Federal Court of Australia

The Property Mentors Australia Pty Ltd v Touch for Health Pty Ltd as Trustee for Knight Superannuation Fund [2026] FCAFC 21

ORDERS

THE COURT ORDERS THAT:

1.    The appeal is dismissed.

2.    The cross-appeal is upheld as to ground 1 and otherwise dismissed.

3.    Paragraphs A and B of the orders made by the primary judge on 16 December 2024 (being the declarations) are set aside and the following declaration substituted:

A.    Pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) it is declared that the first, second and third respondents engaged in conduct, in trade or commerce, that was misleading or deceptive or likely to mislead or deceive in contravention of s 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) by way of an Information Memorandum in respect of the proposed residential development at Lot 380 Cottesloe Crescent, Secret Harbour, Western Australia that was provided to the applicants which contained representations that:

(a)    the investment in the Secret Harbor Unit Trust would have a term of 12 to 15 months; and

(b)    it was to be expected that the investment in the Secret Harbor Unit Trust would return more than 20% to the applicants.

4.    For the avoidance of doubt, the orders made by the primary judge on 16 December 2024 and on 16 July 2025 regarding damages, interest and costs are not disturbed.

5.    The appellants/cross-respondents and the eighth respondent must pay the costs of the first to seventh respondents of and incidental to the appeal and the cross-appeal.

6.    There is liberty to apply in relation to paragraph 5 above with any such application to be made before 4.00 pm AWST on 7 April 2026.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

JACKSON J:

1    I have had the benefit of reading in draft the reasons for decision of Needham J. I respectfully agree with her Honour that each of grounds of appeal should be dismissed. However for reasons that will be explained, I will focus on ground 2. As for the cross-appeal, for the following reasons I agree that ground 1 should be upheld, but respectfully differ from Needham J on ground 3, which in my view should be dismissed. Her Honour's thorough exposition of the background and the various grounds of appeal and cross-appeal permit me to explain my views in a relatively concise way (I adopt all defined terms used by Needham J).

Ground 2 of the appeal - the Expected Profit Representation

2    By the time of closing submissions, the first to seventh respondents (applicants below, whom I will call the Investors) submitted that the Expected Profit Representation was that it was to be expected that the investment in the SHUT would produce a return on investment in the range of 39.7% to 49.6% to the Investors: primary judgment (PJ) [101]. That representation was found in a table in a section 5.2 of the Information Memorandum titled 'Unit Holder Returns': PJ [103].

3    The problem with that representation was that it overlooked the terms of the SHUT itself: PJ [121]. Those terms required a return of capital to each unit holder, regardless of whether or not the unit holder had contributed cash in return for units. Each unit came with the same entitlement on a winding up of the SHUT. On that basis, and on the basis of projections that the Secret Harbour Development would realise about $1 million more than the cost of developing it, a return on equity of around 40% or more was unattainable; indeed any positive return on equity was likely unattainable.

4    That was because, on the terms of the SHUT, each unit holder was entitled to share, not only in the profit that was expected on the development, but in the equity that had been contributed at the outset. In cash, that equity was $1.012 million (PJ [22]). Divided among 200 issued fully paid units, the distribution of equity ($1,012,000/200= $5,060) and the distribution of expected profit ($991,755.43/200= 4,958.78) totalled $10,018.78. That was $2,481.22 less than the $12,500 per unit that had been contributed by those who invested in cash: see PJ [112].

5    The primary judge recorded the acknowledgment of TPM and Mr Harris that this meant that the Information Memorandum was 'in a fundamental respect misleading': PJ [113]. But, as her Honour also recorded, they submitted that the Information Memorandum was based on an 'assumption' that on a winding up, capital would only be returned to those who had contributed that capital in cash in the first place, and there was no intention that PM Asset Holdings, the entity controlled by Mr Bateman and Mr Harris, would receive a return of capital.

6    Her Honour also recorded Mr Bateman's acknowledgment that there was a 'dilution error' in the Information Memorandum and his statement that nevertheless it was TPM's intention that 'equity investors', presumably meaning those who had contributed cash, would have their contribution paid in priority to other unitholders, despite the lack of any provision in the Unit Trust Deed to compel that course: PJ [115].

7    The appeal as to this representation proceeds on the basis that Mr Bateman's evidence as to that intention was 'unchallenged' and so it should have been accepted. TPM and Mr Harris also make a point based on Browne v Dunn (1893) 6 R 67. They further rely on findings that the primary judge made in the course of concluding that Mr Harris and Mr Bateman lacked knowledge of the falsity of the representation, and so could not be held liable as persons knowingly involved in TPM's contravention of s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act): PJ [191].

8    The key evidence from Mr Bateman on which the appellants rely is at trial transcript (ts) 453, as follows:

The error is a dilution error. In that, the original equity has been added to the total profit of the project when that figure should have been 81 units instead of 200 units. So there's a dilution error between the number of units that were sold to investors and the number 5 of units on offering. The balance of those units is held by PM Asset Holdings. Once that mistake would have been found, and the only - there's only two ways or three ways it could have been found: the applicants did appropriate due diligence, discovered it themselves. They took professional advice, and a professional adviser found it, or we got to the end of the project and distributed those profits and realised that there wasn't enough cash to satisfy that project. PM Asset Holdings then would have had to make the decision to whether they keep the profit or whether they share that with the investors. My personal belief and very firm conviction that Mr Harris would have been of the same opinion is that we would have paid out the investors as per the terms of this unit holding, and PM Asset Holding would have taken a smaller amount. That's my contention.

9    On appeal, the appellants contend that this meant that there were reasonable grounds for making the Expected Profit Representation.

10    In order to arrive at a proper appreciation of the primary judge's conclusions as to this representation, three preliminary points should be made.

11    The Browne v Dunn point is first. I do not accept it, because the cross examination of Mr Bateman that followed the testimony just set out made it clear that the cross examiner disputed the evidence (ts 453 - it will be recalled that Davlyn Property was the trustee of the SHUT):

And what I'm asking you, you were a director of Davlyn?---For a period of time. Correct.

And you were a director of Davlyn at the time that the structures were put in place to ensure that initial unit holder - initial investors would receive a repayment of their investment?---Correct.

Where is that mechanism? Where is a statement in the trust deed that says - - -?---Distribution - - - - - - that investors will receive - - -?---Yes.

- - - their initial capital back in preference to anyone else?---It doesn't say that. It says in - at the winding up of the trust, all funds will be provided to the unit holders in proportion to their unit holding. It's a standard unit trust document.

And PMA holds over 100 units?---117, I believe.

Yes. And the - - -?---Oh no, sorry, 190 [sic 119].

The par value of its units are $12,500?---By the time the project completed and all of the work had been done, yes, those numbers sound right.

So would you agree with me that under this model there is no legal requirement that would require either Davlyn or PMA to repay to the investors the amount of capital that they paid initially for this investment?---No, there's no requirement. Like I told you, there's a mistake in this document.

12    And later (ts 454):

MR RUBENSTEIN: That's my point. There is no structure in the trust deed that allows what is contemplated to occur. And again - and I think you will agree with this, Mr Bateman, it's the effect of your evidence - that under this arrangement there is an error in the way that this investment has been framed and it would rely upon PMA giving up its entitlement to receive a payment under its units?---It would require a partial repayment, yes.

So, equally so, PMA might determine that it is going oblige - it is going to seek strict compliance with its rights to receive its distribution under the trust deed?---There is that possibility, but I would not have - I personally would not have allowed that to occur.

13    The points the cross examiner was making were that there was no mechanism in the Unit Trust Deed to allow for a priority distribution of capital to cash investors, and that it was open to PM Asset Holdings as the holder of the balance of the units to insist on its strict entitlements under the trust deed. Mr Bateman can have been in no doubt that the Investors disputed his statement of intention.

14    The second point to make is that it is not correct to describe Mr Bateman's evidence as 'unchallenged'. The evidence of his intention may not have been contradicted by any witness. That is unsurprising, since it was a statement of Mr Bateman's subjective intention at the time of trial, which was only made by him in cross examination. But it was certainly challenged. In their written closing submissions, the Investors said that the statement was 'self-serving' and had 'little weight' and they relied on Mr Bateman's behaviour during the proceeding to submit that the applicants could not rely on him acting in their best interests and contrary to his self interest. They also relied on evidence as to how Mr Harris and Mr Bateman had planned to protect their own self interest in the course of planning the Secret Harbour Development which, the Investors said, suggested that Mr Harris and Mr Bateman 'would not have voluntarily acted in the interests of members where that might have been against their own self-interest'.

15    Thirdly, it is important to appreciate the argument that the primary judge was addressing. In contrast to the way it is being put on appeal, it was not an argument that the existence of these intentions on the part of Mr Harris or Mr Bateman meant that the Expected Profit Representation, a representation with respect to a future matter, was made on reasonable grounds. Her Honour described the appellants as having changed their approach at trial from an argument of that kind to an argument that the Expected Profit Representation was not misleading because the preferential return of capital to cash investors was somehow 'plainly the intention of the SHUT': see PJ [116]. On appeal the appellants do not contend that her Honour misstated or misunderstood their case in this regard.

16    Once these three points are understood, TPM and Mr Harris's submissions on ground 2 of the appeal lose any force they might otherwise have had. The primary judge did not accept that Mr Bateman's evidence of the intention he held at trial provided sufficient support for the proposition that the capital which investors had paid in would have been returned to them in priority to any capital distribution to PM Asset Holdings. Nor did her Honour accept that this intention was somehow inherent in the SHUT. At PJ [121] her Honour called it 'the respondents' so-called assumption'. It was an assumption that her Honour clearly rejected. She did so on the cogent grounds that the terms of the SHUT contradicted it, as did statements in the Information Memorandum that described the effect of those terms: see PJ [117]-[120].

