Care A2 Plus Pty Ltd v Pichardo

1. [1]

   BELL CJ: By his judgment delivered on 23 January 2023, Black J (the primary judge) held that a serious fraud had been committed by Dylan Charles Azzopardi (DA) involving contraventions of the Australian Consumer Law (ACL) and commission of the tort of deceit. His Honour ordered judgment against DA in favour of:

   1. (1)

      Care A2 Plus Pty Ltd (Care A2 Plus), for the sum of $1,970,000 plus interest; and

   2. (2)

      Care A2 Australia Pty Ltd (Care A2 Australia), for the sum of $230,000 plus interest.

2. [2]

   The primary judge found that a number of payments by the Appellants to DCA Sydney Enterprises Pty Ltd (DCA) (a small proprietary company controlled by DA) had been induced by false misrepresentations by DA to the effect that DCA had acquired streaming and broadcasting rights for the 2021 Rugby League World Cup (RLWC) for $9,000,000 and that these rights would attract an annual revenue of $15,000,000 or $30,000,000 through payment from the Australian Hotels Association (NSW) (AHA (NSW)). The fraudulently induced payments made were made on the following dates in the following amounts:

   1. (1)

      11 May 2021 – $110,000;

   2. (2)

      18 May 2021 – $1,000,000;

   3. (3)

      9 June 2021 – $850,000;

   4. (4)

      9 June 2021 – $10,000;

   5. (5)

      9 June 2021 – $130,000; and

   6. (6)

      30 June 2021 – $100,000.

3. [3]

   A series of other claims were made in the proceedings at first instance, both for other relief and against other parties (for example, against DA’s parents). Many of these claims were abandoned or not ultimately pressed during the course of the proceedings at first instance.

4. [4]

   One claim that still was pressed, however, was that made against Karla Patricia Pichardo (KP), a chartered accountant and described in correspondence to the Appellants or their representatives as the Chief Financial Officer (CFO) of DCA – a perhaps somewhat grandiose title in view of the size of DCA but a not insignificant title, as shall be seen. The primary judge’s rejection of the claims against KP is the subject of the present appeal.

5. [5]

   KP provided affidavit evidence stating that she graduated in 2000 with the degrees of Bachelor of Commerce (Accounting) and Bachelor of Commerce (Economics & Finance) from the University of Western Sydney. She commenced working as an accountant at the firm Occhiuto Partners, in the areas of Superannuation and Taxation. In 2005, KP graduated from the Chartered Accountants program, and in 2011 obtained a tax agent’s licence to work as a registered tax agent for clients. KP obtained a Certificate of Public Practice from the Institute of Chartered Accountants in 2015.

6. [6]

   The evidence also disclosed that KP had made loans valued at $37,149.77 to DCA from late 2020 to 10 May 2021, which DCA had not repaid up until the time that it started dealing with the Care A2 companies. There was also evidence that KP owned 507 shares in DCA from January 2021 although whether the “loans” and shares were by way of what is sometimes colloquially styled “sweat equity” was not apparent. KP only appears to have been paid a salary from 17 May 2021, a date post-dating the first of the payments referred to in [2] above.

7. [7]

   The claims made against KP were for misleading and deceptive conduct and tortious deceit and, in the alternative, for accessorial liability, namely knowing involvement in the misleading or deceptive conduct of DA. Exemplary damages were also sought against KP. An important difference between direct and accessorial liability for misleading and deceptive conduct relates to the element of intention. No intention to mislead or deceive is required for direct liability; in respect of accessorial liability, however, a party must know of the misleading and deceptive nature of the relevant conduct: Yorke v Lucas (1985) 158 CLR 661 at 667-668, 670; [1985] HCA 65 (Yorke); see also Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1; [2003] FCAFC 289 at [9]-[15].

8. [8]

   The precise claims made against KP are set out at [79]-[85] below, and the primary judge’s reasons for rejecting these claims are set out at [86]-[99].

9. [9]

   The Appellants raised five grounds of appeal as follows:

10. [10]

    The Appellants structured their grounds of appeal so as to confine their claim against KP for misleading and deceptive conduct (as opposed to the claim in deceit and for accessorial liability) to the payments made after 11 May 2021 and 18 May 2021, these being payments that amounted to $1,090,000 (see [2] above).

11. [11]

    Although DA was named as Second Respondent to the appeal, no relief was sought against him, and, although served with appeal papers, he did not appear or participate in the hearing of the appeal.

12. [12]

    Before turning to consider the case made against KP and the primary judge’s rejection of it, it is first necessary to provide a detailed overview of the underlying fraud for which DA was held liable and in respect of which KP was also sued. This overview incorporates unchallenged findings by the primary judge as to what occurred or was said in various meetings where there had been a dispute on the evidence at first instance between DA and Dominic Galati (DG), the major shareholder of the Care A2 companies, and Alberto (Berti) Mariani (BM), a consultant to the Care A2 companies.

Overview of the fraud

1. [13]

   DCA was the vehicle through which DA conducted his business, known variously as “Sportsflick” or “Sports Flick”, which purportedly provided a platform to broadcast and stream sports events.

2. [14]

   On 14 April 2021, DCA submitted a bid of $5,000,000 (an amount which it did not then have) to RDA Television LLP (RDA) for the 2021 RLWC broadcast and streaming rights (PJ [33]).

3. [15]

   On 23 April 2021, Richard Dennis (RD), the CEO of RDA, requested that DA provide DCA’s company information and proof of its ability to make the $5,000,000 payment. DA replied to RD indicating that he would “get Karla [KP] to send this information to you as soon as possible”.

4. [16]

   On the same day, Colin Kleyweg (CK) (a 4.98% shareholder in DCA) emailed DA (copying KP) concerning the budget required to expand Sportsflick’s broadcasting capacity. In this email, CK referenced $5,000,000 as the cost to acquire the RLWC rights. This email also stated:

5. [17]

   The email contained a rough costing of expenses. These included, under the heading “Marketing and Management Budget”, payment of $200,000 to DA and $120,000 to KP.

6. [18]

   Interpolating here, under cross-examination, KP said that “at all times” she understood that the cost of the RLWC rights was $5,000,000.

7. [19]

   On 26 April 2021, DA (and not KP) emailed RD (copying Russell Scott (representing RLWC) (RS) and CK) a series of Australian Securities and Investments Commission (ASIC) extracts and a purported transaction summary issued by the Commonwealth Bank of Australia (CBA) which recorded the then balance of DCA’s account as in excess of $43,000,000. These were false documents (PJ [37]). DCA in fact had a bank balance of only $2,577.11 at the time. KP was not copied into this email.

8. [20]

   On 26 April 2021, BM contacted DA, expressing interest in DCA’s acquisition of soccer rights and suggested a meeting between DA, DG and himself.

9. [21]

   From late April until June 2021, DA engaged in multiple meetings with DG and BM to discuss various rights for both soccer and the RLWC, but principally the RLWC, and the Appellants’ potential investment in DCA to benefit from these rights. KP was not a participant in these meetings.

10. [22]

    As the primary judge noted, there was a lack of clarity on the evidence as to whether the Appellants would invest in DCA, with DG acquiring control of it, or whether they would simply take some benefits from DCA’s possession of the RLWC rights. On either view, the misrepresentations about the RLWC rights were material to the Appellants’ payment of moneys to DCA.

11. [23]

    The first meeting between DA, BM and DG occurred on 27 April 2021. During the meeting, the RLWC streaming rights were discussed. DG’s evidence (which the primary judge accepted) was that during the 27 April 2021 meeting, DA explained that acquiring the RLWC streaming rights from RDA would cost $9,000,000. At this meeting, DG’s evidence was that DA said that Sportsflick needed financial backing, and said:

12. [24]

    On 7 May 2021, a second meeting occurred between DA, BM and DG. BM gave evidence that DG referred to a payment of $9,000,000 for the RLWC rights, and that DA expressed confidence that the deal with the AHA (NSW) would come off with clubs to pay $2,500 for the RLWC streaming with ongoing monthly long-term fees.

13. [25]

    Also on 7 May 2021 (after their second meeting), DA sent DG and BM several emails attaching:

    1. (1)

       a letter dated 7 May 2021, titled “Re: Offer to Purchase Shares in [DCA]”. KP was copied into this email. In this email, DA noted that he had “CC’d Karla, our CFO”. This may have been KP’s introduction to DG and BM. As will be seen, she was to engage in subsequent email communications with both of them.

    2. (2)

       a purported sub-license agreement between DCA and RDA, dated 27 April 2021 (False Sub-License Agreement), described with the file title “RLWC executed contract Australia 27-04-21.pdf”.

    3. (3)

       an updated letter dated 7 May 2021, titled “Re: Offer to Purchase Shares in [DCA]”.

14. [26]

    The False Sub-License Agreement recorded a sub-license fee of $9,000,000 (rather than the true $5,000,000) payable by DCA to RDA in respect of the RLWC streaming rights, and was purportedly signed by RD of RDA.

