Blue Dog Group Pty Ltd v Australian Securities and Investments Commission & Ors [2025] QSC 342

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - PLEADINGS - GENERALLY - application by the plaintiff under Uniform Civil Procedure Rules 1999 (Qld) r 377(1) for leave to file an amended Claim and Statement of Claim, confined to allegations of insider trading - where the defendants oppose the application to re-plead - whether the proposed amended Statement of Claim establishes a new cause of action now statute-barred - whether the proposed amended Statement of Claim is deficient in proving knowledge - whether the proposed amended Statement of Claim does not properly identify the cause of the plaintiff's loss - whether the proposed amended Statement of Claim is otherwise embarrassing, vexatious, and an abuse of process - whether the plaintiff is granted leave to file the amended Claim and Statement of Claim

Civil Proceedings Act 2011 (Qld) Pt 13A

Corporations Act 2001 (Cth) s 9, s 760A, s 1317HA, s 1317J, s 1317K, s 1041E, s 1041F, s 1041H, s 1042A, s 1042C, s 1042D, s 1043, s 1043A

Uniform Civil Procedure Rules 1999 (Qld) r 149, r 150, r 154, r 375, r 376, r 377

20 Trevis Court Pty Ltd (as trustee for the Blackstone Property Trust) v Emmapeel Holdings Pty Ltd (as trustee for the Trevis Court Unit Trust) [2023] QSC 254

Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 179 FLR 1

Agricultural Land Management Ltd v Jackson (No 2) [2014] WASC 102; (2014) 48 WAR 1

Althaus v Australian Meat Holdings P/L & Anor [2006] QSC 56

Ampolex Ltd v Perpetual Trustee Company (Canberra) Ltd & Ors (No 2) (1996) 20 ACSR 649

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175

Ashby v Slipper [2014] FCAFC 15; (2014) 219 FCR 322

ASIC v Citigroup Global Markets Australia Pty Ltd (No 4) [2007] FCA 963; (2007) 160 FCR 35

Australian Competition and Consumer Commission v Valve Corporation (No 7) [2016] FCA 1553

Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200

Baldwin v Icon Energy Ltd [2018] QSC 233

Banque Commerciale SA (In liq) v Akhil Holdings Ltd (1990) 169 CLR 279

Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82

Barr Rock Pty Ltd v Blast Ice Creams Pty Ltd & Ors [2011] QCA 252

Berry v CCL Secure Pty Ltd [2020] HCA 27; (2020) 271 CLR 151

BHP Group Ltd v Impiombato [2021] FCAFC 93; (2021) 286 FCR 625

Blue Dog Group Pty Ltd v Australian Securities & Investments Commission [2024] QSC 233

Borsato v Campbell [2006] QSC 191

Brisbane Airport Corporation Pty Ltd v Airservices Australia & Anor [2025] QSC 54

Bruce v Odhams Press Ltd [1936] 1 KB 697

Caffrey v AAI Ltd [2017] QSC 339

Cement Australia Pty Ltd v Australian Competition and Consumer Commission [2010] FCAFC 101; (2010) 187 FCR 261

Central Sawmilling No. 1 P/L & Ors v State of Queensland [2003] QCA 311

Colston v McMullen [2011] QSC 60

Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd [2010] QSC 249

Draney v Barry [2002] 1 Qd R 145

Eggerth v EPI International Pty Ltd [2017] FCA 1547

Equititrust Ltd v Tucker & Ors (No 2) [2019] QSC 248

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87

Gall v Domino's Pizza Enterprises Ltd (No 2) [2021] FCA 345; (2021) 150 ACSR 387

Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in liq) [1916] HCA 81; (1916) 22 CLR 490

Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; (2012) 200 FCR 296

Hartnett v Hynes [2009] QSC 225

Harvey v Commonwealth Scientific and Industrial Research Organisation [1999] QSC 191; [2000] 2 Qd R 594

Janssen-Gilag Pty Limited v Pfizer Pty Limited (1992) 37 FCR 526

Jonker v Thomas International Ltd [2017] FCA 1397

KTC v David [2022] FCAFC 60

Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jacques (No 2) [2017] QSC 251; [2018] 3 Qd R 28

Lewis v Australian Capital Territory [2020] HCA 26; (2020) 271 CLR 192

LM Investment Management Ltd (receiver apptd) (in liq) v Drake (2019) 350 FLR 17

Luna & Co Australia Pty Ltd ATF the Thompson Family Trust v Yuen's Retail Pty Ltd [2023] FCA 365

Mansfield v The Queen [2012] HCA 49; (2012) 247 CLR 86

Marks v GIO Australia Holdings [1998] HCA 69; (1998) 196 CLR 494

McQueen v Mount Isa Mines Ltd [2017] QCA 259

Meckiff v Simpson [1968] VicRp 7; [1968] VR 62

Mio Art Pty Ltd v Macequest Pty Ltd [2013] QSC 211

Monto Coal 2 Pty Ltd v Sanrus Pty Ltd as trustee of the QC Trust & Ors [2014] QCA 267

Murphy v Victoria [2014] VSCA 238; (2014) 45 VR 119

PFJV Pty Ltd v Bartter Enterprises Pty Ltd [2022] QSC 110

QIC Logan Hyperdome Pty Ltd & Anor v Briridge Pty Ltd & Anor [2011] QSC 43

Quinlan v ERM Power Ltd [2021] QSC 35; (2021) 7 QR 377

R v Farris (2015) 301 FLR 230

R v Mansfield [2011] WASCA 132; (2011) 251 FLR 286

Renshaw v New South Wales Lotteries Corporation Pty Ltd [2018] NSWSC 1954

Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu [2017] FCA 1202; (2017) 123 ACSR 223

Spencer v Commonwealth (2010) HCA 28; (2010) 241 CLR 118

Thiess Pty Ltd v FFE Minerals Australia Pty Ltd [2007] QSC 209

Thomas v State of Queensland [2001] QCA 336

P Dunning KC and M Steele KC and S Scarlett for the plaintiff

G Thompson KC and A Psaltis for the third defendant

D O'Sullivan KC and K Dyon and M Paterson for the fifth defendant

G Beacham KC and B O'Brien for the eleventh, twelfth, and thirteenth defendants

Wilson Lawyers as town agent for Huggins Legal for the third defendant

Wotton Kearney for the eleventh, twelfth, and thirteenth defendants

Part 1 - Introduction

• [1] The plaintiff, Blue Dog Group Pty Ltd, is a shareholder in Blue Sky Alternative Investments Ltd and applies, pursuant to rr 375 and 377 of the Uniform Civil Procedure Rules 1999 (Qld) ("UCPR") for leave to amend its Claim and Statement of Claim in this proceeding. The defendants object to leave being granted.
• [2] This application is made upon a convoluted background by the plaintiff to plead its case, including that:

(a) on 8 March 2024, the plaintiff commenced this proceeding against the then first to tenth defendants by filing a Claim starting a Representative Proceeding under Pt 13A of the Civil Proceedings Act 2011 (Qld) ("CPA");[1]

(b) on 22 March 2024, the plaintiff commenced proceedings[2] against the then eleventh to thirteenth defendants (the Oasis proceedings);

(c) on 16 April 2024, the plaintiff filed an amended statement of claim in this proceeding;

(d) on 28 June 2024, the plaintiff filed a further amended statement of claim in this proceeding;

(e) by order of Bradley J (as his Honour then was) on 19 July 2024, this proceeding was consolidated with the Oasis Proceeding; and

(f) on 30 July 2024, the plaintiff filed a consolidated statement of claim in this proceeding against all the then thirteen defendants (4SOC).

• [3] The plaintiff's case is in connection with the publication of the report on 28 March 2018 by Glaucus Research Group California LLC (Glaucus) in relation to Blue Sky. As originally conceived, the plaintiff made allegations:

(a) in conspiracy; and

(b) in respect of contraventions of ss 1041E, 1041F, or 1041H and 1043A of the Corporations Act 2001 (Cth) ("the Act").

• [4] The claim was brought on behalf of group members who "had an interest in shares of [Blue Sky] when the [Glaucus Report] was published". The Glaucus Report was a "short position" report published by Glaucus about Blue Sky shares on 28 March 2018.
• [5] The plaintiff originally claimed loss or damage by reference to the decline in the Blue Sky share price between the time of publication of the Glaucus Report on 28 March 2018 and close of trade on 5 April 2018.
• [6] Except for the then ninth defendant, who has not appeared in the proceedings, each of the defendants applied to strike out the 4SOC in August 2024. The hearings were listed on the following days:

(a) 20 September 2024 (for the then first defendant);

(b) 23 September 2024 (for the then fifth to thirteenth defendants); and

(c) 2 October 2024 (for the then second to fourth defendants).

• [7] The then fifth to eighth and tenth to thirteenth defendants raised, inter alia, complaints about fundamental deficiencies in respect of the plaintiff's loss and causation case generally, and its loss and causation case in respect of its insider trading case specifically.
• [8] The strike out application by ASIC (the then first defendant) was heard by Bradley J on 20 September 2024, with the claim against the first defendant being dismissed with no leave to replead.
• [9] On 23 September 2024, Bradley J made the following orders by consent:

(a) strike out the plaintiff's then current pleading[3] (the 4SOC); and

(b) the plaintiff file any application for leave to replead, including a proposed pleading in respect of which it intends to seek leave, by 25 November 2024 (which date was extended by the orders of Treston J dated 6 December 2024 to 18 December 2024).

• [10] The plaintiff's application for leave to replead in the terms of the fifth amended statement of claim (5SOC) was filed on 18 December 2024.
• [11] Notably, the 5SOC:

(a) was confined to alleged contraventions of s 1043A of the Act (insider trading prohibition); and

(b) contained a modified definition of group members.

• [12] In relation to this present application, the parties provided written submissions. However, after receiving the defendant's submissions, the plaintiff provided a revised amended statement of claim, this being the sixth iteration of the plaintiff's statement of claim (6SOC).
• [13] This application dealt with the matters raised by defendants in relation to the proposed 6SOC.

• [14] Blue Sky (referred to as BLA in the pleadings) was a public company listed on the Australian Stock Exchange with Mr Sowerby as the director and a shareholder.
• [15] Blue Sky's business was to charge a fee for investing money on behalf of investors. On 28 March 2018, Glaucus, an American research company, published a report, highly critical of Blue Sky. Blue Sky's share price plummeted.
• [16] The plaintiff had 4.4 million shares in Blue Sky and claims around $33 million in damages against the defendants in a representative proceeding for all the shareholders who had shares in March and April 2018, which would be a claim in excess of about $580 million.
• [17] The plaintiff's statement of claim in the proceeding originally had 12 defendants. However, the latest iteration of the statement of claim (6SOC) has 8 defendants:

(a) Credit Suisse Equities (first defendant);

(b) Argonaut Securities (second defendant);

(c) Euroz Hartleys (third defendant);

(d) Mr Wiechert (fourth defendant);

(e) Mr Aandahl (fifth defendant);

(f) Oasis Investments II Master Fund (sixth defendant);

(g) Oasis Management Company (seventh defendant); and

(h) Mr Fischer (eighth defendant).

• [18] For convenience, I will refer to the defendants as set out in the plaintiff's latest amended statement of claim (6SOC).
• [19] The defendants can be categorised into three groups:

(a) the Glaucus parties;

(b) the Oasis parties; and

(c) the brokers.

• [20] The Glaucus parties are Mr Wiechert (fourth defendant) and Mr Aandahl (fifth defendant) who were, respectively, the Principal and the Director of Research and Chief Investment Officer of Glaucus. It is claimed that they were responsible for Glaucus publishing the report on 28 March 2018.
• [21] The Glaucus Report stated that Glaucus, and its associates, held short positions in Blue Sky shares, and that they would make money if the price of Blue Sky shares declined.
• [22] The plaintiff contends that the Glaucus parties communicated inside information as relating to the publication of the Glaucus Report, to Glaucus, to Glaucus' associates, and to the Oasis parties, and procured them to trade in Blue Sky shares while in possession of this information.
• [23] In essence, the plaintiff's case is that the Glaucus Report was used:

(a) by the Oasis parties in a short‑selling arrangement, whereby they sold shares (via the broker parties) at a higher price before 28 March 2018 (i.e., shares they did not own but borrowed); and

(b) then bought shares back at a lower price in Blue Sky after 28 March 2018 to return those to the owners once the market had dropped.

• [24] The Oasis parties made a profit over a period of days to weeks between when they sold the borrowed shares and subsequently bought them back at a lower price.
• [25] The plaintiff's case against each of the other defendants is that they did certain things with the knowledge of the publication of the Glaucus Report and how the publication might be used. In doing so, the plaintiff claims that each were in contravention of the Act because their acts were done whilst they had the inside information. It is claimed that the short‑selling scheme, and the acts by the other defendants which facilitated it, caused the plaintiff's loss.

(a) Oasis Investments II Master Fund (Oasis) (sixth defendant);

(b) Oasis Management Company Ltd (seventh defendant), which was Oasis' investment manager; and

(c) Mr Seth Fischer (eight defendant), who was the founder and Chief Investment Officer of Oasis Management Company Ltd, and who is claimed to be the person responsible for making Oasis' investment decisions.

• [27] It is claimed that Oasis had never previously traded in Blue Sky shares. However, between 9 and 28 March 2018, it is claimed that Oasis created a significant short position in Blue Sky shares, in that it borrowed, and sold, Blue Sky shares with an obligation to purchase Blue Sky shares at a later date.
• [28] The plaintiff contends that, when Oasis did this, the Oasis parties possessed inside information relating to the likely publication of the Glaucus Report and that the other Oasis parties procured Oasis to engage in these trades.

• [29] The brokers are Credit Suisse Equities (first defendant), Argonaut Securities (second defendant) and Euroz Hartleys (third defendant).
• [30] They were each brokers for Oasis and sold Blue Sky shares on its behalf, in turn, between 9 and 28 March 2018, immediately before publication of the Glaucus Report.
• [31] Immediately after publication of the Glaucus Report, Credit Suisse started buying Blue Sky shares, in part to cover Oasis' short position.
• [32] The plaintiff contends that the brokers also possessed the inside information when they sold Blue Sky shares, or, alternatively, that information had been communicated to them that allowed them to deduce the inside information.

• [33] The plaintiff's claims of insider trading concern "short selling" surrounding Glaucus' publication on 28 March 2018 of a "short report" concerning Blue Sky. Both terms are pleaded in the revised 6SOC.

"14. "Short selling" is a means of trading by which a person (the short seller) seeks to profit from trading in listed securities [such as Blue Sky shares], as follows:

(a) a short seller borrows the shares of a company (the Target) from a person who owns shares in the target (the share lender);

(b) usually involves the short seller paying a rental to the share lender for the use of the shares;

(c) the short seller sells the shares in the Target that it has borrowed, thereby creating a "short position" in respect of shares in the Target (the short position);

(d) at a later date, the short seller buys shares in the Target, in order to enable the short seller to return to the share lender, shares equivalent to those borrowed by the short seller as described in subparagraph (a) above;

(e) the short seller seeks to profit from the difference between (short selling):

(i) the price at which they had earlier sold the shares in the Target, as set out in subparagraph (c) above; and

(ii) the price at which they had later bought the shares in the Target, as set out in subparagraph (d) above;"

• [35] The term "short reports"[4] is explained in the 6SOC as:

"15. "Short reports" are reports about Target entities that certain short sellers (or their agents or associates) publish, in circumstances:

(a) where the short seller has, and/or its associates have, adopted a short position in a Target:

(b) the short report is released during trading hours;

(c) in an attempt to drive down the trading price of shares in the Target; or

(d) in the expectation or hope of triggering, leading to or resulting in a reduction in the trading price of shares in the Target;

(e) to enable the short seller and/or its associates to profit from short selling shares in the Target.

(i) ASIC Information Sheet 255, titled "Activist short selling campaigns in Australia," at p.1."

• [36] Short selling is not unlawful. However, as ASIC commented in its Information Sheet 225 (INFO 225) concerning "activist short sellers":

"Short reports are often released during trading hours for maximum and immediate effect on the price of the target entity's securities. The time taken:

may result in a period of trading in the target entity's securities where the market is not fully informed".[5]

• [37] The contents of the "short report" about Blue Sky that Glaucus published on 28 March 2018, that is, the Glaucus Report, are set out in the 6SOC as follows:

"18. The Glaucus report contained adverse and pejorative statements concerning the reporting, valuation and quality of a number of assets held by BLA and the fees charged by BLA, including alleging that:

(a) BLA charged management fees that were "egregious" (p.1) and "extortionate" (p.3,p.4,p.58);

(b) BLA had "wildly exaggerate[ed]" its reporting fee earning assets under management (p.1,p.5);

(c) BLA's "ludicrous upfront fees [are] an abusive practice that gouges the very investors Blue Sky claims to serve, but Blue Sky's revenues will continue to shrink as it runs out of suckers to pay such exorbitant fees" (p.2);

(d) BLA had engaged in what appeared to be a "systemic practice" of overstating the value of unrealised assets (p.4);

(e) BLA had engaged in "deception" (p.7);

(f) BLA's management fees were used to "gouge unsuspecting investors" (p.58);

(g) BLA was engaged in an "abusive and unsustainable practice" (p.58);

(h) BLA's fee structure was "extortionate" and "unconscionable" (p.61); and

(i) BLA's fee structure was "designed to rip off investors" (p.61); and

(j) "charging such extortionate upfront fees to relatively unsophisticated investors is not only abusive but unsustainable" (p.61).

1. The Glaucus Report report also contained the following express statements:

(a) "We have a short interest in Blue Sky's stock and therefore stand to realize significant gains in the event that the price of such instrument declines" (at p.1);

(b) "We are short sellers" (at p.67);

(c) "You are reading a short-biased opinion piece. Obviously, we will make money if the price of Blue Sky stock declines" (at p.67);

(d) "As of the publication date of this report, Glaucus Research Group California, LLC (a California limited liability company) (possibly along with or through our members, partners, affiliates, employees, and/or consultants) along with our clients and/or investors has a direct or indirect short position in the stock (and/or possibly other options or instruments) of the company covered herein, and therefore stands to realize significant gains if the price of such instrument declines" (at p.67);

(e) "We estimate that the Company's shares are worth at most $2.66 per share" (at p.1);

(f) "Our valuation implies a market capitalization of $256 million and a Glaucus adjusted share price of $2.66, 77% below the current share price of $11.43. That said, we believe that this valuation is likely far too generous to the Company because it gives full credit to Blue Sky's reported performance on its portfolio, which we believe is significantly overstated. We therefore think it would be reasonable for investors to value Blue Sky's shares even lower. Where the bottom is, perhaps not even Blue Sky knows"; (at p.4; emphasis in original);

(g) "Our valuation implies a market capitalization of $343 million and a Glaucus adjusted share price of $2.66, 77% below the current share price of $11.43. That said, we believe that this valuation is likely far too generous to the Company because it gives full credit to Blue Sky's reported performance on its portfolio, which we suspect is inappropriately exaggerated. We therefore think it would be reasonable for investors to value Blue Sky's shares even lower. Where the bottom is, perhaps not even Blue Sky knows." (at p.66, emphasis in original)."

• [38] The 6SOC refers to the Glaucus' members, partners, affiliates, employees, consultants, clients and/or investors as the Glaucus Associates and it is pleaded that they were short sellers:

"20. In the premises of the statements in the Glaucus Report report pleaded in paragraph 18 and paragraphs 19(a) to 19(d) above, it is reasonably to be inferred that at all material times Glaucus, and/or associates of Glaucus (which may have included Glaucus's members, partners, affiliates, employees, consultants, clients and/or investors) (Glaucus Associates), were short sellers, within the meaning of that term as defined in paragraph 14 above, in respect of BLA."

