Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as “STC Sports Trading Club” (No 8)

1. [1]

   I gave judgment in this matter on 18 February 2019: Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as “STC Sports Trading Club” (No 7) [2019] NSWSC 103.

2. [2]

   These reasons assume familiarity with that judgment. I shall use the same abbreviations here. I will refer to the paragraphs in the judgment thus: “J” followed by the number of the paragraph in question.

3. [3]

   At J829-J839, I referred to a number of further matters requiring resolution. At J840, I said:

4. [4]

   On 4 March 2019, I made directions for the exchange of submissions in relation to the following questions:

5. [5]

   I misstated question (a). The question that arose from J762 was whether Ms Johnson represented to anyone other than Mr de Klerk that “Mark Hughes” was the National Sales Manager of STC.

6. [6]

   I received further submissions from Mr Dixon, for Mr Mackinnon, on 30 April 2019.

7. [7]

   There was delay in provision of submissions on behalf of Ms Johnson. Ultimately, on 22 July 2019, Mr Argy served a document headed “Fifth Defendant’s Further Submissions re Causation and Damage”. The document contains 995 paragraphs and comprises 152 closely typed pages.

8. [8]

   In his covering email, Mr Argy said that the submissions had not been prepared by him. On their face, they purport to have been prepared by Ms Johnson herself.

9. [9]

   To a very large extent that document was not responsive to my direction of 4 March 2019 and sought to reargue matters that I had determined in the main judgment.

10. [10]

    Mr Dixon delivered written submissions in reply on 5 August 2019.

11. [11]

    Mr Dixon and Mr Argy made oral submissions on 20 September 2019. During those submissions, Mr Argy directed me to those parts of the 22 July 2019 document that he contended to be relevant to the issues remaining for determination.

12. [12]

    I have received written submissions since 20 September 2019, in response to particular questions I notified to the parties.

A class action

1. [13]

   As I stated at J4, Mr Mackinnon brings these proceedings under Pt 10 of the Civil Procedure Act 2005 (NSW) as representative of 153 named Group Members.

2. [14]

   The findings I have made about the conduct of Mr Foster and Ms Johnson answer questions which are common to the Group Members. Those findings enure for their benefit as well as for Mr Mackinnon himself. I summarise those findings later in these reasons.

3. [15]

   However, all Group Members will need to prove, at an appropriate time, that they have suffered damage as a result of the conduct I have found. In that regard, I am told that the Group Members have served some 184 affidavits. They have not yet been read before me. That will take place at a later hearing.

4. [16]

   These reasons are concerned with, amongst other things, whether Mr Mackinnon has suffered damage as a result of the conduct I have found.

Application to amend the Further Amended Commercial List Statement

1. [17]

   In the Further Amended Commercial List Statement, Mr Mackinnon alleges that Mr Foster and Ms Johnson made the representations set out at J736 (being representations made by Mr Foster himself or by Ms Johnson on his instructions) and at J801 (being representations made in the Proposal). Together, these representations were defined in the List Statement as “the Representations”.

2. [18]

   Paragraph 23 of the List Statement is in these terms:

3. [19]

   As I set out at J16-J19, the List Statement inaptly named a partnership as “the first defendant”. Mr Dixon sought to overcome the infelicity of that pleading as I set out at J89-J90. I concluded that the references in par 23 of the List Statement to “the first defendant” should be taken to include a reference to Ms Johnson (see J82-J90).

4. [20]

   During argument on 20 September 2019, the question arose as to whether, on the proper construction of the pleading, par 23 amounted to an allegation that each of the statements made in the Proposal, as set out at par 21 of the List Statement and at J801, was false.

5. [21]

   Against the possibility that that allegation was not clearly made by par 23 of the List Statement, Mr Dixon sought leave to amend the chapeau to that paragraph to add “inter alia” so that it read:

6. [22]

   Mr Argy opposed that amendment and submitted that had he understood that the matters specified in sub-pars 23(a)-(f) were not a complete statement of the respects in which the Representations were said to be misleading, he would have conducted the case differently.

7. [23]

   On reflection, my conclusion is that, on its proper construction, the effect of par 23 in its existing form is to allege that all of the Representations alleged in the List Statement were false, notwithstanding the fact par 23 does not list each of the Representations earlier alleged. In my opinion that is made clear by par 23(e) which alleges, as a matter of generality, but with sufficient clarity that there was no “legitimate sports betting or trading business” but rather a “fraudulent scheme” of the kind described. That is, in effect, what I found at J802-J803.

8. [24]

   Accordingly, my conclusion is that the List Statement in its present form alleges that each of the pleaded representations arising from the Proposal was false. Thus it is not necessary that I grant Mr Mackinnon leave to amend.