15. [27]

    On 10 and 11 May 2021, DA sent emails to BM and DG attaching AHA (NSW) payment dates, payment figures and income projections. An email dated 10 May 2021 from DA to BM headed “Sportsflick Pub Numbers” read:

16. [28]

    The result of that calculation corresponds to the amount of $15,000,000 referred to in other evidence concerning revenue from the suggested AHA (NSW) arrangement (PJ [58]).

17. [29]

    On 11 May 2021, a third meeting took place between DA, his brother Justin Azzopardi (JA), DG and BM. By email on the same day, DA sent DG a document headed “SF Projections”, and the attachment referred to the projected profit from the RLWC and from “Pubs & Clubs” as follows:

18. [30]

    Also on 11 May 2021, KP (through her alternative “accounts@sportsflick.com.au” address) emailed BM, with a copy to herself and DA, attaching an invoice for $110,000 from DCA to Care A2 Plus, and Care A2 Plus paid $110,000 to DCA. This was the first of the payments referred to in [2] above however the invoice did not appear to relate to the RLWC. Rather, the fee was described as being for “Rights – Chinese Super League, Belgium Pro-League, CONCAF Gold Cup”.

19. [31]

    On the same day, CK emailed DA and KP (through her “accounts@sportsflick.com.au” address) to further discuss the future investments for Sportsflick. Here, CK refers to a cost of $5,000,000 to acquire the rights to the RLWC and payments of $200,000 and $120,000 to DA and KP respectively.

20. [32]

    On 12 May 2021, DA emailed RD, copying CK and RS, attaching a false loan document dated 18 January 2021 for a loan of $40,000,000 between DG as lender and DCA as borrower, purportedly signed by DA and witnessed by Chloe Azzopardi (CA) who was DA’s wife and a purported letter from the CBA. The attached loan agreement dated 18 January 2021 between DG and DCA (False DG Loan Agreement) purportedly recorded a loan of $40,000,000 by DG to DCA with a drawdown date of 18 January 2021 and a due date of 18 January 2024. This document was fabricated. Also attached to the 12 May 2021 email was a fabricated letter from CBA to DCA, purportedly signed by Mr Moseley of CBA, who it appears did not exist. The letter purportedly confirmed the successful and legal transfer of funds by DG to DCA:

21. [33]

    On 13 May 2021, DA sent a further document to BM, indicating an acceptance of the transaction on specified terms and, the next day, sent documents to DG and BM asking if they required adjustment or changes (PJ [71]). Also on 13 May 2021, DA emailed DG and BM (copying KP) purportedly attaching written confirmation of terms of the agreement including as to payment of $9,000,000.

22. [34]

    On 18 May 2021, a further meeting took place between DA, DG and BM. On the same date at 7.50am, KP (through her “accounts@sportsflick.com.au” address) had sent BM (copying DA and KP’s personal email addresses) an invoice for $1,000,000 with the description “Rights – 2021 Rugby League World Cup”.

23. [35]

    Interpolating here, it is not surprising that the Appellants do not pursue their claim against KP on appeal in relation to the first two payments (as they had at first instance). On the evidence before the primary judge, KP’s only involvement to this point in time was sending an invoice to BM on 11 May 2021 (see [30] above) and 18 May 2021 (see [34] above), and being copied in on emails of 23 April 2021, 7 May 2021 and 13 May 2021 (see [16], [25] and [33] above).

24. [36]

    At 5.11pm that same day, Care A2 Australia made the payment of $1,000,000, attaching a payment remittance receipt.

25. [37]

    On 19 May 2021, KP sent two emails concerning DCA’s “5 year projections”. First, at 9.44am on 19 May 2021, KP sent to BM and DG, with a copy to DA, an email entitled “DCA Sydney Enterprises Pty Ltd – 5 Year Projections”. This email read as follows:

26. [38]

    An attached document was headed “DCA Sydney Enterprises Pty Ltd 5 Year Projected Profit and Loss Statement”. The income projected for 2021/2022 in respect of pubs and clubs was $60,000,000. The expense identified as “Rights Fees” for 2021/2022 was $11,000,000. The figure did not possess an accompanying breakdown which specified the cost of acquiring the RLWC rights (cf [40] below).

27. [39]

    Later that day, by email at 12.40pm, KP sent to BM and DG (with a copy to DA) an “updated 5 years projected report”. The email stated “[p]lease find attached updated 5 year projections report as requested”.

28. [40]

    The email contained an attachment with an updated 5 year projected profit and loss statement for DCA. Importantly, the updated 5 year projected profit and loss statement contained a number of notations which were not included in the projections sent less than three hours earlier. Alongside the income entry headed “PPV (RLWC) for 2021”, which indicated an income of $24,975,000, a PPV fee of $49.95 was indicated. Secondly, alongside the expense item for “Rights Fees” which showed $11,000,000 for 2021/2022, there was a notation which indicated a breakdown of this figure as $9,000,000 attributed to RLWC and $2,000,000 attributed to football.

29. [41]

    It may readily be inferred that, following receipt of the 9.44am email, BM and DG made enquiries of KP as to particular entries on the projections document and that those enquiries, and the answers to them, were reflected in the notations on the second email. Of particular significance, as shall be seen, is the fact that the rights fees for the RLWC were identified as $9,000,000 (when the true figure was $5,000,000) and the projected income in relation to the RLWC was identified as being $24,975,000.

30. [42]

    Both the 9.44am and 12.40pm projection emails carried the signature block:

31. [43]

    On 20-21 May 2021, RD sent emails to DA attaching a revised draft license agreement and an invoice. It referred to a license fee of $5,000,000. Interpolating, KP’s evidence under cross-examination was that she became aware of the amount that was to be paid for the RLWC rights when “the invoice came through for the payment”. It may be inferred that it was this invoice, dated 20 May 2021, to which she was referring.

32. [44]

    On 21 May 2021, DA sent CK a purported email from a non-existent Mark Geggo of CBA and purported confirmation issued by CBA dated 12 May 2021, signed by the non-existent Mr Moseley of CBA, confirming the status of moneys that were not in fact then held, in any substantial amount, by DCA. The primary judge was satisfied that that document was false. The email was not copied to KP.

33. [45]

    On 21 May 2021, CK emailed a copy of the purported confirmation to RD and RS. Again, KP was not copied in on this email.

34. [46]

    On 22 May 2021, CK emailed DA (copying KP) to discuss expanding the media department to manage the requirements in-house for RLWC and other investments. The email was addressed “Dylan / Karla”.

35. [47]

    On 24 May 2021, an agreement was signed by RDA and DCA for the RLWC rights at a price for the license of $5,000,000. KP was not copied in on an email which included RDA’s counterpart of the agreement, although, as has already been noted, she accepted under cross-examination that “at all times” she knew that the true rights for the RLWC was $5,000,000 (see [18] above) and that she became aware of this when the invoice came through for payment (see [43] above).

36. [48]

    On the same day, KP emailed RD and RS to provide advice on the impact of Australia’s double tax treaty with the UK on the rate of withholding tax on overseas royalties in Australia.

37. [49]

    Further emails ensued in relation to payments. Of particular significance, KP sent an email at 4.24am on 25 May to RD and RS (copying DA and Hannah Griffiths of RDA (HG)) in the following terms:

38. [50]

    This email was clear further evidence that KP understood that the amount owing by DCA to RDA for the RLWC rights was $5,000,000.

39. [51]

    By email on 25 May 2021, HG emailed KP (copying DA) with a revised invoice for $5,000,000.

40. [52]

    By email on 26 May 2021, KP notified HG and RD (copying DA) that DCA could only make the $5,000,000 payment to RDA once they attended their bank’s branch in person, which would occur on 3 June 2021. KP indicated that DCA had nonetheless transferred $192,000 to RDA as a deposit in relation to the invoice and as a gesture of “good faith” that the balance of the invoice would be paid the following week. Of this email, the primary judge said at PJ [79] that the explanation for late payment was:

41. [53]

    By email dated 27 May 2021 from KP to BM and DG (copying DA), KP requested further funds from DG. KP’s email to BM and DG relevantly stated:

42. [54]

    No contract was in fact signed with RDA on 27 April 2021. Instead, the date of 27 April 2021 related to the False Sub-License Agreement (see [25(2)] above) which falsely recorded the amount payable to RDA as $9,000,000 and was not a genuine document. DA accepted in cross-examination that the only contract that was signed and dated 27 April 2021 was false although he had sent it to DG and BM on 7 May 2021.

43. [55]

    In relation to the 27 May 2021 email, the primary judge noted at PJ [80] that KP’s evidence in cross-examination was that she was only told of the 27 April agreement, and that it had not been established that she knew it was a fabrication. Two points may be noted. First, his Honour did not expressly indicate that he accepted KP’s evidence on this point. Second, even if he did, his Honour did not address the balance of the 27 May 2021 email and KP’s role in sending it. This is a matter about which the Appellants complain given that the email perpetuated the representation that DCA had a sub-license agreement in respect of the RLWC dated 27 April 2021 and this agreement falsely referred to a fee of $9,000,000.