• [39] The Glaucus Report was released at 11:48am during a trading day.
• [40] The plaintiff contends that the timing of the release of the Glaucus Report appears to have been coordinated between Glaucus, the Oasis parties, and the brokers.
• [41] Prior to 9 March 2018, Oasis had not traded in Blue Sky shares on the ASX at all.[6] In relation to Oasis trading in Blue Sky shares, the 6SOC alleges:

"22. Between 9 March 2018 and 11:43am on 28 March 2018, Oasis sold BLA shares on the ASX via its brokers Credit Suisse, Argonaut and Euroz Hartleys, as follows:

(a) between 9 and 19 March 2018, Credit Suisse sold a total of 425,833 BLA shares on the ASX, the majority of which it sold on behalf of Oasis;

(i) The trades in respect of BLA shares that Credit Suisse undertook on the ASX in the period from 3 January 2017 to 31 December 2018, including those trades undertaken between 9 and 19 March 2018, are set out in Appendix 1 to this Statement of Claim;

(ii) The plaintiff is unable to provide particulars of the precise number of BLA shares that Credit Suisse sold on behalf of Oasis, until after completion of interlocutory steps in this proceeding;

(iii) The matters pleaded in paragraph 47 below;

(b) between 20 and 22 March 2018 Argonaut sold 134,303 BLA shares on the ASX on behalf of Oasis;

(i) The trades in respect of BLA shares that Argonaut undertook on the ASX in the period from 3 January 2017 to 31 December 2018 are set out in Appendix 2 to this Statement of Claim;

(ii) The trades in respect of BLA shares that Argonaut undertook on the ASX on behalf of Oasis between 20 and 22 March 2018 are those sales recorded in Appendix 2 on 20, 21 and 22 March 2018;

(c) between 23 March 2018 and 11:43am on 28 March 2018, Euroz Hartleys sold 246,024 BLA shares on the ASX on behalf of Oasis;

(i) The trades in respect of BLA shares that Euroz Hartleys undertook on the ASX in the period from 3 January 2017 to 31 December 2018 are set out in Appendix 3 to this Statement of Claim;

(ii) The trades in respect of BLA shares that Euroz Hartleys undertook on the ASX on behalf of Oasis between 23 March 2018 and 11:43am on 28 March 2018 are those sales recorded in Appendix 3 on 23, 26, 27 and 28 March 2018..."

• [42] Five minutes after Euroz Hartleys completed its selling activities on behalf of Oasis, at 11:48am on 28 March 2018, Glaucus published the Glaucus Report.
• [43] Immediately after the release of the Glaucus Report, the trading activity switched from selling to buying, notwithstanding that the price of Blue Sky shares began dropping after the publication of the Glaucus Report.
• [44] The 6SOC describes the trading activity following the release of the Glaucus Report:

"35. After the release of the Glaucus report, Credit Suisse bought BLA shares on the ASX, as follows:

(a) Credit Suisse bought 101,545 BLA shares on the ASX in the period:

(i) immediately after the Glaucus report was published at approximately 11:48am on 28 March 2018; and

(ii) before trading was halted in BLA shares by the ASX at approximately 1:04pm that day; and

(b) after the suspension of quotation of BLA shares was lifted on 4 April 2018, Credit Suisse bought a further 539,828 BLA shares on the ASX on 4 April 2018;

(i) The trades in respect of BLA shares that Credit Suisse undertook on the ASX in the period from 3 January 2017 to 31 December 2018, including those trades that Credit Suisse undertook on 28 March 2018 and 4 April 2018, are set out in Appendix 1 to this Statement of Claim."

"36. It is to be inferred, in the premises of the matters pleaded in paragraphs 22 to 25 above, that by the trades pleaded in the preceding paragraph, Credit Suisse enabled Oasis to cover a portion of Oasis's Short Position (by the acquisition of BLA shares that could be returned to share lenders from whom BLA shares had previously been borrowed)."

• [46] The plaintiff pleads the inside information in the 6SOC as:

"39. At all material times until the publication of the Glaucus report, information that:

(a) a short seller that held or intended to acquire a substantial short position in respect of BLA shares was preparing a report that would contain adverse statements in respect of the current value of BLA shares compared to the price at which BLA shares had been trading on the ASX in the recent past; and

(b) the short seller intended to publish the report by in or about late March 2018 in an attempt to drive down, or in the expectation or hope of triggering, leading to or resulting in a reduction in, the ASX trading price of BLA shares to enable the short seller or its associates to profit from the short selling of BLA shares;

(the Inside Information), was "inside information" within the meaning of that term as defined in s.1042A(1) of the Act, as it was information:

(c) that was not "generally available", within the meaning of that term as defined in s.1042C of the Act; and

(d) if it were generally available, a reasonable person would expect it to have a "material effect" on the price or value of a Division 3 financial product (being BLA shares) within the meaning of that term as defined in s.1042D of the Act, in that the Inside Information would, or would be likely to, influence persons who commonly acquire Division 3 financial products in deciding whether or not to acquire or dispose of BLA shares."

• [47] The plaintiff pleads that it is to be inferred that the Oasis parties possessed the inside information, when Oasis:

(a) entered into a securities lending arrangement in order to borrow Blue Sky shares; and

(b) entered into the trades undertaken via the brokers, or other purchases of Blue Sky shares undertaken to cover the short position.

• [48] Thereby, the plaintiff pleads that Oasis contravened ss 1043A(1)(c) and 1043A(1)(d) of the Act[7] in that, while in possession of the inside information, and knowing the matters specified in ss 1042A(1)(a) and (b) of the Act, Oasis disposed of Blue Sky shares (and/or the other Oasis parties procured Oasis to dispose of Blue Sky shares).[8]
• [49] The plaintiff pleads that it is to be inferred that each of the brokers possessed the inside information when they disposed of Blue Sky shares on behalf of Oasis, and thereby contravened the "trading" prohibition.
• [50] As against each of the brokers, the 6SOC pleads:

(a) the particulars of Oasis' short position requested by and given to each of them by Oasis;

(b) the information required to be given to each of the brokers to comply with the Market Integrity Rules; and

(c) the claims against each of them.

• [51] In relation to the claims against each of the brokers, the 6SOC pleads that when each of them sold Blue Sky shares for Oasis:

"(a) it knew the Inside Information, or had received information from which the Inside Information could be deduced; and

(b) it knew, or ought reasonably to have known, that:

(i) the Inside Information was not "generally available", within the meaning of that term as defined in s.1042C of the Act; and

(ii) if the Inside Information was were generally available, a reasonable person would have expected it to have a material effect on the price or value of BLA shares, in that the information would, or would be likely, to influence persons who commonly acquire Division 3 financial products in deciding whether or not to acquire or dispose of BLA shares.

Credit Suisse knew, or ought reasonably to have known, these matters because it was retained by Oasis to:

A. sell shares to establish a substantial short position in BLA shares, prior to the publication of the Glaucus report; and

B. purchase BLA shares immediately after publication of the Glaucus report (or some similar report)".[9]

• [52] The 6SOC pleads against each of the brokers a contravention of s 1043A(1)(c) of the Act. For example, in relation to Credit Suisse, the 6SOC pleads:

"61. In the premises of paragraph 60 above, Credit Suisse contravened s.1043A(1)(c) of the Act, in that:

(a) by disposing of BLA shares, as pleaded in paragraph 22(a) above, it disposed of relevant Division 3 financial products; and

(b) by entering into an agreement with its client Oasis to dispose of BLA shares, as pleaded in paragraph 46 above, it entered into an agreement to dispose of relevant Division 3 financial products; and

(c) by entering into an agreement with its client Oasis to buy BLA shares, as pleaded in paragraph 46(b) above, it entered into an agreement to acquire relevant Division 3 financial products.

1. In the premises of paragraph 74 above, Argonaut contravened s.1043A(1)(c) of the Act, in that:

(a) by disposing of BLA shares, as pleaded in paragraph 22(b) above, it disposed of relevant Division 3 financial products; and

(b) by entering into an agreement with its client Oasis to dispose of BLA shares as pleaded in paragraph 62 above, it entered into an agreement to dispose of relevant Division 3 financial products.

1. In the premises of paragraph 88 above, Euroz Hartleys contravened s.1043A(1)(c) of the Act, in that:

(a) by disposing of BLA shares, as pleaded in paragraph 22(c) above, it disposed of relevant Division 3 financial products; and

(b) by entering into an agreement with its client Oasis to dispose of BLA shares, it entered into an agreement to dispose of relevant Division 3 financial products."

• [53] Finally, as against the Glaucus parties (Mr Weichert and Mr Aandahl), the plaintiff pleads that it is to be inferred that Mr Weichert and/or Mr Aandahl:

(a) possessed the inside information;

(b) given the statements in the Glaucus Report, that they had communicated the inside information to Glaucus, and/or to one or more Glaucus Associates; or

(c) alternatively, that they communicated the inside information to the Oasis parties, or engaged in communications that allowed the Glaucus Associates to deduce the inside information;

"92. When Mr Weichert and Mr Aandahl engaged in the conduct pleaded in paragraph 90 and 91 above they knew, or ought reasonably to have known, that:

(a) the Inside Information was not "generally available", within the meaning of that term as defined in s.1042C of the Act; and

(b) if the Inside Information was were generally available, a reasonable person would have expected it to have a material effect on the price or value of BLA shares, in that the information would, or would be likely, to influence persons who commonly acquire Division 3 financial products in deciding whether or not to acquire or dispose of BLA shares; and

(c) that the person/s to whom they communicated the Inside Information would be likely to:

(i) dispose of, and then acquire, BLA shares; or

(ii) procure another person to dispose of, and then acquire, BLA shares."

• [55] The 6SOC pleads that Mr Weichert and Mr Aandahl contravened ss 1043A(1)(d) and 1043(2) of the Act.
• [56] The plaintiff seeks compensation for damage that resulted from the contraventions, pursuant to s 1317HA of the Act which states:

"1317HA Compensation orders - financial services civil penalty provisions

(1) A Court may order a person (the liable person) to compensate another person (including a corporation), registered scheme or notified foreign passport fund for damage suffered by the person, scheme or fund if:

(a) the liable person has contravened a financial services civil penalty provision; and

Note: An order may be made under this subsection whether or not a declaration of contravention has been made under section 1317E.

(2) In determining the damage suffered by a person, scheme or fund for the purposes of making a compensation order, include profits made by any person resulting from the contravention.

Damage includes diminution of value of scheme or fund property

(3) In determining the damage suffered by a registered scheme or notified foreign passport fund for the purposes of making a compensation order, include any diminution in the value of the property of the scheme or fund.

(4) If the responsible entity for a registered scheme is ordered to compensate the scheme, the responsible entity must transfer the amount of the compensation to the scheme property. If anyone else is ordered to compensate the scheme, the responsible entity may recover the compensation on behalf of the scheme.

(4A) If the operator of a notified foreign passport fund is ordered to compensate the fund, the operator must transfer the amount of the compensation to the fund property. If anyone else is ordered to compensate the fund, the operator may recover the compensation on behalf of the fund.

(5) A compensation order may be enforced as if it were a judgment of the Court."

• [57] Section 1317HA of the Act applies to contraventions of "financial services civil penalty provisions",[10] which is defined in s 1317E as including contraventions of ss 1043A(1) and (2) (the insider trading prohibitions).
• [58] The 6SOC sets out the compensation in relation to damage resulting from the contraventions and profits made by the contraventions and pleads that:

"98. Pursuant to s.1317 HA of the Act, the plaintiff, and the Group members, are entitled to orders:

(a) requiring each of the defendants to compensate the plaintiff and the Group Members for damage they suffered, resulting from the defendants' contraventions of s.1043A(1) and s.1043A(2) of the Act;

(b) the damage referred to in the preceding subparagraph is, or includes,-:

(i) by s.1317HA(2) of the Act, the profits the defendants made resulting from their contraventions, the extent of which is not presently known to the plaintiff; and, or alternatively

1. the price at which the Plaintiff and Group Members would have or could have sold their BLA shares by no later than mid-March 2018 had the Inside Information been generally available, being between $12.00 and $13.20 (the prices at which BLA shares traded in the period between 1 and 12 March 2018); and

1. the price at which BLA shares were quoted on the ASX at close of business on 5 April 2018, being $5.62;

(iii) a decrease in the value of the plaintiff's BLA shares; and

(iv) the lost opportunity of the plaintiff to sell its BLA shares at a higher value had the contraventions not occurred."

• [59] The plaintiff accepts that it requires leave, pursuant to r 377 UCPR, to amend its originating process in this proceeding (in this case, its Claim and Statement of Claim):

(1) An originating process may not be amended except -

(a) if the amendment is a technical matter - with the leave of the registrar or the court; or

(b) if the originating process has not been served and all sealed copies of the originating process, and other documents filed with the originating process, are returned to the court that issued the originating process - with the leave of the registrar or the court; or

(2) Subrule (1) does not apply to a pleading or particular included in an originating process."

• [60] Otherwise, r 378 UCPR provides that a party may, as often as necessary, make an amendment for which leave is not required under the Rules, before the filing of a request for trial date.

Before the filing of the request for trial date, a party may, as often as necessary, make an amendment for which leave from the court is not required under these rules.

See rule 470 in relation to the amendment of pleadings after the filing of the request for trial date."

• [61] Accordingly, absent the order of Bradley J dated 23 September 2024, leave would not be required for the amendments sought in respect of the 6SOC (except if, as per the defendant's submissions, the 6SOC raises a new claim).[11]
• [62] I note that the plaintiff consented to the orders made by Bradley J, which required it to file the present application for leave. Where a party makes an application for leave to amend pleadings, the Court should have regard to considerations of case management, cost, and delay.
• [63] In this case, the plaintiff has had a number of attempts in providing a complaint pleading.
• [64] The plaintiff was granted an extension of time to file the 5SOC on 18 December 2024 and complied with this order. However, the defendants, in their written submissions, made a number of criticisms of the 5SOC.
• [65] In their reply, the plaintiff did not concede that these complaints had any substance. However, the plaintiff stated that it provided a revised amended statement of claim annexed to their reply in the interests of narrowing the field of dispute. This constitutes the sixth iteration of the plaintiff's pleading (the 6SOC).
• [66] It should be noted the defendants state that the 6SOC does anything but narrow the field of dispute; rather, it has the opposite effect.
• [67] The 6SOC does not comply with orders made to file the proposed pleading by 18 December 2024. It is essentially another bite of the cherry by the plaintiff to bring a compliant pleading and was simply annexed to the plaintiff's reply submissions to address complaints raised by the defendants. The plaintiff did not bring any application to deal with this late proposed pleading.
• [68] However, it is noted that all parties engaged in their submissions with the 6SOC as to why the plaintiff should not be given leave to replead based on this latest iteration.
• [69] Thus, despite being outside the orders made by the Court, it is the 6SOC that the parties dealt with in detail at the hearing, and it is this iteration that is being considered as to whether the plaintiff has leave to amend its claim and statement of claim.
• [70] Any assessment of the consequences of refusing leave to replead must be gauged against the opportunity that has been afforded to a plaintiff to properly articulate its claim. In this case, I have had regard to the numerous opportunities that have already been given to the plaintiff to amend its claim.

"[51] Aon Risk is not a one size fits all case. Whilst various factors are identified in the judgment as relevant to the exercise of discretion, the weight to be given to these factors, individually and in combination, and the outcome of that balancing process, may vary depending on the facts in the individual case ..."

• [73] Before allowing an amendment, the Court must be satisfied that the proposed amendments are proper as to both substance and form.
• [74] The relevant principles on an application for leave to amend were identified by Applegarth J in Hartnett v Hynes[15] and have been held to be of general application (whether or not leave to amend is required).[16]
• [75] Principles identified by Applegarth J that are relevant to this application include:

"1. An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation.

1. The discretion is guided by the purpose of the rules of civil procedure, namely the just and expeditious resolution of the real issues in dispute at a minimum of expense.
2. There is a distinction between amendments which are necessary for the just and expeditious resolution of "the real issues in civil proceedings" and amendments which raise new claims and new issues.

1. Parties should have a proper opportunity to plead their case, but justice does not permit them to raise any arguable case at any point in the proceedings upon payment of costs.
2. The fact that the amendment will involve the waste of some costs and some degree of delay is not a sufficient reason to refuse leave to amend.
3. Justice requires consideration of the prejudice caused to other parties, other litigants and the Court if the amendment is allowed. This includes the strain the litigation imposes on litigants and witnesses.
4. The point the litigation has reached relative to a trial when the application to amend is made is relevant, particularly where, if allowed, the amendment will lead to a trial being adjourned, with adverse consequences on other litigants awaiting trial and the waste of public resources.
5. Even when an amendment does not lead to the adjournment of a trial or the vacation of fixed trial dates, a party that has had sufficient opportunity to plead their case may be denied leave to amend for the sake of doing justice to the other parties and to achieve the objective of the just and expeditious resolution of the real issues in dispute at a minimum of expense.
6. The applicant must satisfy the specific requirements of rules, such as UCPR 376(4) where it seeks to introduce a new cause of action after the expiry of a relevant limitation period."

• [76] The Court's power to grant leave to amend is broad in scope. The power is, however, subject to:

"...[T]he overriding purpose of the rules which is to facilitate the "just and expeditious resolution of the real issues in civil proceedings at a minimum of expense" and the requirement that the rules be applied with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of the rules".[17]

• [77] As such, the paramount consideration in determining an application to amend pleadings is justice.[18]
• [78] Importantly, the Court will not permit an amendment if doing so would be futile. To this end, it has been observed that leave will not be granted where the subject matter of the proposed amendment would be liable to be struck out had it appeared in the original pleading. In KTC v David,[19] Wigney J noted:

"[111] Leave to amend should generally be granted unless the proposed amendment is futile, including, for example, because the issue sought to be raised by the amendment has no reasonable prospects of success, or would be liable to be struck out as not raising a reasonable cause of action, or where the amendment would cause substantial prejudice or injustice to the opposing party in a way that cannot be compensated by the award of costs".

• [79] The need for the claim to be articulated in a proper way includes the need for particulars sufficient for the defendant to identify the case it would be required to meet.
• [80] The Court must balance the interests of the defendants in knowing the case they are to meet with the effect of striking out a pleading on the plaintiff. Considerations relevant in deciding whether a pleading is deficient include:[20]

(a) whether it fails to fulfil the function of pleadings, which are "to state with sufficient clarity the case that must be met" and thus define the issues for decision thereby ensuring procedural fairness;[21]

(b) a pleading will lack sufficient clarity if it is "ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him";[22]

(c) a pleading will be deficient if the pleader's case is not "advanced in a comprehensible, concise form appropriate for consideration both by the court, and for the purpose of the preparation of a response";[23]

(d) a pleading must contain all the material facts relied upon (UCPR r 149(1)(b)) and a deficiency in pleading material facts needed to establish a cause of action may not be remedied through the use of particulars, which are intended to meet a further and quite separate requirement;[24] however

(e) on the other hand, a pleading may be liable to be struck out where it includes irrelevant allegations which, by their nature, will affect the expeditious determination of the proceeding.[25]

• [81] The decision as to whether it is appropriate to strike out a pleading is a case specific enquiry[26] and, in Equititrust Ltd v Tucker & Ors (No 2),[27] Bowskill J (as the Chief Justice then was) noted that pleadings are a means to the ultimate attainment of justice between the parties to litigation:

"[15] Importantly, though, "pleadings are not an end in themselves, instead they are a means to the ultimate attainment of justice between the parties to litigation". As the Full Court of the Federal Court (Greenwood, McKerracher and Reeves JJ) observed in Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15 at [13], for these reasons "the courts do not, at least in the current era, take an unduly technical or restrictive approach to pleadings". As their Honours also observed, contemporary approaches to case management are in part responsible for this change. They refer in this regard to the observations of Martin CJ in B_arclay Mowlem Construction Limited v Dampier Port Authority_ [2006] WASC 281; (2006) 33 WAR 82 at [4]- [8], where his Honour said:

"4. It is, I think, important when approaching an issue of that kind to bring to mind the contemporary purposes of pleadings. The purposes of pleadings are, I think, well known and include the definition of the issues to be determined in the case and enabling assessment of whether they give rise to an arguable cause of action or defence as the case may be, and apprising the other parties to the proceedings of the case that they have to meet.

