense conveyed in the May 2017 WeChat exchange, where Ms Zhuang had used the Mandarin term "anquan".
11. The primary judge addressed whether the "safe investment" representation was made at the April meeting at J[96]-[108], concluding at J[108]: … Ms Xue's evidence does not leave me… with any "actual persuasion" that Ms Zhuang told Ms Xue in this conversation that the investment in the Steller Fund was "zero risk" or [made reference] to the due diligence report confirming that the investment was "safe" or made any broadly corresponding statements at that time. It is sufficient to reach this finding that I have concluded, by reference to Ms Xue's evidence as a whole, that she is an unreliable witness as to these matters, whose evidence has been shaped by the manner in which it was prepared and her wish to avoid making any concessions that she believes would harm her case.
12. His Honour had earlier made more general observations as to the credibility and reliability of Ms Xue's evidence. At J[21], he found: … that Ms Xue's evidence of her reliance upon Ms Zhuang overstated that reliance and substantially understated her business experience, intelligence, and capacity to make independent judgment. It seems to me that that is significantly adverse to Ms Xue's credit, where it underpinned a significant part of her evidence.
13. And at J[24], he said: I am not persuaded that Ms Xue's evidence is reliable and it seems to me that it was, at best, reconstructed and tailored to her perception of what would assist or damage her case in cross-examination. In particular, Ms Xue resisted admitting any matter in cross-examination that she thought was adverse to that case, unless she was left with no alternative other than to do so, and on occasion maintaining denials even after they had become patently unsustainable.
14. In comparison, his Honour's findings as to the credibility and reliability of Ms Zhuang's evidence were much more benign. At J[38], he observed: It seems to me that Ms Zhuang was a precise witness, with a strong understanding of the structure of the relevant financial products, and her answers were often more precise than the questions she was asked in cross-examination. I accept that there was a degree of advocacy in Ms Zhuang's evidence, although that is perhaps understandable… I am left with a degree of uncertainty as to whether the precision in her approach operated, at some times, as a way of avoiding uncomfortable questions, but it is not necessary to determine that question in order to determine the proceedings.
15. His Honour continued at J[40]: Ms Zhuang explained, plausibly (T549) that, at the time she had given her affidavit, she had not understood the extent to which translation would become a significant issue in the proceedings. Ms Zhuang's evidence was also that the texts of conversations set out in her affidavit were short summaries of more detailed conversations (T551). I am inclined to accept that evidence, which likely reflects what generally occurs when witnesses give evidence of the effect of conversations that took place some years previously… I recognise that there were occasions on which Ms Zhuang claimed not to remember matters that had occurred, including matters that occurred relatively recently, and I am uncertain as to the accuracy of her evidence in that respect. Ultimately, little turns on the criticisms of Ms Zhuang's evidence given the findings which I reach on other grounds below, which do not depend on that evidence.
16. At this point, it is convenient to set out the competing versions of these witnesses as to what was said during their meeting in Atlas' office in the morning of 6 April 2017.
17. Ms Xue's affidavit evidence as to the conversation (using "Fiona" to refer to Ms Zhuang) included that there were exchanges to the following effect: A few days later in or around late April 2017 I met with Fiona at the Atlas offices to discuss the proposed Steller Fund investment, during which Fiona said words to the following effect: Fiona said: The development is secured by mortgages and is zero risk. The investment will pay a return of approximately 10% per annum and is a single site project with presales of 50 to 70% already in place and that construction of the project cannot start until this minimum has been met. I said: Has Atlas done its own due diligence? Fiona said: Atlas has its own due diligence team and has done a report on the Steller Fund, confirming that it's safe. We would not be recommending this investment to you if it was not safe. I said: How can you do due diligence if the project is in Melbourne? Fiona said: Atlas has arranged and sent a dedicated person to Melbourne to do on site inspections and due diligence.