17    The references to return on capital in the Information Memorandum on which TPM and Mr Harris relied as being based on the assumption (PJ [114]) are in fact only a list of statements that are inconsistent with the Expected Profit Representation, in the same way that the terms of the SHUT were inconsistent with it. At least by the time of the appeal, there is no suggestion that those references somehow negated the misleading import of the Expected Profit Representation. They do not avail the appellants.

18    Nor do the primary judge's findings about Mr Harris's and Mr Bateman's knowledge of the misleading nature of the Expected Profit Representation assist the appellants in relation to ground 2. At PJ [190] her Honour recorded that she had rejected the submission that the 'assumption' was implicit in the Information Memorandum. Her Honour then said at PJ [191]:

However, I am not satisfied that the applicants have established that Mr Bateman and Mr Harris knew the Expected Profit Representation was false. It was not put to Mr Bateman or Mr Harris that they knew that the Information Memorandum (and the Trust Deed) provided that all unitholders would be paid according to the number of units held regardless of whether the units had been paid. It was not put to Mr Harris or Mr Bateman that they also must have considered the amount of capital or equity that had been invested in the SHUT and been aware that capital was to be distributed to unitholders according to the number of units held. Mr Bateman said that it was his understanding and intention that capital would be returned to those who had paid in capital. Mr Bateman said that if that intention had not been conveyed, he would have caused equity investors to be paid in priority to PM Asset Holdings. Mr Bateman was not challenged on this.

19    These are findings to the effect that the Investors had not discharged their burden of establishing that Mr Harris and Mr Bateman were aware at the time of the issue of the Information Memorandum that the terms of the SHUT required that all unit holders would receive capital or equity pro rata. In that context, the statements that Mr Bateman was not challenged on certain evidence refers to his evidence about his unawareness at the time of the issue of the Information Memorandum that it was inconsistent with the SHUT Trust Deed. They do not indicate that her Honour accepted as a fact that on a winding up of the SHUT, the trustee (Davlyn Property) would have distributed capital in a manner inconsistent with the terms of the SHUT.

20    In his submissions on the appeal Mr Bateman, who is unrepresented, simply asserts that the 'error' was in the Unit Trust Deed, in that it provided that all units would be treated as fully paid when it should not have. But it does not avail him to attribute 'error' to one document or another; the point of significance is that the Information Memorandum misstated the effect of the Unit Trust Deed.

21    For those reasons, I would not uphold ground 2 of the appeal.

Ground 1 of the cross-appeal

22    Turning next to ground 1 of the cross-appeal, the Investors contend that the primary judge should have held that Mr Harris and Mr Bateman engaged in misleading and deceptive conduct 'personally and principally'. In other words, that they are liable as having contravened s 12DA of the ASIC Act themselves, and not just as persons involved in the contraventions of TPM.

23    Since the Information Memorandum conveyed both the Expected Timeframe Representation and the Expected Profit Representation, it is only necessary to examine Mr Harris's and Mr Bateman's respective roles in the production and dissemination of that document in order to determine this ground. For Mr Bateman it is simple: he wrote the Information Memorandum and he sent it to Investors: PJ [179]. Mr Harris did not engage directly with the Investors, but he read it and satisfied himself that its contents were fair and reasonable before authorising it to go out under TPM's name and livery: PJ [180].

24    In finding that Mr Harris and Mr Bateman were not liable as principal wrongdoers, the primary judge relied on a passage from Australian Securities and Investments Commission v Narain [2008] FCAFC 120; (2008) 169 FCR 211 at [96]. There, Jacobson and Gordon JJ drew a distinction between situations where 'all of the elements of the contravention are made out against the individual' and situations were 'he or she merely acted as a corporate organ, binding the company but not the person individually'. But their Honours had previously made it clear (at [94]) that an individual could be personally liable for wrongful acts committed in their capacity as an employee or director of a company. They did not seek to outline any general criterion for drawing a distinction between personal liability or acting 'merely' as a 'corporate organ' and nor is one to be found in the cases they cited in support of the proposition. To the contrary, their Honours went on to say, at [97], that those authorities made clear that 'it is a question of fact in each case whether all the elements of the contravention are made out'.

25    Narain is therefore consistent with the pithy statement of the Western Australian Court of Appeal (Quinlan CJ, Buss P and Vaughan JA) in Pave Wealth Services Pty Ltd v Jones as executrix of estate of Late Michael Frederick Jones [2021] WASCA 7 at [46] (emphasis in original): 'The question is not whether Mr Jones had engaged in the conduct for himself or as director or agent, but rather simply whether Mr Jones engaged in the conduct. In short, did Mr Jones make the representation?'.

26    In my respectful view, when that question is asked in relation to Mr Bateman and Mr Harris in this case, the answer for both is 'yes'.

27    Mr Bateman wrote the Information Memorandum and sent it to the Investors and others. In doing so, he conveyed the representation made in the Information Memorandum that that the investment in the SHUT would produce a return on investment in the range of 39.7% to 49.6%. While each case depends on its own facts, Mr Bateman had more of a role in the dissemination of the Information Memorandum in this case than Mr Narain did in the publication of the ASX announcement that contained misleading statements. Mr Narain had participated in the preparation and drafting of the announcement, and adopted and approved its contents as well as authorising and directing its transmission to the ASX. He was held by the Full Court to be liable as a principal wrongdoer. And that was so even though, unlike Mr Bateman here, he did not send the announcement to anyone himself.

28    In that respect, there is a closer analogy between Mr Harris's conduct in this case and the conduct of Mr Narain. Mr Harris 'read every word' of the Information Memorandum to satisfy himself that its contents were reasonable. He then approved it to go out, even if Mr Bateman performed the act of sending it. He also joined with Mr Bateman in deliberations as to whom it would be sent. Like Mr Narain, Mr Harris thereby engaged in conduct that conveyed the representations in the Information Memorandum, including the Expected Profit Representation. Putting it another way, Mr Harris's approval of the Information Memorandum to be disseminated to potential investors was conduct that had a tendency to lead persons into error (see Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 at [39]), because of the contents of the document that was disseminated as a result of that approval.

29    There is no basis for the submission made on appeal on behalf of Mr Harris that he 'did no more than carry out a function as an organ of TPM'. While Mr Harris was no doubt acting in his capacity as a director of TPM, the authorities canvassed in Narain at [94]-[97] indicate that a person can be acting as a 'corporate organ' while at the same time being engaged in misleading or deceptive conduct that is properly attributed to him or her, and not just to the company. For the reasons given, that is what Mr Harris did here. The fact that Mr Narain also participated in the drafting of the ASX announcement, while Mr Harris only read the Information Memorandum, does not assist Mr Harris. He 'read every word' with a view to satisfying himself that it was reasonable so that he could then approve its dissemination to investors, and along with Mr Bateman he decided to whom it would be disseminated. By his approval and decisions in those circumstances, as a necessary step to the Information Memorandum being conveyed to others, he engaged in the misleading or deceptive conduct.

30    Ground 1 of the cross-appeal should be upheld.

Ground 3 of the cross-appeal - pre-judgment interest

31    In the reasons for decision that concerned pre-judgment interest, the primary judge found that the cause of action accrued when the Investors invested in the Secret Harbour Development in June 2015: Touch for Health Pty Ltd as Trustee for Knight Superannuation Fund v Property Mentors Australia Pty Ltd (No 4) [2025] FCA 621 at [24]. Her Honour found that the six year delay between June 2015 and the commencement of the proceeding in June 2021 was 'good cause' within the meaning of s 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) as to why pre-judgment interest should not be awarded.

32    The Investors cross-appeal from this on the basis of a contention that their cause of action did not accrue until December 2019. That was when the land that was the subject of the Secret Harbour Development was sold by a mortgagee, thus crystallising losses on the development. The Investors therefore say that there was no inordinate delay during the approximately 18 months that elapsed between then and June 2021. It is not in issue on appeal that if the cause of action did accrue earlier, in June 2015, then the primary judge's findings should stand.

33    The Investors rely on Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 to submit that loss or damage, and so the statutory cause of action conferred here by s 12GF of the ASIC Act, do not necessarily arise on the entry into a loss-making contract. They submit, by analogy, that loss does not arise merely because the investment made by a plaintiff lacks the qualities that it was represented to have. Even then, it might still be worth what was paid for it. According to the Investors, in June 2015 when they invested in the Secret Harbour Development, there was no actual loss capable of being ascertained. It was possible at that point that the development could have been completed and that it may have realised a profit. Relying on Wardley, the Investors say that it would be unjust to compel them to commence proceedings before they had suffered a loss that could be ascertained.

34    While the propositions on which the Investors rely can be found in passages of Wardley, the case does not in the end assist them. That is for two reasons. First, understood as a whole, the case does not stand for any general proposition that a cause of action under s 12GF of the ASIC Act and its statutory analogues only arises when the prospective plaintiff becomes aware, or should have become aware, that they have suffered loss. And second, on the particular facts here, which are quite different to those in Wardley, the Investors did suffer loss when they made their investments in June 2015.