1. In my view, the contemporary role of pleadings has to be viewed in the context of contemporary case management techniques and pre-trial directions. In this Court, those pre-trial directions will almost invariably include; firstly, a direction for the preparation of a trial bundle identifying the documents that are to be adduced in evidence in the course of the trial; secondly, the exchange well prior to trial of nonexpert witness statements so that non-expert witnesses will customarily give their evidence-in-chief only by the adoption of that written statement; thirdly, the exchange of expert reports well in advance of trial and a direction that those experts confer prior to trial; fourthly, the exchange of chronologies; and fifthly the exchange of written submissions.
2. Those processes leave very little opportunity for surprise or ambush at trial and, it is my view, that pleadings today can be approached in that context and therefore in a rather more robust manner, than was historically the case; confident in the knowledge that other systems of pre-trial case management will exist and be implemented to aid in defining the issues and appraising the parties to the proceedings of the case that has to be met.
3. In my view, it follows that provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action or defence, as the case may be, and appraising the parties of the case that has to be met, the Court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the Court to be spent extensively debating the application of technical pleadings rules that evolved in and derive from a very different case management environment.
4. Most pleadings in complex cases, and this is a complex case, can be criticised from the perspective of technical pleading rules that evolved in a very different case management environment. In my view, the advent of contemporary case management techniques and the pre-trial directions, to which I have referred, should result in the Court adopting an approach to pleading disputes to the effect that only where the criticisms of a pleading significantly impact upon the proper preparation of the case and its presentation at trial should those criticisms be seriously entertained.""

• [82] In this case, the plaintiff submits that refusing leave to replead would be likely to summarily terminate the proceeding and be akin to a permanent stay of the proceeding, as the practical effect of the order would be the same.
• [83] The exercise of a power to summarily terminate a proceeding must always be attended with caution.[28] While some restraint is appropriate where refusing leave to replead would have the effect of bringing a proceeding to an end, that restraint need not be as firm where the perceived inadequacies will not change at trial.

• [84] Between the defendants, they raise a plethora of issues with four general categories of objection:

(a) the 6SOC brings forward a new cause of action now statute barred ("the new cause of action issue");

(b) the 6SOC fails to plead the material facts sufficient to support the alleged cause of action against each of them in relation to the possession and knowledge requirement of s 1043A of the Act ("the knowledge issue");

(c) causation of the plaintiff's loss is not properly identified ("the causation issue"); and

(d) the 6SOC is otherwise embarrassing, vexatious, and an abuse of process ("the abuse of process issue").

• [85] The defendants have provided comprehensive written submissions addressing these and other related issues. Where one defendant raises an issue, the other defendants embrace it. It is fair to say that the defendants have 'thrown the kitchen sink' in their submissions for leave not to be granted.

• [86] The defendants submit the insertion of paragraphs 97A to 97F in the 6SOC allege a new cause of action for compensation under s 1317HA of the Act and, accordingly, r 376(4) of the UCPR needs to be satisfied. Counsel for Mr Aandahl took the lead on this issue and the other defendants embraced the submissions.
• [87] Rule 376(4) states:

(4) The court may give leave to make an amendment to include a new cause of action only if -

(a) the court considers it appropriate; and

(b) the new cause of action arises out of the same facts or substantially the same facts as a cause of action for which relief has already been claimed in the proceeding by the party applying for leave to make the amendment."

• [88] Accordingly, rule 376(4) applies when an application is made to amend a pleading to include a new cause of action where a relevant period of limitation, current at the date the proceeding was started, has ended.
• [89] If the 6SOC contains a new cause of action, time limitations are in play, whereby the cause of action:

(a) accrued by 5 April 2018;

(b) became barred by lapse of time by 5 April 2024 at the latest;[29]

(c) and was statute-barred when the 6SOC was served on the defendants on 2 May 2025.

• [90] In such circumstances, the defendants state the plaintiff is required to bring an application seeking leave under r 376(4) of the UCPR, which they have not done.
• [91] The defendants state that the two limbs of r 376(4) are not satisfied;

(a) in relation to the first limb of r 376(4)(a):

(i) late amendments are not given for the asking, and the minimum requirement is an explanation for why the new case was not brought forward within time,[30] but no such explanation is offered; and

(ii) the plaintiff has not established an absence of prejudice from the cause of action being claimed so late;[31]

(b) in relation to the second limb of r 376(4)(b), the facts now alleged in the 6SOC do not arise out of the same or substantially the same facts as those previously pleaded in the 5SOC.

• [92] The defendants submit that these paragraphs articulate a new case, based on new allegations of material fact, as to why conduct said to contravene s 1043A caused a loss to the plaintiff and group members, for which they are entitled to compensation.
• [93] It is submitted that paragraphs 97A to 97F of the 6SOC go well beyond particulars of the case already claimed in the previous iterations of the pleadings and represent an "entirely different story". Accordingly, the defendants state that:

(a) the previously articulated cause of action was anchored in the central thesis that the drop in the Blue Sky share price after 28 March 2018 was caused by the publication of the Glaucus Report; and

(b) the previous case of compensation for insider trading, in which the share price collapse was caused by publication of the Glaucus Report, was, in turn, connected to a separate proposition (now abandoned), that the Glaucus Report was misleading or deceptive, being false in material particulars.

• [94] The defendants note that part of this previous case involved a positive allegation that Mr Sowerby did not sell, but rather retained, his shares and that the drop in share price therefore also sounded in damages for misleading conduct.
• [95] Accordingly, it is submitted that the previous insider trading case as pleaded by the plaintiff is totally different from the case sought to be introduced in the 6SOC, which pleads that:

(a) it was the "short selling" that caused the drop in price, and not the Glaucus Report itself; and

(b) but for the short selling, the plaintiff and other group members would have moved to sell their shares after 31 March 2018, once the report came out (a proposition that is not only missing from the 5SOC, but which is contrary to the positive allegation pleaded in paragraph 128 of the 5SOC).

• [96] Counsel for Mr Aandahl, the fifth defendant in the 6SOC, took the lead in this argument with the other defendants embracing his submissions.
• [97] To determine whether the 6SOC does contain a new cause of action, a comparison needs to be undertaken with the previous struck out pleading.[32]
• [98] The pleading that was struck out by consent (4SOC) on 23 September 2024 contained the following remedies:

1. At approximately 11.47am on 28 March 2018, the BLA shares had a market price of $11.41.

(a) became generally available in the period from 11.48am on 28 March 2028 to the ASC close of trade on 5 April 2018, and would reasonably have been expected to have a material affect on the value or price of BLA's shares,

(i) the publication of the Glaucus BLA Report by the Ninth and Tenth Defendants,

(ii) the publication of the Gadens Statement by the Fifth Defendant,

(iv) the continued publication of the Gadens Statement by the Fifth Defendant after publication of the BLA Response,

(v) the publication of the 3 April 2018 and 4 April 2018 articles by the Sixth Defendant in the AFR,

(vi) the publication of the Glaucus BLA Rebuttal by the Ninth and Tenth Defendants, and

(vii) the information that the First Defendant had failed to act, as pleaded in 561 above.

1. At the close of trade on the ASX on 5 April 2018, BLA shares had a market price of $5.62.
2. It follows that the loss caused to the Plaintiff and each of the Group Members by the conduct in 652.b above was at least $5.79 for each interest in a BLA share held at the time of publication of the Glaucus Report (except to the extent a Group Member disposed of that interest for a price above $5.62).

BLA's Share price had been higher than $11.41 in the period before the Broker Parties had commenced shortening BLA shares on 9 March 2018 and, by the volume of BLA shares sold by them, caused the price of BLA shares to fall.

1. It follows that the total loss or damage suffered by the Plaintiff and the Group Members was no less than $444 million.

There were approximately 77 million BLA shares outstanding at the time the Glaucus BLA Report was published. However, there were also an unknown number of BLA shares on loan under securities lending arrangements.

In the premises above, the plaintiff claims the following relief:

(a) at least $5.79 for each interest in a BLA share held at the time of publication of the Glaucus BLA Report (except to the extent a Group Member disposed of that interest for a price above $5.62),

(b) exemplary damages at the discretion of the Court, and

(c) interest under s 58 Civil Proceedings Act 2011."

1. Pursuant to s.1317J(3A) of the Act, the plaintiff, and other Group Members:

(a) are persons who suffered damage in relation to a contravention, or alleged contravention, of a financial services civil penalty provision;

(b) are entitled to apply for a compensation order pursuant to s.1317HA of the Act.

Compensation in relation to profits made by the contravention Compensation in relation to damage resulting from the contraventions and profits made by the contraventions

1. If the Inside Information had been "generally available" (within the meaning of that term as defined in s.1042C of the Act), then the Plaintiff and Group Members would have sold their BLA shares by no later than mid-March 2018 at a price of between $12.00 and $13.20 (being the prices at which BLA shares traded in the period between 1 and 12 March 2018). Pursuant to s.1317HA(2) of the Act, compensation to the plaintiff, and other Group Members, of any profits the defendants made resulting from their contraventions, the extent of which is not presently known to the plaintiff.

97A. Further or alternatively, were it not for the matters referred to in paragraphs 97B to 97E, the plaintiff and the Group Members would have sold some or all of their shares in BLA after 31 March 2018 at a price between $12.00 and $13.20.

97B. By reason of the matters set out in paragraphs 14, 19, 20, 22, 25, 35, 40, 45:

(a) Oasis engaged in short selling of BLA shares, within the meaning of paragraph 14 of this statement of claim, between about March 2018 and April 2018; and

(b) Glaucus engaged in short selling of BLA shares, within the meaning of paragraph 14 of this statement of claim, between about March 2018 and April 2018.

97C. Each of the contraventions referred to in paragraphs 45, 61, 75, 89 and 93 above, were part of, facilitated or enabled the short selling referred to in paragraph 97B(a) of this statement of claim.

97D. Each of the contraventions referred to in paragraph 93 above were part of, facilitated or enabled the short selling referred to in paragraph 97B(b) of this statement of claim.

97E. The short selling referred to in paragraph 97:

(a) caused a reduction in the price of BLA shares after 28 March 2018;

(b) thereby deprived the plaintiff of an opportunity to sell its shares after 28 March 2018 at the price referred to in paragraph 98(b)(ii)A; and

(c) caused the plaintiff's loss referred to in paragraph 98(b)(ii).

97F. By reason of the matters in paragraphs 97 to 97E, each of the contraventions referred to in paragraphs 45, 61, 75, 89 and 93 above:

(a) resulted in the plaintiff's loss referred to in paragraph 98(b)(ii); and

(b) resulted in, for the reasons in s.1317HA(2) of the Act, the loss referred to in 98(b)(i).

Compensation in relation to damage resulting from the contravention

98. Pursuant to s.1317HA of the Act, the plaintiff, and the Group Members, are entitled to orders:

(a) requiring each of the defendants to compensate the plaintiff and the Group Members for damage they suffered, resulting from the defendants' contraventions of s.1043A(1) and s.1043A(2) of the Act;

(b) the damage referred to in the preceding subparagraph is, or includes:

(i) by s.1317HA(2) of the Act, the profits the defendants made resulting from their contraventions, the extent of which is not presently known to the plaintiff; and, or alternatively

(ii) the difference between:

1. the price at which the Plaintiff and Group Members would have or could have sold their BLA shares by no later than mid-March 2018 had the Inside Information been generally available, being between $12.00 and $13.20 (the prices at which BLA shares traded in the period between 1 and 12 March 2018); and
2. the price at which BLA shares were quoted on the ASX at close of business on 5 April 2018, being $5.62;

(iii) a decrease in the value of the plaintiff's BLA shares; and

(iv) the lost opportunity of the plaintiff to sell its BLA shares at a higher value had the contraventions not occurred.

1. The plaintiff repeats the matters pleaded in paragraphs 26 to 33 and paragraphs 96 and 1(a) above.
2. At all material times, the plaintiff owned 4.4 million ordinary shares in BLA.
3. The difference between the price at which the plaintiff would have, or could have, sold its BLA shares in early to mid-March 2018, and the ASX listed price of BLA shares on 5 April 2018, wasis calculated as follows:

(a) as at 1 March 2018, BLA shares traded at a high of $13.20;

(b) in the premises, the saleable value of the plaintiff's 4.4 million ordinary BLA shares on 1 March 2018 at the highest trading price of BLA shares was $58,080,000;

(c) at the close of trade on the ASX on 5 April 2018, ordinary shares in BLA were trading at a price of $5.62 per share on the ASX;

(d) in the premises, the saleable value of the plaintiff's 4.4 million ordinary BLA shares as at close of business on 5 April 2018 was $24,728,000;

(e) in the premises, by reason of the Inside Information not being available to the plaintiff, the plaintiff suffered a loss $33,352,000, being the difference between the price at which the plaintiff would have sold its BLA shares, and the saleable value of the BLA shares at close of business on 5 April 2018."

• [100] The defendants submit that the new pleading introduces new theories of causation, including a new alternative counterfactual based on an assertion that the plaintiff and Group Members would have sold "some or all" of their Blue Sky shares after 31 March 2018 (i.e., after the Glaucus Report was published) at a price between $12.00 and $13.20.[33]
• [101] The defendants submit that such an assertion is:

(a) inconsistent with the plaintiff's previous case which instead alleges that the plaintiff and group members would have sold their shares "by no later than mid-March 2018";[34] and

(b) entirely new, being raised for the first time in the 6SOC.

• [102] The defendants submit that the insider trading case as pleaded in the 6SOC is totally different from the case pleaded previously as the 6SOC pleads:

(a) it was the "short selling" that caused the drop in price, and not the Glaucus Report itself; and

(b) but for the short selling, the plaintiff and other group members would have moved to sell their shares after 31 March 2018.

• [103] As to selling of shares after 31 March 2018, the defendants state this proposition is not only missing from the 4SOC, but is contrary to the positive allegation at paragraph 128 of 4SOC:

"128. Mr Sowerby did not sell, and so retained, 53% of his shares in BLA which were then valued at $39 million and, therefore, by the same reasoning, Mr Sowerby could not have expected BLA's share price to collapse."

• [104] The defendants submit that the 6SOC introduces the following new propositions:

(a) the fall in the price of Blue Sky shares following publication of the Glaucus Report was not due to the market reaction to the report itself, but was instead due to the short selling in which the defendants are alleged to have engaged (with advance knowledge that a short report would be released in late March 2018);[35]

(b) the opportunity lost by the plaintiff and group members was not a loss of the opportunity to sell their shares, with the knowledge that a short report would be published in late March 2018, and before the report was published (as is alleged in the present draft pleading[36]) but is instead the quite different alleged opportunity to sell their shares free from the alleged effect upon the price of Blue Sky shares of the alleged short selling by the defendants, after the report was published;[37] and

(c) by being denied the opportunity to sell their shares at higher prices after 28 March 2018, without the presence of short selling depressing the price of the shares, the plaintiff suffered damage referable to the price at which they could have sold their Blue Sky shares several weeks earlier (by no later than mid-March 2018).[38]

• [105] The defendants state that the 6SOC is not telling the same story as the 4SOC:

MR O'SULLIVAN: The difficulty with that, your Honour, is that if you live in the world of trials and understanding what you need to prove to bring forward a case, this is a completely different case. In the - the cases say is it telling the same story [indistinct] is it telling the same story. The answer's, no. It's not telling the same story because the story now being told posits (1), we would have sold in fact at the various points in time, and (2) - and this is the critical point, the other part of the story being told is that what has caused the price to crash is short selling, which is entirely missing from that case.

So we've got two new fundamental facts. One is what the plaintiff and the group members would've [d]one. New fact. Second new fact, why did the price collapse. New cause of action. And the question, it's - in our respectful submission, it's uncontroversially a new cause of action. Why? Because the facts to be pleaded to establish the right to relief have expanded materially in a way I've just submitted to your Honour.

The second question your Honour asks is two questions. Is it appropriate? And secondly, does it arise out of the same or substantially the same facts. And as your Honour knows, both of those have to be answered in the affirmative. It has to be appropriate, and they have to arise out of the same or substantially the same facts. And as to the question of appropriateness, as your Honour knows, the authorities indicate that that's really a matter at large.

But what we point to in our written submissions is it's not appropriate, because (a), there is no explanation given to your Honour as to why the case now pleaded was not brought forward earlier. (2), it's not appropriate because there is before the court material which flatly contradicts the theory upon which the case rests. Namely the evidence of Mr Sowerby before the American courts."

• [106] The defendants submit that the facts alleged in the 6SOC represent an "entirely different story" from the 4SOC which was anchored in the central thesis that the drop in the Blue Sky share price after 28 March 2018 was caused by the publication of the Glaucus Report.
• [107] The defendants state that the previous case of compensation for insider trading was that the share price collapse was caused by publication of the Glaucus Report:

(a) which was connected to a separate proposition (now abandoned) that the Glaucus Report was misleading or deceptive, being false in material particulars;[39] and

(b) involved a positive allegation that Mr Sowerby did not sell, but rather retained, his shares,[40] and that the drop in share price therefore also sounded in damages for misleading conduct.[41]

• [108] Accordingly, in the circumstances, the defendants state that leave to replead based on the matters alleged in paragraphs 97A to 97 6SOC would be refused if the plaintiff had brought an application under r 376(4).

• [109] In Equititrust Limited, Bowskill J (as the Chief Justice then was) considered the term "cause of action" and its practical application in determining if pleadings contained a new cause of action:

"[142] In Borsato v Campbell [2006] QSC 191 McMurdo J (as his Honour then was) said this in relation to the meaning of "cause of action" in r 376(4):

"[8] The term 'cause of action' was defined in Cooke v Gill as being 'every fact which is material to be proved to entitle the plaintiff to succeed', a definition which many judgments have employed in the context of this rule or its equivalent: see eg Allonnor Pty Ltd v Doran per McPherson JA. But it has not been applied literally, for otherwise any new fact to be added to a plaintiff's case would be treated as raising a new cause of action which required leave in the context of a rule such as r 376(4). So in Allonnor Pty Ltd v Doran for example, there is an indication of what the Court of Appeal in Thomas v State of Queensland subsequently endorsed as a 'fairly broad brush comparison between the nature of the original claim and that to which it is sought to be amended'. The dividing line is between the addition of facts which involve a new cause of action and those which are simply further particulars of the cause already claimed**,** and its location involves a question of degree which can be argued, one way or the other, by the level of abstraction at which a plaintiff's case is described. Some illustrative guidance is provided by Allonnor Pty Ltd v Doran; Thomas v Queensland and another judgment of the Court of Appeal, Central Sawmilling No 1 Pty Ltd v Queensland.

[9] In Allonnor, the plaintiff was employed by the defendant as a delivery driver, and sued for an injury to his back and neck said to have been suffered on a certain date making a certain delivery of furniture. He sought to amend to add a claim for an injury to his shoulder, allegedly caused by another delivery made to a different address but on the same day. McPherson JA 'doubted whether what was sought to be added by way of amendment really amounts to a new cause of action' but in any case held that the new cause of action (if any) arose out of substantially the same facts and the amendment should be allowed. His Honour said:

'On any view of what is pleaded, the plaintiff was, at the end of the day in question, left with physical injury to his body, which resulted from the same cause, which was lifting (whether on one or more than one occasion) in the course of the same employment with the same employer. It is not unreasonable to state it in this way, although admittedly it is to some extent a matter of the level of generality at which the proposition is expressed.'

[10] In Thomas v Queensland, the Court of Appeal disallowed an amendment of a case brought by an injured motorcyclist against the State as the authority responsible for the highway on which he was injured. His case was that there was a large amount of soil on the road surface which caused his motorcycle to lose traction and collide with another vehicle. His claim was pleaded originally on the basis that the defendant had been undertaking road works at the scene which had resulted in this soil on the road. He sought to amend to claim that the soil was there because it had been washed from a nearby embankment in a way which was attributable to poor construction of the highway in the first place. The Court held that this was a new cause of action, saying in its joint judgment:

'The essential elements in a claim for damages for negligence are the duty of care, breach of that duty and injury caused by that breach. Here, although only for one injury an incident is alleged, different duties, different breaches and different causes of injury are now alleged. In our view the effect of the amendment is to include new causes of action.'