18. In her affidavit in response, Ms Zhuang (describing herself as 'Me') said there was a conversation (in Mandarin) to the following effect (Blue 139I-Q): Ms Xue: What is the property investment like? Me: Steller [Developments] is a property developer based in Melbourne. Steller develops smaller commercial and residential projects than other developers, but has more of them. It is well known in the Melbourne market. Ms Xue: Is it safe? Me: There are personal and group guarantees. The guarantors include two directors from two very well-known and wealthy Melbourne families. The issuer and the guarantors guarantee the punctual payment of interest distributions and the repayment of initial capital. Atlas has a due diligence team that has done due diligence on the developments. The projects are located in affluent areas of Melbourne. Because they are smaller and focused on people living in Melbourne, turnover is faster and there is less risk of low occupancy or problems with foreign investor restrictions. There is also less risk of development application problems because the developments are not so large. Atlas will have someone in Melbourne during the development to keep track of progress. Ms Xue: Ok, I will think about it.
19. As the primary judge noted at J[98], Ms Xue was cross-examined at some length as to her claim that she understood that the investment in the Steller Fund was "both risk-free and 'safe'". In her evidence, she maintained, as the primary judge observed, somewhat "inconsistently" with her concession that all investments carry risk, that she understood Ms Zhuang's alleged advice that the Steller Fund was "safe" to mean that it was "free from risk" and that "it did not contain risk" (J[98]).
20. There was a contest between these witnesses as to whether and when the information memorandum for the Steller Fund was provided to Ms Xue. Ms Xue's evidence was that she was not provided with a copy until August 2019. The primary judge rejected that evidence, being "comfortably satisfied" that he should prefer Ms Zhuang's evidence that she provided that memorandum to Ms Xue at the meeting on 6 April 2017 (J[78]).
21. In explaining his conclusion that he could not accept Ms Xue's evidence as to what was said at the April 2017 meeting, the primary judge accepted the appellants' submission that neither Ms Xue nor Ms Zhuang had "provided a full account of the conversation at the April meeting", describing that as understandable given the time which had passed (J[106]). His Honour also accepted that the evidence of both witnesses was that there was "reference to the safety of an investment in the Steller Fund at that meeting" (J[106]). That left to be resolved their different accounts of what was said on that subject. In doing so his Honour recognised that a statement by Ms Zhuang that the investment was "safe", at least for an investment of the relevant kind and rate of return, would have been consistent with the views that Ms Zhuang held in April 2017. However, his Honour did not accept that was a "reason to prefer Ms Xue's account of how that matter arose to Ms Zhuang's account" (J[106]).
22. Having concluded (at J[108]) that he could not accept Ms Xue's account, his Honour added at J[109]: … I also note that the unqualified statements attributed by Ms Xue to Ms Zhuang are inconsistent with Ms Xue's evidence as to what she said at that meeting as to the steps taken to mitigate risk in respect of investment in the Steller Fund, to which I referred above; they are inconsistent with the rate of return on the Steller Fund and the fact that a return well above the risk free rate would not be expected on a risk free investment; and they are starkly inconsistent with the risk disclosures made in the information memorandum, to which I referred above.
23. The appellants accept, as they must, that because the primary judge's finding was affected by his assessment of Ms Xue's credibility and reliability this Court should not overturn that finding unless it concludes that the primary judge's findings are "glaringly improbable" or "contrary to compelling inferences" (it not being suggested that they are otherwise inconsistent with incontrovertible facts or uncontested testimony) (Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [28]-[29]; Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55]). In the face of these insurmountable difficulties, the appellants do not submit that this Court should accept Ms Xue's evidence.
24. The starting point for their argument is the acceptance of Ms Zhuang's evidence that Ms Xue asked whether the investment was safe, and that Ms Zhuang gave an answer to that question.
25. Accepting Ms Zhuang's evidence as to her answer, the appellants nevertheless submit that her reference to two features of the investment meant that "with nothing else… that's an affirmative answer". As counsel put it: I'm inviting the Court to characterise that answer, not as an evasive answer to someone who wants some assurances to safety, but as an affirmative answer, express or implied.
26. Counsel earlier submitted, to the same effect: [Ms Zhuang's answers] should be treated or characterised as an affirmative answer to the question, irrespective of whether or not the word "yes" or the word "anquan" was used.
27. These submissions are not supported by the evidence, and so must be rejected. Ms Zhuang did not respond directly to Ms Xue's question. Instead, she referred to two features of the investment likely to mitigate, but not eliminate, any risk that payment and repayment might not occur. Accordingly, neither could have the consequence that there was little or no risk attached to the investment or justify a description of the investment as "safe" in the sense of "free from risk".
