Sydney Criminal Lawyer Loses Appeal Against Finding of Deceptive Conduct

by Sonia Hickey & Ugur Nedim
Woman lawyer

A Sydney-based criminal defence lawyer with ties to conman Peter Foster has lost her appeal against a decision made by the Supreme Court that both she and Mr Foster engaged in misleading or deceptive conduct in relation to a fraudulent gambling scheme called the “Sports Trading Club”.

The backstory

Leigh Johnson, who was the principal of criminal law firm Leigh Johnson Lawyers, met Peter Foster in 2012 and agreed to appear on his behalf in pending litigation.

In the following months, Foster proposed that the lawyer become a limited partner in the Sports Trading Club (STC) which claimed to trade on the outcome of sporting events.

The Scheme had a high-profile marketing campaign, which did not mention the involvement of Peter Foster, who has been imprisoned in Australia, Britain, the United States, and Vanuatu for a variety of offences including fraud and money laundering, contempt of court and resisting arrest.

It was found that the omission of Foster’s involvement was intended to prevent potential investors from being deterred from the Scheme.

Career conman

Peter Foster is well-known for his slimming tea scam, and also for becoming a ‘property consultant’ to Former English Prime Minister Tony Blair and his wife Cherie.

The STC marketing and promotional material, including the website, did mention Ms Johnson as the “legal partner” in the scheme, including an extensive bio of her 30-year career history, including a photo of her with former Prime Minister Julia Gillard.

Between early 2013 and late 2014, more than 400 members of the public provided funds in the sum of $29.6 million to STC and a successor partnership.

The funds were deposited into a bank account under the partners’ names, and were withdrawn from that fund almost immediately.

After passing through several accounts, including a number held offshore, the funds were ultimately applied for the benefit of Mr Foster, his relatives and his associates for purposes entirely unrelated to the STC proposal.

There was no evidence that Ms Johnson received funds from the account, or that she authorised their release.

The court heard the lawyer had advanced $182,500 in cash to STC that, according to her, she obtained through “friends”, and expected to obtain 100 per cent interest in a matter of months.

Ms Johnson retired in 2014 after the expected returns did not eventuate, and a successor partnership was created without her.

The court also heard that while initial discussions were held to determine that the lawyer would have only a ‘limited’ involvement – and therefore only be a ‘limited partner’ – these talks were never formalised into an agreement.

Ms Johnson became the only defendant of a class action against the STC, brought by one of the investors who sought $12.3 million on behalf of 153 people.

Supreme Court Decision upheld

The New South Wales Supreme Court found in 2019 that both Ms Johnson and Mr Foster engaged in misleading or deceptive conduct, and that the Group Members were entitled to the unrecovered balance of the amounts they paid to STC.

The appeal judges recently upheld this decision, finding that as one of the partners, Ms Johnson made the proposal representation to investors, including those behind the class action. As such, the lawyer was liable for her representations.

The appeal judges also found that the primary judge did not make an error of law by finding that the lawyer knew Mr Foster was in control of STC, or that she must have at least strongly suspected that investors’ funds were being misappropriated.

The primary judge’s finding that the lawyer actively represented that Mr Foster was not involved, despite knowing of his “notoriety and modus operandi”, was also confirmed.

Ms Johnson’s appeal was therefore dismissed and she was ordered to pay legal costs.

She and Mr Foster continue to be liable for the amounts obtained from STC investors.

Peter Foster was due to appear in the District Court in May this year, when his lawyer had to apologise to Judge Graeme Henson that he had been unable to “obtain instructions” from his client.

For now, the conman is on the run again, and warrants for his arrest have been issued by both NSW and Queensland Police.

Misleading or deceptive conduct

Under the Australian Consumer Law, which is the principal piece of legislation for consumer protection in Australia, people or businesses or non-profit organisations must not mislead or deceive their customers by misrepresenting their goods and services.

Consumers who feel that they have entered contracts where misleading or deceptive conduct has been present can take these matters to court.

If the court decides that misleading or deceptive conduct has taken place, then it may impose a range of penalties on the individual, business or entity, including payment of damages, injunctions or compensation.

The Court can also make an individual, business or entity pay a civil penalty for engaging in misleading and deceptive conduct.

In deciding whether a provider of consumer goods or services misled or deceived its customers, the provider’s intention is not relevant. What is important is what the impression was created for its intended audience.

The offence of intending to deceive members or creditors in NSW

Intending to deceive members or creditors by false or misleading statement is an offence under section 192H of the Crimes Act 1900 which carries a maximum penalty of 7 years in prison.

To establish the offence, the prosecution must prove beyond reasonable doubt that:

  1. You were an officer of an organisation,
  2. You made or published, or concurred with making or publishing, a statement you knew was, or could be, false or misleading in a material particular,
  3. You did so dishonestly, and
  4. You did so with the intention of deceiving the organisation’s members or creditors about the state of the organisation’s affairs.

‘Officer’ includes any member of the organisation who is concerned in its management, as well as any person purporting to act in that capacity.

‘Organisation’ includes any company or unincorporated association.

‘Creditor’ includes any person who has entered security for the organisation’s benefit.

‘Dishonesty’ is determined according to the standards of ordinary people, and known by you to be dishonest according to those standards.

‘Deception’ includes any deception, by words or conduct, as to fact or law, including:

  1. Deception as to your intentions or those of another, and
  2. Causing a computer, machine or electronic device to make a response you were not authorised to make.

‘Statement’ includes both written and verbal statements.

Duress is a defence to the charge.

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Authors

Sonia Hickey

Sonia Hickey is a freelance writer, magazine journalist and owner of 'Woman with Words'. She has a strong interest in social justice, and is a member of the Sydney Criminal Lawyers® content team.

Ugur Nedim

Ugur Nedim is an Accredited Criminal Law Specialist with over 20 years of experience as a criminal defence lawyer. He is the Principal of Sydney Criminal Lawyers®.

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