[11] In Central Sawmilling, the plaintiffs claimed damages for breach of contract, saying that the defendant, the State of Queensland, by three identified written agreements had promised to provide them with certain quantities of timber. They then sought to amend to plead another agreement made between various timber millers, including the plaintiffs, and the defendant by which they were to receive those amounts of timber. That was held to involve a new cause of action."

[143] Borsato was a medical negligence claim. As originally pleaded, the plaintiff alleged a breach of duty on the part of two surgeons in the manner in which they performed surgery on him. The amendments sought to plead a breach of the duty to warn about risks of the surgery. McMurdo J found that:

"[14] Indisputably, the breach of duty now alleged is quite distinct from that already alleged. In substance it is such a different case from an allegation of negligent performance of the surgery that it cannot be described as some further particularisation of the original claim of breach of duty. It requires the plaintiff to prove a distinct fault, necessarily prior in time to the alleged breach in the course of the surgery, and then to prove the likelihood of some sequence of events in response to a proper warning. I do not accept that it is appropriate for present purposes to characterise the duty in this new case as the same as in the existing case, but on any view the new case involves quite a different breach."

[144] McMurdo J's approach has been adopted in a number of subsequent cases: see, for example, Wolfe v State of Queensland [2008] QCA 113; [2009] 1 Qd R 97, Jetcrete Oz Pty Ltd v Conway [2015] QCA 272 and the discussion in McQueen v Mount Isa Mines Ltd [2017] QCA 259; [2018] 3 Qd R 1 at [44]- [55].

[145] The plaintiff submits the amendment to the claim does not seek to add a new cause of action because the original statement of claim pleaded all the material facts necessary to establish a cause of action for breach of contract; albeit the original pleading erroneously labelled the duty as fiduciary rather than contractual.

[146] As to that matter, the plaintiff's solicitor, Mr Russell, in his affidavit filed 12 August 2019 (CFI 100), describes the pleading of a duty in terms of the original [49(d)] as a fiduciary duty as an oversight (at [24]). Both the Cowen applicants and the Tucker applicants sought to challenge this characterisation; the Tucker applicants also seeking to cross-examine Mr Russell at the hearing. Although the plaintiff did not object to leave being given to cross-examine Mr Russell, it did not proceed beyond the first few introductory questions, as I formed the view that it was an unhelpful and time wasting exercise. The involvement of human beings in this process means mistakes can be made. There is no need to say more about this.

[147] The plaintiff is right to contend that the attribution of a legal label is not determinative of the question whether a new cause of action has been added - what matters is whether the material facts were already pleaded. That is apparent from the observation of Barwick CJ in Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 473 that:

"[in] fact pleading as it was introduced in the judicature system, there is no necessity to assert or identify a legal category of action or suit which the facts asserted may illustrate, involve or demonstrate and on which the particular relief claimed is based or to which it is relevant."

[148] Nevertheless, in my view the amendment does add a new cause of action, because it has been necessary to plead (at least) the additional material fact of a contractual duty arising from the pleaded retainers (see [102B] of the FASOC); it is a different case from that which was previously pleaded, albeit, as discussed below, it arises out of the same or substantially the same facts; and in my view the amendment cannot be described as some further particularisation of the original claim of breach of fiduciary duty."

• [110] The starting point in considering whether the 6SOC contains a new cause of action is to undertake a comparison with the previous struck out pleading.[42] In Althaus v Australia Meat Holdings Pty Ltd,[43] de Jersey CJ addressed the task in assessing the co-incidence of facts between two pleadings:

"[20] As to the question of coincidence, or lack of it, between the facts then and now, I note what was said in the Court of Appeal in Draney v Barry (2002) 1 Qd R 145, 164 (per Thomas JA):

"Rule 376 provides a structure within which courts may regulate such procedural applications with due regard to the interests of all parties. Subrule (4) ... allows a fairly wide discretion in that the court will not allow such an amendment unless it considers it 'appropriate' to do so and also considers that the new cause of action arises at least substantially out of the same facts as the existing cause of action. I do not think that 'substantially the same facts' should be read as tantamount to the same facts, and consider that the need to prove some additional facts is not necessarily fatal to a favourable exercise of the discretion under r 376(4). If the necessary additional facts to support the new cause of action arise out of substantially the same story as that which would have been told to support the original cause of action, the fact that there is a changed focus with elicitation of additional details should not of itself prevent a finding that the new cause of action arises out of substantially the same facts_._ In short, this particular requirement should not be seen as a straitjacket_._"

• [111] In this case, my view is that the defendants have applied a straitjacket approach.
• [112] In this case, the 4SOC and the 6SOC both plead the statutory contravention of the insider trading provisions and the statutory remedy as set out in s 1317 HA of the Act. That is uncontroversial.
• [113] The controversy between the parties is whether the matters as pleaded in the 6SOC are substantially different from the 4SOC as to give rise to a new cause of action. The question is whether paragraphs 97A to 97F change focus or represent a new cause of action.
• [114] As noted by McMurdo J (as his Honour then was) in Borsato v Campbell,[44] the dividing line is between the addition of new facts which involve a new cause of action and those which are simply further particulars of the cause already claimed, and its location involves a question of degree which can be argued, one way or the other, by the level of abstraction at which a plaintiff's case is described.
• [115] As to the 4SOC's level of abstraction, it is poorly pleaded, and I note the observations of Pincus JA in Draney v Barry:[45]

"[32] Apart from these rather technical answers to the appellants' argument based on paras 12(j) and 13 of the existing pleading, there is the broader consideration that one cannot evade the plain intention of O. 32 r. 1(5), or its counterpart r. 376(4), by inserting in a pleading a vague allegation raising no identifiable cause of action. Such an allegation would be liable to be struck out as not setting out the material facts: Rubenstein v. Truth and Sportsman Ltd [1960] VicRp 75; [1960] V.R. 473. But the fact that para. 12(j) was not struck out does not oblige the Court to ignore its vacuous character, when considering whether an amendment will if allowed add or substitute a "new cause of action". That view appears, in my opinion, the proper one to take under both the new and the old Rules, but especially under the former, which require that the rules be applied so as to avoid undue technicality and to facilitate their purpose: r. 5(2). The spirit of the UCP Rules would not be respected if the question whether what are in substance new causes of action should be allowed to be added out of time is made to depend upon the presence or absence in the existing pleading of an allegation of misconduct which is so vague as to be devoid of any ascertainable meaning."

• [116] However, what can be clearly ascertained is that the 4SOC and 6SOC both plead the same statutory contravention and remedy. The 6SOC pleads the contraventions and remedy with reference to the required statutory language.
• [117] The 6SOC changes the focus as to the pathway to prove the compensation and it elicits additional details to do so.
• [118] However, that should not itself prevent a finding that the new cause of action arises out of substantially the same facts.
• [119] The circumstances of this case are not akin to:

(a) adding a different breach of duty, different breaches, and different causes of injury;[46] or

(b) adding a different agreement in a contract case.[47]

• [120] The cause of action remains in the 6SOC compensation for loss resulting from the contraventions, pleading to the statutory language. The 6SOC does not constitute a new cause of action, but rather a changed focus with the elicitation of additional details.
• [121] There may be inconsistencies between the 6SOC and 4SOC which may elicit relevant cross examination of Mr Sowerby at the trial, which, in turn, may affect the plaintiff's prospects. However, these are trial considerations about whether the plaintiff can ultimately prove its case at trial. In my view, they do not ground a new cause of action.
• [122] There is no new cause of action. Accordingly, I do not need to consider r 376(4).
• [123] Justice Brown (as her Honour then was) noted in McQueen v Mount Isa Mines Ltd:[48]

"[59] ... in the event that a statement of claim is substantially amended but a new cause of action is not added, a party who is prejudiced by such amendments is not without recourse. It may apply to disallow those amendments pursuant to r 379 of the UCPR. That provision provides the court with a broad discretion and factors of delay and prejudice will be relevant in considering any such application, consistent with the principles in Aon Risk Services Australia Ltd v Australian National University."

• [124] To this end, the defendants further submit that leave should not be given for the plaintiff to replead as the 6SOC is otherwise embarrassing, vexatious, and an abuse of process. Part 5 of these reasons deals with the abuse of process issue.

• [125] In relation to each of the defendants, the 6SOC pleads claims for contravention of the insider trading provisions of the Act which are prescribed by s 1043A of the Act:

"1043A Prohibited conduct by person in possession of inside information

(a) a person (the insider) possesses inside information; and

(b) the insider knows, or ought reasonably to know, that the matters specified in paragraphs (a) and (b) of the definition of inside information in subsection 1042A(1) are satisfied in relation to the information;

the insider must not (whether as principal or agent):

(c) apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products; or

(d) procure another person to apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products.

(a) a person (the insider) possesses inside information; and

(b) the insider knows, or ought reasonably to know, that the matters specified in paragraphs (a) and (b) of the definition of inside information in subsection 1042A(1) are satisfied in relation to the information; and

(c) relevant Division 3 financial products are able to be traded on a financial market operated in this jurisdiction;

the insider must not, directly or indirectly, communicate the information, or cause the information to be communicated, to another person if the insider knows, or ought reasonably to know, that the other person would or would be likely to:

(d) apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products; or

(e) procure another person to apply for, acquire, or dispose of, relevant Division 3 financial products, or enter into an agreement to apply for, acquire, or dispose of, relevant Division 3 financial products."

• [126] The concept of "insider trading" extends well beyond the conduct of trading itself.
• [127] The relevant prohibitions of s 1043A of the Act are:

(a) the trading prohibition[49] which is pleaded against Oasis and the brokers;

(b) the procuring prohibition[50] which is pleaded against the Glaucus parties, Mr Fischer, and Oasis Management; and

(c) the communicating prohibition[51] which is pleaded against the Glaucus parties.

• [128] To disclose a cause of action under s 1043A, it is necessary to plead:

(a) that certain information was inside information;[52]

(b) that a person possessed inside information;[53]

(c) that the person knows, or ought reasonably to know, that the matters specified in s 1042(1)(a) and (b) are satisfied in relation to the inside information;[54] and

(d) that the person breached the trading and procuring prohibitions.[55]

• [129] An issue in this application is whether the 6SOC properly pleads the knowledge element in relation to each of the defendants. The defendants state that the 6SOC fails to do so.
• [130] "Inside information" is defined in s 1042A(1) of the Act as follows:

"1042A Meaning of some terms relating to the insider trading prohibitions

"inside information" means information in relation to which the following paragraphs are satisfied:

(a) the information is not generally available;

(b) if the information were generally available - a reasonable person would expect it to have a material effect on the price or value of particular Division 3 financial products."

• [131] "Information," in turn, is defined in s 1042A(2) as follows:

(a) matters of supposition and other matters that are insufficiently definite to warrant being made known to the public; and

(b) matters relating to the intentions, or likely intentions, of a person."

• [132] The requirement that information must not be "generally available" is defined in s 1042C of the Act as follows:

(1) For the purposes of this Division, information is generally available if:

(a) it consists of readily observable matter; or

(b) both of the following subparagraphs apply:

(i) it has been made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in Division 3 financial products of a kind whose price might be affected by the information; and

(ii) since it was made known, a reasonable period for it to be disseminated among such persons has elapsed; or

(c) it consists of deductions, conclusions or inferences made or drawn from either or both of the following:

(i) information referred to in paragraph (a);

(ii) information made known as mentioned in subparagraph (b)(i)."

• [133] "Material effect" is, in turn, defined in s 1042D of the Act, which provides:

For the purposes of this Division, a reasonable person would be taken to expect information to have a material effect on the price or value of particular Division 3 financial products if (and only if) the information would, or would be likely to, influence persons who commonly acquire Division 3 financial products in deciding whether or not to acquire or dispose of those financial products."

• [134] The defendants state that the 6SOC fails to plead the material facts sufficient to support the alleged cause of action against each of them, in relation to the possession and knowledge requirement of s 1043A of the Act.
• [135] The constant theme between the defendants is that the 6SOC is predicated upon a series of unsupportable alleged inferences, and fails to particularise who possessed the information, when it was communicated and to whom.
• [136] Essential to the 6SOC is pleading that each defendant possessed the relevant information with the requisite knowledge of the character of that information. The plaintiff seeks to do this by a circumstantial case.
• [137] Section 1043A of the Act is relevantly engaged where a person ("the insider"):

(a) possesses inside information; and

(b) knows, or ought reasonably to know that that information is inside information (within the meaning of that term in s 1042A(1)).

• [138] The Act does not define the term "possess" and, in R v Farris,[56] Hall J stated that it should have its ordinary meaning:

"[169] The term "possesses" is not defined in s 1042A. Accordingly that term should be interpreted as having its ordinary meaning. A person possesses a physical object if he has dominion or control over it and either knows or has a belief as to its nature. In the case of something intangible like information it is sufficient to establish that a person possesses information to prove that they know it: R v Hannes.

[170] In the context of s 1043A it is important to distinguish between the knowledge required to establish possession and the knowledge of particular characteristics of the information referred to in s 1043A(1)(b). That is, to distinguish between the physical element and the relevant fault element attaching to it. It is conceivable that a person may possess, that is know of, information and yet not appreciate that the information is not generally available or that it is price sensitive."

• [139] The defendants state that both elements of the inside information definition are conditions of mind (i.e., knowledge of information and knowledge of the character of that information) and are necessary elements of the cause of action.
• [140] Accordingly, the defendants state that rr 149(1)(b) and 150(1)(k) of the UCPR require that the plaintiff must specifically plead material facts which establish:

(a) that the defendants knew the alleged inside information; and

(b) that the defendants knew or ought reasonably to have known that the information had the character of inside information.

• [141] Rule 150(2) of the UCPR requires that, if a pleaded case of knowledge is based on inference, it is not sufficient that a plaintiff only plead the conclusion sought to be drawn; it is also required specifically to plead "any fact from which [the possession of the alleged inside information] is claimed to be an inference".
• [142] A statement of claim will be struck out, and a proceeding dismissed, for failing to disclose a cause of action where "the Court is satisfied that, even if all the facts set out in the pleading were proven, those facts would not establish the essential ingredients of a cause of action" (emphasis added).[57]
• [143] The defendants state that the 6SOC fails to plead the material facts sufficient to support the alleged cause of action against each of them in relation to the possession and knowledge requirement.
• [144] At the hearing, Euroz Hartleys and Credit Suisse (two of the brokers) took the lead on this issue and matters raised by them have general application for all the defendants.
• [145] It is convenient to set out the 6SOC pleading in relation to the claims against Euroz Hartleys:

1. On a date that the plaintiff is presently unable to particularise, but which must have occurred On or before 23 March 2018, Oasis engaged Euroz Hartleys under an agreement to act as its (Oasis's) broker for the purpose of selling shares in BLA that Oasis had borrowed, which formed part of Oasis's Short Position, as pleaded in paragraph 22(c) above.

The engagement of Euroz Hartleys under an agreement with Oasis is to be inferred from the matters pleaded in paragraphs 22(c) and 23 to 25 above.

1. The trades in respect of BLA shares that Euroz Hartleys undertook on the ASX in the period from 3 January 2017 to 31 December 2018 are set out in Appendix 3 to this Statement of Claim and are depicted in the graph in Appendix 4 to this Statement of Claim.
2. As recorded in Appendix 3, the trading that Euroz Hartleys undertook in BLA shares on the ASX, in the period from 23 March 2018 until the release of the Glaucus report on 28 March 2018, differed materially from the trading that Euroz Hartleys otherwise undertook in the period from 3 January 2017 to 5 April 2018, in that:

(a) as pleaded in paragraph 8(e) above, at all material times Euroz Hartleys had a "specialist small to mid cap institutional dealing desk with a strategic focus on Western Australian resources, energy, mining services and industrial companies";

(b) consistently with that statement, in the period prior to 5 January 2018, Euroz Hartleys did not trade in BLA shares;

(c) in the period from 8 January 2018 to 22 March 2018, Euroz Hartleys sold a cumulative total of 8,298 BLA shares;

(d) in the period from 23 March 2018 until the release of the Glaucus report on 28 March 2018 (approximately three and a half trading days), Euroz Hartleys sold a total of 199,615 BLA shares;

(e) after the release of the Glaucus report on 28 March 2018 and prior to the implementation of the trading halt on that day, Euroz Hartleys purchased 17,119 shares, and did not thereafter trade in BLA shares during the material times.

Particulars of Oasis' Short Position required to be required to be requested by and given to Euroz Hartleys

1. In the premises By reason of the matters pleaded in paragraphs 8(f), 6(d), 7(f), 8(f), 23 to 25 and 49 above, when Oasis engaged Euroz Hartleys as its broker to sell BLA shares on its behalf on the ASX, as pleaded in paragraph 76 above, pursuant to ss.1020AB(1)(a)(i), (3) and (4) of the Act and reg.7.9.100 of the Corporations Regulations 2001, Oasis was required to, and it is to be inferred that it did, report particulars to Euroz Hartleys, including:

(a) the number of BLA shares that Oasis (as the seller) would vest in the buyer (of BLA shares) pursuant to Oasis's Securities Lending Arrangement; and

(b) particulars of Oasis's Short Position:

(i) on or before 9am on the third reporting day after entering into the agreement that caused Oasis's Short Position to occur; and

(ii) on or before 9am on each subsequent reporting day, as long as Oasis had a short position.

1. In the premises pleaded in paragraphs 6(d), 7(f), 8(f), 23 to 25 and Further to the matters pleaded in paragraph 79 above, pursuant to s.1020AE of the Act, Euroz Hartleys was prohibited from selling BLA shares on the ASX on behalf of Oasis unless, before making the sale:

(a) Euroz Hartleys had asked Oasis whether Oasis was obliged under to give Euroz Hartleys information as required by s.1020AB of the Actto give them the information pleaded in paragraph 49, concerning the sale; and

(b) Euroz Hartleys had recorded in writing Oasis's answer.

80A. In the premises of the matters pleaded in paragraphs 22(c) and 35 above, and in paragraphs 77 to 80 above (including all matters to be reasonably inferred from those matters as to the provision of information by Oasis to Euroz Hartleys to facilitate and undertake the trading in BLA shares undertaken by Euroz Hartleys on behalf of Oasis), on or prior to 23 March 2018 when Oasis engaged Euroz Hartleys as pleaded in paragraph 76 above, Oasis informed Euroz Hartleys of the following, or engaged in communications with Euroz Hartleys such that the following could be deduced:

(a) the matters in paragraphs 11(c) and 25 above;

(b) Oasis was seeking to create a substantial short position in BLA shares;

(c) Oasis's substantial short position in BLA shares would need to be covered by the subsequent purchase of BLA shares;

(d) after Oasis's substantial short position in BLA shares had been created, the Glaucus report (or some similar report) would be published;

(e) following publication of the Glaucus report (or some similar report), Oasis would seek to purchase BLA shares to cover its substantial short position in BLA shares.

(f) the Inside Information.

(i) The persons who engaged in the communications on behalf of Oasis were Oasis Management and/or Mr Fischer, or persons acting at the behest or direction of Oasis Management and/or Mr Fischer.

(ii) The Plaintiff is unable to provide further or better particulars of the communications between Argonaut and Oasis, or the persons who engaged in those communications, until completion of disclosure.

1. Further, Iin the premises pleaded at paragraphs 22(c), 79 and above, it is to be inferred that (including all matters to be reasonably inferred therefrom as to the provision of information by Oasis to Euroz Hartleys to undertake the trading in BLA shares undertaken by Euroz Hartleys on behalf of Oasis), at all material times commencing no later than 23 March 2018, Euroz Hartleys:

(a) knew (or ought to have known) particulars of the short position in BLA shares that Oasis was creating; and

(b) knew, or had received information from which could be deduced, the matters in paragraphs 80A(c) to 80A(f).