Findings not made

1. [25]

   I concluded that, because of her bankruptcy, it was not competent for me to deal with Mr Mackinnon’s claims against Ms Larter (J81).

2. [26]

   I also found that Mr Mackinnon’s claims in contract could not succeed against any of Mr Foster, Ms Johnson or Ms Larter (J826-J828).

Findings made about Mr Foster

1. [27]

   I made findings about the representations made by Mr Foster at J737-J740 and J804-J807.

2. [28]

   In summary, I found that Mr Foster made each of the representations set out at J736 and that each of those representations was false and thus misleading or deceptive.

3. [29]

   Mr Foster was the mastermind of the STC fraud and must have known that each of the representations that he made was false.

4. [30]

   As I found at J835, I am satisfied that the representations made by Mr Foster have caused the loss of which Mr Mackinnon and the Group Members complain.

5. [31]

   At J835, I said that:

6. [32]

   On reflection, I conclude that the appropriate course is that I enter judgment against Mr Foster in favour of Mr Mackinnon for the amount that Mr Mackinnon claims. I will consider what judgments ought to be entered in favour of the other Group Members once their evidence is read.

Findings made about Ms Johnson

1. [33]

   I made findings as to the representations made by Ms Johnson at J750-J800 and J808-J819.

2. [34]

   In relation to a number of those representations, to which I referred at J760-J762, J797-J798 and J799, I found that Ms Johnson had made such representations to Mr de Klerk. I invited submissions as to whether the evidence permitted a conclusion that Ms Johnson made those representations to anyone other than Mr de Klerk. Mr Dixon now accepts that there is no such evidence.

3. [35]

   In those circumstances, my conclusions are that Ms Johnson made the following representations on the instructions of Mr Foster:

   1. (1)

      on 14 March 2013 and 30 May 2013 to Mr de Klerk, that a person whose real name was “Mark Hughes” was the National Sales Manager of STC (J750-J761);

   2. (2)

      on 14 March 2013 to Mr de Klerk, that monies invested by Associate Members to STC were secured (J796-J797);

   3. (3)

      on 14 March 2013 to Mr de Klerk, that STC had assets of $10 million (J799);

   4. (4)

      on 14 March 2013 and 30 May 2013 to Mr de Klerk, that Mr Foster was not involved in STC (J244; J265; J447-459; J750-761);

   5. (5)

      from at least 30 September 2013 to all existing Associate Members of and all prospective investors in STC, that Mr Foster was not involved in STC (J766-J783);

   6. (6)

      from 14 March 2013 to all existing Associate Members of and all prospective investors in STC, that the statements made in the Proposal were true (J808-J819).

4. [36]

   I found that those representations were false as:

   1. (1)

      there was no person whose real name was “Mark Hughes” who was the National Sales Manager of STC and that the person representing himself to Associate Members of and prospective investors in STC as “Mark Hughes” was Mr Foster;

   2. (2)

      the monies invested by Associate Members in STC were not secured;

   3. (3)

      STC did not have assets of $10 million;

   4. (4)

      Mr Foster was involved in STC and, by July 2013, was in control of STC’s operations; and

   5. (5)

      the following statements in the Proposal were false:

5. [37]

   It follows that Ms Johnson thereby engaged in misleading or deceptive conduct within the meaning of s 18 of the Australian Consumer Law.

6. [38]

   Further, I found that Ms Johnson made representations referred to at [35(1), (4) and (5)] with knowledge that they were false.

7. [39]

   Before further considering the consequences of my findings about Ms Johnson’s misleading or deceptive conduct, I will turn to the remaining causes of action agitated on behalf of Mr Mackinnon.

Further findings sought

1. [40]

   On 20 September 2019, Mr Dixon submitted that I should make findings of deceit against Ms Johnson.

2. [41]

   To the extent that I have made the finding reiterated at [38], I have done so.

3. [42]

   However, Mr Dixon accepted that such a finding does not take Mr Mackinnon’s case, so far as it concerns the relief to which he is entitled, any further.

4. [43]

   Mr Dixon submitted that, in addition to making the findings to which I have referred, I should also find there to have been a “conspiracy to defraud investors involv[ing] at least Mr Foster and Ms Johnson”.

5. [44]

   The tort of conspiracy may take two forms.

6. [45]

   These are:

   1. (1)

      an agreement or combination between two or more persons to commit a lawful act with the predominant purpose of injuring or damaging a plaintiff, and the act is carried out and the purpose achieved: McKernan v Fraser (1931) 46 CLR 343 (see especially the judgment of Evatt J); or

   2. (2)

      an agreement or combination between two or more persons to commit an unlawful act with an intention to injure a plaintiff, and the act is carried out and the intention achieved: Williams v Hursey (1959) 103 CLR 30; [1959] HCA 51 (Fullagar J at 78 with Dixon CJ and Kitto J agreeing, Taylor J at 108-109, Menzies J at 125).