44. [56]

    By email dated 3 June 2021, KP advised RD that the balance of RDA’s invoice (for $5,000,000), less withholding tax, had been transferred to RDA. It is plain that this statement was false. DA’s evidence was that he instructed KP to send the email to RDA. An attachment to the email was a purported record on CBA letterhead of an international money transfer for the amount of $4,558,000. DA accepted in cross-examination that that document was also false and he accepted that he had never corrected that document in dealing with RDA and that that transfer had not been made (PJ [82]). KP, as DCA’s CFO, must have known that the document was false, and accepted as much in the following passage of cross-examination:

45. [57]

    Further deceitful conduct on KP’s part followed. Thus, on 4 June 2021, she responded to an email from RDA indicating that the payment had not yet arrived by writing:

46. [58]

    KP was also constrained to admit under cross-examination that this statement was false, as was her subsequent statement in an email on 8 June 2021 to RD that “[t]he bank did advise us last week that it could take anywhere between 3 to 5 business days for the transfer to clear”. By email dated 7 June 2021, KP advised BM and DG, with a copy to DA, that:

47. [59]

    The forensic significance of this email was that it necessarily continued the concealment of the true cost of the RLWC rights, which was $5,000,000, especially since the Appellants had already paid DCA $1,000,000 towards what they understood to be the true cost. Request for a payment of “at least $6M” was in excess of what was truly owing by at least $2,000,000. By a further email on 7 June 2021, KP (through her “accounts@sportsflick.com.au” address) sent BM (copying DA and KP’s personal email address) an invoice for $1,100,000. It may be inferred that this was the amount they indicated they could or would pay at this point.

48. [60]

    On 9 June 2021, BM sent remittances to DA (copying KP and DG) for three payments valued at $990,000 (Care A2 Plus making two payments of $850,000 and $10,000, and Care A2 Australia paying $130,000). On the same day, KP emailed BM, DA and DG confirming receipt of the remittances. These were the third, fourth and fifth payments referred to at [2] above.

49. [61]

    By email on 10 June 2021, BM sent DA (copying KP and DG) due diligence requests concerning DCA. On the same day, KP responded to BM’s email, explaining that they would return with answers to their questions shortly.

50. [62]

    By email on 11 June 2021, KP sent an email to BM and DA (copying DG), providing answers to BM’s due diligence questions, attaching an ASIC company statement, company tax return, balance sheets and profit and loss statements for the 2020/2021 financial year.

51. [63]

    By email on 15 June 2021, KP sent to BM (copying DA and DG) a copy of a “Register of Member for shares issued and transferred by shareholders for DCA” as at 15 June 2021.

52. [64]

    On 17 June 2021, KP sent a further email to BM, copying DG and DA, providing a breakdown of income and expenditure associated with various streaming rights (including the RLWC).

53. [65]

    By email dated 22 June 2021, DA sent BM a copy of a purported agreement between DA and the AHA (NSW) which was dated 22 June 2021 and purportedly signed by DA and by Leone Cruden for AHA (NSW). That document recorded that DCA would provide “Services” described as providing Sportsflick channels to NSW pubs and hotels, and recorded that “Australian Houses Hotel (NSW) shall pay [AHA (NSW)] $30,000,000 plus GST”, with a payment of $2,500,000 plus GST to be made monthly. The primary judge found that this agreement was falsified (PJ [88]).

54. [66]

    On 23 June 2021, DA forwarded to CK, RS and RD (copying KP) a further email purporting to be from Mark Greggo of CBA to him and KP. That document was also false because Mark Greggo did not exist (PJ [90]). KP acknowledged in cross-examination that she never met or communicated with a Mark Greggo and that that correspondence was not legitimate.

55. [67]

    By email dated 25 June 2021, DA sent BM an invoice purporting to be issued by RDA which referred to license fees due for the RLWC of $9,000,000. That document was plainly also false (PJ [91]). KP was not copied in on this email.

56. [68]

    By email on 29 June 2021, DA sent to RD and RS (copying KP) further false correspondence from Mark Greggo of CBA on 29 June 2021 to DA (copying KP), explaining why the transfer of funds from DCA to RDA had not been completed. KP must have known this correspondence was false.

57. [69]

    By email also dated 29 June 2021, KP sent to RD, RS, CK and DA a purported remittance from DCA to RDA of $50,000.

58. [70]

    On the same day, DA forwarded to DG and BM purported legal advice from a Swiss lawyer regarding RDA’s capacity to terminate DCA’s acquisition of the RLWC rights:

59. [71]

    By email at 9.20am on 30 June 2021, KP (at DA’s request) sent copies of two purported remittances to DG and BM concerning the RLWC payments, which recorded $1,000,000 paid on 18 May 2021 and $1,000,000 paid on 9 June 2021 by DCA to RDA, both under the heading “RLWC”, on forged CBA stationery. In cross-examination, DA accepted that those amounts had not been sent to RDA but claimed these documents were provided to DG under instructions from him. However, the primary judge was not persuaded by DA’s evidence of that matter (PJ [97]).

60. [72]

    By email at 1.56pm of the same day, KP requested DG and BM to provide remittance advices once payment had been made. By email at 2.36pm of the same day, BM advised KP (copying DA and DG) that the IBAN reference number provided was not recognised by the bank, preventing the transfer of funds.

61. [73]

    By email at 4.10pm of the same day, Bhavani Ma (also known as Kerry Hyland (KH)), the sole director of Care A2 Plus and Care A2 Australia, provided KP with a remittance receipt of $100,000 paid by Care A2 Australia.

62. [74]

    By email at 4.57pm of the same day from KP to KH (copying DA, DG and BM), KP confirmed receipt of the transfer of $100,000, and attached a CommBiz remittance advice purporting falsely to evidence that a $100,000 payment had been made by DCA to RDA. This payment of $100,000 to DCA on 30 June 2021 was the last of the payments referred to in [2] above.

63. [75]

    By email on 1 July 2021, DA sent to CK, RD and RS (copying KP) further false communications with Mark Greggo of CBA, purportedly explaining why DCA’s transfer of $4,588,000 to RDA had not been completed.

64. [76]

    Contrary to the purpose for which all of the payments were made, $1,900,000 of the $2,200,000 funds paid by the Care A2 companies to DCA were spent on personal gain, a mortgage in the name of DA’s parents, and other business expenses. None of these expenses were disclosed to, or authorised, by the Care A2 companies.

65. [77]

    On 3 July 2021, the Appellants became aware of the “fraud” in relation to the money paid to DCA, and DG, BM and others then met with DA on 3 July 2021. A meeting also took place between DA, DG, BM and Raymond Younan that same day. DA claimed that he was falsely imprisoned during the meeting but the primary judge rejected that claim (PJ [135]).

66. [78]

    After the 3 July meeting, DG, BM and KH initially caused BM and KH to be purportedly appointed as directors of DCA in place of DA. Since 10 July 2021, KH was purportedly the sole director of DCA up until the primary judgment, and also caused DCA’s registered office address to be changed to DG’s address. Furthermore, BM, Acell Holdings Pty Ltd and KH are described as the secretaries and shareholders of DCA, replacing JA and DA. JA’s evidence was that he did not authorise the appointment of BM or KH as director or secretary of DCA from 4 July 2021. This issue, which was also dealt with by the primary judge in his judgment, is not relevant to the appeal.

The pleaded case against KP

1. [79]

   In November 2021, DA and JA, together with KP, commenced proceedings in the Corporations List in the Equity Division challenging the steps taken by DG and others involved with the Care A2 companies to take control of DCA, in the course of the meetings referred to in the last two paragraphs above. The Appellants’ claims against DA and others associated with the misleading and deceptive conduct described above were introduced by way of a First Cross-Claim. KP was the Third Cross-Defendant in those proceedings. The First Cross-Defendant was DA and other members of his family were named as the Second and Fourth to Sixth Cross-Defendants. The First Cross-Claimant was DG and the Care A2 companies were the Third and Fourth Cross-Claimants respectively. The Second Cross-Claimant was DCA, but it was removed by an Amended First Cross-Claim.

2. [80]

   The Amended First Cross-Claim commenced by alleging that the First to Fourth Cross-Defendants were liable to the Cross-Claimants (other than DCA) under the ACL. Various representations were alleged to have been made in trade or commerce under the meaning of the ACL, although none of those representations were alleged to have been made expressly by KP.

3. [81]

   Paragraph 8 of the Amended First Cross-Claim then alleged that:

4. [82]

   This allegation was particularised at paragraph 23(c) of the Amended First Cross-Claim by reference to the following documents and matters referred to in the Cross-Claimants’ Further and Better Particulars of 21 February 2022 (see [84] below):

5. [83]

   Further particulars in relation to the allegations of silence and active conduct referred to in paragraph 8 of the Amended First Cross-Claim were sought on 10 May 2022. This request was answered as follows:

6. [84]

   KP was also alleged to have been accessorily liable for the contravention of the ACL ultimately found to have been committed by DA. The particulars included in the Amended First Cross-Claim did not refer to KP but further particulars were supplied on 21 February 2022 as follows:

7. [85]

   The items of correspondence referred to in these particulars have largely been referred to in the earlier section of these reasons headed “Overview of the fraud”.