35    As to the first of these points, it is true that the plurality in Wardley (Mason CJ, Dawson, Gaudron and McHugh JJ) declined to equate the 'detriment in a general sense' on entry into a disadvantageous contract with 'the legal concept of "loss or damage"'. Their Honours said that the two had not 'universally been equated': at 527. They made general observations about the injustice that could arise if a plaintiff were compelled to institute proceedings before the existence of the loss was ascertained or ascertainable. They cast doubt on cases in England and Australia that might have stood for the proposition that loss or damage is sustained on entry into an agreement induced by a false, negligent or misleading misrepresentation: at 528-532.

36    Nevertheless, their Honour's comments were focussed on the situation before them, where the State of Western Australia had granted an indemnity in reliance on alleged misrepresentations which, at the time of the grant, may or may not have been called upon. Any loss that might follow was contingent in the fullest sense of the word. In the end, their Honours refused to extend to that situation the principle that applied when a plaintiff acquired property: at 533. Wardley is not authority for the proposition that in the latter situation, which is the situation here, loss is not suffered when the property is acquired.

37    As to the second of these reasons, and in any event, the loss that the Investors suffered upon investing in the Secret Harbour Development was real, immediate and ascertainable.

38    The loss was real because the Investors did not just enter into a contract that may or may not have proved to be disadvantageous. They had paid money over: cf the comments in Wardley at 529, that the decision in Jobbins v Capel Court Corporation Ltd (1989) 25 FCR 226 may have been supported by the payment that had been made in that case.

39    The loss was immediate because, quite apart from unknowns about the likely progress and outcome of the development, the matters canvassed in relation to ground 2 of the appeal meant that, from the outset, the investments were drained of value because they were required by the terms of the SHUT to share the capital they had contributed with PM Asset Holdings. (Hence the focus on that ground of appeal in the above reasons.)

40    And the loss was ascertainable, on a proper understanding of the terms of issue of the units in the SHUT. While that does not prevent the conduct of the appellants from being misleading, nothing about that conduct prevented the Investors from discovering the true position. That is not to say that the Investors could be expected to discover it overnight, but the terms of s 51A of the Federal Court Act permit the Court to make due allowance for that. Here, as has been said, no issue was raised about the primary judge disallowing interest for the entire period between the accrual of the cause of action and the commencement of the proceeding; what was in issue was when the accrual occurred.

41    Hence I consider that the primary judge was correct to conclude that the cause of action here accrued in June 2015, so that her Honour's decision as to pre-judgment interest should not be disturbed.

Resolution of the appeal and cross-appeal and orders

42    The Full Court has not disturbed the primary judge's conclusions as to the making of the Expected Timeframe Representation or the Expected Profit Representation. It was common ground that if those conclusions were not disturbed, it followed that grounds 3 and 4 of the appeal should not be upheld. The appeal will therefore be dismissed.

43    Since ground 1 of the cross-appeal is upheld, so that Mr Harris and Mr Bateman are liable as principal contravenors of s 12DA of the ASIC Act, it is not necessary to deal with ground 2, concerning accessory liability on their part for the Expected Profit Representation. As said, I would dismiss ground 3 of the cross-appeal. My conclusions that the Expected Profit Representation was made by each of TMP, Mr Harris and Mr Bateman, and that the cause of action arose in June 2015, are sufficient to mean that the primary judge's orders as to damages, interest and costs should not be disturbed.

44    The primary judge did also make a declaration, however. It was to the effect that TPM made the Expected Timeframe Representation and the Expected Profit Representation, and that Mr Harris and Mr Bateman were knowingly involved in the making of the first of these. In view of the conclusion of this Court on appeal that the two individuals were liable as principal contravenors, the declaration should be altered to say that each of TPM, Mr Harris and Mr Bateman contravened s 12DA by the making of each of the two representations.

45    The Court is not aware of any reason why costs should not follow the event, so there should be an order in favour of the Investors, and against the appellants and Mr Bateman, for the costs of the appeal and the cross appeal, on a party-party basis. But in case of any matter which the Court is not aware, there should be liberty to apply in relation to costs within 28 days of the date of these orders.

Associate:

Dated:    10 March 2026

REASONS FOR JUDGMENT

ANDERSON J:

46    I have had the benefit of reading in draft the reasons for decision of Needham J. I respectfully agree with her Honour that each of the grounds of appeal should be dismissed.

47    I have also had the benefit of reading in draft the reasons for decision of the presiding judge, Jackson J, in respect of ground 2 of the appeal and grounds 1 and 3 of the cross-appeal. I concur with his Honour's reasons and with the orders proposed by the presiding judge.

Associate:

Dated:    10 March 2026

REASONS FOR JUDGMENT

NEEDHAM J:

48    The proceedings below, and this appeal and cross-appeal, arise out of a failed property development in Secret Harbour, Western Australia. The first seven respondents/cross- appellants were unitholders in the Secret Harbour Trust (SHUT) which was to undertake and own the Secret Harbour Development. The appellants are The Property Mentors Australia Pty Ltd (TPM) and Mr Luke Harris, a director of TPM. Mr Matthew Bateman, the second respondent in the proceedings before the primary judge, was named as the eighth respondent to the appeal, and appeared in person. The fourth respondent before the primary judge was Davlyn Property Pty Ltd, the trustee of the SHUT pursuant to a Unit Trust Deed. Davlyn Property took no part in the proceedings and has been deregistered since 21 August 2022. TPM was the vehicle by which Messrs Harris and Bateman sought investors for the Secret Harbour Development.  

49    The primary judge gave reasons on 2 December 2024 in Touch for Health Pty Ltd as Trustee for Knight Superannuation Fund v Property Mentors Australia Pty Ltd (No 3) [2024] FCA 1381 (primary judgment), and formal orders were made on 16 December 2024 (substantive orders). The substantive orders made against TPM, Mr Harris, and Mr Bateman were declarations pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) that:

(a)    The first respondent engaged in conduct, in trade or commerce, that was misleading or deceptive or likely to mislead or deceive in contravention of s 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) by providing to the applicants an Information Memorandum in respect of the proposed residential development at … the [Secret Harbour Development] which contained representations that:

(i)    the investment in the Secret Harbor Unit Trust would have a term of 12 to 15 months (Expected Timeframe Representation); and

(ii)    it was to be expected that the investment in the Secret Harbor Unit Trust would return more than 20% to the applicants [the Expected Profit Representation].

(b)    The second and third respondents were knowingly involved in the first respondent’s breach of s 12DA(1) of the ASIC Act with respect to the Expected Timeframe Representation.

50    The substantive orders then provided for damages in various amounts to be paid to the first to seventh applicants (the unitholders). The appellants appeal against the substantive orders as set out at [54] below.

51    The unitholders were not entirely successful on their claim. They did not succeed on some of their claims as to representations, nor were Mr Harris and Mr Bateman found to have personally contravened s 12DA of the ASIC Act. Nor were the applicants able to establish that they were entitled to a refund of their membership fees of TPM under its “money back guarantee”.

52    On 15 April 2025, the primary judge granted a stay of execution of her orders of 16 December 2024 pending this appeal, and gave reasons on costs and interest on 13 June 2025 in Touch for Health Pty Ltd as Trustee for Knight Superannuation Fund v Property Mentors Australia Pty Ltd (No 4) [2025] FCA 621 (costs and interest judgment). The orders for costs and interest were made on 16 July 2025. Those orders included amendments to the stay orders, and awarded pre-judgment interest to the first to seventh applicants from the date of the commencement of the proceedings. Costs were awarded on a party and party basis.

53    The unitholders cross-appeal against Mr Harris and Mr Bateman not being held principally liable for the misrepresentations, and against the commencement date for pre-judgment interest.

Background facts 

54    The background facts are set out from [7] to [63] of the primary judgment and are generally not in dispute. The grounds of appeal in the Amended Notice of Appeal of 11 September 2025 are mainly concerned with the construction of the Information Memorandum in relation to the Secret Harbour Development, whether it conveyed the Expected Timeframe Representation and the Expected Profit Representation, and whether TPM had reasonable grounds for making those representations.

55    TPM was established in 2014 by Mr Bateman and Mr Harris. At the relevant time, they were each directors of TPM, and held all the shares, through entities controlled by each of them. TPM’s business model was, as set out at [8] of the primary judgment:

TPM generated revenue from membership fees and selling off the plan investment properties. TPM’s service offering included providing paid up members with property investment education and mentoring services, through TPM’s educational platform of live events, webinars and one-on-one mentoring, and access to members-only property based investment opportunities.

56    Members of TPM would be offered opportunities to invest in property developments. The relevant opportunity was referred to as an “Armchair Development™” which was a co-investment with TPM in, relevantly, the Secret Harbour Development. The Secret Harbour Development was identified by a Mr Polak, a builder who was a business associate of Mr Bateman. The Secret Harbour property was bought by Davlyn Property, of which, in mid-2015, Mr Bateman and Mr Polak were directors. That company was the trustee of the SHUT which was established on 1 May 2015. In February 2017, Mr Polak became the sole director of Davlyn Property. 

57    PM Asset Holdings Pty Ltd was the initial unitholder of the SHUT. Mr Harris and Mr Bateman were directors and controlled the shares. In 2019, Mr Bateman resigned as director.

58    TPM issued an Information Memorandum on 11 June 2015, seeking expressions of interest in units in the SHUT from its members. Expressions of interest closed at 3pm on 17 June 2015. The Secret Harbour Development was described in the Information Memorandum as an opportunity for a “select group of investors”, and TPM promised “a hands-off vehicle for investors with expected returns on investment of greater than 30% over the life of the project which is expected to be 12-15 months in duration”.