7. [46]

   It is evident from the form of par 39 in the List Statement that Mr Mackinnon alleges a conspiracy of the second kind.

8. [47]

   It is necessary to pay careful attention to the precise manner in which Mr Mackinnon has pleaded his case in conspiracy.

9. [48]

   The claim is contained in par 39 of the List Statement which is in the following terms:

10. [49]

    Paragraph 39(c) refers to par 23(e) in the List Statement which is in the following terms:

11. [50]

    That is, what is pleaded is that, along with Mr Foster, Ms Johnson:

12. [51]

    In order that Ms Johnson knowingly participate in such a fraudulent scheme, it would have to be shown that she knew such a scheme was afoot.

13. [52]

    I see no basis in the evidence upon which I could conclude that Ms Johnson behaved in this fashion.

14. [53]

    Mr Dixon said:

15. [54]

    Not only is there no “direct evidence” that Ms Johnson had this intention, I do not feel able to infer from the evidence that she did.

16. [55]

    Ms Johnson was a signatory on the STC Westpac account. However, as I found at J192, there is no suggestion that Ms Johnson authorised any payment out of that account or received any money deposited to the account, apart from the $50,000 she withdrew in December 2013 (see J646-J647).

17. [56]

    Although Ms Johnson understood that it was necessary that Mr Foster’s involvement in STC be concealed, and took steps to ensure that occurred, and, by September 2013, developed strong suspicions about the use to which Mr Foster was putting Associate Members’ money, I see no basis on which I could conclude that Ms Johnson intended to cause damage to Group Members.

18. [57]

    Mr Mackinnon has not made out this claim.

19. [58]

    Mr Dixon did not develop submissions in relation to the remaining claims in the List Statement: restitution (par 31), conversion (par 38), constructive trust (pars 41 to 43) and contravention of s 601ED(5) of the Corporations Act 2001 (Cth).

20. [59]

    I take those claims to have been abandoned.

Ms Johnson’s misleading or deceptive conduct

1. [60]

   I return now to the consequences of my findings that Ms Johnson engaged in misleading or deceptive conduct.

2. [61]

   I have found that Ms Johnson’s misleading or deceptive conduct arose from:

   1. (1)

      her knowledge that the Proposal was made available to investors in STC; and

   2. (2)

      her silence about Mr Foster’s involvement in STC.

Ms Johnson’s representations about the statements in the Proposal

1. [62]

   I have found that:

   1. (1)

      from 14 March 2013 Ms Johnson represented to Associate Members of and prospective investors in STC that the statements in the Proposal were true (see [35(6)] above);

   2. (2)

      numerous statements in the Proposal were false (see [36] above); and

   3. (3)

      Ms Johnson thereby engaged in misleading or deceptive conduct.

2. [63]

   I have found that Ms Johnson knew of the Proposal, and was sufficiently familiar with it to discuss it in some detail with Mr de Klerk (see J818). As I said at J14, Ms Johnson must have known the Proposal to contain false statements. At the very least, she was recklessly indifferent to whether the statements were true or false.

3. [64]

   Mr Mackinnon said in his affidavit that “[o]n the basis of the information in the Proposal…I decided to loan monies to STC”.

4. [65]

   Section 236 of the Australian Consumer Law relevantly provides:

5. [66]

   In Gould v Vaggelas (1984) 157 CLR 215 at 238; [1984] HCA 68, Wilson J observed:

6. [67]

   In Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54, French CJ and Crennan, Bell and Keane JJ observed at [39]:

7. [68]

   It is not necessary that reliance on misleading or deceptive conduct be “reasonable”: see Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 517 (Heerey J, Sundberg J agreeing at 521).

8. [69]

   Merely failing to check the accuracy of the defendant’s representation is not sufficient to deny a claimant a remedy: Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 at [128] (McHugh J).

9. [70]

   In Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112; (1990) 94 ALR 719, the claimant, a solicitor, failed to give adequate attention to a planning certificate attached to a contract of sale. Had the solicitor been more careful, he would have found that the representations made to him were false (at 134-135). Yet the Federal Court did not regard the solicitor’s behaviour as denying him a remedy (at 138). That was because the relevant misrepresentation remained an operative factor in inducing the solicitor to act.

10. [71]

    In Travel Compensation Fund v Tambree t/as R Tambree & Associates (2005) 224 CLR 627; [2005] HCA 69 at [32], Gleeson CJ observed that:

11. [72]

    Notwithstanding these authorities, Mr Argy submitted that Mr Mackinnon’s reliance on the claims made in the Proposal was, considering the extravagant nature of those claims, unreasonable. Mr Argy submitted that it followed that Mr Mackinnon had not relied on the statements in the Proposal in any relevant matter and thus Mr Mackinnon’s loss could not be said to have been “because of” the misrepresentations made in the Proposal.