Primary judgment

1. [86]

   In considering the Cross-Claimants’ several allegations of fraud and intentional deceit against the Cross-Defendants the primary judge had regard to the approach identified in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 and now s 140 of the Evidence Act 1995 (NSW). In doing so, his Honour appropriately acknowledged at PJ [3] that where a party advances allegations of impropriety, the Court must take account of the gravity of the matters alleged in deciding whether the inference should be drawn and, although the standard of proof remains proof on the balance of probabilities, the strength of the evidence necessary to establish a given fact to the civil standard may vary according to the nature of what it is that is sought to be proved.

2. [87]

   As has already been noted, the primary judge found DA liable for misleading and deceptive conduct and the tort of deceit. He also found that DA had fabricated, or was involved in the fabrication of, a series of documents including:

   1. (1)

      The False Sub-License Agreement dated 27 April 2021, purportedly between DCA and RDA;

   2. (2)

      The false agreement purportedly between DCA and AHA (NSW) dated 22 June 2021 (PJ [89]);

   3. (3)

      A false letter from the CBA purportedly signed by Mr Moseley of CBA, whom the primary judge found did not exist (PJ [69]);

   4. (4)

      Further falsified Commonwealth Bank statements in relation to receipt and transmission of funds to and from DCA (see [19], [32], [44], [56], [71] above); and

   5. (5)

      Further false invoices, false remittances and other correspondence from non-existent employees of CBA, such as Messrs Geggo or Greggo (neither of whom existed) and Mr Moseley.

3. [88]

   These findings were underpinned by adverse findings of credit in relation to DA who was, undoubtedly, the principal architect of the fraud. It was he, for example, who was involved in the initial meetings with DG and BM where the two core falsities were first aired, namely that the RLWC rights cost (or would cost) $9,000,000 and that there was a strong prospect that millions would be earned through the sale of RLWC packages to many pubs and clubs associated with the AHA (NSW). Further, the False Sub-License Agreement appears to have originated with DA. These considerations no doubt also contributed strongly to the primary judge’s decision to award exemplary damages in respect of the tort of deceit.

4. [89]

   The primary judgment does not contain a separate section dealing with the credit of individual witnesses; rather, in the course of setting out the factual narrative, the primary judge’s general practice was to note when there was a dispute on the evidence, and to express his acceptance or non-acceptance of particular witnesses’ evidence. His Honour also accepted at PJ [161] the Appellants’ closing written submissions that:

5. [90]

   His Honour rejected DA’s evidence that “he did not ‘expect’ the Cross-Claimants to rely on revenue or profitability information provided to them” (PJ [161]).

6. [91]

   At PJ [162], the primary judge confirmed his finding that:

7. [92]

   It should be noted that the primary judge rejected an indirect causation case advanced by the Appellants at first instance (PJ [164]-[165]):

8. [93]

   The primary judge made a small number of adverse credit findings in respect of KP in the course of his reasons. Thus, his Honour held that:

   1. (1)

      “By email dated 26 May 2021, KP sought to explain the delay by reference to a need to attend the bank branch in person and confirmed that ‘payment of the remaining balance will be made in full next Thursday and a remittance will be sent to you once the payment is made’ (Ex J1, 1620). That explanation was, at best, incomplete where DCA would not have the funds to make that payment until it received funds from the Care A2 companies.” (PJ [79]);

   2. (2)

      “By email dated 3 June 2021, KP advised RD that the balance of RDA’s invoice, less withholding tax, had been transferred to RDA (Ex J1, 1552). It is plain that statement was false, as DA accepted on cross-examination, and his evidence was that he instructed KP to send the email to RDA” (PJ [82]). It should also be noted that an attachment to the email, being a purported record on CBA letterhead of an international money transfer for $4,558,000 was fabricated; and

   3. (3)

      In respect of the email dated 30 June 2021, by which KP, at DA’s request, sent copies of two false remittances to DG and BM, the primary judge said at PJ [177] that:

9. [94]

   At PJ [122], in the context of dealing with an aspect of the case not material to this appeal, namely the purported transfer of shareholding in DCA after the fraud was discovered, the primary judge said:

10. [95]

    The primary judge did not make any positive findings in relation to KP’s credit, and, although noting at various points in his judgment that KP said that she had been told to do certain things or send certain documents by DA, his Honour did not make any findings as to whether or not he accepted KP’s answers in this regard. This was notwithstanding the fact that the Appellants, in closing submissions at first instance, had made serious criticisms of KP’s evidence and her lack of credibility. One of the Appellants’ grievances on appeal was that the primary judge did not deal with these attacks on KP’s credit, or consider her brazen mendacity in relation to her dealings with RDA in the context of what was argued to be implausible evidence in relation to KP’s dealings with DG, BM and the Appellant companies.

11. [96]

    The primary judge rejected the direct claim for liability against KP as follows:

12. [97]

    In relation to the deceit claim, the primary judge held at PJ [186] that:

13. [98]

    The primary judge also rejected the accessorial liability claim against KP in relatively short reasons at PJ [177]:

14. [99]

    Against this background, I turn to a discussion of applicable legal principles and then the grounds of appeal.

Applicable legal principles

1. [100]

   Direct liability for misleading and deceptive conduct, under s 18 of the ACL, depends upon whether the impugned person’s conduct is objectively misleading or deceptive, or likely to mislead or deceive: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198; [1982] HCA 44 (Parkdale); Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435; [2013] HCA 1 at [6]-[9].

2. [101]

   That is, a person’s knowledge or intention to mislead or deceive is immaterial to determining whether that person is liable for misleading and deceptive conduct: Parkdale at 197; Yorke at 666.

3. [102]

   Section 18 of the ACL, and its predecessor, s 52 of the Trade Practices Act 1974 (Cth), are concerned with conduct, although cases, including the present, are frequently pleaded by reference to representations. It is sufficient that the conduct leads or is likely to lead another party into error: Johnson Tiles Pty Ltd v Esso Australia Ltd (2000) 104 FCR 564; [2000] FCA 1572 at [63], per French J (with whom Beaumont and Finkelstein JJ agreed); Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 at [15] (Miller). The authorities emphasise the need to consider the circumstances as a whole, and those circumstances may include people standing silently by in the context of representations by others as well as requests for information.

4. [103]

   In Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 41; [1993] ATPR 41-203 (Demagogue), Gummow J (with whom Black CJ and Cooper J agreed) observed that:

5. [104]

   In Nadinic v Drinkwater [2020] NSWCA 2, Barrett AJA, with whom Meagher and Leeming JJA agreed, observed at [40] that:

6. [105]

   The role of silence, and misleading and deceptive conduct more generally was considered extensively in Miller. In Wormald v Maradaca Pty Ltd [2020] NSWCA 289 at [111], I sought to isolate certain key propositions to emerge from Miller as follows:

   1. (1)

      “the language of reasonable expectation [found in cases such as Demagogue] is not statutory: at [19]”;

   2. (2)

      “in commercial dealings between individuals or individual entities, characterisation of conduct will be undertaken by reference to its circumstances and context: at [20]”;

   3. (3)

      “close analysis of all of the circumstances of a transaction embraces a consideration of the sophistication of the parties and their experience in their fields: at [91]”;

   4. (4)

      “the knowledge of the person to whom the conduct is directed may be relevant: at [20]. See also Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 319; [2009] HCA 25 at [26]”;

   5. (5)

      “the existence of common assumptions and practices established between the parties or prevailing in the particular profession, trade or industry in which they carry on business may also be relevant: at [20]”;

   6. (6)

      “the analysis is objective: at [20]”;

   7. (7)

      “the analysis is to be ‘unmediated by’ high moral expectations exceeding the requirements of the general law: at [21]”;

   8. (8)

      “the statutory prohibition on misleading or deceptive conduct does not require a party to commercial negotiations to volunteer information which will be of assistance to the decision-making of the other party: at [22]”; and

   9. (9)

      “the failure to make reasonable inquiries, whilst not automatically defeating a statutory claim for damages for misleading or deceptive conduct, is a circumstance that is relevant to a consideration as to whether a failure to make disclosure is correctly characterised as misleading: at [91]”.

7. [106]

   More than one individual may engage in the same or related misleading or deceptive conduct, or, alternatively, a person may become knowingly involved in such conduct. Sometimes, a person (or corporation) who or which otherwise appears to have engaged in misleading or deceptive conduct by, for example, making a particular representation that engages the statute, may escape liability if they are a mere conduit of misleading information on behalf of another. As Mason ACJ, Wilson, Deane and Dawson JJ observed in Yorke at 666, persons who are mere conduits of information are not liable for misleading and deceptive conduct:

8. [107]

   The status of an employee or officer does not necessarily immunise him or her from liability for contravening conduct engaged in in that capacity: Anchorage Capital Master Offshore Ltd v Sparkes (2023) 111 NSWLR 304; [2023] NSWCA 88 at [362] (Anchorage); Australian Securities and Investments Commission v Narain (2008) 169 FCR 211; [2008] FCAFC 120 at [94]. The question is whether the role of the individual was more than merely ministerial.