(a) the number of BLA shares that the seller would vest in the buyer, pursuant to Oasis's Securities Lending Arrangement; and

(b) particulars of Oasis's Short Position, after it had been created; and

Information required to be given to Euroz Hartleys to comply with Market Integrity Rules

1. The plaintiff repeats the matters pleaded in paragraphs 49, 53 and 54 above.
2. In the premises pleaded in paragraphs 8(f) 49, 53 and 54 above, at all material times Euroz Hartleys, as a participant in the ASX, was required to comply with the Market Integrity Rules.
3. At all material times clause 5.7.1(b)(iii) of the Market Integrity Rules proscribed Euroz Hartleys from making a bid or offer for, or dealing in, any financial product on account of any other person where, taking into account the circumstances of the order, Euroz Hartleys ought reasonably suspect that the person had placed the order with the intention of creating a false or misleading appearance of active trading in any financial product or with respect to the market for, or the price of, any financial product.
4. By clause 5.7.2 of the Market Integrity Rules, in considering the circumstances of an order to purchase or sell financial products, at all material times Euroz Hartleys was required to have regard to (inter alia) the following matters:

(a) clause 5.7.2(a): whether the order or the execution of the order would be inconsistent with the history of recent trading in that financial product;

(b) clause 5.7.2(g): whether there appears to be a legitimate commercial reason for that person placing the order, unrelated to an intention to create a false or misleading appearance of active trading in or with respect to the market for, or price of, any financial product;

(c) clause 5.7.2(i): the frequency with which orders are placed by a person;

(d) clause 5.7.2(j): the volume of financial products the subject of each order placed by a person.

1. Separately and in addition to the matters pleaded in paragraphs 79 to 8081 above, by reason of the matters pleaded in paragraphs 82 to 85 above (including all matters to be reasonably inferred from those matters), it is reasonably to be inferred that at all material times commencing no later than 23 March 2018, Euroz Hartleys knew, or engaged in communications with Oasis from which Euroz Hartleys could deduce, the matters pleaded in paragraphs 40 and 41 80A(a) to 80A(f) and 81 above.

1. [Deleted] In the premises pleaded in paragraph 22(c), paragraphs 41(f) and 41(g) and paragraphs 76 to 86 above, it is reasonably to be inferred that Euroz Hartleys possessed the Inside Information, or received information from which the substance of the Inside Information could be deduced, when it engaged in the trades pleaded in paragraph 22(c) above:

(a) which had been communicated to it directly, from Glaucus or from by Oasis, Oasis Management and/or Mr Fischer;

(b) in the alternative to subparagraph (i) above, by engaging in communications with Oasis, Oasis Management and/or Mr Fischer, which enabled Euroz Hartleys to deduce the Inside Information;

(c) in the further alternative, which Euroz Hartleys had deduced from the information it received and the matters it knew, as pleaded in paragraphs 76 to 86 above.

1. When Euroz Hartleys engaged in the conduct pleaded in paragraph 22(c) above, in the premises of the matters pleaded in paragraphs 80A and 81 and, or alternatively, paragraph 86, above:

(a) it knew the Inside Information, or had received information from which the Inside Information could be deduced; and

(b) it knew, or ought reasonably to have known, that:

(i) the Inside Information was not "generally available", within the meaning of that term as defined in s.1042C of the Act; and

(ii) if the Inside Information was were generally available, a reasonable person would have expected it to have a material effect on the price or value of BLA shares, in that the information would, or would be likely, to influence persons who commonly acquire Division 3 financial products in deciding whether or not to acquire or dispose of BLA shares."

• [146] Paragraphs 80A and 81 of the 6SOC plead the facts upon which the plaintiff relies to contend that Euroz Hartleys possessed the necessary knowledge of information and knew it was "inside information" as defined in s 1042A(1) of the Act.
• [147] Paragraph 80A is premised upon the matters pleaded in paragraphs 22(c), 35, and 77 to 80 of the 6SOC. As to these paragraphs:

(a) paragraph 22(c) pleads that Euroz Hartleys sold 246,024 BLA shares between 23 March 2018 and 11:43am on 28 March 2018;

(b) paragraph 35 pleads that Credit Suisse purchased BLA shares after 11:43am on 28 March 2018;

(c) paragraphs 77 and 78 plead that Euroz Hartleys had engaged in limited trades in Blue Sky shares prior to 23 March 2018 and that Euroz Hartleys had a specific focus on West Australian resource companies; and

(d) paragraphs 79 and 80 appear under the heading "Particulars of Oasis's Short Position required to be requested by and given to Euroz Hartleys":

(i) paragraph 79 pleads the requirements on Oasis under s 1020AB of the Corporations Act and reg 7.9.100 of the Corporations Regulations 2001 (Cth) to report certain particulars to Euroz Hartleys if Oasis was short selling;

(ii) paragraph 79 further alleges that "it is to be inferred" that Oasis did report those particulars to Euroz Hartleys; and

(iii) paragraph 80 pleads the alleged requirements of s 1020AE, by which Euroz Hartleys was to ask Oasis whether it was obliged to give information to Euroz Hartleys as required by s 1020AB. It is not alleged that Euroz Hartleys breached that section.

(a) even if the allegations in paragraphs 79 and 80 of the 6SOC were proved, either alone or in combination with the matters alleged in paragraphs 22(c), 35, 77 and 78, that would not establish a basis for alleging the matters pleaded in subparagraph 80A(d) to (f) were known or "could be deduced";

(b) those matters do not, collectively and separately, amount to a contravention of the Act;

(c) short selling is not illegal and does not support an inference that some adverse report or statement about the value of the shares will be published or that the short seller has inside information;

(d) no attempt is made in 6SOC to identify how Euroz Hartleys' knowledge of the matters in subparagraph 80A(d) to (f) are capable of being inferred, or deduced, or the natural person or persons within Euroz Hartleys who held, or deduced, that knowledge;

(e) paragraph 81 relies on the same facts and thus adds nothing to the allegations in paragraph 80A;

(f) paragraph 81, like paragraph 80A, also incorporates the imprecise formulation of words "including all matters to be reasonably inferred therefrom" which fail to comply with the requirements for pleading inferences;

(g) paragraph 81(a) is also so vague and ambiguous to be embarrassing insofar as it alleges that Euroz Hartleys "knew (or ought to have known) particulars of the short position in Blue Sky shares that was creating" which appears to be a reference to the aggregation of all the shares sold on behalf of Oasis by all of the three broker defendants; and

(h) the matters pleaded in paragraphs 22(c), 35, and 77 to 80 do not support such an inference being drawn.

• [149] Further, Euroz Hartleys states that the allegations in paragraphs 79 and 80 are pleaded in the face of documents provided to the plaintiff in March 2024 (by way of preliminary disclosure) which record in writing that the instructions received by Euroz Hartleys from Oasis were that those sales were long sales, not short sales.
• [150] Euroz Hartleys contend that paragraph 82 does not take the matter any further because:

(a) paragraphs 82 to 85 upon which paragraph 86 relies for the inference, are directed to their obligations under the ASIC Market Integrity Rules (Securities Markets) 2017 ("Market Integrity Rules");

(b) the Market Integrity Rules do not support, nor is it explained in the pleading how they might even conceivably support, the possession of the pleaded Inside Information; and

(c) in any event, paragraph 86 relies upon the same facts as paragraph 80A, which are insufficient to support the allegations of knowledge for the reasons addressed above.

• [151] Paragraphs 88 and 89 are the culmination of the pleading against Euroz Hartleys and plead that Euroz Hartleys contravened s 1043A(1)(c) of the Act.
• [152] Euroz Hartleys states that paragraphs 88 and 89 are deficient because they rely on the matters pleaded in paragraphs 80A, 81 and 86 which, it states, are incapable of supporting the conclusion that Euroz Hartleys possessed the inside information and knew or ought to have known that that information was "inside information" for the purposes of the Act.
• [153] Further, Euroz Hartleys states that the 6SOC makes no attempt to identify how their knowledge of the matters in subparagraph 80A(d) to (f) are capable of being inferred, or deduced, or to identify the natural person or persons within Euroz Hartleys who held, or deduced, that knowledge.
• [154] Euroz Hartleys' position is that the 6SOC pleads a number of facts and then there is a lacuna:

"MR THOMPSON: ... there's a jump to say therefore you knew these other facts, but logically, it doesn't - the facts don't lead to either establishing knowledge of the matters in subparagraphs 80A(a) through to (f) or even being able to deduce those matters ..."

• [155] Further, Euroz Hartleys referred to the use of the phrase 'and/or' in the pleading and pointed to criticism that such a term attracts.[58]
• [156] In relation to Credit Suisse, the same theme and complaints as those made by Euroz Hartleys thread throughout its submissions.
• [157] The relevant parts of the pleading in relation to Credit Suisse are:

"51A. In the premises of the matters pleaded in paragraphs 22(a) and 35 above, and in paragraphs 47, 48, 50 and 51 above (including all matters to be reasonably inferred from those matters as to the provision of information by Oasis to Credit Suisse to facilitate and undertake the trading in BLA shares undertaken by Credit Suisse on behalf of Oasis), on or prior to 9 March 2018 when Oasis engaged Credit Suisse as pleaded in paragraph 46 above, Oasis informed Credit Suisse of the following, or engaged in communications with Credit Suisse such that the following could be deduced:

(a) the matters in paragraphs 11(c) and 25 above;

(b) Oasis was seeking to create a substantial short position in BLA shares;

(c) Oasis's substantial short position in BLA shares would need to be covered by the subsequent purchase of BLA shares;

(d) after Oasis's substantial short position in BLA shares had been created, the Glaucus report (or some similar report) would be published;

(e) following publication of the Glaucus report (or some similar report), Oasis would seek to purchase BLA shares to cover its substantial short position in BLA shares;

(f) the Inside Information.

(i) the persons who engaged in the communications on behalf of Oasis were Oasis Management and/or Mr Fischer, or persons acting at the behest or direction of Oasis Management and/or Mr Fischer

(ii) The Plaintiff is unable to provide further or better particulars of the communications between Credit Suisse and Oasis, or the persons who engaged in those communications, until completion of disclosure.

52. Further, iIn the premises pleaded at paragraphs 22(a), 35, and paragraphs 46 to 48, 50 49 to and 51 above (including all matters to be reasonably inferred therefrom as to the provision of information by Oasis to Credit Suisse to undertake the trading in BLA shares undertaken by Credit Suisse on behalf of Oasis), it is to be inferred that at all material times commencing approximately 9 March 2018, Credit Suisse:

(g) knew (or ought to have known) particulars of the short position in BLA shares that Oasis was creating; and :

(h) knew, or had received information from which could be deduced, the matters in paragraphs 51A(c) to 51A(f).

(a) the number of BLA shares that the seller would vest in the buyer, pursuant to Oasis's Securities Lending Arrangement/s; and

(b) particulars of Oasis's Short Position, after it had been created; and

(c) in the premises, the matters pleaded in paragraphs 40 and 41 above."

• [158] Paragraph 51A is the lynchpin of the case against Credit Suisse which alleges that Oasis told Credit Suisse certain things from which information could be "deduced". Credit Suisse submits that relying upon "deduced" is not sufficient for the purposes of the Act as s 1043A is concerned with actual knowledge of matters.
• [159] Credit Suisse submits that the 6SOC does not allege they should have deduced the ultimate information, merely that it was possible that they could have, a pleading that Credit Suisse characterises as being less than constructive knowledge.
• [160] Paragraph 51A cross references the following paragraphs in the 6SOC:

(a) paragraph 22 which sets out that Credit Suisse sold a number of Blue Sky shares;

(b) paragraph 35 which alleges that, after the publication of the Glaucus Report, Credit Suisse bought a number of Blue Sky shares;

(c) paragraph 47 which refers to particular trades that were made by Credit Suisse;

(d) paragraph 48 which refers to trades made by Credit Suisse and that they differed from those that had been made in the past; and

(e) paragraphs 50 to 51 which plead certain provisions of the Act and Regulations.

• [161] It is from those matters that the plaintiff alleges that:

(a) Credit Suisse was told the inside information; or

(b) Credit Suisse engaged in conversations with Oasis such that the Inside Information could have been deduced on or before 9 March 2018.

• [162] However, Credit Suisse submits that these paragraphs relate to it being aware that Oasis was placing trades and that those trades were short sales (which, in itself, is not prohibited). In particular, Credit Suisse makes the following submissions about the effect of these paragraphs:

(a) paragraph 35 deals with matters occurring after 9 March 2018. Those matters cannot rationally be a basis for inferring that Credit Suisse was told the inside information on or before 9 March 2018;

(b) the matters in paragraph 48 similarly cannot rationally be a basis for inferring that Credit Suisse was told the inside information on or before 9 March 2018; and

(c) the balance of the matters relied upon by the plaintiff as the basis for an inference that Credit Suisse had possession of the inside information on or before 9 March 2018 (an inference that Credit Suisse acted unlawfully), being the matters in paragraphs 22(a), 50, and 51, cannot properly be a basis for that allegation.

• [163] Credit Suisse states that none of the matters referred to in paragraph 51A can support actual knowledge, nor come close to supporting an inference that Credit Suisse was told very specific information about the publication of the Glaucus Report or Oasis' intention in relation to trading.
• [164] Rather, Credit Suisse submits that these matters amount to selling a number of shares as a broker, that the shares it sold were different to the number of shares it had traded in the past, and that certain regulatory requirements obliged Oasis to tell Credit Suisse certain information relating to the trades.
• [165] Even if the plaintiff proves the matters alleged in paragraphs 22(a), 48, 50, and 51 of the 6SOC, Credit Suisse states that the plaintiff would still not establish that Credit Suisse possessed the inside information. Rather, these facts are entirely consistent with a broker acting on instructions from its client to trade certain shares and there is nothing that would support an inference that Oasis told Credit Suisse the inside information. So much is made clear, Credit Suisse submits, by the fact that the plaintiff is unable to provide any detail as to how such information was in fact provided to Credit Suisse, including when, or by whom.
• [166] Credit Suisse states that paragraph 51A contains bare assertions that Credit Suisse was told information by Oasis (or by people acting at its behest) with a lack of particularity, as to:

(a) the identification of who was told anything;

(b) the identification of when the unidentified people were told those matters; and

(c) the identification of the content of what was said.

• [167] Accordingly, Credit Suisse states that it is a claim without foundation and that the 6SOC merely pleads conjecture with nothing to support the conclusion that Credit Suisse was told the relevant information. Credit Suisse submits that the 6SOC is nothing more than speculation which selects the most nefarious possibility said to arise from the stated premises, which is not sufficient, particularly given the serious nature of the allegations.
• [168] The plaintiff also alleges, "separately and in addition to the matters pleaded in paragraphs 49 to 51", that, by reason of the matters pleaded in paragraphs 53 to 57 (including all matters to be reasonably inferred from those matters), at all material times no later than 9 March 2018, Credit Suisse knew or engaged in communications with Oasis from which Credit Suisse could deduce the inside information (amongst other things).
• [169] Credit Suisse states that the 6SOC does not explain how it deduced the inside information. No natural persons are identified, nor is there any attempt to particularise the alleged communications.
• [170] Paragraph 58 of the 6SOC pleads:

"58. Separately and in addition to the matters pleaded in paragraphs 49 to 52 51 above, by reason of the matters pleaded in paragraphs 53 to 57 above (including all matters to be, it is reasonably to be inferred from those matters), that at all material times commencing no later than 9 March 2018, Credit Suisse knew, or engaged in communications with Oasis from which Credit Suisse could deduce, the matters pleaded in paragraphs 40 and 4151A(a) to 51A(f) and 52 above."

• [171] Credit Suisse states that the allegation in paragraph 58 of the 6SOC is an assertion predicated upon the alleged application and operation of the Market Integrity Rules.
• [172] Paragraphs 5lA and 58 of the 6SOC utilise the phrase "including all matters to be reasonably inferred from" other paragraphs cited within in the 6SOC. Credit Suisse states that what those matters to be inferred are is left entirely opaque. For this reason alone, Credit Suisse submits that the 6SOC is deficient.
• [173] As to the plaintiff pleading that it is unable to provide better particulars until after disclosure, Credit Suisse states that such a plea makes clear that the 6SOC is just a place holder in an attempt to obtain disclosure to discover a case.
• [174] It is noted that the same complaints raised by Euroz Hartleys and Credit Suisse are embraced by each of the defendants, taking into account how the plaintiff pleads knowledge against each of them.
• [175] For completeness, I will set out the relevant parts of the pleading for the other defendants in relation to the knowledge issue.
• [176] In relation to the Oasis parties, the 6SOC pleads:

"40. Prior to 9 March 2018, Oasis had not traded in BLA shares on the ASX.

1. As pleaded, or in the premises of the matters pleaded, in paragraphs 11(c) and to 13, paragraphs 22 to 26, and paragraphs 29 to 35 above:

(a) prior to 9 March 2018, Oasis:

(i) held no BLA shares in its own right; and

(ii) entered into one or more of Oasis's Securities Lending Arrangements;

(b) on 9 March 2018, Oasis commenced selling BLA shares on the ASX;

(c) between 9 and 19 March 2018, Oasis (by its broker, instructed Credit Suisse) sold to sell BLA shares on its behalf on the ASX;

(d) between 20 and 22 March 2018 Oasis (by its broker, instructed Argonaut to sell sold 134,303 BLA shares on its behalf on the ASX;

(e) between 23 March 2018 and 11:43am on 28 March 2018, Oasis (by its broker, instructed Euroz Hartleys) to sell sold 246,024 BLA shares on its behalf on the ASX;

(f) Oasis, by its brokers, continued to sell BLA shares on the ASX until 11:43am on 28 March 2018, thereby creating Oasis's Short Position;

(g) five minutes after Oasis had finished selling BLA shares on the ASX (via its broker Euroz Hartleys), at 11:48am on 28 March 2018 Glaucus published the Glaucus report;

(h) immediately after the Glaucus report was published at 11:48am, Oasis (via its broker Credit Suisse):

(i) commenced buying BLA shares on the ASX; and

(ii) bought BLA shares, notwithstanding:

1. that the ASX price for BLA shares was dropping after the publication of the Glaucus report.; and
2. as alleged at 19I to 19(g) above, the price at which Oasis bought BLA shares exceeded the value of BLA shares asserted in the Glaucus report.

1. It is to be inferred, from the matters pleaded in paragraphs 12, 13, 40 and 41 above, that:

(a) prior to 9 March 2018, or alternatively, prior to 28 March 2018, Oasis, by Oasis Management or Mr Fischer, knew that the Glaucus report, or a report of a similar nature concerning BLA:

(i) was intended to be published; and

(ii) would, or would likely, contain adverse statements in respect of the current value of BLA shares compared to the price at which BLA shares had been trading on the ASX in the recent past;

(b) prior to 9 March 2018, or alternatively, prior to 28 March 2018, Oasis Management, by Mr Fischer, knew that the Glaucus report, or a report of a similar nature concerning BLA:

(i) was intended to be published; and

(ii) would, or would likely, contain adverse statements in respect of the current value of BLA shares compared to the price at which BLA shares had been trading on the ASX in the recent past;

(c) prior to 9 March 2018, or alternatively, prior to 28 March 2018, Mr Fischer knew that the Glaucus report, or a report of a similar nature concerning BLA:

(i) was intended to be published; and

(ii) would, or would likely, contain adverse statements in respect of the current value of BLA shares compared to the price at which BLA shares had been trading on the ASX in the recent past;

(d) Oasis entered into the transactions that created Oasis's Short Position, because Oasis, Oasis Management and/or Mr Fischer had the knowledge set out at subparagraphs (a) to (c) above;

(e) prior to publication of the Glaucus report, Oasis, Oasis Management and/or Mr Fischer (or some person acting at the direction of Mr Fischer) had instructed Oasis's brokers (or one or more of them) to commence buying BLA shares on its Oasis's behalf immediately after the Glaucus report (or some similar report) was published;

(f) on 28 March 2018:

(i) Oasis, Oasis Management and/or Mr Fischer (or some person acting at the direction of Mr Fischer) communicated to Glaucus directly or indirectly, at or after 11:43am, that Oasis had completed selling BLA shares on the ASX; and

(ii) Glaucus immediately thereafter published the Glaucus report;

1. In the premises Further to the matters pleaded in paragraphs 41 and 42 above, it is also to be inferred from the matters pleaded in paragraphs 12, 13, 40 and 41 above that each of Oasis, Oasis Management and Mr Fischer possessed the Inside Information, when Oasis:

(a) entered into Oasis's Securities Lending Arrangement, as pleaded in paragraph 25 above;

(b) engaged in the trades undertaken via its brokers Credit Suisse, Euroz Hartleys and Argonaut to undertake the trades, as pleaded in paragraphs 22(a), 22(b), 22(c) and 35 above;

(c) engaged inits brokers, or any other person, before 28 March 2018, to make on its behalf any other purchases of BLA shares that Oasis may have undertaken to cover:

(i) Oasis's Short Position; or

(ii) any other short position that Oasis may have created in BLA, while in possession of the Inside Information.