12. [73]

    In support of that proposition, Mr Argy cited the observations of Gray J in Chew v Amanatidis [2009] SASC 334 at [42] as follows:

13. [74]

    I do not see Gray J’s observations as being relevant to the case before me. His Honour was considering the law of negligent misstatement and the question of whether or not a duty of care had arisen by the party in question in relation to the relevant statements.

14. [75]

    The inherent improbability of a representation made under the Australian Consumer Law may be relevant to the question of whether the statement is “of such a nature as would be likely to provide…inducement” (to adopt the words of Wilson J in Gould v Vaggelas) to the representee in question. But in a case where, as here, the extravagant representations were, as I find, made for the precise purpose of inducing gullible investors to part with their money, the Court would be slow indeed to reject the evidence of persons such as Mr Mackinnon to whom the representations were directed.

15. [76]

    In any event, in this case, Mr Argy did not challenge Mr Mackinnon’s evidence that he did rely upon what was said in the Proposal to make his investment.

16. [77]

    As I have said at [64], Mr Mackinnon’s evidence in his affidavit was:

17. [78]

    Mr Argy did ask Mr Mackinnon questions about his response to the advertisement published by STC, a copy of which I set out at J145.

18. [79]

    That part of the cross-examination read:

19. [80]

    That cross-examination fell far short of putting to Mr Mackinnon that he did not rely upon the statements made in the Proposal.

20. [81]

    In the absence of such a challenge to Mr Mackinnon’s evidence, I am not prepared to reject it.

21. [82]

    Mr Mackinnon gave this evidence in response to a question from me:

22. [83]

    It is true that in this evidence Mr Mackinnon said that he thought the return shown on “our account” to be “so astronomical” that it was “almost unbelievable”. But these are observations made after Mr Mackinnon had executed the loan agreement and advanced his funds.

23. [84]

    It may be that Mr Mackinnon was gullible to accept the extravagant claims made in the Proposal. A more sophisticated or sceptical person in Mr Mackinnon’s position may have not been persuaded by the claims made in the Proposal to invest in STC.

24. [85]

    However, I am satisfied that the matters stated in the Proposal were, in fact, matters which caused Mr Mackinnon to make his investment and, to return to Wilson J’s words, were “of such a nature as would be likely to provide such inducement”.

25. [86]

    I am therefore satisfied that Mr Mackinnon invested in STC “because of” the statements in the Proposal and thus “because of” Ms Johnson’s misleading or deceptive representation that the statements in the Proposal were true.

26. [87]

    It follows that Mr Mackinnon is entitled to recover his loss from Ms Johnson.

Ms Johnson’s representation that Mr Foster was not involved in STC

1. [88]

   In finding the representation at [35(5)], I accepted Mr Mackinnon’s case that on Mr Foster’s instruction and “by silence or omission” Ms Johnson represented to Mr Mackinnon and Associate Members including the Group Members that Mr Foster “was not involved in STC” (as alleged at List Statement par 20(c)(i)).

2. [89]

   At J765, I referred to authority to the effect that if circumstances give rise to a reasonable expectation that, if a fact existed, it would be disclosed, then the failure to disclose that fact might give rise to an inference that it did not exist; and that failure to disclose the existence of the fact in those circumstances might constitute misleading or deceptive conduct.

3. [90]

   At J782-J783, I concluded that, by the end of September 2013, Associate Members of STC and prospective investors in STC were entitled reasonably to expect that if, as I found was the fact, Ms Johnson, as a partner in STC:

4. [91]

   Ms Johnson’s email of 10 September 2013 shows that Ms Johnson knew of, and was concerned about, each of these matters (J509 and J513).

5. [92]

   Although Ms Johnson claims she took the steps set out at J687-J705, she did not disclose the matters at [90] to Associate Members of and prospective investors in STC.

6. [93]

   I found that, in those circumstances, by the end of September 2013, Ms Johnson represented to Associate Members and to prospective investors in STC that Mr Foster was not involved in STC (J791-J792).

7. [94]

   Mr Dixon submitted that I should go further, and find that from a point much earlier than the end of September 2013, Associate Members of and prospective investors in STC were reasonably entitled to expect that if Ms Johnson knew that Mr Foster was in any way involved in STC, she would disclose that fact to them.

8. [95]

   That case is, I find, open on the pleadings as:

9. [96]

   I have found that Ms Johnson knew from the outset that Mr Foster was involved in STC (J131 and J766). I have found Ms Johnson took active steps to conceal Mr Foster’s involvement from Mr de Klerk and from Mr Jenman and Mr Baker, the investigators to whom Pikes & Verekers Lawyers wrote in April 2013 (J315-J330).