59    The unitholders were members of TPM. A brief summary of their involvement is as follows (parties in bold):

(a)    Touch for Health Pty Ltd as trustee for the Knight Superannuation Fund, Mr Brian Knight and Mrs Claire Knight. Mr and Mrs Knight invested personally and through their super fund. The Knights attended an investment strategy seminar and had meetings with Mr Bateman. As a result, they established a self-managed superannuation fund and became members of TPM, and invested around $110,000 in “deposit recycling” investments. They had a discussion with  Mr Bateman about the Secret Harbour Development, during which Mr Bateman said it was a very exclusive investment opportunity, and would return a profit “as high as 30% within 12-18 months”. The Knights, and Touch for Health, invested $250,000 in June 2015.

(b)    Scoob Pty Ltd is the trustee of the Scoob Family Trust. Mr Stephen Sciberras, a director of Scoob Pty Ltd, had a similar trajectory to the Knights; he attended an investment seminar, joined TPM, and was told of the Secret Harbour Development in 2015 by Mr Bateman. He was given the same projections about the timeframe and the profit. He invested $50,000 for Scoob Pty Ltd in June 2015.

(c)    Mr Richard Segui and Mrs Jennifer Segui as trustees of the Segui Family Trust learned about TPM through their son. They contacted its office and spoke to an employee about an investment in ATMs, which subsequently failed. Their son then told them about the Secret Harbour Development, and forwarded them Mr Bateman’s email with the Dropbox link to the final Information Memorandum, which they downloaded and read. In June 2015 they called Mr Bateman who said that it would “provide high returns over a short period”, unlike the ATM investment. Although they were not members of TPM, Mr Bateman said he would not preclude them from investing but would offer them a five-year membership for $2,950 if they invested. They applied for units and paid $125,000.

(d)    DW Super Fund Pty Ltd is the trustee of the DW Super Fund, and DW Assets Pty Ltd is the trustee of the DW Trust. Mr David White is the sole director and shareholder of each of those companies. He also attended an investment conference and heard a presentation by Mr Bateman. After that he travelled to Melbourne to attend a two-day masterclass at the TPM office, and then established a self-managed superannuation fund in order to start investing. Not long after that, Mr Bateman telephoned Mr White and told him about the Secret Harbour Development; he noted an expected return of at least 20% and that Mr Bateman would be managing it. Mr White was sent the email with the link to the draft Information Memorandum and in July 2015, invested $75,000; $50,000 from the DW Super Fund and $25,000 from DW Assets.

(e)    Together, the unitholders invested a total of $500,000 of the $1,012 million in equity. They received in total 47 units, and PM Asset Holdings retained 107 units in the SHUT.

60    In relation to each of the conversations with investors, Mr Bateman could not recall, but did not dispute, the contents of those conversations.

61    The unitholders alleged four misleading representations, two of which succeeded: the Expected Timeframe Representation that the SHUT would have a term of 12 to 15 months, and the Expected Profit Representation that the SHUT would return more than 20%. Representations alleged by the unitholders as to funding, and the obtaining of plans and permits from the relevant Council, were not made out.

62    When the purchase of the Secret Harbour property settled, the building contract had not yet been executed, and finance had not been obtained. The plan was that when finance was obtained, the building contract would be executed, and the builder then had 378 days to complete the build.

63    The development had a difficult history, and culminated in the loss of the land because Mr Polak, as director, caused a mortgage for an unrelated loan to be secured over the Secret Harbor land, and the land became subject to an order for possession. It was sold by the mortgagees in December 2019.

The appeal

64    The following questions, drawing on the Notice of Appeal and as refined in submissions, are posed in determining this appeal:

(a)    Did the primary judge err in finding that the Expected Timeframe Representation was misleading as a representation as to a future matter, on the basis that TPM had reasonable grounds for making it?

(b)    Did the primary judge err in finding that the Expected Profit Resolution was misleading as a representation as to a future matter, on the basis that TPM had reasonable grounds for making it?

(c)    Did the primary judge err in finding that Mr Harris was knowingly involved in TPM’s breach of s 12DA(1) of the ASIC Act and thereby liable for the unitholders’ loss?

(d)    Did the primary judge err in finding that TPM had breached the common law duty of care it owed the unitholders in making the two representations?

(e)    If any of the answers to the above are positive, then what is the effect on the costs and interest orders?

65    The appeal is based on the following provisions of the ASIC Act:

12BB Misleading representations with respect to future matters 

(1)    If:

(a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and

(b) the person does not have reasonable grounds for making the representation; 

the representation is taken, for the purposes of Subdivision D (sections 12DA to 12DN), to be misleading. 

(2)    For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by:

(a) a party to the proceeding; or 

(b) any other person; 

the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary.

…

12DA Misleading or deceptive conduct 

(1)    A person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive. 

…

66    For the reasons which follow, I have determined that grounds 1 and 2 do not succeed, and accordingly it is not necessary to determine grounds 3, 4, and 5.

Ground 1 - Did TPM have reasonable grounds for making the Expected Timeframe Representation?

67    The basis for the appellants’ argument as to reasonable grounds for making the Expected Timeframe Representation is that they contended that there was no suggestion in the primary judgment that the primary judge had not accepted the evidence of Mr Bateman, who said that he had relied on Mr Polak’s assurances that the build would be completed in under nine months. It was not disputed that the Expected Timeframe Representation had been made, but where the unitholders had not led any evidence at the trial to contradict that evidence, and where Mr Bateman’s evidence was not rejected by the primary judge, it was submitted that there was no basis to find that there was no reasonable ground to do so.

68    The appellants analysed the available evidence as being that the buildings were pre-fabricated building modules, and that while the building contract gave the builder 378 days to complete the construction, Mr Bateman gave evidence that he was reassured by Mr Polak that the project could be completed in nine months. It was submitted that it did not logically follow that the building work could not have been completed in nine months, merely because the contract afforded it a longer period in which to do so.

69    The appellants do not cavil with the test applied by her Honour, which were the relevant principles extracted from Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8; 277 CLR 186 at [80]-[81] and which are set out at paragraphs [73]-[76] of the primary judgment.  The appellants say that the primary judge ought not to have concluded that the Expected Timeframe Representation was misleading or deceptive with respect to future matters, and should have found that the evidence of Mr Harris and Mr Bateman at the hearing tended to establish that there were reasonable grounds for making the Expected Timeframe Representation.

70    The appellants formulated their argument on this ground of appeal in part B of their written submissions. Essentially, they take issue, not that the Expected Timeframe Representation was a representation as to a future matter, or that it was made, but with the primary judge’s finding at [100] of the primary judgment that it was misleading or deceptive, or likely to mislead or deceive. The facts upon which the primary judge based that finding are set out at [93] of the primary judgment, in particular where her Honour set out her assessment that the building works were not practicable to be completed because they could not commence at the time of the Secret Harbour property purchase being settled. Her Honour said (at [93]):

There was no evidence that the builder had or would agree to vary the Schedule of Particulars, or the duration for completion of the works, to complete the building works in nine months, consistently with the alleged verbal assurances given to Mr Bateman by Mr Polak. I also observe that there would be no incentive for the builder to agree a lesser period, because a longer period would have protected the builder from exposure to delays and liquidated damages.

71    The appellants submitted that the primary judge should not have reached the conclusions she did because she accepted the evidence of Mr Bateman as to the “verbal assurances” he received from Mr Polak. It was submitted that it was an “impermissible inference” because it was unsupported by the evidence, and “contrary to the compelling inference” that the building works would be completed consistently with the Expected Timeframe Representation. In support of this, the appellants argued that her Honour did not make any adverse credit findings against either of Mr Harris or Mr Bateman, and noted that Mr Polak had not been called.

72    In oral argument, Mr Ravech, who appeared for the appellants, agreed with the presiding judge that the appeal came down to the fact that “Mr Polak’s assurance to Mr Bateman meant that whatever the contract said about the legal obligations, in fact, there was a reasonable basis to expect that, in fact, the build would have been completed much sooner than the contract deadline.” He submitted that the evidence of Mr Harris and of Mr Bateman which was either not rejected, or should have been explicitly accepted, was “not inherently implausible”.

73    It was submitted that the finding was “contrary to the compelling inference” that the building works would be completed in 12-15 months. The appellants contended that it should be set aside, and the primary judge should have regarded the evidence adduced by TPM as establishing that there were reasonable grounds for making the Expected Timeframe Representation. In particular, the appellants relied on Mr Bateman’s evidence at T371.10 to T372.16 where he gave details of his “very deep communication[s] with Mr David Polak”. Mr Bateman said he had grilled Mr Polak on timeframes and he was “absolutely certain” that the build would be done in under nine months, and that three further months were included as a buffer. This evidence grounds the appellant’s contention that “TPM through its corporate actor Mr Bateman … [had] a basis which was objectively reasonable for what was represented”.

74    The unitholders submitted that the primary judge did not need to draw any inference, and did not in fact draw any “impermissible inference”, because the evidence revealed the following facts:

(a)    The building works could not commence immediately on settlement of the land purchase on 19 June 2015;

(b)    The building contract had not been executed, despite the representation that it had in the Information Memorandum;

(c)    Mr Harris and Mr Bateman were aware that the building works could not commence until three to six months after settlement, because that was the time it would take for TPM to obtain construction finance, execute the building contract, and commence construction; and

(d)    The builder then had 378 days (about 18 calendar months) to complete the construction.