9. [108]

   In Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 at [39] (Butcher), Gleeson CJ, Hayne and Heydon JJ explained that determining whether a person is a mere conduit of information involves a holistic assessment of the nature of the information conveyed, surrounding circumstances and the relationship between the parties:

10. [109]

    An intermediary is more readily inferred to be merely passing on information (and therefore not directly liable for misleading and deceptive conduct) where: (i) the alleged victim possesses experience or knowledge of the subject matter relating to the representations made; (ii) the conduct relates to information which is not ordinarily within that individual’s expertise or knowledge; and (iii) the intermediary “does nothing more than provide or refer to a document that, on its face, was prepared by another”: Borzi Smythe Pty Ltd v Campbell Holdings (NSW) Pty Ltd [2008] NSWCA 233 at [53]; Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd (No 2) [2009] FCA 1153; (2009) 74 ACSR 373 at [31]; Richard v Gendore Enterprises Pty Ltd [2004] NSWCA 116 at [26]; Colin Lockhart, The Law of Misleading or Deceptive Conduct (5th ed, 2018, LexisNexis) at [4.57] (Lockhart).

11. [110]

    Conversely, an intermediary is more likely to have adopted information where: (i) the underlying third-party document has been altered before being passed on; (ii) the individual knows that the representations passed on may not be reliable; and (iii) the representation concerns a “relatively simple matter”, supposedly within the intermediary’s “professional judgment”: Granitigard Pty Ltd v Termicide Pest Control Pty Ltd [2011] FCAFC 81; (2011) 281 ALR 1 at [31]; Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200 at [3139], [3165]; Havyn Pty Ltd v Webster [2005] NSWCA 182 at [89]; CH Real Estate Pty Ltd v Jainran Pty Ltd [2010] NSWCA 37 at [123]; Lockhart at [4.57].

12. [111]

    For example, in Butcher, a real estate agent passed on inaccurate survey diagrams provided by the vendor by incorporating the diagram into an advertising brochure for prospective purchasers of the property. The real estate agent was held to have been a mere conduit of the information because, as Gleeson CJ, Hayne and Heydon JJ explained at [40]:

13. [112]

    Whether KP can be characterised as a mere conduit of the misrepresentations provided by DA is analysed below at [165]-[170].

14. [113]

    To claim damages under s 236 of the ACL for misleading and deceptive conduct, the impugned person’s conduct must have caused the loss or damage suffered. The relevant breach need not, however, be the “sole” cause of the victim’s loss: I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109; [2002] HCA 41 at [33], [57]-[58]. Rather, conduct will be treated as having relevantly caused loss where it made a “non-trivial” or “material” contribution to the victim’s loss: Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 at [60]-[61], [109], [163]; Gould v Vaggelas (1985) 157 CLR 215 at 236, 250-251; [1985] HCA 75 (Gould).

15. [114]

    Furthermore, as French CJ, Crennan, Bell and Keane JJ explained in Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54 at [55]:

16. [115]

    In Gould at 236, Wilson J, after famously observing that “[i]f a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation”, went on to observe that a representation “need not be the sole inducement” and that it was “sufficient so long as it plays some part even if only a minor part in contributing to the” relevant loss. Later in his judgment, at 238, his Honour held that:

17. [116]

    A representation (or conduct) which is confirmatory either of a prior representation or of a pre-existing impression or belief of the representee may be causally significant. As Burchett J observed many years ago, a representation “which accords with the recipient’s prior impression, and confirms it, is all the more likely to be accepted without question”: Benlist Pty Ltd v Olivetti Australia Pty Ltd (1990) ATPR 41-043 at 51,593 (Benlist).

18. [117]

    Logically and inexorably, as the primary judge consistently pointed out in his judgment, conduct causing the loss must also have occurred before the relevant loss was incurred. Therefore, the Appellants must establish that the relevant payments (made on 11 May 2021, 18 May 2021, 9 June 2021 and 30 June 2021) were each respectively induced by misrepresentations made by KP prior to these relevant dates.

19. [118]

    A person may be an accessory to misleading and deceptive conduct where he or she participates, or is involved in, the impugned individual’s misleading or deceptive conduct: ACL, ss 2, 18 and 236. An individual is “involved” in contravening s 18 where the person aids or abets, or has “in any way, directly or indirectly” been “knowingly concerned in, or party to, the contravention”: ACL, s 2. The involvement provisions of the ACL do not establish liability on those deemed as accessories to misleading and deceptive conduct. Rather, the relevant provisions establish a “means of definition of the persons to whom … remedial orders may be directed”: Trade Practices Commission v Manfal (No 3) (1991) 33 FCR 382 at 385; (1991) 105 ALR 520 at 523; Lockhart at [8.14].

20. [119]

    As established in Yorke at 667, accessorial liability depends upon both knowledge and participation in the relevant misleading or deceptive conduct. Participation requires “some practical involvement” in the misleading conduct, such as helping, encouraging or inducing the conduct: Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 5) [2014] FCA 340; (2014) 98 ACSR 347 at [543].

21. [120]

    Furthermore, the individual must have knowledge of the essential facts constituting the breach: Yorke at 670. For misrepresentations, as in this appeal, this requires the individual to have “knowledge or [be] wilfully blind to, the falsity of the relevant representations”: Volunteer Eco Students Abroad Pty Ltd v Reach Out Volunteers Pty Ltd [2013] FCA 731; (2013) 102 IPR 161 at [546]-[547]. For instance, in Sutton v AJ Thompson Pty Ltd (in liq) (1987) 73 ALR 233 at 242, Forster, Woodward and Wilcox JJ determined that it was necessary that Mr Sutton knew that the figures which he provided would create a “false picture” in relation to the acquisition of the impugned business.

22. [121]

    A live debate remains as to whether persons can become accessorily liable on a wider basis, being that they have knowledge of the underlying facts which would have falsified the misrepresentation. Such issues were recently explored by this Court, in Anchorage at [329], where the Court characterised the debate as concerning:

23. [122]

    Following a detailed analysis of the competing authorities, their Honours concluded that only the narrow view should be adopted, determining that (at [342]-[343]):

24. [123]

    The five necessary elements in a tortious deceit claim were outlined by Gummow, Kirby and Crennan JJ in Magill v Magill (2006) 226 CLR 551; [2006] HCA 51 at [114]:

25. [124]

    In relation to the fourth and fifth propositions, namely that the victim suffered loss due to reliance upon the false representation, Wilson J’s decision in Gould has already been noted: see [115] above.

26. [125]

    Liability for deceit may arise (the other elements being satisfied) not only through positive misrepresentations, but also through non-disclosure or silence where doing so creates a false or deceptive meaning to what has already been uttered: Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 574-575; [1995] HCA 68; Crouch v Bloody Mary Group Pty Ltd [2020] SASC 68 at [276]-[279].

27. [126]

    The causation requirements for an action in deceit are satisfied where the misrepresentation “contributed”, even if only a “minor part”, to the plaintiff’s conduct which precipitated their loss: Gould at 236, 238-239. Therefore, a misrepresentation can relevantly cause loss despite the victim being actuated by misapprehensions from other sources, or their own predetermined intention to embark on the particular course of action: Demetrios v Gikas Dry Cleaning Industries Pty Ltd (1991) 22 NSWLR 561 at 570; David Rolph et al, Balkin & Davis: Law of Torts (6th ed, 2021, LexisNexis) at [23.38]. An action for deceit will only fail on causation grounds if the court determines that the plaintiff was motivated entirely upon their own judgement when they entered the transaction, or if they were aware of the representation’s falsity, and instead knew the true state of affairs: Holmes v Jones (1907) 4 CLR 1692 at 1702; [1907] HCA 35; Gipps v Gipps [1978] 1 NSWLR 454 at 460.

28. [127]

    Exemplary damages are not available under s 236 of the ACL for misleading and deceptive conduct. However, exemplary damages are available in tortious deceit claims: Musca v Astle Corporation Pty Ltd (1988) 80 ALR 251 at 269; [1988] ATPR 40-855 (Musca).

29. [128]

    As is well-established, exemplary damages awards are punitive, rather than compensatory, in nature. Brennan J explained in XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448 at 471; [1985] HCA 12 (XL) that the function of exemplary damages is to “punish the defendant for conduct showing a conscious and contumelious disregard for the plaintiff's rights and to deter him from committing like conduct again”.

30. [129]

    In Musca, French J (as his Honour then was) awarded exemplary damages for tortious deceit. His Honour explained (at 268) that there is:

31. [130]

    In Musca, the defendant made false representations concerning future profits in order to induce the plaintiff into establishing a business in an arcade. French J noted that the defendant knowingly made the misrepresentations, and awarded exemplary damages in the sum of $12,500 for tortious deceit.