1. Further to the matters pleaded in paragraphs 42 and 43 above, it is also to be inferred from the matters pleaded in paragraphs 12, 13, 40 and 41 above that wWhen Oasis, Oasis Management and/or Mr Fischer engaged in the conduct pleaded in paragraphs 22 and 25 35 above, they knew, or ought reasonably to have known, that:

(a) the Inside Information was not "generally available", within the meaning of that term as defined in s 1042C of the Act; and

(b) if the Inside Information had been generally available, a reasonable person would have expected it to have a material effect on the price or value of BLA shares."

• [177] In relation to Argonaut, the relevant parts of the pleading are:

"65. By reason of the matters In the premises pleaded in paragraphs 6(d), 7(f), 8(f), 23 to 25, and 49 and 62 to 64 above, when Oasis engaged Argonaut as its broker to sell BLA shares on its behalf on the ASX as pleaded in paragraph 62 above, pursuant to ss.1020AB(1)(a)(i), (3) and (4) of the Act and reg.7.9.100 of the Corporations Regulations 2001, Oasis was required to, and it is to be inferred that it did, report particulars to Argonaut, including:

(a) the number of BLA shares that Oasis (as the seller) would vest in the buyer (of BLA shares) pursuant to Oasis's Securities Lending Arrangement; and

(b) particulars of Oasis's Short Position:

(i) on or before 9am on the third reporting day after entering into the agreement that caused Oasis's Short Position to occur; and

(ii) on or before 9am on each subsequent reporting day, as long as Oasis had a short position.

1. Further to the matters pleaded in paragraph In the premises pleaded in paragraphs 6(d), 7(f), 8(f), 23 to 25, 49 and 62 to 65 above, pursuant to s.1020AE of the Act, Argonaut was prohibited from selling BLA shares on the ASX on behalf of Oasis unless, before making the sale:

(a) Argonaut had asked Oasis whether Oasis was obliged to give Argonaut information as required by under s.1020AB of the Actto give them the information pleaded in paragraph 65, concerning the sale; and

(b) Argonaut had recorded in writing Oasis's answer.

66A. In the premises of the matters pleaded in paragraphs 22(b) and 35 above, and in paragraphs 63 to 66 above (including all matters to be reasonably inferred from those matters as to the provision of information by Oasis to Argonaut to facilitate and undertake the trading in BLA shares undertaken by Argonaut on behalf of Oasis), on or prior to 20 March 2018 when Oasis engaged Argonaut as pleaded in paragraph 62 above, Oasis informed Argonaut of the following, or engaged in communications with Argonaut such that the following could be deduced:

(b) Oasis was seeking to create a substantial short position in BLA shares;

(c) Oasis's substantial short position in BLA shares would need to be covered by the subsequent purchase of BLA shares;

(d) after Oasis's substantial short position in BLA shares had been created, the Glaucus report (or some similar report) would be published;

(e) following publication of the Glaucus report (or some similar report), Oasis would seek to purchase BLA shares to cover its substantial short position in BLA shares;

(i) The persons who engaged in the communications on behalf of Oasis were Oasis Management and/or Mr Fischer, or persons acting at the behest or direction of Oasis Management and/or Mr Fischer.

(ii) The Plaintiff is unable to provide further or better particulars of the communications between Argonaut and Oasis, or the persons who engaged in those communications, until completion of disclosure.

1. Further, Iin the premises pleaded at paragraphs 22(b), 65 and 66 above, it is to be inferred that (including all matters to be reasonably inferred therefrom as to the provision of information by Oasis to Argonaut to undertake the trading in BLA shares undertaken by Argonaut on behalf of Oasis), at all material times commencing approximately 20 March 2018, Argonaut:

(a) knew (or ought to have known) particulars of the short position in BLA shares that Oasis was creating; and:

(b) knew, or had received information from which could be deduced, the matters in paragraphs 66A(c) to 66A(f).

(a) the number of BLA shares that the seller would vest in the buyer, pursuant to Oasis's Securities Lending Arrangement; and

(b) particulars of Oasis's Short Position, after it had been created; and

(c) in the premises, the matters pleaded in paragraph 0, paragraphs 0 to 0 and paragraph 0 above.

• [178] In relation to the Glaucus parties, the relevant parts of the pleading are:

"90. It is reasonably to be inferred, given the statements contained in the Glaucus report pleaded in paragraphs 19(a) to 19(d) above, and the matters pleaded in paragraphs 9, 10 and 14:

(a) that when the Glaucus report was published, Glaucus, and/or one or more Glaucus Associates, held a short position in BLA shares (the Glaucus Short Position/s);

(i) at all material times, possessed the Inside Information;

(ii) had communicated the Inside Information to Glaucus, and/or to one or more Glaucus Associates, in order to enable them to create the Glaucus Short Position/s;

(c) that Mr Weichert and/or Mr Aandahl thereby procured Glaucus, and/or to one or more Glaucus Associates:

(i) to dispose of, and then acquire, BLA shares; or

(ii) to enter into an agreement or agreements to dispose of, and then acquire, BLA shares.

1. Further, it is reasonably to be inferred, in the premises pleaded in paragraphs 9, 10, 16 to 22, 41 and 43 above, that Mr Weichert and/or Mr Aandahl:

(aa) at all material times, possessed the Inside Information;

(a) communicated the Inside Information to Oasis, Oasis Management and/or Mr Fischer, prior to 9 March 2018;

(b) in the alternative, engaged in communications with Oasis, Oasis Management, and/or Mr Fischer and/or some representative of Oasis, prior to 9 March 2018, which enabled Oasis, Oasis Management and/or Mr Fischer to deduce the Inside Information;

(ii) to enter into an agreement or agreements to dispose of, and then acquire, BLA shares.

1. When Mr Weichert and Mr Aandahl engaged in the conduct pleaded in paragraph 90 and 91 above they knew, or ought reasonably to have known, that:

(a) the Inside Information was not "generally available", within the meaning of that term as defined in s.1042C of the Act; and

(b) if the Inside Information was were generally available, a reasonable person would have expected it to have a material effect on the price or value of BLA shares, in that the information would, or would be likely, to influence persons who commonly acquire Division 3 financial products in deciding whether or not to acquire or dispose of BLA shares; and

(c) that the person/s to whom they communicated the Inside Information would be likely to:

(ii) procure another person to dispose of, and the acquire, BLA shares."

• [179] I note that Mr Aandahl states that the 6SOC does not overcome that:

(a) no material facts are pleaded as to when or how Mr Aandahl is said to have communicated the alleged inside information (as defined) to Glaucus/the Glaucus Associates or the Oasis parties, or procured them to deal with BLA shares using that information; and

(b) no material facts are pleaded that are capable of supporting an inference that Mr Aandahl communicated the Inside Information as alleged, or that he procured dealings in Blue Sky shares as alleged.

• [180] The plaintiff relies on a circumstantial case to support the alleged cause of action against each of the defendants in relation to the possession and knowledge requirement of s 1043A of the Act.
• [181] In Equititrust Limited, Bowskill J (as the Chief Justice then was) noted that, when the effect of striking out a claim is to summarily dismiss a party's claim, caution should be heeded and the discretion should only be exercised in the clearest case, particularly when the case pleaded is a circumstantial case:

"[9] Where the effect of the invocation of the power [to strike out a proceeding] would be to summarily dismiss a party's claim, or part of it, the court is to adopt a cautious approach and the discretion should only be exercised in the clearest case. As Mackenzie J said in Royalene Pty Ltd v Registrar of Titles [2007] QSC 59 at [6] this "is especially so where the case is pleaded as a circumstantial one and the inference to be drawn from evidence critical to determining liability is not common ground and the evidence is untested".

[10] The focus of such an application is the pleading itself. As such, the court ordinarily assumes the factual allegations made by the plaintiff can be established; particularly where the application is brought at an early stage. Although, the court is not limited to receiving evidence about the pleading (r 171(3)). Nevertheless, the apparent improbability of impugned allegations of fact does not justify the exercise of the power to strike out a pleading, because "to enter upon the question of their truth or falsehood would be trying the action prematurely".

[11] While the court may determine a difficult question of law on such an application, the power to strike out a sufficiently pleaded statement of claim cannot be exercised "once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it".

• [182] The defendants take particular umbrage at the use of the term "deduce" in the 6SOC. For example, counsel for Credit Suisse submits that "insofar as the pleading alleges that certain things were told to Credit Suisse from which it could've deduced particular information, that simply can't make out a contravention" of s 1043A of the Act.
• [183] The 6SOC consistently uses the term "could be deduced" in pleading that a defendant communicated information or received information from another defendant.
• [184] However, the scheme of the Act contemplates the practical realities of corporate activity and, in doing so, casts a wide net as to the meaning of information which includes "matters of supposition and other matters that are insufficiently definite to warrant being known to the public".[59]
• [185] In R v Mansfield,[60] Buss JA considered the meaning of "supposition" in the context of where false information was held to be information for the purposes of s 1042A of the Act:

"[108] The word "supposition" includes an assumption, a hypothesis and a matter which is accepted or received as true, without positive knowledge and perhaps erroneously. See the definitions of "supposition" in The Macquarie Dictionary (3rd ed, 1997) and The Shorter Oxford English Dictionary (5th ed, 2002). Invariably (if not always), an assumption, a hypothesis or a matter which is accepted or received as true, without positive knowledge and perhaps erroneously, relating to a corporation or its affairs would be insufficiently definite to warrant being made known to the public."

• [186] Plainly, information as defined by s 1042A(2) of the Act will include matters that can be deduced or inferred.
• [187] The statutory obligation is not triggered only by specific knowledge of information. Rather, it embraces information that can be nonspecific and can include matters drawn by way of inference or supposition. In ASIC v Citigroup Global Markets Australia Pty Ltd (No 4),[61] Jacobson J considered the broad and imprecise nature of information pursuant to the Act:

"[537] In my view it follows from what was said by McInerney J in CCA v Green [1978] VicRp 48; [1978] VR 505, by Young J in Hooker Investments v Baring Bros 10 ACLR 462 and by Barr and Hall JJ in Hannes v DPP [2006] NSWCCA 373; 165 A Crim R 151 that information can be non-specific and that what is drawn from it by way of inference is also included within the statutory definition of information. Moreover, the information, whether in the form of a hint or a rumour, must be communicated orally or by conduct, for example by observation of the words or conduct of others.

[538] It also seems to follow from this that an inference may be a supposition or a matter of supposition, and therefore falls within the definition of information in s 1042A. The supposition would therefore be that which the person drew from the hint or other non-specific information received from another.

[539] It was submitted on behalf of Citigroup that the legislative history shows that the inclusive definition of "information" in s 1042A of the Corporations Act was not intended to extend the ordinary meaning of the word "information" to encompass uncommunicated thought processes.

[540] Citigroup pointed to the expression "matters of supposition" in the definition and submitted that a distinction was to be drawn between such a "matter" and a mere supposition. Mr Myers submitted that "information" is something which is necessarily communicated.

[541] Reference was made in Citigroup's written submissions to difficulties which would arise where a court is required to assess whether a person's supposition, as opposed to the facts or material on which it is based, would have been likely to have a material effect on the price of the securities. Citigroup argued that this would undermine s 1042D, which provides that the materiality of information is to be assessed objectively.

[542] However, it seems to me that Citigroup's submissions are contrary to the views expressed in Hannes v DPP [2006] NSWCCA 373; 165 A Crim R 151 at [410]- [412] per Barr and Hall JJ. It seems to me to follow from this that whilst the hint or other non-specific information must be communicated by words or conduct, the inference or supposition drawn from it is "information" within the statutory definition.

[543] The answer to the practical difficulties raised by Citigroup seems to me to have also been given in Hannes v DPP [2006] NSWCCA 373; 165 A Crim R 151 at [415] per Barr and Hall JJ. Their Honours noted that the kind of information which may affect a securities market may be quite imprecise. But if the information in question is so imprecise that it is unlikely to affect the market, the charge will not be made out. See also their Honours' remarks at [412].

[544] Thus, although I have come to the view that Mr Manchee did not make the supposition alleged in the pleadings, I would reject the submission that his own internal thought processes were incapable of constituting "information" within s 1042A of the Corporations Act."

• [188] An inference may be a supposition, or a matter of supposition, being that which a person drew from the hint or non-specific information received and may, therefore, include a person's uncommunicated internal thought processes.
• [189] Further, the meaning of inside information pursuant to the Act casts a wide net and may include:

(a) an uncommunicated internal thought process;[62]

(b) knowledge of a defendant's own intention;[63]

(c) false information;[64] and

(d) "statements of alleged fact, opinions, predictions, forecasts, statements of intention or likely intention, hypotheses, assumptions, hints, suggestions and conjecture" and need not be reliable or have a sound factual foundation, and may be unreasonable, false or a lie.[65]

• [190] Further, if a defendant possesses inside information, it is not necessary to prove that the defendant was consciously aware of it when engaging in the prohibited behaviour.[66]
• [191] Accordingly, the statutory regime has established a wide approach to information and how it can be acquired and used. The plaintiff's case relies on drawing inferences and the 6SOC pleads for each defendant the material facts alleged that, at a minimum, the inside information could have been deduced. To this end, counsel for the plaintiff submits:

"MR DUNNING: ...one of the matters we point to infer they did know something was the history of trading to - and one of the purposes of these allegations is to demonstrate the sorts of inquiries that you would expect to have been made would have produced information from which you could deduce those matters. Now, we've got to prove that case at trial, and we have got to have the tribunal of facts draw the inference. But at the moment we've identified the basis on which the inference is invited to be drawn."

• [192] In the circumstances, I agree.
• [193] The pleading of a state of mind by inference was summarised by Bowskill J (as the Chief Justice then was) in Quinlan v ERM Power Ltd:[67]

"[65] It is not sufficient for a plaintiff simply to plead facts somewhere in the statement of claim, later to plead in a conclusory way that a party(ies) had a particular motive, intention or other state of mind, and contend that the other party(ies) is or are on notice, because of the general pleading, of what is to be alleged against it or them. It is incumbent on the plaintiff to be specific about the basis upon which they allege the motive, intent or other state of mind was held by each particular defendant. Contrary to the plaintiff's submissions, what rr 150(1)(k) and 150(2) UCPR require is the "explicit linking" of facts to inferences; the drawing of an inference is not a matter of law for the Court, but a matter of fact; and a party is required to "spell out in the statement of claim" the precise manner in which underlying facts are to be deployed so as to establish a matter alleged to be available as a matter of inference from those facts. That is the point of r 150(2). It is not appropriate to plead a whole lot of facts, and leave it for the other parties to guess which are relied upon to support the pleaded inference, and for the Court ultimately to "reach the correct decision", irrespective of the parties' arguments: "[i]t is for the party making the allegations ... to identify the case which it seeks to make and to do that clearly and distinctly". This is all the more essential where the allegations are of fraudulent or serious misconduct, in respect of which more precision is required than in other cases."

• [194] As to drawing of inferences, in Ashby v Slipper,[68] Mansfield and Gilmour JJ set out the correct approach:

"[71] The so-called Briginshaw standard, whilst it has been criticised by some, nonetheless is well enough understood. It is effectively enshrined in s 140 of the Evidence Act. However, an inference must not be drawn where it is but "a choice among rival conjectures but rather there must be "evidence supporting some positive inference ... which arises as an affirmative conclusion from the circumstances proved in evidence": Jones v Dunkel at 304. As was stated in Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5, reported in Holloway v McFeeters [1956] HCA 25; (1956) 94 CLR 470 at 480-481:

" ... you need only circumstances raising a more probable inference in favour of what is alleged ... where direct proof is not available it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degree of probability so that the choice between them is mere matter of conjecture (see per Lord Robson, Richard Evans & Co Ltd v Astley [1911] AC 674 at 687)."

[72] The Full Court in CEPU v ACCC at [38] stated in a paraphrase of this passage:

"Ultimately, because this is a civil, not criminal, proceeding the civil standard of proof applies. Thus, the ACCC had to establish that the circumstances appearing in the evidence gave rise to a reasonable and definite inference, not merely to conflicting inferences of equal degrees of probability, that [the impugned conduct had occurred]."

[73] As was put more recently by the Full Court in Australian Competition and Consumer Commission v Metcash Trading Ltd (2011) 198 FCR 297 at [31], drawing from what was said by Crennan J in Lithgow City Council v Jackson (2011) 244 CLR 352 at [94]:

[31] Inference does not mean conjecture, even in a civil case. In civil proceedings the inferential process 'may fall short of certainty, [but] must be more than an inference of equal degree of probability with other inferences, so as to avoid guess or conjecture'. ... A court is not authorised to choose between guesses, even on the ground that one guess seems more likely than another or others.""

• [195] The defendants state that the material facts are insufficient for the requisite inference to be drawn. However, in my view, the pleading is sufficient.
• [196] Here, the plaintiff has nailed its colours to the mast. The 6SOC does not plead a whole lot of facts to be found somewhere in the claim for the defendants to guess which ones are relied upon. Nor does it state a conclusion without pleading a factual basis.
• [197] In relation to each defendant, the plaintiff sets out the material facts relied upon for the inference to be drawn.
• [198] I note that the pleading does not particularise who communicated and received information. In Baldwin v Icon Energy Ltd,[69] Bond J (as his Honour then was) stated, when pleading knowledge of a corporation, it is insufficient to plead that the corporation has the requisite state of mind, because corporations act through natural persons. The pleader must identify the person(s) who had that state of mind on behalf of the corporation:

"[151] Second, companies act by natural persons. If a pleading alleges that a company has a particular state of mind, then the pleading must be taken to have asserted that a particular person or persons had that state of mind and that it should be inferred that their state of mind should be attributed to the company. In breach of the rules of pleading BBAI did not identify the person or persons who had the deceitful intent as at 12 June 2008. However, BBAI's case at trial was that the intention of Icon and Jakabar could be established by reference to the intentions of Mr James. No objection was advanced in this regard and I would not refuse the plaintiffs the ability to advance that argument because of the inadequacy of this aspect of their pleading. But for the following reasons, I would not accept the underlying proposition that the intention of Icon and Jakabar could be established by reference to the intentions of Mr James alone:

(a) In Stirling Resources NL v Capital Energy NL [1996] FCA 899; (1996) 14 ACLC 1,005 Hill J explained:

Views in the minds of individual directors not communicated to other directors nor made the subject of board decision, cannot be taken as being the plans of the company of which the proponents are directors. It is trite to say that a company can only act through its directors. Likewise a company's intentions can only be judged by reference to the intentions of the directors, not the directors singly but the directors acting as a board. There may be cases in which a particular person may be found as a fact to the governing mind of a company so that that person's intentions may be taken as being the intentions of the company.

(b) There is no pleading that the directors acting as a board had the alleged deceitful intention. But, in any event, there is no basis for drawing the inference that the directors acting as a board had the alleged deceitful intention. I agree with the defendants' submission that there had been no attempt by the plaintiffs to do this because, quite apart from the evidence of Mr James, there had been no attempt to establish the state of mind of Mr Pyecroft or Dr McNamara and, importantly, no relevant challenge to Mr Barry's statement evidence, the effect of which was that he as a director of Icon intended that the company would comply with its obligations under the MOU. The plaintiffs sought to make something from the defendant's failure to call Dr McNamara, but it is trite law that the Jones v Dunkel inference cannot be employed to fill gaps in the evidence, or to convert conjecture and suspicion into inference.