75    Her Honour found at [94] that the development was meant to be completed “in 12-15 months, that is, between 19 June 2016-19 September 2016”. However, on the basis of the evidence of Mr Harris, she found that the earliest date for completion of the Secret Harbour Development would have been late March 2017. The unitholders submitted that her Honour reached this conclusion “by application of simple arithmetic”.

76    In relation to Mr Bateman’s evidence, the unitholders submitted that the evidence relied upon from Mr Bateman as to Mr Polak’s reassurances was unreliable, and carried little to no weight. In support of this submission, they pointed to the fact that Mr Bateman did not refer to the conversation he recounted in cross-examination in his affidavit. Instead, he merely said that “… I and TPM reasonably believed at the time, the term of the investment was estimated to be 12-15 months from the land settlement date”. The discussion he gave in oral evidence was first given after Mr Harris had been cross-examined about his grounds for making the representation. Mr Polak was not called, and so the only evidence of this discussion came from Mr Bateman. There was no written corroboration. They submitted that the evidentiary onus on the appellants was not discharged.

77    The unitholders relied on SPAR Licensing Pty Ltd v MIS QLD Pty Ltd [2014] FCAFC 50; 314 ALR 35 (Buchanan, Foster, and Farrell JJ), which dealt with the Trade Practices Act 1974 (Cth). The equivalent “deeming effect” is found in s 12BB(2) of the ASIC Act. That is, a representor is taken “not to have had reasonable grounds for making the [future] representation, unless evidence is adduced to the contrary”.

78    As Foster J noted at [76] of SPAR Licensing:

In this court, there is authority for the proposition that a party who wishes to rely upon s 51A ought specifically plead that it intends to rely upon that provision or ought at least to notify the counter-party that it intends to rely upon that provision: see O’Neill v Medical Benefits Fund of Australia Ltd  [2002] FCAFC 188; 122 FCR 455 at [15]-[21]. Only in that way can the counter-party be placed on fair notice that it is required to adduce “… evidence to the contrary …” (see s 51A(2)) if it is to avoid the deeming effect of s 51A(2).

79    The unitholders contend that the Concise Statement responses and the affidavits brought by TPM and Messrs Bateman and Harris put forward their “evidence to the contrary” (see SPAR Licensing at [74]). Those documents did not include the conversations alleged by Mr Bateman with Mr Polak, upon which the appellants relied for the “reasonable grounds”.

80    As counsel for the unitholders, Mr Rubenstein, put it, Mr Bateman’s evidence of the conversation with Mr Polak was “the first time anyone heard that issue raised in the proceeding”. Mr Rubenstein submitted that the primary judge was correct in giving that evidence little weight. He relied on the onus being the appellants (see s 12BB(2)), and submitted that the primary judge gave little attention to the conversation in her reasons not only because it was not pleaded, but because it only came up in cross-examination for the first time. That submission was underlined by her Honour’s reference to the evidence at [93] as “the alleged verbal assurances”. See also at [186], where her Honour noted that Mr Bateman “did not adduce any evidence to show that Davlyn Homes or Mr Polak had agreed or would agree to a nine month build-time” in finding that Mr Bateman knew that the Expected Timeframe Representation was false, or alternatively that TPM did not have reasonable grounds to make it.

81    Both parties relied on the fact of the Jones v Dunkel inference submissions being mentioned by her Honour (at [92]) but there being no following specific finding as to whether such an inference would be drawn. The unitholders submitted that the rejection of Mr Bateman’s oral evidence can be inferred by the explicit acceptance of the objective indications such as the building contract timeframe, and the appellants submitted that the primary judge did not accept “the invitation from [the unitholders] to make an adverse finding under Jones v Dunkel”.

82    Mr Bateman, who as noted above appeared in person, made two points in support of Mr Ravech’s submission on ground 1 of the appeal. He said that there was a Gantt chart in evidence setting out the build plan, and that that chart (or sheet), which was tendered before the primary judge but not in the appeal book, demonstrated the breakdown of the building period. Mr Ravech, for the appellants, noted that the date of that document was 14 November 2016, which was after the relevant events. Mr Bateman further relied on an analysis of the figures in the Information Memorandum which reflected the appellants’ position that the “intention there was that they got their full $250,000 that they invested back, whether they were an A class, a B class, or a C class unit holder”. Mr Bateman further appealed to the “pub test” which he characterised as follows:

Is it fair and reasonable that, as non-builders, we could take an experienced builder at his word that it’s going to take nine months? And I think, in a pub, the answer to that is a resounding yes.

Determination of Ground 1

83    I am of the view that the appellants did not discharge their evidentiary onus in demonstrating that they had reasonable grounds for the making of the Expected Timeframe Representation. This is a case, as in Sykes v Reserve Bank of Australia [1998] FCA 1405; 88 FCR 511 (Heerey, Sundberg and Emmett JJ), where “there was not merely lack of positive grounds for [the representor] making the representations, but evidence pointing the other way” (Heerey J at 514). Liability for a representation of a future matter may be avoided if the representor had reasonable grounds for making the representation (at 514).

84    It is important to note that the evidence relied on by the appellants of the conversation between Mr Polak and Mr Bateman was not part of Mr Bateman’s Concise Statement in Response or his Response to the Amended Concise Statement. Instead, the response to the Amended Concise Statement denied that he “(personally, or as a director of [TPM], and/or Davlyn)” made any representation or guarantee that any of the unitholders would achieve any specific financial outcome, and relied on “the plain English meaning contained in the Information Memorandum” which contained disclaimers and exclusion clauses. In relation to the timeframe, in his response to the Amended Concise Statement, Mr Bateman said that “[t]here was no promise of guarantee regarding any specific timeframe, but rather expected estimates were given with appropriate caveats”.

85    The primary judge’s finding of fact the subject of ground 1 appears at [100] of the primary judgment. It reads:

In my assessment, the provision of the Information Memorandum conveyed that the Secret Harbour Development was expected to be completed in 12-15 months with returns on the investment expected within a short period after completion of the development. That conduct was misleading or deceptive, or likely to mislead or deceive …

86    Contrary to the appellants’ submissions, supported by Mr Bateman, that this finding was “an impermissible inference” (relying on Robinson Helicopter Company Inc v McDermott [2016] HCA 22; 331 ALR 550 at [43] (French CJ, Bell, Keane, Nettle and Gordon JJ), unsupported by evidence, I am of the view that the primary judge was justified in having regard to the evidence that she did. It is not to the point, as the appellants contend, to characterise Mr Bateman’s evidence as “uncontradicted” – it was evidence which sprang into life during the hearing, and was not reflected in the filed documents, including Mr Bateman’s evidence. It was not necessary for the primary judge to make a specific finding rejecting that evidence; her reliance on the fact that there was a false statement in the Information Memorandum about the readiness of the project to begin on imminent completion was sufficient to base the analysis of the reasonable timeframe which she undertook at [94].

87    In any event, her Honour took the view that despite the “alleged verbal assurances” given to Mr Bateman by Mr Polak, there was no evidence that Mr Polak would have backed up those assurances with an amendment to the timeframe in the Schedule of Particulars (at [93]).

88    No separate argument was made on behalf of Mr Harris, or by Mr Bateman, to distinguish them from the conduct of TPM as found by her Honour. This ground relied only on the question of a reasonable basis for TPM’s representation. In any event, the primary judge found that each of Mr Bateman and Mr Harris knew that the Expected Timeframe Representation was made, and they knew that it was false (at [193]). In the alternative, she found that they knew that TPM did not have reasonable grounds to make it (at [193]). The appellants’ complaints about the limited factual finding expressed in the Amended Notice of Appeal does not grapple with these findings.

89    In the absence of some incontrovertible facts or (properly brought) uncontested evidence which have been ignored by the primary judge, a Full Court should not interfere with the fact finding of a trial judge (see Robinson Helicopter at [43]). I am of the view that the primary judge did not ignore any such facts or evidence. 

90    Ground 1 does not succeed.

Ground 2 - Did TPM have reasonable grounds for making the Expected Profit Representation?

91    Ground 2 relies on a similar premise to ground 1 – that TPM had reasonable grounds for the making of the Expected Profit Representation. The appellants contended that the evidence adduced by TPM at trial was “not evidence that ‘tended to establish, or that admitted of the inference, that there were’ reasonable grounds for making it” (see McGrath; in the matter of Pan Pharmaceuticals Ltd (in liq) v Australian Naturalcare Products Pty Ltd [2008] FCAFC 2; 165 FCR 230 at [191]). 

92    The Expected Profit Representation in the Further Amended Concise Statement was phrased as being “it was to be expected that the [investment in the Secret Harbour Unit Trust] would return more than 20% to the applicants”, but the applicants submitted, and TPM and Messrs Harris and Bateman accepted, that the Information Memorandum conveyed a statement to the effect: 

…based on the assumptions and financial information set out in the Information Memorandum, the project pre-tax profit was expected to be $991,775 or 19.97%, which would provide for a return on investment in the range of 39.7% to 49.6% depending on the class of units held by the member (49.59% for members with A Class Units, 47.60% for members with B Class units and 39.67% for members with C Class Units) 

(primary judgment at [101]). 