10. [97]

    I have found that, far from taking steps to reveal Mr Foster’s involvement in STC, Ms Johnson actively concealed it.

11. [98]

    I have made the following findings relevant to Ms Johnson’s knowledge and perception of the significance of Mr Foster’s role at STC:

12. [99]

    In light of those findings, I am persuaded that Mr Dixon is correct to submit that Associate Members of and prospective investors in STC were reasonably entitled to expect that Ms Johnson would disclose what she knew to be fact by 14 March 2013, that being the date of the meeting at the Catalina restaurant.

13. [100]

    On 14 March 2013, Ms Johnson participated in the charade of apologising for the absence of “Mark Hughes” (J249), who she knew to be Mr Foster (J244 and J459), and explained his role at STC as being “head of trading” (J257).

14. [101]

    By 14 March 2013, Ms Johnson knew that:

15. [102]

    By not disclosing these matters, Ms Johnson remained silent when Associate Members of and prospective investors in STC were reasonably entitled to expect that she, as one of the two partners in STC, would disclose what she knew to be the true state of affairs, either to them or to a person or body that would cause them to be made aware of those matters.

16. [103]

    For these reasons my conclusion is that Ms Johnson engaged in misleading or deceptive conduct on and from 14 March 2013.

17. [104]

    This is especially so in circumstances where, at the outset:

18. [105]

    As I recorded at J644, in his affidavit Mr Mackinnon said:

19. [106]

    I recorded at J645 that Mr Argy did not challenge this evidence and that I was not prepared to reject it.

20. [107]

    Mr Argy submitted that Mr Mackinnon’s evidence should be read as meaning that had Mr Mackinnon known that Mr Foster was involved in STC as described in the “news reports” to which he referred, he would not have invested in STC. That is, Mr Argy submitted that the “this” to which Mr Mackinnon referred to in the phrase “if I had known this” was not the mere fact of Mr Foster’s involvement in STC, but such involvement as described in the news reports.

21. [108]

    I do not accept that submission. The natural reading of Mr Mackinnon’s evidence is that, had he known Mr Foster “was involved in STC”, that is “involved” at all, he would not have invested.

22. [109]

    In any event, such “news reports” from this time as are in evidence did not describe the nature of Mr Foster’s involvement in STC other than to quote a “Gold Coast man” who said that he lost the $500,000 that he invested with STC and that Mr Foster “had been in contact with him chasing money for the ponzi-style scheme”. Otherwise, the articles said the Australian Federal Police had “confirmed it was not investigating [Mr] Foster over any new dealings” and that “there was no ongoing case relating to [Mr] Foster’s links to [the] Sports Trading Club”.

23. [110]

    Mr Argy submitted that it was not necessary for him to challenge Mr Mackinnon in cross-examination about his statement as I have set out at [105] because of Mr Dixon’s statements in opening oral submissions that “there was notoriety that if people had have known that [Mr] Foster was doing the same thing as he was doing in those cases” and that “there is a number of press reports that we rely upon to show that [Mr] Foster’s name was associated with those types of scams”. I do not accept that submission. Mr Dixon was merely explaining why he submitted that earlier decisions about Mr Foster, including those to which I referred at J27-J36, were relevant. Mr Dixon’s statements had no relevance to what Mr Mackinnon said about his own position, and provided no justification for Mr Argy’s failure to challenge Mr Mackinnon about his evidence.

24. [111]

    Mr Argy submitted that the revelation by Ms Johnson to Mr de Klerk on 30 August 2013 (see J447ff) that Ms Larter was “in [with] Peter Foster”, Mr de Klerk’s subsequent realisation that “Mark Hughes” was in fact Mr Foster and his communications thereafter with a television journalist and the police (see J460-J465) was a “novus actus interveniens” which broke the “chain of causation” between any representation made by Ms Johnson that Mr Foster was not involved in STC and the loss suffered by Mr Mackinnon and other investors.

25. [112]

    Mr Argy put it this way:

26. [113]

    This submission requires me to give more detailed consideration to this aspect of Mr de Klerk’s conduct than is set out at J460-J465.

27. [114]

    On 30 August 2013, Ms Johnson sent Mr de Klerk an SMS saying that Ms Larter was “in [with] Peter Foster” (J448).

28. [115]

    This was the first time Ms Johnson had mentioned the name “Peter Foster” to Mr de Klerk (see J449).