(c) Nor is there any basis for concluding that Mr James was the governing mind of Icon and Jakabar for the purposes of making the alleged deceitful representation. There was almost no attention paid at trial to establishing the levels of decision-making delegation which operated within Icon and Jakabar. Such evidence as there was suggested that the decision to enter into the MOU was a board level decision, rather than a decision within the sole purview of Mr James. And although the agency contract had been signed by Mr James as director, the MOU itself was executed "in accordance with s 127 of the Corporations Act" by both Mr James and Dr McNamara."

• [199] Section 1042G(1)(a) of the Act provides that, where a cause of action concerns the possession of information by a body corporate, the body corporate will be taken to possess the information if an officer of the body corporate possesses the information in the course of the performance of her or his duties as such an officer.
• [200] The plaintiff states that it is unable to provide further and better particulars of the communication between the parties, or the persons who engaged in those communications, until completion of disclosure and refers to Murphy v Victoria,[70] which states:

"[35] With respect, however, we think that reasoning was misplaced. It is one thing to make an allegation without any basis for it - which is plainly impermissible - and quite another to make allegations - as the appellant did in this case - which ex facie were soundly based on the best particulars which could be given until after discovery (and which, it should be noted, were not sought to be struck out as being something else). In a case like this, where ex hypothesi the documents needed to prove the appellant's allegations were within the respondents' exclusive possession or power, and the respondents refused to produce them, the appellant not only had no option other than to plead his case as he did but was perfectly entitled to do so. The propriety of so proceeding is established by a long line of authority dating back to the nineteenth century."

• [201] There has already been an application for preliminary disclosure by the plaintiff and, on 15 March 2024, Brown J (as her Honour then was) made the following orders:
  1. Argonuat and Euroz Hartleys produce to the plaintiff, by 26 March 2024, trading records and confirmations recording any transactions executed by them during the period from 20 March 2018 to 28 March 2018 (inclusive) in the following:
     1. Blue Sky Alternative Investments Limited (BLA) shares; or
     2. derivatives or other financial products used to take a short position in respect of BLA shares,

save that relate to the Argonuat and Euroz Hartleys engaging in such transactions on their own behalf and transactions by Totus Capital Day Ltd (as trustee for the Totus Alpha Fund).

1. Mr Aandahl produce to the plaintiff by 26 March 2024 all documents recording any individual or entity, other than with respect to Argonuat and Euroz Hartleys and Totus Capital Day Ltd (as trustee for the Totus Alpha Fund), that:
   1. received a draft of the Report prior to publication;
   2. discussed the Report with Mr Aandahl prior to its publication; or
   3. was aware that a report would or may be published by Glaucus in relation to Blue Sky,

in the period from 1 October 2017 to 28 March 2018 (inclusive).

• [202] Accordingly, the disclosure that has been ordered was limited in scope and the plaintiff states that it is unable to provide further and better particulars of the communication between the parties or the persons who engaged in those communications, until completion of disclosure.
• [203] In my view, this a case where it is appropriate for any such particulars to be provided after disclosure by the defendants.
• [204] As Ambrose J observed in Harvey v Commonwealth Scientific and Industrial Research Organisation:[71]

"[23] When facts upon which a plaintiff will ultimately seek to rely are solely within the knowledge of a defendant at the time when particulars are required, or are evidenced by documents in the possession of the defendant of which the plaintiff does not have copies, it is obviously impossible for a plaintiff to give particulars of those facts which will not be known until after discovery of documents has been effected or interrogatories answered. It has been common in such circumstances to postpone the obligation to give particulars until after discovery or interrogation of the other side has been completed so that the person required to provide particulars designed to limit the issues at the trial is aware of the documentary evidence in the possession of the other party or facts within the knowledge of that party upon which reliance will be placed to establish those facts. Once the plaintiff becomes aware of such facts then of course if they are to be relied upon at trial particulars should be given...".[72]

• [205] I also note that the defendants refer to evidence that may be inconsistent with the 6SOC. I am not persuaded, in the circumstances of this case, to make final determinations of matters of fact, on an interlocutory application.
• [206] In relation to the use of "and/or", the plaintiff states that that phrase does not make the pleading vague - it identifies the case that is intended to press at trial, and each of the three parties as persons it intends to prove at trial engaged in the conduct. The plaintiff also submits that, should the phrase remain contentious, "and" may be adopted in place of "and/or". In any event, the dispute about the use of "and/or" may be determined at a later time.

Part 4 - The causation issue

• [207] The defendants state that there is an insufficient causal nexus in relation to the 6SOC's claim for damages made pursuant to s 1317HA of the Act. In particular, the defendants state that the 6SOC:

(a) does not plead a counterfactual;

(b) does not plead an obligation to make the alleged inside information available; and

(c) rolls up the alleged contraventions,

• [208] Counsel for the Oasis parties made the principal oral submissions addressing this issue. The other defendants embraced these submissions.
• [209] The 6SOC alleges contraventions of s 1043A of the Act, which are pleaded to be the defendants' trading in shares or procuring of the trading, whilst in possession of the pleaded inside information, or the communication of that information.
• [210] The claims against the Oasis parties are set out in the 6SOC:

"40. Prior to 9 March 2018, Oasis had not traded in BLA shares on the ASX.

1. As pleaded, or in the premises of the matters pleaded, in paragraphs 11(c) and to 13, paragraphs 22 to 26, and paragraphs 29 to 35 above:

(a) prior to 9 March 2018, Oasis:

(i) held no BLA shares in its own right; and

(ii) entered into one or more of Oasis's Securities Lending Arrangements;

(b) on 9 March 2018, Oasis commenced selling BLA shares on the ASX;

(c) between 9 and 19 March 2018, Oasis (by its broker, instructed Credit Suisse) sold to sell BLA shares on its behalf on the ASX;

(d) between 20 and 22 March 2018 Oasis (by its broker, instructed Argonaut to sell sold 134,303 BLA shares on its behalf on the ASX;

(e) between 23 March 2018 and 11:43am on 28 March 2018, Oasis (by its broker, instructed Euroz Hartleys) to sell sold 246,024 BLA shares on its behalf on the ASX;

(f) Oasis, by its brokers, continued to sell BLA shares on the ASX until 11:43am on 28 March 2018, thereby creating Oasis's Short Position;

(g) five minutes after Oasis had finished selling BLA shares on the ASX (via its broker Euroz Hartleys), at 11:48am on 28 March 2018 Glaucus published the Glaucus report;

(h) immediately after the Glaucus report was published at 11:48am, Oasis (via its broker Credit Suisse):

(i) commenced buying BLA shares on the ASX; and

(ii) bought BLA shares, notwithstanding:

1. that the ASX price for BLA shares was dropping after the publication of the Glaucus report .; and
2. as alleged at 19(e) to 19(g) above, the price at which Oasis bought BLA shares exceeded the value of BLA shares asserted in the Glaucus report.

1. It is to be inferred, from the matters pleaded in paragraphs 12, 13, 40 and 41 above, that:

(a) prior to 9 March 2018, or alternatively, prior to 28 March 2018, Oasis, by Oasis Management or Mr Fischer, knew that the Glaucus report, or a report of a similar nature concerning BLA:

(i) was intended to be published; and

(ii) would, or would likely, contain adverse statements in respect of the current value of BLA shares compared to the price at which BLA shares had been trading on the ASX in the recent past;

(b) prior to 9 March 2018, or alternatively, prior to 28 March 2018, Oasis Management, by Mr Fischer, knew that the Glaucus report, or a report of a similar nature concerning BLA:

(i) was intended to be published; and

(ii) would, or would likely, contain adverse statements in respect of the current value of BLA shares compared to the price at which BLA shares had been trading on the ASX in the recent past;

(c) prior to 9 March 2018, or alternatively, prior to 28 March 2018, Mr Fischer knew that the Glaucus report, or a report of a similar nature concerning BLA:

(i) was intended to be published; and

(ii) would, or would likely, contain adverse statements in respect of the current value of BLA shares compared to the price at which BLA shares had been trading on the ASX in the recent past;

(d) Oasis entered into the transactions that created Oasis's Short Position, because Oasis, Oasis Management and/or Mr Fischer had the knowledge set out at subparagraphs (a) to (c) above;

(e) prior to publication of the Glaucus report, Oasis, Oasis Management and/or Mr Fischer (or some person acting at the direction of Mr Fischer) had instructed Oasis's brokers (or one or more of them) to commence buying BLA shares on its Oasis's behalf immediately after the Glaucus report (or some similar report) was published;

(f) on 28 March 2018:

(i) Oasis, Oasis Management and/or Mr Fischer (or some person acting at the direction of Mr Fischer) communicated to Glaucus directly or indirectly, at or after 11:43am, that Oasis had completed selling BLA shares on the ASX; and

(ii) Glaucus immediately thereafter published the Glaucus report;

1. In the premises Further to the matters pleaded in paragraphs 41 and 42 above, it is also to be inferred from the matters pleaded in paragraphs 12, 13, 40 and 41 above that each of Oasis, Oasis Management and Mr Fischer possessed the Inside Information, when Oasis:

(a) entered into Oasis's Securities Lending Arrangement, as pleaded in paragraph 25 above;

(b) engaged in the trades undertaken via its brokers Credit Suisse, Euroz Hartleys and Argonaut to undertake the trades, as pleaded in paragraphs 22(a), 22(b), 22(c) and 35 above;

(c) engaged inits brokers, or any other person, before 28 March 2018, to make on its behalf any other purchases of BLA shares that Oasis may have undertaken to cover:

(i) Oasis's Short Position; or

(ii) any other short position that Oasis may have created in BLA, while in possession of the Inside Information.

1. Further to the matters pleaded in paragraphs 42 and 43 above, it is also to be inferred from the matters pleaded in paragraphs 12, 13, 40 and 41 above that wWhen Oasis, Oasis Management and/or Mr Fischer engaged in the conduct pleaded in paragraphs 22 and 25 35 above, they knew, or ought reasonably to have known, that:

(a) the Inside Information was not "generally available", within the meaning of that term as defined in s 1042C of the Act; and

(b) if the Inside Information had been generally available, a reasonable person would have expected it to have a material effect on the price or value of BLA shares.

1. In the premises pleaded in paragraphs 12, 13 and 40 to 44 above:

(a) by entering into Oasis's Securities Lending Arrangement, as pleaded in paragraph 25 above, Oasis contravened s.1043A(1)(c) of the Act, in that it entered into an agreement to dispose of and/or acquire relevant Division 3 financial products; and, or alternatively

(b) by disposing of BLA shares, as pleaded in paragraphs 22 and 35 above, Oasis contravened s.1043A(1)(c) of the Act, in that it disposed of relevant Division 3 financial products; and, or alternatively

(c) by procuring Oasis to dispose of BLA shares, as pleaded in paragraphs 22 and 35 above, Oasis Management contravened s.1043A(1)(d) of the Act, in that it procured another person to dispose of relevant Division 3 financial products; and, or alternatively

(d) by procuring Oasis to dispose of BLA shares, as pleaded in paragraphs 22 and 35 above, Mr Fischer contravened s.1043A(1)(d) of the Act, in that he procured another person to dispose of relevant Division 3 financial products; and, or alternatively

(e) by procuring Oasis to enter into Oasis's Securities Lending Arrangement, as pleaded in paragraph 25 above, Oasis Management contravened s.1043A(1)(d) of the Act, in that it procured another person to enter into an agreement to dispose of and/or acquire relevant Division 3 financial products; and, or alternatively

(f) by procuring Oasis to enter into Oasis's Securities Lending Arrangement, as pleaded in paragraph 25 above, Mr Fischer contravened s.1043A(1)(d) of the Act, in that he procured another person to enter into an agreement to dispose of and/or acquire relevant Division 3 financial products; and, or alternatively

• [211] The 6SOC then sets out the claims against the broker parties with reference to the particulars of Oasis' short position requested by, and given to, them.
• [212] The 6SOC sets out the claims against Credit Suisse as:

"60. When Credit Suisse engaged in the conduct pleaded in paragraph 22(a) above, in the premises of the matters pleaded in paragraphs 51A and 52 and, or alternatively, paragraph 58, above:

(a) it knew the Inside Information, or had received information from which the Inside Information could be deduced; and

(b) it knew, or ought reasonably to have known, that:

(i) the Inside Information was not "generally available", within the meaning of that term as defined in s.1042C of the Act; and

(ii) if the Inside Information was were generally available, a reasonable person would have expected it to have a material effect on the price or value of BLA shares, in that the information would, or would be likely, to influence persons who commonly acquire Division 3 financial products in deciding whether or not to acquire or dispose of BLA shares.

Credit Suisse knew, or ought reasonably to have known, these matters because it was retained by Oasis to:

A. sell shares to establish a substantial short position in BLA shares, prior to the publication of the Glaucus report; and

1. purchase BLA shares immediately after publication of the Glaucus report (or similar report).

1. In the premises of paragraph 60 above, Credit Suisse contravened s.1043A(1)(c) of the Act, in that:

(a) by disposing of BLA shares, as pleaded in paragraph 22(a) above, it disposed of relevant Division 3 financial products; and

(b) by entering into an agreement with its client Oasis to dispose of BLA shares, as pleaded in paragraph 46 above, it entered into an agreement to dispose of relevant Division 3 financial products; and

(c) by entering into an agreement with its client Oasis to buy BLA shares, as pleaded in paragraph 46(b) above, it entered into an agreement to acquire relevant Division 3 financial products."

[213] These claims are essentially repeated for the other brokers, as it relates to them.

• [214] In relation to the Glaucus parties, the 6SOC pleads:

"90. It is reasonably to be inferred, given the statements contained in the Glaucus report pleaded in paragraphs 19(a) to 19(d) above, and the matters pleaded in paragraphs 9, 10 and 14:

(a) that when the Glaucus report was published, Glaucus, and/or one or more Glaucus Associates, held a short position in BLA shares (the Glaucus Short Position/s);

(b) that Mr Weichert and/or Mr Aandahl:

(i) at all material times, possessed the Inside Information;

(ii) had communicated the Inside Information to Glaucus, and/or to one or more Glaucus Associates, in order to enable them to create the Glaucus Short Position/s;

(c) that Mr Weichert and/or Mr Aandahl thereby procured Glaucus, and/or to one or more Glaucus Associates:

(i) to dispose of, and then acquire, BLA shares; or

(ii) to enter into an agreement or agreements to dispose of, and then acquire, BLA shares.

1. Further, it is reasonably to be inferred, in the premises pleaded in paragraphs 9, 10, 16 to 22, 41 and 43 above, that Mr Weichert and/or Mr Aandahl:

(aa) at all material times, possessed the Inside Information;

(a) communicated the Inside Information to Oasis, Oasis Management and/or Mr Fischer, prior to 9 March 2018;

(b) in the alternative, engaged in communications with Oasis, Oasis Management, and/or Mr Fischer and/or some representative of Oasis, prior to 9 March 2018, which enabled Oasis, Oasis Management and/or Mr Fischer to deduce the Inside Information;

(c) thereby procured Oasis to:

(ii) to enter into an agreement or agreements to dispose of, and then acquire, BLA shares.

1. When Mr Weichert and Mr Aandahl engaged in the conduct pleaded in paragraph 90 and 91 above they knew, or ought reasonably to have known, that:

(a) the Inside Information was not "generally available", within the meaning of that term as defined in s.1042C of the Act; and

(b) if the Inside Information was were generally available, a reasonable person would have expected it to have a material effect on the price or value of BLA shares, in that the information would, or would be likely, to influence persons who commonly acquire Division 3 financial products in deciding whether or not to acquire or dispose of BLA shares; and

(c) that the person/s to whom they communicated the Inside Information would be likely to:

(ii)procure another person to dispose of, and then acquire, BLA shares.

(a) in the circumstances pleaded in paragraphs 92(a) and 92(b) above, by procuring another person to acquire, or dispose of BLA shares, as pleaded in paragraph 90 above, and, Mr Weichert and Mr Aandahl contravened s.1043A(1)(d) of the Act;

(b) in the circumstances pleaded in paragraph 92 above, by communicating the Inside Information to one or more associates of Glaucus, as pleaded in paragraph 90 above, Mr Weichert and Mr Aandahl contravened s.1043A(2) of the Act;

(c) in the circumstances pleaded in paragraph 92 above, by communicating the Inside Information to Oasis, Oasis Management and/or Mr Fischer, as pleaded in paragraph 91 above, Mr Weichert and Mr Aandahl contravened s.1043A(2) of the Act;

(d) in the circumstances pleaded in paragraph 92 above, by procuring another person to acquire, or dispose of BLA shares, as pleaded in paragraph 91 above, Mr Weichert and Mr Aandahl contravened s.1043A(1)(d) of the Act."

• [215] The 6SOC then pleads that the plaintiff and other group members are entitled to apply for a compensation order pursuant to ss 1317J(3A) and 1317HA of the Act:

"96. Pursuant to s.1317J(3A) of the Act, the plaintiff, and other Group Members:

(a) are persons who suffered damage in relation to a contravention, or alleged contravention, of a financial services civil penalty provision;

(b) are entitled to apply for a compensation order pursuant to s.1317HA of the Act."

• [216] As to these sections pleaded in the 6SOC:

(a) s 1317J(3A) provides that a person "who suffers damage in relation to a contravention, or alleged contravention of [s 1043A[73]] may apply for a compensation order under section 1317HA"; and

(b) s 1317J(4) provides that "[n]o person may apply for....a compensation order unless permitted by this section".[74]

• [217] Section 1317HA of the Act sets out the basis for an order for compensation for a contravention of s 1043A[75] as follows:

"Compensation orders - financial services civil penalty provisions

(1) A Court may order a person (the liable person) to compensate another person (including a corporation) ... for damage suffered by the person ... if:

(a) the liable person has contravened [s 1043A]; and

(2) In determining the damage suffered by a person ... for the purposes of making a compensation order, include profits made by any person resulting from the contravention ..."

• [218] The plaintiff pleads that, pursuant to s 1317HA of the Act, the plaintiff, and the group members, are entitled to orders requiring each of the defendants to compensate them for damage they suffered, resulting from the defendants' contraventions of s 1043A(1) and s 1043A(2) of the Act:[76]

"98. Pursuant to s.1317HA of the Act, the plaintiff, and the Group Members, are entitled to orders:

(a) requiring each of the defendants to compensate the plaintiff and the Group Members for damage they suffered, resulting from the defendants' contraventions of s.1043A(1) and s.1043A(2) of the Act;

(b) the damage referred to in the preceding subparagraph is, or includes, :

(i) by s.1317HA(2) of the Act, the profits the defendants made resulting from their contraventions, the extent of which is not presently known to the plaintiff; and, or alternatively

(ii) the difference between:

(A) the price at which the Plaintiff and Group Members would have or could have sold their BLA shares by no later than mid-March 2018 had the Inside Information been generally available, being between $12.00 and $13.20 (the prices at which BLA shares traded in the period between 1 and 12 March 2018); and

(B) the price at which BLA shares were quoted on the ASX at close of business on 5 April 2018, being $5.62;

(iii) a decrease in the value of the plaintiff's BLA shares; and

(iv) the lost opportunity of the plaintiff to sell its BLA shares at a higher value had the contraventions not occurred."

• [219] The defendants submit that the plaintiff's claim for profits can only be brought if causation is established between the contravening conduct and loss suffered by the plaintiff.
• [220] The defendants focus on the phrase "resulted from the contravention" used in s 1317HA of the Act and state that s 1317 HA(1)(b) picks up damage which, as a matter of fact, was caused by the contravention.[77]
• [221] The defendants state that a 'but for' approach is applied as a negative criterion[78] and, whilst there is some authority supporting the use of the 'common sense' approach, other cases have sounded a note of caution over such use.[79]
• [222] In any event, the defendants state that the commonsense test does not remove the need to plead a factual basis for the causal connection between the damage and contravention.
• [223] Therefore, the defendants state that the plaintiff must plead the following elements to disclose a reasonable cause of action:

(a) the contravention of s 1043A;

(b) the damage alleged to have been suffered by the plaintiff and group members; and

(c) a causal link between the contravention/s and the alleged damage suffered, by pleading that the damage resulted from the contravention and the material facts which at least arguably establish that link.