93    The Expected Profit Representation was repeated in similar or substantially similar terms by Mr Bateman in telephone discussions, and in the final version of the Information Memorandum sent by email and Dropbox link. It was not contested that it was made, nor that it was a representation as to a future matter. It was also acknowledged by Messrs Bateman and Harris that the Information Memorandum contained two “errors”. The first error was that the “Unit Holder Returns” section of the Information Memorandum did not include a line item or entry providing for the return of equity invested in the SHUT following a winding up. The second error is explained by the primary judge at [111] and deals with the effect of the potential distribution on a winding up of the SHUT either on the basis that the capital invested would be returned to the investors (which would result in a profit), or profit would be distributed per unit (which would result in a loss for the unitholders) (at [110]-[112]). The Information Memorandum contained “Clause 5.2 | Unit Holder Returns” which stated that:

… the SHUT would allocate profits and return of capital to unit holders “in proportion to their unit holding” at the completion of the project.

([111] of primary judgment).

94    The primary judge noted that TPM and Mr Harris contended that the Information Memorandum was not misleading because it was “premised on the assumption that, on a winding up of the SHUT, capital would only be returned to those who had paid capital into the fund” (at [113]). However, that was not made explicit; there were references in the Information Memorandum to “return of capital” but it was accepted by the appellants that it was “in a fundamental respect misleading” because it did not make this clear (at [113]).

95    The appellants contend that the finding of the misleading and deceptive nature of the Expected Profit Representation should be set aside, and the primary judge ought to have concluded, on the basis of Mr Bateman’s unchallenged evidence, that:

(a)    it was his understanding and intention that capital would be returned to those who had paid in capital; and

(b)    if that intention had not been conveyed, he would have caused equity investors to be paid in priority to PM Asset Holdings.

96    In other words, the primary judge should have accepted that the second error would have, in practice, been corrected, by Mr Bateman’s actions foreshadowed in his evidence at the trial in relation to PM Asset Holdings’ foregoing any profit to the extent necessary for the unitholders to receive their investments back.

97    The appellants submitted that Mr Bateman’s evidence was that it was his, and so, TPM’s, intention that “equity investors would have their contribution paid in priority to other unitholders” (at [115]). While there was no provision in the Unit Trust Deed to compel this, nor was it reflected in the Information Memorandum (at [120]), her Honour recognised that Mr Bateman was not challenged on his evidence that he had that intention to do so (at [191]). It was not put to him or to Mr Harris that they knew that the Information Memorandum and the Trust Deed provided for a “per capita” distribution (at [191]).

98    The fact that Mr Bateman’s understanding and intention was unchallenged, the appellants submitted, leads to a conclusion that the primary judge should have accepted Mr Bateman’s evidence on the question of TPM’s “primary liability for misleading or deceptive conduct” in relation to the Expected Profit Representation, and cited Browne v Dunn (1893) 6 R. 67 (H.L) and its corollary in MWJ v The Queen [2005] HCA 74; 222 ALR 436 at [39] as “rule[s] of fairness” in support of that claim. It was submitted for the appellants that it was “glaringly improbable” that it was intended that all units receive a return of capital, rather than only those that had paid in equity, and as Mr Bateman’s evidence was unchallenged, then the Court should have accepted that evidence as reasonable grounds for the making of the representation.

99    Further, the appellants submitted that the primary judge should have found corroborative evidence in the Information Memorandum (in particular but not limited to references to “return of capital” (see [114]-[115])) that the return on investment would include the equity invested on a winding up. It was said that the explanation was plausible and credible, and there was no reason for her Honour not to accept it and so to conclude that TPM had adduced evidence of reasonable grounds for the making of the representation.

100    In oral argument, the Full Court was taken to the transcript in which Mr Bateman agreed that

“under this model there is no legal requirement that would require either Davlyn … or … PM Asset Holdings, to repay to the investors the amount of capital … that they paid initially with this investment.

And later: 

MR RUBENSTEIN: ... There is no structure in the trust deed that allows what is contemplated to occur. And again – and I think you will agree with this, Mr Bateman, is the effect of your evidence – that under this arrangement there is an error in the way that this investment has been framed and it would rely upon PMA giving up its entitlement to receive a payment under its units?---It would require a partial repayment, yes.

So, equally so, PMA might determine that it is going to oblige – it is going to seek strict compliance with its rights to receive its distribution under the trust deed?---There is that possibility, but I would not have – I personally would not have allowed that to occur.

101    The appellants characterised this evidence as giving rise to a compelling inference that the reason the Information Memorandum did not express that paid up capital would be returned to the unitholders on the winding up of the SHUT was because of the underlying assumption that that would happen, and Mr Bateman would, on a winding up, have caused equity investors to be paid in priority to PM Asset Holdings. They relied on the finding that the primary judge was not satisfied that Messrs Harris and Bateman knew that the Expected Profit Representation was false (at [191]) and that, in so finding, should have gone on to find that the Expected Profit Representation “in and of itself, was not misleading or deceptive and that TPM had reasonable grounds for making it”.

102    The unitholders relied on the words of the Information Memorandum and the terms of the Unit Trust Deed (which were sent at the same time). They note the primary judge’s finding that the Information Memorandum was “in a fundamental respect misleading” because it did not raise the possibility of PM Asset Holdings having to reduce its share in the assets of the SHUT (at [113]). But the effect of the Information Memorandum was that return of capital would be allocated in proportion to their unit holdings, until the trial, when Mr Bateman gave evidence that he intended to ensure that it would be returned by reference to paid capital and so “correcting” the errors he saw in the Information Memorandum.

103    It was submitted by the unitholders that the reasons the primary judge gave for rejecting the appellants’ submission as to reasonable grounds (at [117]-[119]) were “detailed and cogent”, and that Mr Bateman’s reliance on an unstated assumption in the Information Memorandum was “utterly untenable”. They submitted that the primary judge relied on the express terms of the Information Memorandum and the Unit Trust Deed, and that the explanation as to the intentions on a winding up emerged, similarly to the explanation in ground 1, only at trial. In oral submissions, Mr Rubenstein said that the unitholders’ case at trial was that Mr Bateman prepared the Information Memorandum, Mr Harris reviewed it and “ticked off every aspect of it”, including the position that all holders of the units (including PM Asset Holdings) would be treated and paid equally under the SHUT. For TPM, Mr Bateman and Mr Harris now to say that the fact that Mr Bateman voiced an intention, years after the fact, that he did not intend to distribute profits in the way set out in those documents, is not relevant to whether the representation was misleading at the time.

104    Her Honour set out the principles in Quinlivan v Australian Competition and Consumer Commission  [2004] FCAFC 175; 160 FCR 1 at [15] (Heerey, Sundberg and Dowsett JJ) at [184] of the primary judgment. The unitholders submitted that for a case of accessorial liability, it was not necessary to show that the accessories knew a representation of a future matter were false; merely that there were no reasonable grounds for making it.

105    Mr Bateman submitted, in relation to the Expected Profit Representation, that he acknowledged that the Information Memorandum contained the error set out above that the “trust will comprise 200 fully paid units”. He said that while it was supplied to the unitholders by TPM, it was not “authored by myself or TPM”.

Determination of ground 2 

106    The question here is whether the evidence of Mr Bateman as to his intentions as to the return of capital is sufficient to provide reasonable grounds as to why the Expected Profit Representation was not misleading or deceptive. In my view, it does not flow from the primary judge’s finding at [191] as to her state of satisfaction about the knowledge of the falsity of the Expected Profit Representation, that Mr Bateman’s and Mr Harris’ knowledge as to the contents of the Information Memorandum and the Unit Trust Deed is not relevant. As stated by the Full Court in Quinlivan at [10], “actual knowledge of the essential elements of the contravention is required”. And at [15], the Full Court said: 

If reasonable grounds exist, there will have been no contravention and thus no question of accessorial liability will arise. However, as against the accessorial respondent, the onus will be on the applicant to show the respondent had actual knowledge that:  

•    the representation was made and 

•    it was misleading or 

•    the corporation had no reasonable grounds for making it 

(See Australian Competition and Consumer Commission v Michigan Group Pty Ltd [2002] FCA 1439 at [303].) 

107    In my view, the primary judge’s acceptance of the misleading nature of the profit provisions of the Information Memorandum and the Unit Trust Deed is unexceptionable. It is clear that the mistake in the clauses regarding distribution of profits made the Expected Profit Representation misleading; that much appears from its face. The subjective intention of Mr Bateman, which was apparently not formed at the time of the provision of the documents to the proposed investors, is not able to transform a misleading or deceptive representation into one with reasonable grounds for the making of it. The test is not whether some unilateral actions of a director of a company entitled under a trust deed to equal shares of invested capital and profit would forego that entitlement to capital; it is whether TPM, Mr Bateman, or Mr Harris had reasonable grounds at the time of making the representation as to a future matter to make that representation. I see no reason for setting aside the reasoning of the primary judge on this point.

108    Ground 2 cannot succeed.

Grounds 3 and 4; Knowing Assistance by Mr Harris, and Negligence at common law

109    The appellants did not make any separate submissions on these grounds, and they and the unitholders were agreed that the success of these grounds would stand and fall on the Court’s determinations of grounds 1 and 2. As the appellants have not made out grounds 1 and 2, and the appellants rely on the same submissions in respect of grounds 1 and 3, and for 2 and 4, there is no need to consider either of these grounds.

Ground Costs 

110    Order 3 of the orders sought by the appellants relates to the costs and interest judgment. As I have not allowed the appeal on the substantive orders, the question as to her Honour’s determinations in the costs and interest judgment do not arise.