32. [131]

    In Hill v James [2004] NSWSC 55 at [280], Bergin J observed that:

33. [132]

    Bergin J awarded exemplary damages in the sums of $75,000 and $125,000 against two defendants due to their deceptive conduct of changing certain contractual documents with the “obvious intent upon trickery”. While there was an appeal from this decision, the exemplary damages ground of appeal in relation to tortious deceit was dismissed: see James v Hill [2004] NSWCA 301 at [66]-[85].

34. [133]

    In respect of the appropriate quantum of exemplary damages to be awarded, Heydon JA explained in Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298; [2003] NSWCA 10 at [253] (Harris) that if “exemplary damages are to fulfil their threefold purpose, they must not merely irritate, they must sting”. His Honour continued at [254] that it is the “gravity and character of the Defendants’ conduct which guides the Court's discretion as to the proper amount to award by way of exemplary damages”.

35. [134]

    Therefore, as his Honour explained at [254], a “minimal amount of damage inflicted on a plaintiff may, if the wrongdoing was outrageous, nevertheless require heavy exemplary damages to be visited upon the defendant” and the necessity for exemplary damages is increased where the wrongdoing was motivated by profit. That is, there need not be proportionality between the loss suffered and the quantum awarded for exemplary damages: XL at 471; James v Hill [2004] NSWCA 301 at [66].

Ground 1: KP’s misleading and deceptive conduct

1. [135]

   The Appellants contend that the primary judge should have found that, in addition to DA, KP also engaged in misleading and deceptive conduct, and that such conduct caused the Appellants loss and damage of $1,090,000 (or alternatively $100,000). The alternative claim to $100,000, reflecting the payment made by the Appellants on 30 June 2021, is the subject of Ground 4 (see [187]-[189] below).

2. [136]

   The primary judge’s reasons in relation to the direct claim against KP for misleading and deceptive conduct have been noted at [96] above. His Honour’s task was not made easy by the somewhat obscure manner in which the claim was pleaded against KP, with three separate sets of particulars. Nevertheless, as his Honour’s reasons make clear (as does a perusal of the written and oral submissions at first instance), a direct liability case based upon a combination of particularised communications and silence was pursued against KP.

3. [137]

   Although, on appeal, some (legitimate) criticism was made of the pleading, I am satisfied that the trial was fought on the basis that KP herself engaged in misleading and deceptive conduct of a continuous kind contrary to s 18 of the ACL, and was not merely accessorily liable.

4. [138]

   KP’s knowledge (or ignorance) of the fact that her conduct was misleading or deceptive is not, on well-established principles, relevant to any question of direct liability: see [7] and [100]-[101] above.

5. [139]

   The primary judge’s dismissal of the direct liability case against KP appeared to be based upon findings of causation: see PJ [170] reproduced at [96] above. Implicit in this conclusion was a finding or assumption that KP did engage in misleading or deceptive conduct vis-à-vis the Appellants but that such conduct was not causative of any loss. Put slightly differently, his Honour’s conclusion was that any misleading conduct did not materially contribute to the Appellants’ loss. The principles relating to causation under the ACL have been noted at [113]-[117] above.

6. [140]

   The central thrust of the Appellants’ complaint under Ground 1 was that the primary judge did not engage with large parts of the case they had sought to make against KP and had also overlooked certain key documents. The Appellants’ complaint about the primary judge’s failure to deal with attacks on KP’s credit has already been noted: see [95] above. In this context, the Appellants submitted that the primary judge downplayed the extent of KP’s dishonesty and, to the extent he found dishonesty in relation to KP’s dealings with RDA, it was submitted that the primary judge in effect, and illegitimately, “siloed” that discreditable conduct.

7. [141]

   This aspect of the attack was perhaps most relevant to the Appellants’ case in deceit and for accessorial liability. It is not critical to Ground 1 where the exercise, as has been pointed out, involves an objective analysis of the conduct complained of. This is an appeal by way of rehearing and, insofar as the conduct of KP falls to be assessed, this Court is in as favourable a position as the primary judge to make an assessment of the matter.

8. [142]

   It is first necessary to consider whether KP engaged in any misleading or deceptive conduct at all before turning to the question of causation by reference to which the primary judge resolved the claim under s 18 of the ACL.

9. [143]

   The Appellants submitted that the primary judge failed to address, adequately or at all, several key documents sent by KP which contained statements by KP which were misleading or deceptive and that these, together with her silence in not disclosing the true picture, amounted to misleading or deceptive conduct of a continuing kind.

10. [144]

    These documents were the 19 May 2021 emails from KP to DG and BM (see [37]-[40] above); 27 May 2021 email from KP seeking payment (see [53] above); 7 June 2021 email from KP seeking payment in the sum of $6,000,000 or $8,000,000 (see [58] above); 7 June 2021 KP correspondence to BM, providing the invoice (see [59] above); 9 June 2021 email from KP seeking payment; received remittances on 9 June 2021 and an email from KP confirming receipt (see [60] above).

11. [145]

    The Appellants’ point was that, even though the primary judge may have made reference to these documents, he did not do so in the context of considering KP’s liability. There is some force in that criticism.

12. [146]

    The first two documents were the forecast documents of 19 May 2021 sent by KP to DG and BM. These have been referred to at [37]-[40] above. The primary judge dealt with these two documents at PJ [75] as follows:

13. [147]

    The primary judge did not address the important fact, noted at [37]-[41] above, that BM sought clarification and a breakdown of the rights figure of $11,000,000 shown in the first projection. The second projection responded to this query by indicating that $9,000,000 of the $11,000,000 figure related to the rights for the RLWC. This was to repeat the deceit that had already been conveyed by earlier communications, including the provision of the False Sub-License Agreement which contained that misleading (indeed utterly false) figure of $9,000,000.

14. [148]

    Two points may be made. First, the primary judge’s observation at PJ [67] that it was “highly unlikely that an experienced business person such as DG would rely on a profit projection in that form without any real inquiry as to the basis of its assumptions” did not address the point that the core deception as to the cost to DCA of the RLWC rights was repeated. There was no relevant assumption underlying the indication of $9,000,000 other than that it was an accurate figure. That was a reasonable assumption for DG and BM to have made. Secondly, and contrary to the primary judge’s supposition, the fact that clarification was sought in relation to this figure was a powerful indication that it was a matter of importance to DG and BM, and played a causal role in the decision to make further payments to DCA on 9 and 30 June 2021.

15. [149]

    To this extent, I am unable to agree with the primary judge’s conclusion at PJ [170] that this:

16. [150]

    The 19 May 2021 projection sent by KP contained a further misrepresentation, being that DCA would receive $60,000,000 from pubs and clubs from licensing the RLWC streaming rights. This representation was objectively false and misleading, as DCA had no basis for this figure, given that no pubs or clubs had agreed to pay DCA in connection with its prospective acquisition of the RLWC streaming rights (see also KP’s admission that she was never aware of any pub that committed to paying DCA in relation to the RLWC). The misrepresentation as to DCA’s future income arising from the RLWC rights likely contributed to the Appellants’ decision to invest in DCA, thereby causing their loss in respect of the 9 June and 30 June 2021 payments.

17. [151]

    The next document relied upon by the Appellants was the 27 May 2021 email sent by KP to BM and DG and which is set out in full at [53] above. The subject of this email was the need for DCA to pay the “full balance of the payment” for the RLWC rights. The email referred to “the contract which was signed on the 27th April 2021”. That was the False Sub-License Agreement which was a fabricated document and referred to the rights fee as being $9,000,000. A copy of this had been sent by DA to DG and BM on 7 May 2021. Read in its full context, the 27 May 2021 email conveyed the representation that the balance of a sum of $9,000,000 was payable, and that RDA was pressing for payment of the balance. This communication was misleading as $9,000,000 was never owing for the RLWC rights. The Appellants submitted correctly that the 27 May 2021 email by KP “continued the deception”.

18. [152]

    In relation to the 27 May 2021 email, the primary judge said at PJ [80] that “KP’s evidence in cross-examination was that she was told of that agreement and it has not been established that she knew it was a fabrication”. For the purposes of assessing whether the email was misleading or deceptive, it matters not whether KP did or did not know of the terms of the False Sub-License Agreement. However, it was entirely reasonable for the recipients of the email to have assumed that the CFO of DCA, who was corresponding with them by reference to that document, was aware of its terms and was aware of the true amount owing to RDA in respect of the RLWC rights. On any view, the 27 May 2021 email continued the deception as to the cost to DCA of the RLWC rights. For the purposes of causation, KP’s 27 May 2021 email went further than DA’s previous misrepresentations as to the $9,000,000, because it created a timeframe for the Care A2 companies to make payments. This is suggested by KP’s email explaining that payment was due to RDA according to a fictional 27 April 2021 “deadline”. By attempting to force the Care A2 companies into making the transfer to DCA quickly, KP’s email not only continued DA’s deception – but gave it further force by reference to an apparent contractual obligation, a matter likely contributing towards the Appellants’ 9 June 2021 payments.