29. [116]

    Mr de Klerk gave this evidence in his affidavit of 27 October 2016:

30. [117]

    This was doubtless very alarming from Mr de Klerk’s point of view. Not only was he an Associate Member of STC, having loaned $250,000 pursuant to the agreements he signed on 17 February 2013 (see J208) and the further $200,000 on 10 July 2013 (see J395), he had paid the Australian dollar equivalent of US$1 million to Bella Development Limited for the rights to the alleged South African STC venture (see J381ff) in return for which he received nothing (see J394).

31. [118]

    Very shortly after receiving the SMS from Ms Johnson, Mr de Klerk received a telephone call from Mr Cameron Williams from Channel 9. Mr de Klerk said this was “just after” he received Ms Johnson’s SMS or “maybe the next day”.

32. [119]

    Mr de Klerk said in cross-examination:

33. [120]

    Mr de Klerk gave this evidence in a somewhat compressed fashion. However, I understand Mr de Klerk’s evidence to be that:

34. [121]

    On the question of the previous connection of Ms Johnson to Mr Foster, Mr de Klerk said that he found out later (“not like immediately”) from sources in South Africa that Ms Johnson had represented Mr Foster “in some cases”.

35. [122]

    Mr Argy submitted that this showed that Ms Johnson’s “solution” was “to put the media on to Mr de Klerk and have them go to the police” and to “put the media on to a person who could give more detail and more factual material of a kind which was more likely to be publicised than if all she had done was taken them her suspicions”. I will return to this.

36. [123]

    Mr de Klerk said that he flew from Perth to Sydney and met Mr Williams at Sydney Airport and that Mr Williams “gave me some information” at the airport.

37. [124]

    Part of that information was, evidently, that the 60 Minutes team from Channel 9 was doing “their own investigation” of certain cases including Mr Foster.

38. [125]

    Thus Mr de Klerk said:

39. [126]

    Thus it appears that Mr de Klerk had an opportunity to appear on 60 Minutes to speak about his experience at STC.

40. [127]

    It appears that at around this time Mr de Klerk was minded to take steps to “stop STC”. Thus he gave this evidence:

41. [128]

    When pressed by Mr Argy to describe what steps he took in this regard Mr de Klerk said:

42. [129]

    Consistently, with a desire to “step up to stop STC” Mr de Klerk also said that, about a week or 10 days after receiving the 30 August 2013 SMS from Ms Johnson, he went to the police.

43. [130]

    Mr de Klerk did not say, and Mr Argy did not ask what information Mr de Klerk then gave to the police.

44. [131]

    However, Mr de Klerk had second thoughts.

45. [132]

    Thus he said:

46. [133]

    Mr de Klerk agreed that the “investigation” and “negotiation going forwards and backwards” to which he referred did not occur in September 2013 but occurred after Mr Foster’s arrest in October 2014.

47. [134]

    Thus he gave this evidence in response to Mr Argy’s questions:

48. [135]

    Mr de Klerk gave this explanation for not “spilling the beans” for 14 months:

49. [136]

    For the same reasons, Mr de Klerk declined to appear on 60 Minutes. He explained:

50. [137]

    Ultimately, on 10 February 2016, some 15 months after Mr Foster’s arrest in October 2014, Mr de Klerk gave a formal statement to the police which was, in substance, to the same effect as his affidavit of 27 October 2016 in these proceedings.

51. [138]

    This evidence does establish that Mr de Klerk had the opportunity, in around September 2013, to publicise Mr Foster’s involvement at STC.

52. [139]

    It also establishes that Mr de Klerk consulted the police at around that time. I am not able to come to any conclusion as to what Mr de Klerk then said to the police. That subject was not explored by Mr Argy in cross-examination.

53. [140]

    For the reasons he explained, Mr de Klerk decided not the take matters further until after Mr Foster’s arrest in October 2014.

54. [141]

    Had Mr de Klerk agreed to appear on 60 Minutes in September or October 2013, it may well be that Mr Foster’s involvement in STC would have come to the attention of Mr Mackinnon and other Associate Members and may have led to the collapse of the STC scheme or otherwise deterred them from advancing funds to STC.

55. [142]

    But it does not follow from these facts that Mr Mackinnon’s loss, nor the loss of other Group Members, was not “because of” Ms Johnson’s conduct; namely her representation by silence that Mr Foster was not involved in STC.

56. [143]

    To show that his loss was “because of” Ms Johnson’s conduct, Mr Mackinnon does not have to show that the sole cause of his loss was Ms Johnson’s conduct. It is sufficient for Mr Mackinnon to show that Ms Johnson’s conduct was “a” cause of his loss.