Appeal outcome 

111    The Notice of Appeal is dismissed, with costs.

Cross-appeal by the unitholders 

112    The unitholders rely on an Amended Notice of Cross-Appeal and appeal from Declarations A and B of the primary judge’s substantive orders, and seek to vary paragraph 2 of the orders made by the primary judge on 8 July 2025 as amended on 16 July 2025 by way of a longer period of pre-judgment interest.

113    The declarations the subject of the cross-appeal are set out at [49] above. The order as to pre-judgment interest the subject of the cross-appeal is as follows: 

Subject to paragraph 2, pursuant to s 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) the first, second and third respondents pay pre-judgment interest, from the date of the filing of the Originating Application on 3 June 2021, on the amounts payable as ordered by order 1 of the orders made 16 December 2024, as amended by orders made on 12 June 2025, as follows:  

(a) to the first applicant (in respect of the ordered amount of $160,000) – pre- judgment interest of $35,899.67;  

(b) to the second and third applicants (in respect of the ordered amount of $90,000) – pre-judgment interest of $20,193.58;  

(c) to the fourth applicant (in respect of the ordered amount of $50,000) – pre- judgment interest of $11,218.63;  

(d) to the fifth applicant (in respect of the ordered amount of $125,000) – pre- judgment interest of $28,046.64;  

(e) to the sixth applicant (in respect of the ordered amount of $50,000) – pre- judgment interest of $11,218.63; and  

(f) to the seventh applicant (in respect of the ordered amount of $25,000) – pre-judgment interest of $5,609.34  

(collectively, the Pre-Judgment Interest Amount). 

(emphasis in original)

114    Despite this part of the reasons being a consideration of the cross-appeal, I will continue to refer to the parties as defined previously. 

Ground 1 - Were Mr Bateman and Mr Harris principally liable for contravention of s 12DA(1) of the ASIC Act? 

115    At [154] of the primary judgment, her Honour found that the Information Memorandum contravened s 12DA(1) of the ASIC Act as follows: 

It was agreed that the conduct that was said to contravene s 12DA of the ASIC Act was the provision of the Information Memorandum. In my assessment, the Information Memorandum contained statements that conveyed the Expected Timeframe and Expected Profit Representations, which were misleading or deceptive, or likely to mislead or deceive. TPM issued the Information Memorandum, which bore TPM’s name and livery, and it was emailed to the applicants by Mr Bateman on behalf of TPM.  

116    The primary judge considered at [176] the case of Houghton v Arms [2006] HCA 59; 225 CLR 553 at [40] and Australian Securities & Investments Commission v Narain [2008] FCAFC 120; 169 FCR 211 at [94]-[95] to establish the contention that an employee or director of a company is not thereby excused from personal liability for wrongful acts; the question of whether that person themselves engaged in wrongful acts is a question of fact: Pave Wealth Services Pty Ltd v Jones (as executrix of estate of Late Michael Frederick Jones) [2021] WASCA 7 at [36] (Quinlan CJ, Buss P and Vaughan JA). From [171] onwards of the primary judgment, the primary judge considered the question of whether the representations in the Information Memorandum were made by Mr Bateman and Mr Harris personally, and, if so, whether they had each contravened s 12DA of the ASIC Act so that they were principally liable to compensate the unitholders.

117    The unitholders contend that each of Mr Bateman and Mr Harris is personally or principally liable for the Expected Timeframe Representation and the Expected Profit Representation, and so they had themselves engaged in misleading or deceptive conduct or conduct that was likely to mislead or deceive. 

118    The particular error alleged by the unitholders on the cross-appeal is that the primary judge failed to find that each of Mr Bateman and Mr Harris was knowingly involved in TPM’s breach of s 12DA, by knowing that TPM did not have reasonable grounds to make the Expected Profit Representation. 

119    At [179], the primary judge found that Mr Bateman prepared the Information Memorandum “in its entirety, including the projected profit figures” and emailed the Information Memorandum in draft, and in its final version, to the unitholders. At [180], her Honour noted that while Mr Harris did not prepare the Information Memorandum, he “‘read every word’ … to satisfy himself that the contents and the forecasts in the document were reasonable before he approved [it] to go out under TPM’s name and livery”. 

120    In each case, the primary judge was not satisfied that the actions carried out by Mr Bateman and Mr Harris in relation to the Information Memorandum had been carried out personally; each of them was acting, it was found, as “a corporate organ of TPM” and so was not personally liable. At [181] her Honour said: 

The applicants have failed to establish that Mr Bateman and Mr Harris personally contravened s 12GA (sic – 12DA) of the ASIC Act.  

121    The unitholders contend that this conclusion is difficult to reconcile with the outcome and reasoning of the authorities cited by the primary judge at [176] of the primary judgment. They pointed to each of Mr Harris and Mr Bateman as being directors of TPM at the relevant time, and each of them as having a role in preparing, checking, or authorising the representations sent by the company. They pointed to parallels in the facts of Houghton v Arms (representations concerning the extent of the documentary obligations required to be fulfilled by website participants); in Narain (preparation, drafting, approval, and authorisation of an ASX release containing misrepresentations as to a disinfectant product); and Pave Wealth (misrepresentations as to revenue). 

122    It was submitted that those authorities led only to a conclusion that Mr Harris and Mr Bateman were principally liable for the contraventions of 12DA(1) of the ASIC Act. In particular, the High Court in Houghton v Arms at [47] made it clear that the critical issue was whether the elements of the wrongful conduct were made out against the employees; it was beside the point whether their acts were also the acts of the company, or that the employees were not “principals” of the company (Houghton v Arms at [40]-[41]). The inquiry as to whether the director had engaged in the conduct was also the focus of the Full Court of this Court in Narain at [19]. 

123    The primary judge made factual findings that Mr Bateman and Mr Harris were directors of TPM; had a financial interest in the Secret Harbour Development; prepared, approved, and authorised the final version of the Information Memorandum; and sent it to the prospective investors. In addition, Mr Bateman made statements to unitholders about the timeframe and expected return, and Mr Harris arranged for the issue of the units to unitholders. The unitholders submitted that the conduct by each of them was on all fours with the conduct of Mr Narain, but perhaps “even clearer in this case because there are no third parties involved [as there were in the provision of the ASX release]”. In addition, in oral submissions Mr Rubenstein, for the unitholders, made submissions that there was a great deal of thought put into the type of investment (“armchair investment”), the identity of the unitholders (TPM members or those interested in joining), and the quality of the investment (short-term, high-yield). He noted that although he did not communicate directly with investors, Mr Harris joined with Mr Bateman in emails working out who were the appropriate recipients of the Information Memorandum. 

124    The unitholders took issue with the primary judge’s reasoning that Mr Bateman was “at all times acting on behalf of TPM” (at [179]) and this appeared to be the reasoning in relation to Mr Harris as well (at [180]). They relied on the statement of the Western Australian Court of Appeal in Pave Wealth where the Court of Appeal said (at [46]): 

The question is not whether Mr Jones had engaged in the conduct for himself or as director or agent, but rather simply whether Mr Jones engaged in the conduct. In short, did Mr Jones make the representation? In submitting that Mr Jones had not engaged in any conduct for himself, however, it was implicit that the first respondent accepted that Mr Jones had relevantly engaged in the conduct. Indeed, on the findings of the primary judge no other conclusion is open. Her Honour found that Mr Jones made the  representation which grounded the successful misleading conduct claim against Wotif.

(emphasis in original) 

125    They submitted that the units were not issued by TPM but by Mr Harris on behalf of Davlyn, of which Mr Bateman was a director. The conduct “cut across … three different entities …” (including PMA) which indicated that their conduct was not merely as an organ of TPM. 

126    The unitholders submitted that given the primary judge’s factual findings, “the only conclusion open” was that Mr Bateman and Mr Harris engaged in the misleading and deceptive conduct engaged in by TPM. As the two directors of a small proprietary limited company, they submitted that Mr Harris and Mr Bateman were “two people who are running the show and doing everything together”. 

127    TPM and Mr Harris sought to distance Mr Harris from TPM, citing paragraph [180] of the primary judgment to contend that Mr Harris “merely ‘read the Information Memorandum to satisfy himself that the contents and the forecasts in the document were reasonable’.” They distinguished Houghton v Arms, where the representors had a discussion with the representee; Narain, where Mr Narain actually prepared the ASX release; and Pave Wealth, where the defendant “actually made” the false representation in question. Mr Harris’ submissions were that the primary judge’s finding – that he “simply carried out a function as an organ of” TPM – is correct. 

128    Mr Bateman did not make separate submissions on this ground, but supported Mr Harris’ submissions. 

Determination of ground 1 

129    As the High Court said in Houghton v Arms at [46]: 

… recognition of the distinct legal identity of a corporation had the consequence that in law the act of an individual might be both a corporate act and the separate act of the actor as an individual. 

with the further consequence that whether or not the acts of Mr Harris and Mr Bateman were acts in law of TPM, they could also be the acts of them personally (cf Houghton v Arms at [47]). 

130    It is my conclusion that the involvement of Mr Bateman in drafting, preparing, sending, and summarising the Information Memorandum to the unitholders is conduct which is a separate act of his, for which he should bear principal liability. In the vernacular, “his fingers were all over it”. His submissions were stoutly to the effect that the representations were reasonable and, if there were a problem arising out of the dilution error, it could be fixed after the fact by his (Mr Bateman) taking actions to fix it. He took responsibility for the representations from which he did not, except for that aspect, resile. It is, with respect, difficult to see how his involvement was merely as an organ of TPM, bearing in mind his personal involvement in the preparation and dissemination of the Information Memorandum. 