19. [153]

    The next document in sequence upon which the Appellants relied was the 7 June 2021 email from KP, seeking payment (see [58] above) which it will be recalled was in the following terms:

20. [154]

    The statement as to the “need to ensure we make payment of at least $6M to the RLWC this afternoon” conveyed the necessarily misleading proposition that more than $5,000,000 (of which $1,000,000, to KP’s knowledge, had already been paid by the Appellants) was owing in relation to the RLWC rights. The Appellants’ argument on appeal was that, as KP at all material times knew that RDA was only owed $5,000,000 for the RLWC rights, this statement was plainly misleading. This argument was correct. The primary judge did not analyse or consider whether KP, in sending this email, herself engaged in misleading or deceptive conduct. As put by the Appellants on appeal, this email “confirmed, continued and adopted the same misleading conduct of DA, never correcting the falsity thereafter, and inducing damage”. There is also force in the Appellants’ written submission, picking up the language of Burchett J in Benlist, that a representation which accords with, and confirms, the recipient’s prior impression is all the more likely to be accepted without question. This is particularly likely when the confirmation is supplied by someone who might reasonably be expected to have direct knowledge of the subject of the communication such as a CFO in respect of amounts owing by the company.

21. [155]

    I would also reject KP’s contention that the email can only be construed as an inquiry based on discussions between DA, BM and DG. Contrary to this submission, it represented a continuation of the falsity that more than $5,000,000 was payable for the RLWC rights.

22. [156]

    The Appellants characterised the 7 June 2021 email as “confirmation” by KP of the “Respondents’” previous “impression” created as to a false $9,000,000 RLWC rights fee. It was this confirmation which the Appellants claim induced their $990,000 payment two days later on 9 June 2021. The proximity of the payment to the misrepresentation, and its misleading nature, is supportive of it contributing in a material way to the loss suffered by the Appellants (see the principles discussed at [113]-[117] above), especially since it constituted a continuation of the misrepresentation that had been made 13 days earlier in the 27 May email, and the identification of $9,000,000 as owing in the updated projections sent at 12.40pm by KP to DG and BM on 19 May 2021.

23. [157]

    The Appellants then relied upon KP’s email to DG and BM on 30 June 2021 set out at [71] above and as to which there can be no doubt that it was seriously misleading and deceptive. Reference is made in this regard to [93(3)] above. The primary judge, however, also held at PJ [170] that this email and its false attachments were not:

24. [158]

    The Respondent submitted that KP’s email to BM and DG concerning the CommBiz remittances on 30 June 2021 could not have caused the $100,000 payment made by the Appellants to DCA on 30 June 2021. This was because, according to the Respondent, DG and BM had already decided to make the payment of $100,000 to DCA prior to KP’s email sent on 30 June.

25. [159]

    In support of this proposition, the Respondent relied upon BM’s affidavit evidence of two separate conversations between BM and DG, and BM and DA on 29 June 2021. In respect of the conversation between DG and BM on 29 June 2021, BM explained that:

26. [160]

    In respect of the second conversation between BM and DA on 29 June 2021, BM explained in his affidavit that:

27. [161]

    These two conversations on 29 June 2021, the Respondent argued, highlighted that DG and BM had decided on 29 June 2021 that they would make the $100,000 payment, and thus KP’s 30 June 2021 email to DG and BM concerning the false CommBiz remittances did not relevantly induce the Appellants’ $100,000 payment on 30 June 2021.

28. [162]

    There are two difficulties with the Respondent’s submission in respect of causation. First, the two 29 June 2021 conversations between BM and DG, and BM and DA, do not evince an unequivocal and final intention to transfer $100,000 to the RLWC. Indeed, the conversation between BM and DG on 29 June 2021 exposed reservations and suspicions in respect of the $100,000 payment.

29. [163]

    Such suspicion was perhaps made known to DA, when BM explained that the payment of $100,000 would not be made to DCA, but to the RLWC directly. But that is not what occurred. The $100,000 payment was made to DCA. It is likely that the suspicions held by DG and BM as reflected in their conversation of 29 June 2021 were assuaged by KP’s subsequent email containing the false CommBiz remittances on 30 June 2021, it being constructed falsely to suggest that payments were being directed from DCA to RDA for the purpose of acquiring the RLWC streaming rights. In these circumstances, it is likely that KP’s email on 30 June 2021 relevantly induced DG and BM’s ultimate decision to make the $100,000 payment later that day.

30. [164]

    The second problem with the Respondent’s contention is that, even if BM and DG had committed on 29 June 2021 to make the $100,000 payment, they did not in fact make the payment until after KP’s emailing of the CommBiz remittance on 30 June 2021. Therefore, KP’s emailing of the false remittances to DG and BM likely reinforced or confirmed BM and DG’s decision to make the $100,000 payment later that day. Misleading and deceptive conduct which reinforces an individual’s decision to enter a transaction is sufficient to establish causation for the $100,000 loss incurred by the Appellants, for reasons outlined above: Benlist. The primary judge would also have rejected the claim in respect of the 30 June 2021 payment of $100,000 on the basis that the Appellants “did not seek to put a case against KP in respect of the amount of $100,000 only” (PJ [170]). Again with respect to the primary judge, the Appellants sought to recover each of the six payments made as set out in [2] above. The claim was not advanced on an “all or nothing” basis. This was not, therefore, a proper basis to reject the claim for $100,000 in respect of the payment made on 30 June 2021.

31. [165]

    Mr McQuillen, who appeared for KP, submitted that she was a mere conduit who could not be held responsible for any misleading or deceptive conduct or misrepresentations. He drew attention in this regard to the primary judge’s observation at PJ [12] that KP was “at one point described as the ‘chief financial officer’ of DCA, although that role description appears to have overstated her role in a small proprietary company”.

32. [166]

    The primary judge was, with respect, wrong to say that “at one point”, KP was described as the CFO of DCA. At all material times she held that role (on her own evidence) and was so described on a number of key emails referred to earlier in these reasons. She was also introduced both to DG and BM, as well as RDA, as “our CFO”. The fact that DCA was a small proprietary company may have rendered the description somewhat grandiose; it did not, however, reduce KP to an inconsequential ministerial agent.

33. [167]

    KP’s conduct bore this out. Hence, it was KP who sent two sets of projections to DG and BM on 19 May 2021 (see [37]-[40] above) and this is precisely the kind of financial document for which it may reasonably be expected a CFO or accountant would take responsibility. So, too, it was KP who was the point of contact for due diligence exercises (see [61]-[62] above) and it was also KP who purported to explain to RDA about Australian banking practices as well as taxation issues: see [48]-[49] above. KP’s active and independent role in continuing the fraud is evidenced by her 27 May 2021 email, which sought payment from the Appellants according to a fictional deadline. KP acknowledged in cross-examination that these false assertions were made on her own behalf and as a joint statement – rebutting suggestions that she was a mere conduit:

34. [168]

    The present case is far removed from the facts of Butcher where it was evident that the misleading survey plan was authored by someone other than the real estate agent, and the agent had supplied an express disclaimer. KP was plainly the author of a number of key documents, and there was no objective basis for believing that she was a mere conduit. Even Butcher, with its very different circumstances, was relatively finely balanced in terms of ministerial agency.

35. [169]

    One particular argument advanced on behalf of KP by reference to the 7 June 2021 email (see [58] above) should be noted. It was contended that the opening words of that email make clear that KP was merely passing on information in a confirmatory message what DA had advised KP in relation to the discussions between DA, BM and DG as to payment. It is true that that is how the email commences. What follows, however, and the misleading component of the email, is not so qualified. Indeed, KP’s inclusive language of “we need to ensure we make payment of at least $6M to the RLWC this afternoon” (emphasis added.) indicates her purported involvement in receiving and transferring funds to RDA. It is a statement by KP as the CFO of DCA as to what was due in respect of the RLWC rights.

36. [170]

    It follows from the above analysis that the first ground of appeal must be upheld. KP herself engaged in misleading or deceptive conduct and that conduct was causative of the Appellant companies’ payments of 9 and 30 June 2021, in the sum of $1,090,000.

Ground 2: KP’s knowing involvement and accessory claims

1. [171]

   Even if I were not satisfied that KP engaged in misleading or deceptive conduct in the ways described above, I would have held that she was knowingly involved in the sense of aiding and abetting DA’s misleading and deceptive conduct which induced the payments made on 9 and 30 June 2021 amounting to some $1,090,000.

2. [172]

   KP knew or was recklessly indifferent to the fact that DCA had not paid $9,000,000 for the RLWC rights. KP further knew, at the time she sent her email of 7 June 2021, that neither $6,000,000 nor $8,000,000 was owing to RDA as the balance of what DCA had paid for the RLWC rights. As she volunteered under cross-examination, she knew at all material times that these rights had been acquired for only $5,000,000: see [18] above.