57. [144]

    For example, Beazley JA stated in Macquarie Generation v Peabody Resources [2000] NSWCA 361 at [81]:

58. [145]

    Further, in I & L Securities Pty Ltd v HTW Values (Brisbane) Pty Ltd (2002) 210 CLR 109; [2002] HCA 41, Gaudron, Gummow and Hayne JJ said:

59. [146]

    Nor do I accept that what Ms Johnson could have said about Mr Foster’s involvement was less “potent” or “powerful” than anything Mr de Klerk could have said. She was a partner in STC. She believed investors’ money “may both be in danger and may be being improperly used” (J509), that STC may be “being illegally and fraudulently managed” (J513) and that there was a “striking similarity” between the conduct identified by Logan J in relation to the SensaSlim business and that at STC (J553-J568).

60. [147]

    Whether Ms Johnson’s conduct, remaining silent from 14 March 2013 concerning Mr Foster’s involvement, caused Mr Mackinnon’s loss is a question to which I will next turn.

61. [148]

    I have found that from 14 March 2013, by her silence, Ms Johnson represented to Associate Members and to prospective investors that Mr Foster was not involved in STC.

62. [149]

    Mr Mackinnon made his two investments, each of $100,000, in STC on 31 October 2013 and 4 November 2013 (J641-J642).

63. [150]

    The question is whether Mr Mackinnon made his investments “because of” Ms Johnson’s misleading or deceptive conduct; that is “because of” her remaining silent from 14 March 2013 about Mr Foster’s involvement in STC.

64. [151]

    Mr Mackinnon’s evidence, which I have accepted, is that had he known Mr Foster was involved in STC, he would not have invested in STC.

65. [152]

    What could, and should, Ms Johnson have done to reveal Mr Foster’s involvement in STC?

66. [153]

    There are numerous steps Ms Johnson could have taken.

67. [154]

    First, she could have told Mr de Klerk that the person who was passing himself off as “Mark Hughes” was in fact Mr Foster.

68. [155]

    It is probable that, had Ms Johnson taken this step, Mr de Klerk would have acted as he did in September 2013 after Ms Johnson told him that Ms Larter was “in with Peter Foster” and “located information on the internet” identifying Mr Foster as a notorious conman (see [116] above and J460ff).

69. [156]

    Mr Dixon submitted that although, as discussed at [129] to [137] above, in September 2013 Mr de Klerk decided not to “spill the beans”, he would not have hesitated to do so in March 2013 because, at that time, his investment in STC was much less than it was in September 2013.

70. [157]

    Thus Mr Dixon submitted:

71. [158]

    The difficulty with this submission is that Mr de Klerk gave no evidence about what he would have done had Mr Foster’s involvement in STC been revealed to him in March 2013. Acceptance of Mr Dixon’s submission would involve a high degree of speculation on my part as to how Mr de Klerk would have acted. I do not consider I can draw the conclusions Mr Dixon invited me to make.

72. [159]

    But, Ms Johnson could certainly have behaved differently in regard to her involvement with Pikes & Verekers in April 2013.

73. [160]

    Ms Johnson could have refused to be involved in giving instructions to Pikes & Verekers. It may be that, had she behaved that way, Ms Larter would nonetheless have instructed Pikes & Verekers to have written to the private investigators, Messrs Jenman and Baker, denying that Mr Foster was involved in STC.

74. [161]

    But Ms Johnson could have contacted Messrs Jenman and Baker directly, perhaps under conditions of anonymity, and disclosed to them the true position. As those men were evidently investigating whether Mr Foster was in fact involved in STC, it seems likely that they would have taken heed of anything Ms Johnson said to them about Mr Foster’s involvement; particularly if Pikes & Verekers had, in the meantime, sent them a letter denying Mr Foster’s involvement.

75. [162]

    Further, as I said at J788-J789, Ms Johnson knew that the ACCC was acutely interested in Mr Foster’s activities. She had appeared for Mr Foster on an application to adjourn the ACCC proceedings before Yates J.

76. [163]

    Ms Johnson could have approached the ACCC. It is impossible to imagine that the ACCC would have ignored the detailed intelligence that Ms Johnson would have been able to give them about Mr Foster’s involvement in STC and, in particular, from March 2013, that he was passing himself off as “Mark Hughes”.

77. [164]

    Ms Johnson could have also approached the police about these matters.

78. [165]

    Ms Johnson must also have been able to ascertain the identity of existing Associate Members. Had Ms Johnson revealed to one or more of those Associate Members that Mr Foster was involved in STC and was passing himself off as “Mark Hughes”, it seems likely that one or more of them would have caused publication of Mr Foster’s involvement. This is especially so when the person with whom most, if not all, investors were initially involved was “Mark Hughes”. Revelation to those persons that there was no person involved in STC whose real name was “Mark Hughes” and that the person that they thought was “Mark Hughes” was in fact Mr Foster would surely have caused one or more of them to take steps to let other Associate Members know the true position.

79. [166]

    By the end of September 2013, Ms Johnson had even more reason to speak out.