28. In this context, the appellants' reliance on Ms Zhuang's subsequent WeChat exchange as indicating that she believed the investment was "very safe", and would have said so in their earlier conversation, is misplaced. As Ms Zhuang explained, whilst "in Australian language" a "safe" investment may mean that there is little or no risk of losing capital, the Mandarin word she used in the WeChat message, "anquan", which she later translated into English as meaning "safe" or "very safe", did not mean and was "not equal to" the English words "little or no risk".
29. Ms Zhuang denied that in the April exchanges that she had said to Ms Xue in Mandarin that the "investment was a safe investment". She also gave more general evidence of her business practices.
30. She maintained that she did not say to any of her other Chinese clients that she thought an investment in the Steller Fund was "very safe"; and that earlier she did not "assure" any of her clients that an investment in the "Tasman-Epping Fund" was "safe".
31. By way of summary, a finding that Ms Zhuang's evidence as to what was said in Mandarin was to be treated as equivalent to an affirmative answer to Ms Xue's question is: contrary to Ms Xue's evidence as to what was said by Ms Zhuang; contrary to Ms Zhuang's evidence that she did not make any such unqualified and absolute statement to Ms Xue; contrary to Ms Zhuang's evidence that it was not her practice to make such unqualified statements or give such assurances to potential clients; and not a necessary consequence of the investment having the features described by Ms Zhuang in her answer.
32. From the primary judge's perspective, his Honour was not asked at first instance to make such a finding because to do so would not have been in accord with Ms Xue's evidence. In their submissions on appeal, the appellants do not contend that his Honour erred in not being persuaded by Ms Xue's evidence. Rather, it is contended that he did not need to be so persuaded, because Ms Zhuang's evidence is sufficient to establish that the alleged oral statement was made. In my view, the foregoing analysis shows why Ms Zhuang's evidence did not, and could not, do so.
33. In maintaining that the position should be found to be otherwise, the appellants also rely on the following eight reasons, which are said to make the finding of a "yes" answer to Ms Xue's question "overwhelming and compelling". The first "reason" is Ms Zhuang's evidence, which has been addressed above. That evidence is inconsistent with a finding that she answered Ms Xue's question "yes" or a finding that the effect of her answer was "yes".
34. The second is Ms Zhuang's evidence that on 6 April 2017 she discussed with Ms Xue whether the Steller investment was safe. That statement is consistent with Ms Zhuang's evidence as to what was discussed. It is also consistent with Ms Xue's evidence as to that subject matter. Ms Zhuang's later evidence does not take the resolution of the dispute between them any further.
35. The third is Ms Zhuang's statement in her affidavit in relation to the WeChat exchange that she considered the Steller investment to be "very safe". However, that evidence was an English translation of what was said in Mandarin, and that translation is not to be understood as conveying that the investment involved little or no risk. Ms Zhuang used the Mandarin term "anquan" to describe the sense in which she thought the investment was to be regarded as "safe" (see J[195]). That is not the sense in which the appellants contend Ms Zhuang's response in the April 2017 conversation is to be understood.
36. The fourth is Ms Zhuang's evidence that generally she would try her best "to make the client think" a product of hers was "a good investment". However, she made it clear that it did not follow that she would make any statement as to whether a product was "safe" or "very safe". In her evidence referred to above, she made it clear that she would not "assure" or describe to a prospective investor that an investment was "safe" or "very safe".
37. The fifth reason is that Ms Zhuang did not describe the Steller investment as unsafe or risky. That is so. However, as was submitted, it did not follow that she must or would describe it as safe or involving no risk; and Ms Zhuang's evidence of her practice was that she would not do so.
38. The sixth reason is that, in the WeChat exchange on 4 May 2017, when Ms Zhuang responded in Mandarin to Ms Xue's question, she did so by using the term "anquan", which she translated as "very safe". However, this does not make it more likely that in April 2017 she would have used Mandarin which meant or conveyed that the investment was "safe" in the sense of having little or no risk (J[178], [191], [195]).