3. [173]

   The Appellants bolster their submissions as to KP’s knowledge of the falsity of DCA’s dealings with DG and BM with the fact that, effectively simultaneously with her email of 7 June 2021, KP was lying to RDA about having sent $5,000,000 to them in emails of 3 and 4 June 2021: see [56]-[57] above. KP’s willingness to lie in these emails and attach fabricated documents renders it unlikely in the extreme that she was ignorant of the cognate aspects of the deception being directed to DG and BM at precisely the same time. Even though her evidence as to the date of her knowledge varied somewhat under cross-examination, she was plainly aware of this fact from 20 May 2021.

4. [174]

   KP was also recklessly indifferent to the projections as to revenue to be earned from the AHA (NSW), as set out in the projections and revised projections of 19 May 2021: see [37]-[42] above. That recklessness was reflected in KP’s evidence under cross-examination in which she accepted that she was never aware of any potential deal that involved payments from AHA (NSW) to DCA:

5. [175]

   In cross-examination, KP also acknowledged that, despite the representation that DCA would receive $60,000,000 in annual revenue from pubs and clubs, she was not aware of any specific pub or club which might be willing to pay DCA to utilise their streaming rights over the RLWC:

6. [176]

   It was reckless for a CFO of a company to distribute projections without qualification as to the fact that no relevant agreements were in place with the AHA (NSW). KP had no basis at all, let alone any reasonable basis, for believing that the projected revenue contained in these forecasts could be earned.

7. [177]

   Contrary to the primary judge, I do not consider that these projections did not play some material role in inducing the payments on at least 9 June 2021 of $990,000. It is not difficult to conclude that the payments of 9 and 30 June 2021 would not have been made had the true picture been disclosed by KP that: (i) DCA in fact had no contract with the AHA (NSW) or any basis for concluding that the revenue streams would be available or even likely; and (ii) DCA had deceived DG and BM as to the true cost of the RLWC rights.

8. [178]

   As noted at [10] above, the Appellants also seek to make KP accessorily liable for the payments on 11 May 2021 and 18 May 2021 in the sums of $110,000 and $1,000,000 respectively. In order for her liability to be established, it would be necessary for the Appellants to demonstrate that KP had the requisite knowledge at the time of those payments and had rendered relevant assistance to DA in his misleading and deceptive conduct.

9. [179]

   The evidence does not, in my view, establish such knowledge.

10. [180]

    The Appellants relied upon the fact that KP sent an invoice on 18 May 2021 for $1,000,000 in respect of the RLWC rights coupled with the fact, as asserted by the Appellants, that KP knew of the existence of the False Sub-License Agreement which referred to a payment of $9,000,000 being due as at 27 April 2021. The Appellants pointed to certain evidence given under cross- examination by KP which appeared to support this assertion but also pointed to other evidence that contradicted it. This highlights the difficulty of express credit findings not having been made in respect of various aspects of KP’s varying evidence and, more precisely, as to what she knew at what point in time.

11. [181]

    The mere fact that KP sent an invoice for $1,000,000 on 18 May 2021 does not establish the requisite degree of knowledge. Whether KP was aware of the False Sub-License Agreement and, in particular, the $9,000,000 figure it contained, as at the date it was purportedly signed, namely 27 April 2021, is extremely difficult for this Court to determine. No piece of documentary evidence establishes that fact. It was DA who sent the false document to DG and BM, and KP was not copied in on this email. That leaves conflicting oral evidence. On the one hand, the Court was referred to evidence given by DA to the effect that KP was aware of the document and its terms, but much of DA’s evidence was rejected by the primary judge. One then has contradictory evidence from KP herself. Her cross-examination was not, at all times, particularly clear. The Court is not in a position fairly to resolve the evidentiary inconsistency in these circumstances and the Appellants expressly eschewed any remitter of the matter or order for a retrial.

12. [182]

    It should be noted that KP was not involved in any of the meetings with DG and BM, and was not copied into some of the early email communications, rendering it perhaps less likely that she had knowledge of, or was party to, the falsity of the representations and deceit at the time of DA’s early representations which induced the first two tranches of payments on 11 May 2021 and 18 May 2021. The fact that one might expect a person in KP’s position to be aware of documents such as the False Sub-License Agreement is not to the point in circumstances where DA’s dealings could not be described as regular, and no other evidence was available pointing to the requisite knowledge.

13. [183]

    For these reasons, whilst Ground 2 should be upheld to the extent of the final four payments in the sum of $1,090,000, the Appellants’ claim that KP should also be found to be knowingly or accessorily liable for misleading and deceptive conduct in relation to the first two payments made by the Appellants cannot be sustained.

Ground 3: KP’s deceit

1. [184]

   The Appellants contend that the primary judge should have found KP liable in deceit for $2,090,000, alternatively $1,090,000 or $100,000. The primary judge dismissed the deceit claim against KP for the “same reasons” as in relation to the s 18 misleading and deceptive conduct claim against KP, as both relied on substantially the same conduct (PJ [186]).

2. [185]

   Of course, liability for the tort of deceit rests on a very different basis from liability for misleading or deceptive conduct, as intent to deceive is not a necessary component of the latter statutory cause of action.

3. [186]

   In the present case, however, I have found not only that KP engaged in misleading and deceptive conduct in respect of the payments made on 9 and 30 June 2021 but that she had knowledge of the falsity of what she represented by her conduct from at least 19 May 2021 onwards. As such, Ground 3 of the appeal must be upheld to the extent of those final four payments, in the sum of $1,090,000.

Ground 4: Claim for $100,000 payment on 30 June 2021

1. [187]

   As noted above, the primary judge rejected the claim against KP in relation to the $100,000 payment on 30 June 2021 on the footing that “it was not put on that basis” at first instance (PJ [170] and [177]). By this I understood his Honour to have been saying that the Appellants did not advance the submission that, if KP were found to be not liable in respect of the earlier payment, they still pursued her in respect of the $100,000 payment on 30 June 2021.

2. [188]

   The Appellants argued that they did advance a claim against KP in relation to the $100,000 and rely upon [14f] of their Amended Statement of Cross-Claim.

3. [189]

   I have dealt with this argument at [164] above. In view of the conclusions which I have reached in respect of Grounds 1 and 2, it is not necessary to give any further consideration to this ground of appeal.

Ground 5: Exemplary damages

1. [190]

   The Appellants contended that the primary judge ought to have awarded exemplary damages against KP for $75,000. They claim that the tort of deceit is a paradigm case for exemplary damages, and that KP had deliberate and contumelious disregard for the Appellants’ interests.

2. [191]

   The Appellants relied on KP’s many admissions as to dishonest and reprehensible conduct whilst operating as an accountant and ASIC agent although it must be noted, as the primary judge did, that, for the most part, these admissions related to KP’s dealings with RDA and not the Appellant companies, nor DG and BM. Examples of such admissions may be seen at [56]-[58] above.

3. [192]

   In relation to KP’s misrepresentations to RD of RDA by emails on 8 June 2021 and 9 June 2021, she provided the following evidence in cross-examination:

4. [193]

   In relation to the 23 June 2021 email sent by DA to RS and RD (copying KP), which suggested that KP had been in conversation with the fictional Mark Greggo at the CBA, KP provided the following evidence in cross-examination:

5. [194]

   Such testimony evidences a sustained attempt by KP to mislead RD over a period of weeks through the use of false remittances and correspondence. That conduct cannot readily be separated from the overall fraud that was at this stage being perpetuated by both KP and DA.

6. [195]

   KP acknowledged at various points in cross-examination that her conduct was unacceptable, especially given her position as a professional tax accountant and financial officer:

7. [196]

   The Appellants submitted that exemplary damages were particularly warranted given: (i) KP’s subjective knowledge of wrongdoing; (ii) the necessity for deterrence; and (iii) KP’s repeated acts of wrongdoing, referring in this regard to: State of NSW v Ibbett [2005] NSWCA 445 at [44], [81]; Harris at [254]; Rookes v Barnard [1964] 1 All ER 367 at 410-411.

8. [197]

   I agree that this is an appropriate case for the award of exemplary damages. Whilst KP may not have been the originator or author of the fraud, she became an active participant in it, allowing her apparent credibility as an accounting professional to lend respectability and legitimacy to what was brazen fraudulent conduct including fabrication of bank documents.

Conclusions

1. [198]

   For the above reasons, the appeal should be allowed in part with respect to KP, with KP to pay the Appellants’ costs of the appeal.

2. [199]

   Orders 9 and 10 of the primary judge entered on 14 February 2023 dismissing the Amended First Cross-Claim against KP should be set aside.

3. [200]

   In lieu thereof, judgment should be entered against KP in the sum of $1,090,000 together with interest from the date of payments made by the Appellants to DCA calculated in accordance with the rates provided under s 100 of the Civil Procedure Act 2005 (NSW).

4. [201]

   I would also order that KP be liable for exemplary damages in the sum of $30,000.

5. [202]

   KP should also be jointly liable with DA in respect of the Appellants’ costs of the Cross-Claim before the primary judge.

6. [203]

   STERN JA: I agree with the orders of the Chief Justice and with his Honour’s reasons for proposing those orders.

7. [204]

   BASTEN AJA: I agree with Bell CJ.