80. [167]

    That is because by then Ms Johnson:

81. [168]

    Mr Argy submitted:

82. [169]

    One obvious way in which Ms Johnson could have conveyed information about Mr Foster through the media was by responding honestly to the enquiries made of her by Mr Murray from The Courier Mail in early October 2013 (J579-J623).

83. [170]

    I said at J787 that Ms Johnson must have known that if she had told Mr Murray the true position in relation to Mr Foster’s involvement, Mr Murray would have caused that to be publicised and that Associate Members and prospective investors may very well have become aware of that publicity.

84. [171]

    Mr Murray asked Ms Johnson the direct question: “[w]hat connection does Peter Foster have with the Sports Trading Club?” (J588). Ms Johnson said she answered that question by saying Mr Foster was involved “in setting up the internet side of it” but that “he wasn’t running it” (J604). Ms Johnson must have known that was a false answer: she knew full well by then that Mr Foster was in complete control of STC’s operations (J606).

85. [172]

    Evidently Ms Johnson’s proposed answer was not relayed to Mr Murray but was intercepted, presumably by Mr Foster, and substituted by a denial that Mr Foster had any involvement with STC (J599).

86. [173]

    Ms Johnson actually spoke to Mr Murray (J580). She could easily have told him, perhaps anonymously, that Mr Foster was then in total control of STC. It is likely, if not near certain, that if she had done this Mr Murray would have caused this to be publicised.

87. [174]

    As it was, Mr Murray caused an article about STC to be published in The Courier Mail on 28 October 2013 (J616-J618). That article did not mention Mr Foster. Had Ms Johnson told Mr Murray the true position as she knew it to be, it is probable if not certain that Mr Murray’s article would have mentioned Mr Foster’s involvement.

88. [175]

    And had Mr Murray had access to an insider such as Ms Johnson from early October 2013, who was able to give him chapter and verse concerning Mr Foster’s then total control of the STC business, it seems likely that Mr Murray would have caused an article to be published well before 28 October 2013.

89. [176]

    In that event, it is likely that STC would have collapsed almost immediately just as it did in October 2014, following Mr Foster’s arrest and the attendant publicity.

90. [177]

    Overall, I think it more likely than not that had Ms Johnson taken steps from March 2013 to cause Mr Foster’s involvement in STC to be revealed, one way or the other, such involvement would have become publically known and thus was likely to become known to Mr Mackinnon before the dates on which he made his investment.

91. [178]

    This conclusion provides a further reason why Mr Mackinnon is entitled to judgment against Ms Johnson.

Apportionment

1. [179]

   On 20 September 2019, Mr Argy submitted, for the first time, that Mr Mackinnon’s claim was an “apportionable claim” for the purposes of s 34(1) of the Civil Liability Act 2002 (NSW) and that accordingly, by reason of s 35(1)(b) of that Act I am not empowered to give judgment against Ms Johnson for more than an amount:

2. [180]

   Ms Johnson did not plead that Mr Mackinnon’s claim was an apportionable claim. Mr Argy made no such submission amongst the extensive submissions he made prior to my judgment of 18 February 2019. The question of apportionment was mentioned in passing in two paragraphs in Ms Johnson’s 152 page submission of 22 July 2019. As I have said, Mr Argy first mentioned the matter on 20 September 2019.

3. [181]

   Notwithstanding the language of s 35(1)(b) of the Civil Liability Act, there are numerous authorities in this and other courts to the effect if that a party wishes to invoke the relevant provisions of the Civil Liability Act or its analogues, the matter must be pleaded: Ucak v Avante Developments Pty Ltd [2007] NSWSC 367 at [41] (Hammerschlag J); Reinhold v New South Wales Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187 at [32] (Barrett J); Permanent Custodians Ltd v King [2010] NSWSC 509 at [31] (Schmidt J); Miletich v Murchie (2012) 297 ALR 566; [2012] FCA 1013 at [116] (Gray J); Polon v Dorian [2014] NSWSC 571 at [812] (Hall J); Wieland v Texxcon Pty Ltd; Porz v Texxcon Pty Ltd; Nominexx Pty Ltd v Wieland (2014) 313 ALR 724; [2014] VSCA 199 at [97] (Nettle, Hansen and Beach JJA); and In the matter of Kupang Resources Ltd (subject to Deed of Company Arrangement) [2018] NSWSC 1872 at [41] (Rees J).

4. [182]

   The matter not having been pleaded or even mentioned prior to 20 September, I am not prepared to entertain it.

Prof Snyder and Mr Holmes

1. [183]

   It is common ground that that I should make no adverse findings about these individuals.

Conclusion

1. [184]

   The parties should bring in short minutes to give effect to these reasons and to provide for the future conduct of the matter.