39. The seventh reason was that Ms Zhuang said that she was "not a hundred percent sure [that] every word in [her] affidavit [was] true and correct". She added that "the meaning of it, I, the majority of it, I would say [is correct]". It was suggested by the appellants that this was a concession applicable to her affidavit evidence generally. That is not correct. Properly understood, the concession was directed to two matters. One concerned her cross-examination on the meaning of a particular English phrase in an affidavit, which "likely originated with the solicitors drafting the affidavit" rather than her (J[35]). The relevant cross-examination revealed that she did not know what "eschew" meant. The second matter was that, in her principal affidavit, she had translated into English the WeChat messages exchanged in Mandarin. Her reference in the extract above to the "meaning of it" was to those translations that were also the subject of the expert evidence of Dr Wang and Mr Yang (see J[181]ff). Neither of these concessions is relevant to what was said in April 2017.
40. The eighth and final reason was Ms Zhuang's translation of the WeChat exchanges. It is said that the primary judge made no findings as to the correctness or otherwise of those translations. That is not so. His Honour dealt with that question at some length, finally accepting Dr Wang's evidence and addressing the falsity of the exchange in which the term "anquan" was used by reference to the different meanings which Dr Wang said that it could convey in the relevant context (J[191], [195]). How any controversy about the precise meaning of this term might have influenced the resolution of what was said in April remains obscure.
41. In summary, none of these eight matters suggests that the primary judge's challenged finding was glaringly improbable or contrary to any compelling inference which arose on the evidence. Nor do they require reconsideration of my earlier analysis. The position remains as I summarised it at [55] and [56] above.
42. The appeal against the dismissal of the appellants' oral representation case should be rejected because the primary judge did not err in not being satisfied that such a representation was made in terms or to the same effect.
43. The dismissal of that appeal means that it is unnecessary to consider whether, if such a representation had been made, it was misleading or deceptive and causative of Tredmore's losses with respect of its first investment of $2 million.
44. Accordingly, the appeal should be dismissed.

Disposition of cross-appeal (grounds 1 and 2)

1. His Honour found that Ms Zhuang's description of the investment using the Mandarin term "anquan" "conveyed [among other things] that the investment was safeguarded by structural means" (J[191]) or "structural safeguards" (J[192]). That finding is not challenged on appeal.
2. Rather, Atlas challenges the holding at J[195] that, so understood, this representation was falsified in relation to an investment to be used for the acquisition and development of properties in which the borrower, Steller Developments, did not own the properties to be developed and did not have in place any contracts for the acquisition or development of those properties.
3. His Honour said of this fact at J[195]: For the reasons noted in paragraph 119 above, I accept that this matter introduced real risk into the investment where, in the event of financial difficulty within the company which owned the relevant property or other companies within the Steller Group, that property would be realised for the benefit of creditors of that company and not for the benefit of investors in the Steller Fund. It seems to me that this matter, in itself, has the result that a representation in the 4 May WeChat exchange that the investment was "safe", in the sense of "confidence in an investment not being a loss-making one" or in the other possible senses of the term "anquan" identified by Dr Wang, was misleading or deceptive.
4. His Honour then referred to Atlas' closing submissions, which relied on the distinction drawn between a statement of an existing fact and a statement of a prediction or as to a future matter when considering how such a statement must be falsified, and continued (at J[195]): I do not accept that submission, at least so far as the Plaintiffs rely on this aspect of the structure of the transaction to falsify the representation. A representation that an investment is "safe", so far as it relates to the structure of the investment, seems to me to be a representation of present fact, which is capable of being falsified if that structure involves unreasonable risks. (Emphasis added).
5. As his Honour recorded at J[119], the expert financial adviser called in the appellants' case, Mr McMaster, had expressed "the view the investment was not 'safe' because of the level of risk introduced by the fact that the relevant properties were not owned by Steller Developments". His Honour continued: I accept that this matter introduced real risk into the investment where it raised a real risk that, in the event of financial difficulty within the company which owned the relevant property or other companies within the Steller Group, that property would be realised for the benefit of creditors of that company and not for the benefit of investors in the Steller Fund.
6. Mr McMaster's report and evidence on this subject is very brief. The only reference to the significance of the fact that the property to be developed is owned by the borrowing company is contained in the executive summary of his report, and is as follows: (7) To assist the Court, I provide this summary of my opinions…: (a) I have concluded that an investment in the Fund was not a "safe" or low risk investment in May 2017 or any subsequent time. I consider that such investment would be high risk for the following reasons separately and cumulatively: (b) No mortgage security was obtained by Atlas Advisors Australia Pty Ltd... over the properties identified in Schedule 1 of the Steller Commercial Loan Note Master Facility Deed dated 2.2.17, particularly where the properties were not owned by Steller Developments Pty Ltd. …
7. Atlas contends that the primary judge erred in concluding at J[195] that this representation was misleading or deceptive.