131    Mr Harris’ position is somewhat more nuanced, given that he was not the author of the Information Memorandum, and did not speak to any of the unitholders prior to the investments. 

132    In Narain, the Full Court (Finkelstein, Jacobson and Gordon JJ) set aside the primary judge’s finding that Mr Narain, despite being the CEO of the ASX-listed company, and participating in the preparation and drafting of the ASX release, was not liable for the misstatements in it because he did not, personally, send it to the Stock Exchange. Finkelstein J had regard to the “fair trading” aspects of the Corporations Act 2001 (Cth) (at [1]) in the context of ASX releases. While the facts of Narain are not as squarely apposite as the unitholders submitted, they do have sufficient similarities in Mr Narain’s involvement in the misleading and deceptive statements on behalf of the company to provide some guidance here. 

133    In particular, one question in Narain was whether a misrepresenter can be shielded from consequence by procuring that conduct to be done by a third party. Finkelstein J drew a somewhat gruesome analogy with R v Michael (1840) 9 Car & P 356; 173 ER 867, where a prisoner gave poisoned medicine to the carer of a child and instructed her to give it to that child; she did not, but the medicine was discovered by one of her own children and given to the prisoner’s child, who died. The Court (per Alderson B) said that the child had been poisoned by the prisoner “as if the prisoner had actually administered it with her own hand”. Finkelstein J said in Narain (at [18]): 

This appeal is not concerned with a criminal case … It would, nevertheless, be surprising if, for example, the author of a misleading statement about shares can escape the operation of the section by instructing an “innocent agent” to make the statement public.

134    It seems to me that the conduct engaged in by Mr Harris was sufficiently connected with the misrepresentations that he should be liable personally for them. While the submissions for Mr Harris added the word “merely” before “read the Information Memorandum to satisfy himself that the contents and the forecasts in the document were reasonable” (at paragraph 9 of his submissions), the finding of her Honour at [185] was that “he said he read every word of the Information Memorandum”. He did so with the intent to ensure that the content and forecasts in the document were reasonable before he approved them. The fact that he was doing it so that they “go out under TPM’s name and livery” does not absolve him of personal liability; in fact, his stated intention of ensuring that he understood the content before approving it has the opposite effect. 

135    This ground of the cross-appeal succeeds, and I find each of Mr Bateman and Mr Harris liable pursuant to s 12DA(1) of the ASIC Act.

Ground 2 - Were Mr Bateman and Mr Harris accessorially liable for the unitholders’ losses? 

136    As I have found that Mr Bateman and Mr Harris are directly personally liable, there is no need to consider this ground.

Ground 3 - When did the unitholders’ cause of action arise? 

137    Ground 3 of the cross-appeal arises out of the Interest section of the costs and interest judgment (at [20] ff). In the costs and interest orders, the unitholders were not found to be entitled to pre-judgment interest because of their “inordinate and unexplained delay in instituting the proceedings” (at [21]). 

138    Section 51A(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) provides:  

51A    Interest up to judgment  

(1) In any proceedings for the recovery of any money (including any debt or damages or the value of any goods) in respect of a cause of action that arises after the commencement of this section, the Court or a Judge shall, upon application, unless good cause is shown to the contrary, either:  

(a) order that there be included in the sum for which judgment is given interest at such rate as the Court or the Judge, as the case may be, thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date as of which judgment is entered; or  

(b) without proceeding to calculate interest in accordance with paragraph (a), order that there be included in the sum for which judgment is given a lump sum in lieu of any such interest. 

139    The ground of appeal is whether any delay by the unitholders in bringing their proceedings was “good cause” under s 51A(1)(a) of the FCA Act. 

140    The primary judge found that the cause of action arose in June 2015, when the unitholders invested in the Secret Harbour Development, rather than when the land was sold in December 2019 and the investment failed (at [24]). Their explanation for the delay was that while they had initially held out hope that the development would proceed, they sought to recover from the builder before turning to these proceedings. Her Honour found (at [24]) that “the evidence did not adequately explain the applicants’ six year delay in commencing the proceeding against the respondents”. 

141    The unitholders submitted that her Honour misapplied the principles of assessment of damages on a “no transaction” basis (Tang v Yu [2024] FCA 297 (Stewart J)), assessing damages as at the date of entry into the transaction rather than when the cause of action accrued, when the loss becomes actual or capable of assessment. They relied on Wyzenbeek v Australasian Marine Imports Pty Ltd (In Liq) [2019] FCAFC 167; 272 FCR 373 at [105]-[108] to say that “it may not be known until some time after entry into the transaction that the representation was misleading or deceptive”. 

142    The unitholders asserted that, as at the date of investment in the Secret Harbour Development, there was no actual loss or one capable of ascertainment; the development could have succeeded. As the plurality in the High Court in Wardley Australia Limited v The State of Western Australia [1992] HCA 55; 175 CLR 514 (Mason CJ, Dawson, Gaudron and McHugh JJ) noted at 532-3 the proper time to fix the time of accrual of a cause of action as being “the time when … recoupment becomes impossible” (citing Gaudron J in Hawkins v Clayton [1988] HCA 15; 164 CLR 539 at 601). 

143    Mr Zhang, who took the argument on this ground for the unitholders, identified the error into which the primary judge fell as: 

… because damages are awarded on the basis that there is no transaction, it therefore follows that loss and damage was suffered at the time of entry into the investment … A no transaction basis is but a measure of compensation, but the cause of action for misleading or deceptive conduct arises when loss or damage becomes ascertainable, and that is an immutable point in time that cannot change depending on how compensation is to be calculated or measured (and then cited Wyzenbeek).

144    Accordingly, the unitholders seek pre-judgment interest from 13 December 2019, rather than from the commencement of the proceedings on 3 June 2021. 

145    The appellants submitted that the unitholders had indeed suffered a loss as at the entry into the agreement – the loss as the “amount of their respective investments in the Secret Harbour Development which her Honour found would not have been invested if it were not for the Expected Timeframe Representation and the Expected Profit Representation”. They relied on the findings by the primary judge that there were delays in the development and problems with the builder, and were attempting or considering how to recover that loss. On that basis, the primary judge held, they say correctly, that the cause of action arose in June 2015 (at [24]). 

146    Mr Ravech for the appellants said in oral submissions that “the loss is that they were promised a short-term development, and they didn’t get a short-term development … there was meant to be a profit”. It was submitted, colourfully, that the unitholders were aware of issues with the development and didn’t take action, instead, “they just, basically, sat on their arse and didn’t pursue it”. He submitted that those factors meant that the primary judge did not err in refusing pre-judgment interest. 

147    Mr Bateman made no additional submissions on this ground.

Determination of ground 3

148    The High Court said in Wardley (at 527): 

When a plaintiff is induced by a misrepresentation to enter into an agreement which is, or proves to be, to his or her disadvantage, the plaintiff sustains a detriment in a general sense on entry into the agreement. That is because the agreement subjects the plaintiff to obligations and liabilities which exceed the value or worth of the rights and benefits which it confers upon the plaintiff. But, as will appear shortly, detriment in this general sense has not universally been equated with the legal concept of “loss or damage”. And that is just as well. In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired. To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events. In such a situation, there would be an ever-present risk of undercompensation or overcompensation, the risk of the former being the greater. 

149    The prospective loss suffered by the unitholders on entry into the agreement became an actual loss when the Secret Harbour Development failed (see primary judgment at [29]). Following the sale of the property by the mortgagees of the property, their losses became actual. On that basis, the unitholders said, there was only a 1.5-year delay from December 2019 in commencing proceedings, rather than a six-year delay from June 2015. The unitholders noted in submissions that they could not have commenced proceedings in June 2015, as there was then no actual loss. 

150    I agree. The fact that the unitholders entered into an investment which was always likely to result in a loss does not mean that their damage or loss was able to be appreciated, or quantified, at that date. It took more than four years for the development to reach a point that the property was sold by the mortgagees, and it was at that point, rather than when the unitholders “[sustains] a detriment in a general sense on entry into the agreement”, that they suffered a loss. The “no transaction” approach is one which determines compensation; it does not relate to the accrual of actions. 

151    Damages under s 12DA(1) of the ASIC Act are premised on loss to the misrepresentee. As noted by the plurality in Wardley at 532, “the plaintiff sustains no actual damage until the contingency is fulfilled and the loss becomes actual; until that happens the loss is prospective and may never be incurred”. The loss in this case became an actual, not a contingent, loss when the title to the property passed in late 2019. The primary judge set out the string of unfortunate events which plagued the Secret Harbour Development from [23] to [29] of the primary judgment; there were only five pre-sales, one to the builder, and the building contract was signed only in 2018. The land was sold in December 2019 (at [24] of the costs and interest judgment). It was at that point that it became clear that the development had failed. 

152    It seems to me that the proper analysis is that the delay from December 2019 until proceedings were commenced is not sufficiently long or unexplained so as to be “good cause” as to why the unitholders should not be entitled to pre-judgment interest prior to commencing the proceeding.  

153    Order 2 of the costs and interest order should be set aside, and in its place an order for pre-judgment interest as follows:

Paragraph 2 of the orders made by the primary judge on 8 July 2025 as amended on 16 July 2025 be varied so that the reference to “from the date of the filing of the Originating Application on 3 June 2021” is changed to “from 13 December 2019”, and the amount of pre-judgment interest listed in each of the sub-paragraphs 2(a) to 2(f) be adjusted accordingly.

Associate:

Dated:    10 March 2026

SCHEDULE OF PARTIES