8. First, it is said that his conclusion that such a structure introduced "real risk into the investment" was not justified because it wrongly assumed that, ordinarily, the 'developer' would be the owner of the properties to be developed. Atlas points to Ms Zhuang's evidence that developers often "set up separate companies for different developments, in order to try and contain risk" (J[49]). This was said to be consistent with the structure of the Steller group in which Steller Developments' role was as 'treasurer', borrowing and advancing funds to "associated" entities, who would own the properties and conduct the developments.
9. Atlas contends that, whether the adoption of a structure in which Steller Developments did not own the properties and did not have in place contracts for their acquisition or development introduced the real risk identified by the primary judge at J[195] requires consideration of "all of the facts". Those facts are not to be limited to the characteristics of the investment structure. Rather, they are said to require consideration of matters including whether there were group or other guarantees in favour of the investors or mortgages in place for their benefit. Taking all those matters into account, Atlas submits that it is then necessary to assess the likely risk that the investment may be a loss-making one and whether the fact that Steller Developments was not the owner of the properties affected that outcome.
10. This argument does not attend to the representation which the primary judge found, namely that the proposed investment was "safeguarded by structural means". As his Honour recognised, that representation concerns a question of fact, which was capable of being falsified at the outset if the structure of the proposed investment involved 'unreasonable' risks, which would include risks that were unnecessarily present, having regard to the purpose of the investment, which was to fund the acquisition and development of specified real property. Instead, Atlas' argument addresses the falsity or otherwise of a representation that the investment was "safe" in the sense of its "not being a loss-making one", and then focuses on a range of matters which might ultimately be relevant to a prospective assessment of the safety of the investment understood in that sense.
11. As a related argument, it is said that his Honour's analysis proceeds on the assumption that Steller Developments was the entity developing the properties, whereas its role was as group treasurer. Notwithstanding that the stated purpose of the loan facility was "the acquisition and development of real property", it is also contended that the loan facility did not identify a specific entity that was obliged to undertake those activities and did not require Steller Developments to do so. None of this calls into question the primary judge's conclusion that a representation that an investment in Steller Developments via the Steller Fund was "safeguarded by structural means" was misleading.
12. Steller Developments, as issuer of the debenture notes, did not own any of the properties to be developed, and there were not contracts in place for it to acquire them or to require that they be developed. From the appellants' perspective, they were being invited to invest in a fund which lent monies to a company, which in turn was to lend those monies, directly or indirectly, to companies which owned properties identified for development. Although the funds advanced to Steller Developments were described as "linked" to property assets, the evidence did not make clear whether those assets were to be owned by companies 'within' the Steller group or not. At the same time, it was accepted that, for the purpose of assessing risks associated with this structure, a realistic possibility was that one or more of the property-owning companies might engage in business ventures unrelated to the Steller Fund.
13. In such circumstances, the primary judge was justified in concluding that the adoption of this structure introduced risks, which would not have been present if Steller Developments had owned the property proposed for development. The property-owning company could be exposed to business risks beyond the undertaking of the development of specified property using funds contributed by the Steller Fund, thereby exposing its assets to sale and the application of the proceeds of their sale for the benefit of its creditors. As the primary judge held, the existence of this risk was sufficient to falsify the representation.
14. It is said that Mr McMaster's evidence provides little support for his Honour's analysis, in part because it is directed only to the fact that none of the properties was owned by Steller Developments, and in part because it is not accompanied by reasoning. Each of these observations is correct. However, neither of them denies or contradicts the correctness of the primary judge's reasoning and conclusion.
15. Atlas contends that the primary judge's conclusion at J[195] is inconsistent with his reasoning for concluding that the fact that no mortgages were given to secure the appellants' investments did not falsify a representation that the investment was "safe".
16. The asserted inconsistent reasoning is at J[95] and [116]. In the former paragraph, his Honour considers at a general level whether the "no-risk" and "safe investment" representations alleged to have been made in April 2017 were "false or causative of any loss suffered by Ms Xue" by reason of the absence of any mortgage security. At J[116], having noted that the falsity of each of those representations was said to depend on the outcome of an assessment of the "likelihood that investors in the Steller Fund would be repaid", the primary judge again addressed that question with reference to the absence of any mortgage security: … the likelihood that investors in the Steller Fund would be repaid depended upon the financial position of the Steller Group generally and the progress of the developments that were the subject of the Steller Fund and other developments of the Steller Group, not upon the existence or non-existence of mortgage security over the particular properties that were the subject of the Steller Fund, particularly in an undeveloped or partly developed state.
17. Contrary to Atlas' submission, this reasoning is not inconsistent with the primary judge's finding at J[195], which is extracted above at [72]. The reasoning at J[195] is directed to the falsification of a factual representation made in respect of the structure of the proposed investment at the time it was being considered. His Honour held that such a representation was capable of being falsified if that structure involved unreasonable risks. Such a risk is first identified at J[119], and revisited at J[195]. In contrast, the fact that there was no mortgage security in respect of the appellants' investment was relied on as falsifying a different representation, which concerned the likelihood that investors would not be repaid. The falsification of an opinion or prediction as to that likelihood depended upon an assessment of the overall prospects of the investment. The difference between the two representations, both arising from the use of the Mandarin term "anquan", is expressly recognised at J[191].
18. In a further submission, it is said that the primary judge's conclusion at J[195] is difficult to reconcile with his Honour's general observation in the last sentence of J[192] that a "representation of that character is not falsified by the matters on which the Plaintiffs rely". The fate of this submission depends on what his Honour is referring to by the expression "representation of that character". The short answer is that this is a reference to a representation in the nature of a prediction or opinion or otherwise as to a future matter; and to be contrasted with a "representation of present fact" (J[195]).
19. There is a similar difficulty apparent in the primary judge's discussion in J[193], where his Honour says with respect to the 'no mortgage security' argument that it does not falsify a representation that the investment was safe in the sense of not likely to be loss-making, then adding or in the "other possible senses of the term 'anquan' identified by Dr Wang". This reference to the other possible senses could be understood as including the sense "safeguarded by structural means". However, that subject is separately and expressly dealt with at J[195], and there distinguished from a representation that the investment was safe by reference to its predicted or likely outcome. In this context, his Honour's earlier comment in J[193] must be read down, and not as qualifying or contradicting his later and reasoned conclusion at J[195].
20. For these reasons, the cross-appeal also should be dismissed.

Costs

1. There remains the question of costs.
2. Each of the appeal and cross-appeal has been unsuccessful. If possible, a single costs order should be made which reflects that outcome. Taking account of the written submissions made by the parties in relation to the appeal and cross-appeal, and the time occupied in oral argument between the appeal and cross-appeal, and assuming that it reflects the overall time spent in their preparation and prosecution, it is apparent that the appeal has occupied significantly more time and effort on the part of those preparing and delivering the arguments than the cross-appeal. Looked at very broadly and on that basis, an allocation of the overall costs of the proceedings incurred by the parties between the appeal and cross-appeal of 75% to the former and 25% to the latter would seem justified, at least on the face of it.
3. Adopting that allocation, it would follow that the appellants should pay 50% of the first respondent's costs of the proceedings, and that there should be no other order as to costs. That outcome assumes that the costs incurred by both parties in the proceedings are roughly equivalent, and that any order for costs in favour of the appellants in respect of the cross-appeal is notionally set off against the order for costs to which the first respondent would otherwise be entitled in respect of its success on the appeal.
4. Because the parties have not had the opportunity to make submissions in relation to the question of costs, I would propose the following orders, which permit that to occur if either party seeks to argue that a different costs order or orders should be made: 1. Appeal dismissed. 2. Cross-appeal dismissed. 3. Appellants to pay 50% of the first respondent's costs of the proceedings (being the appeal and cross-appeal). 4. Grant leave to either party to file a notice of motion seeking to have the question of costs argued and determined otherwise than in accordance with order 3. Any such motion should be filed within 14 days of the making of these orders, and should be determined with the benefit of written submissions, but otherwise on the papers.
5. GLEESON JA: I agree with Meagher JA.

Amendments 14 April 2023 - Order 3 and [91] amended to clarify that the appellants are to pay 50% of only the first respondent's costs 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: 14 April 2023