• [224] Further, the defendants state that s 1317HA(2) similarly requires a causal nexus between the profits and the contravention because:

(a) the profits are part of the "damages" recoverable under s 1317HA(1) (which requires a causal nexus); and

(b) s 1317HA(2) has the same requirement as s 1317HA(1) that the profits "result[ed] from the contravention".

• [225] Accordingly, the defendants state that the plaintiff has failed to plead a logical causal hypothesis in relation to the claim under s 1317HA(2).
• [226] The defendants state that the 6SOC has no specific and unambiguous pleading of the counterfactual which is something that the plaintiff must plead.
• [227] Paragraph 97 of the 6SOC pleads:

"97. If the Inside Information had been "generally available" (within the meaning of that term as defined in s.1042C of the Act), then the Plaintiff and Group Members would have sold their BLA shares by no later than mid-March 2018 at a price of between $12.00 and $13.20 (being the prices at which BLA shares traded in the period between 1 and 12 March 2018). Pursuant to s.1317HA(2) of the Act, compensation to the plaintiff, and other Group Members, of any profits the defendants made resulting from their contraventions, the extent of which is not presently known to the plaintiff."

• [228] The 6SOC then goes on to plead an alternative in paragraph 97A:

"97A. Further or alternatively, were it not for the matters referred to in paragraphs 97B to 97E, the plaintiff and the Group Members would have sold some or all of their shares in BLA after 31 March 2018 at a price between $12.00 and $13.20."

• [229] The defendants state that paragraphs 97 or 97A (or any paragraph in the 6SOC) do not plead that 'but for' the contravention/s of s 1043A of the Act, the loss would not have occurred - i.e., the 6SOC does not set out what would have happened had the alleged insider trading not occurred.
• [230] Rather, the defendants state that paragraph 97 pleads the loss by reference to what would have happened if the inside information had been generally available which they say is not the correct counterfactual.
• [231] The fact that the information is not generally available is part of the definition of 'inside information' in the Act. However, the defendants state that:

(a) the failure to disclose or make 'available' the alleged inside information is not a contravention of s 1043A of the Act;

(b) it is not pleaded to be a contravention; and

(c) there is no pleaded obligation to make the alleged inside information available.

• [232] The defendants submit that, whilst the pleaded wrongful acts are the contraventions of s 1043A (i.e., the acts of trading, procuring, or communicating whilst in possession of the inside information), there is nothing pleaded to link these alleged wrongful acts to the alleged loss based on the unavailability of the inside information.
• [233] Rather, the 6SOC pleads the loss as linked to what the plaintiff or group members could have sold their shares for in early to mid-March 2018.
• [234] In relation to paragraph 97A (and its sub paragraphs), the defendants state that it is based on the plea that the contraventions "were part of, facilitated or enabled" the short selling and that the short selling caused the drop in the share price.
• [235] The defendants state that paragraph 97A pleads that the short selling is the necessary condition. Accordingly, the defendants state that paragraph 97A does not plead that 'but for' the contravention/s of s 1043A of the Act, i.e., the loss would not have occurred.
• [236] Rather, the defendants state that it pleads that, but for the matters that make up the short selling, the plaintiff and group members would have sold their shares at higher prices, after 31 March 2018.
• [237] As to the short selling, the defendants note that the Act deals separately with short selling. Only 'naked' short selling is prohibited,[80] and the plaintiff's pleading contends that Oasis' alleged short selling was 'covered' short selling (by reason of the alleged Oasis Securities Lending Arrangements), which is permitted.[81]
• [238] Accordingly, the defendants state that the 6SOC does not make out a cause and effect between the contravention/s of s 1043A of the Act and the pleaded loss, sufficient to provide a viable causal hypothesis.
• [239] The defendants state that the 6SOC fails to demonstrate a causal connection between the alleged insider trading as pleaded, and the pleaded loss, as:

(a) the alleged insider trading did not deprive the sellers of those shares of the opportunity to sell their shares in early to mid-March and no basis for a causal link is pleaded;

(b) there is a logical difficulty with there being any causal nexus between at least some of the trading pleaded in the 6SOC, and the pleaded loss, as:

(i) the trades pleaded in 6SOC are sales of shares by Oasis (via the Broker Defendants), alleged to have occurred at least partially after mid-March 2018, such that the purchaser/group members did not hold the shares at the time it is alleged in 6SOC (early to mid-March), so that they might have sold them;

(ii) the sale of shares by Oasis, pleaded in paragraph 22 6SOC did not deprive the plaintiff or group members of a chance to sell shares at some other (presumably earlier) time;

(iii) there is no logical causal link between the alleged communication of the inside information (i.e., the contravention) on the one hand, and, on the other hand, the lack of information (in the hands of the plaintiff and group members) that would have enabled them to sell their shares;

(iv) there could be no basis to assert that the drop in the value of the BLA shares (up to 5 April 2018) was somehow related to the alleged insider trading; and

(v) it would be fanciful to suggest that any particular trade by any particular defendant could have caused the market-wide price drop in BLA shares, and nothing to this effect is pleaded; and

(c) the test for causation should normally ask whether the wrongful act is necessary for the loss[82] and that the 6SOC does not attempt to answer that question and makes no logical sense.

• [240] The defendants refer to Lewis v Australian Capital Territory[83] and Australian Competition and Consumer Commission v Valve Corporation (No 7)[84] as to the counterfactual required when pleading claims for compensation for loss.
• [241] In Lewis, Edelman J considered the causal connection claims for compensation for loss:

"[151] Causation is a concept that establishes a link between a physical event and a physical outcome. Where a claim is brought for compensation for loss, the causal question asks whether the defendant's wrongful act was necessary for the loss: "did the defendant's act make a difference" to that outcome? That question is posed as a counterfactual: would the loss have lawfully occurred without the defendant's wrongful act? In other words, would the plaintiff have suffered the same loss but without a violation of their rights? If the loss would not otherwise have occurred then, subject to other legal issues including remoteness of damage, it is easy to see why the defendant should be responsible for the loss. Conversely, if the defendant's act made no difference to the outcome, because "but for" the act of the defendant the loss would have occurred lawfully, then the defendant's act was not a cause of the loss and the defendant's responsibility for that loss becomes more difficult to justify."

• [242] In Valve Corporation, Edelman J was considering a claim under the Australian Consumer Law and the concept of loss or damage caused by contraventions:

"[26] The High Court has said on a number of occasions that "it is doubtful whether there is any 'common sense' approach to causation which can provide a useful, still less universal, legal norm": most recently, see Comcare v Martin [2016] HCA 43; (2016) 91 ALJR 29, 35 [42] (the Court). The concept of common sense is further abused if it is used to treat contribution and causation as though they were the same concept. As a matter of metaphysics, for which no authority could be required, contribution is different from causation. The former signifies merely involvement in a process, without being necessary for the outcome. Something which makes no difference to an outcome does not "cause" the outcome. Causation requires that the event is necessary for the outcome**.** If authority is needed then, as Heydon J said in Amaca Pty Ltd v Booth [2011] HCA 53; (2011) 246 CLR 36, 91 [149], referring to March v E & M H Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506, 515-516, the "but for" test is a necessary test of causation (although it is not always sufficient for liability).

[27] In summary, to speak in this context of the "contribution" of events (involving contravention) to an outcome (profits or loss) is to accept that but for the events the profits or loss might have happened in any event. In this sense, "contribution" says little more than that the contributing event was part of the process involved in the business. It is a basic error to describe a "contributing" event in the language of "causation" which suggests the more serious consequence that the profits would not have been made but for the contravening conduct. Counsel for the ACCC, in carefully and thoughtfully formulated submissions, did not make this error. In this section I explain why the misrepresentations by Valve were a part of its business process involved in making profits although such causally related profits, and corresponding loss to consumers, cannot be determined (in any proper sense of the word "causation")."

• [243] Further, in Berry v CCL Secure Pty Ltd,[85] Gageler and Edelman JJ noted the importance of pleading any counterfactual on which the plaintiff relies to establish the requisite causal link between identified loss or damage and identified misleading or deceptive conduct:

"[72] The function of pleadings is to state with sufficient clarity the case that must be met" and thereby to "ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and ... to define the issues for decision". A plaintiff should be expected to plead all material facts on which the plaintiff relies to constitute the statutory cause of action, including any counterfactual on which that plaintiff relies to establish the requisite causal link between identified loss or damage and identified misleading or deceptive conduct. In the same way, a defendant resisting the statutory action should be expected to plead any different counterfactual on which that party might rely to deny the causal link. Unless and to the extent that the parties choose to depart from the pleadings in the way they go on to conduct the trial, choice between the competing pleaded counterfactuals on the balance of probabilities should then exhaust the fact-finding that is required to be undertaken by the court on the issue of causation".[86]

• [244] The defendants state that whether the pleading complies with these principles can be tested by reference to the Oasis contraventions and posing this question:

"Does the pleading make out a logical basis to conclude that, without the pleaded Oasis contraventions - taking the most significant one, the selling (and activities related to the selling) of the shares pleaded in [22] of the 6SOC, prior to the publication of the Glaucus report - the pleaded loss would not have occurred?"

• [245] The defendants state that the 6SOC pleads nothing of the sort.
• [246] The defendants state that the position is not improved by the new pleaded contravention in paragraph 45(j) of the 6SOC which states:

"(j) by procuring Credit Suisse to acquire BLA shares on behalf of Oasis, as pleaded in paragraph 46(b) below, Oasis contravened s.1032A(1)(d) of the Act, in that it procured another person to acquire relevant Division 3 financial products."

• [247] The defendants contend this is an arrangement that had no relevant effect on the plaintiff or group members.
• [248] The defendant states that there is no logical basis in the pleading to contend that, but for the arrangement, the plaintiff or group members would have sold their shares after 31 March 2018 at significantly higher prices.
• [249] Further, the defendants state that the 6SOC is not properly pleaded, as it bundles up contraventions, and then merges them with the short selling, with the result being that "the great big lump of things caused this lump of loss".
• [250] The consequence, the defendants submit, is to fail to draw any logical connection between individual contraventions (e.g., those pleaded against the defendants) and the loss, because the connection is sought to be drawn with the blurred merger of the contraventions and the short selling. The defendants state that this form of pleading obscures, rather than explains, the causal theory.
• [251] In Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu,[87] Moshinsky J was considering a pleading that alleged that a number of different pleaded contraventions were "jointly and severally" the cause of a number of other pleaded consequences and stated that:

"[81] It is appropriate that the alleged causal consequences of each set of contraventions be pleaded separately so that the discrete allegations can be responded to separately. Further, the causation pleadings result in a bewildering number of combinations of contraventions and consequences ..."

• [252] As to the mischief of rolling up allegations, in Quinlan, Bowskill J (as the Chief Justice then was) stated:

"[75] I accept the defendants' submission that the pleading is deficient in this respect. Rolling up the allegations of causation and loss in this way fails to fulfil the fundamental function of a pleading, which is to state with sufficient clarify the case that must be met by each party. As Bond J (as his Honour then was) put it in Sanrus Pty Ltd v Monto Coal 2 Pty Ltd (No 7) [2019] QSC 241, [17]:

"It is a trite proposition of law that defendants are entitled to a direct and unambiguous identification of the material facts relied on to establish the causal link between the conduct which plaintiffs impugn and the loss they allegedly suffered, and which identification at least arguably establishes that link.""

• [253] The defendants state that a similar point can be made in relation to this 6SOC, i.e., the rolling up of all the contraventions, along with the non-wrongful allegations of short selling, does not clearly state the causal hypothesis in relation to the contraventions for each of the defendants.
• [254] Further, the defendants state that the claim for recovery of profits pursuant to section 1317HA(2) in the 6SOC is not sufficiently pleaded.

• [255] It is important to appreciate that the 6SOC is not founded in common law remedies. Rather, the 6SOC pleads contraventions and remedies arising from the Act. The parties differ about the consequences of such a pleading.
• [256] The plaintiff states that it is sufficient to establish that its damage "resulted from" the defendants' contravention,[88] whether directly or indirectly[89] due to the definition of "result" in the Act_._[90]
• [257] The plaintiff states that the relevant prohibitions and remedies are statutorily created by bespoke rights, including as to relief, and fall to be determined according to the new statutory norm, rather than pre-existing principle.
• [258] Accordingly, the plaintiff submits that the following considerations are relevant:

(a) it is significant that Parliament has created a sui generis norm of conduct in relation to inside information and insider trading, which does not depend on common law principles for the establishment of liability, loss, or causation;

(b) in that regard, the plaintiff's primary submissions note that the causation issues arising from the phrase "resulted from" are similar to those that arise from the phrase "by conduct" in former s 82 of the Trade Practices Act 1974 (Cth) (TPA);[91]

(c) that is, they are broader than principles which might otherwise apply in relation to remedies for breach of contract, or tort;

(d) Parliament in that respect could have adopted terms such as "but for", but did not; and

(e) so much reflects a manifest legislative choice to pursue the objectives of discouraging market misconduct and other prohibited conduct (in relation to financial products and financial services in Part 7.10 of the Act) by a liberal approach to the entitlement to compensation for persons affected by contraventions so that the actions of private individuals as well as the State may encourage and enforce market integrity.

• [259] In relation to s 82 of the TPA, an applicant may claim compensation when the contravener's conduct caused other persons to act in a way that led to loss or damage to the applicant.[92]
• [260] Section 82 of the TPA was considered in Marks v GIO Australia Holdings[93] where it was noted that these considerations reflect the scope and purpose of the statute (promotion of competition and protection of consumers)[94] and that section 87 "allows for relief which is tailored to the particular case and is not confined by notions drawn from equity" (although equitable remedies may provide guidance in particular cases).[95]
• [261] The plaintiff states that a similar approach should be adopted when considering causation under section 1317HA of the Act, i.e., a person should be entitled to compensation where the contravener's conduct impacts financial products in a way that indirectly causes a person's loss. This, the plaintiff submits, would be consistent with the objects of Chapter 7 of the Act to promote:

(a) confident and informed decision making by consumers of financial products; and

(b) fair, orderly, and transparent markets for financial products.[96]

• [262] The defendants take a different view and submit that:

(a) whilst the prohibition on insider trading is a statutory preclusion (i.e., not a restatement of a common law principle), the wording of s 1317HA does not reflect any legislative choice or policy relevant to the insider trading provisions;

(b) s 1317HA is in similar terms to s 1317H, which applies to corporation/scheme civil penalty provisions, such that the use of the phrase "resulted from" is not specially or exclusively connected to contraventions of the insider trading provisions, nor financial services civil penalty provisions more generally;[97] and

(c) for these reasons, it would not be correct to interpret s 1317HA (which sits in Chapter 9) by reference to what are said to be the objects of Chapter 7 of the Act.[98]

• [263] The issues between the parties are contentious and the law in relation to them is not settled. In such circumstances, I heed the observations of Applegarth J in Caffrey v AAI Ltd:[99]

"The discretion to strike out should not be lightly exercised. It is a power which can be exercised in a matter in which prolonged argument is necessary in order to expose the lack of a claim or the lack of a defence. However, it is a discretionary matter. As was said by Lord Templeman in Williams and Humbert Ltd v W & H Trade Marks [1986] 1 AC 368 at 435 to 436, following earlier authority:

if an application to strike out involves a prolonged and serious argument, the judge should, as a general rule, decline to proceed with the argument unless he not only harbours doubts about the soundness of a pleading but, in addition, is satisfied that striking out will obviate the necessity for a trial, or will substantially reduce the burden of preparing for a trial, or the burden of the trial itself."

• [264] So as not to stultify the development of the law, caution should be exercised when considering the strike out of a pleading where the law is not settled.
• [265] This as noted in 20 Trevis Court Pty Ltd (as trustee for the Blackstone Property Trust) v Emmapeel Holdings Pty Ltd (as trustee for the Trevis Court Unit Trust),[100] can even extend to a circumstance where a proposition of law is apparently precluded by existing authority:

"[45] ... [W]here the success of a proceeding depends upon a proposition of law apparently precluded by existing authority, that may not always be the end of the matter. French CJ and Gummow J in Spencer v Commonwealth observed that summary processes must not be used to stultify the development of the law. Existing authority may be further explained.

• [266] There is limited Australian authority concerning the insider trading provisions of the Act, particularly in relation to civil claims. This application is not the time and place to settle the respective parties' positions as to the application of the law; that is for another day.
• [267] However, this application needs to consider whether there is a genuine controversy, and that the plaintiff's position is not fanciful.
• [268] The plaintiff alleges that the defendants profited from their contravening conduct, therefore, this profit is to be considered part of the plaintiff's damage. That reflects, in the plaintiff's submission, Parliament's view (consistent with the novel statutory norms relating to insider trading) that persons affected by insider trading, or the misuse of inside information, should be entitled to compensation, irrespective of whether loss in fact arises. It reflects the legislative choice to discourage contraventions of the kind in this case.
• [269] I accept that, at the very least, the plaintiff's claims that the defendants' conduct caused the plaintiff's loss are arguable and appraise the defendants of the case to be met.
• [270] Here, the alleged contravening conduct by each defendant was in aid of, or facilitated, the alleged short selling by the Oasis and Glaucus parties which is pleaded as:

(a) the Oasis parties entering into the Securities Lending Arrangement, disposing of Blue Sky shares, procuring Oasis to dispose of Blue Sky shares, procuring Oasis to enter into the Securities Lending Arrangement, procuring the brokers to dispose of Blue Sky shares, and procuring Credit Suisse to later buy Blue Sky shares;[101]

(b) the brokers disposing of Blue Sky shares on behalf of the Oasis parties and entering into agreements with Oasis to do the same,[102] and Credit Suisse entering into an agreement to later buy BLA shares;[103] and

(c) the Glaucus parties procuring Glaucus and/or Glaucus Associates, and the Oasis parties, to dispose of, and then acquire, Blue Sky shares (or enter into an agreement to do so), and communicating the inside information to Glaucus and/or Glaucus Associates, and the Oasis parties, in breach of s 1043A(2) of the Act.[104]

• [271] On the plaintiff's case, the alleged contraventions were integral to the short selling, which would otherwise not have been successful, as:

(a) it was the short selling which caused the (intended) drop in the Blue Sky share price, and therefore the (intended) loss suffered by the plaintiff (and likely the class members); and

(b) that is so whether or not the loss is characterised as loss of a chance.

• [272] The plaintiff's case is that the contraventions motivated and facilitated the short selling, and caused, as intended, the resulting drastic drop in the Blue Sky share price.
• [273] I accept that it is not fanciful to contend that the plaintiff's pleaded loss resulted from the contraventions in this way.
• [274] The plaintiff's case is that the activities in which the defendants took part to borrow, sell, and acquire shares in Blue Sky in reliance on the inside information resulted in the plaintiff's loss, i.e.:

(a) prior to the later stages of the short selling, the value of the plaintiff's shares in BLA was $58,080,000;[105] and

(b) after the short selling was completed (when the shares were purchased at low value), the value of the plaintiff's shares in Blue Sky was $24,728,000.[106]

• [275] The plaintiff's case is that, as a matter of fact and common sense, the contraventions in the form of the short selling pleaded in paragraph 97B of the revised ASOC drove down the price of BLA shares and caused the plaintiff to suffer damage. The plaintiff's case is that:

(a) the damage suffered by the plaintiff (and other class members) that resulted from the contraventions was that shares it held in Blue Sky could, and rationally would if privy to the inside information, have sold prior to the Glaucus Report being released at a higher price it did not sell as it did not have the opportunity the insiders did; and

(b) that is, the scenario the legislature means to avoid and sanction, including by compensation to those deprived of the inside information.

• [276] In Janssen-Gilag Pty Limited v Pfizer Pty Limited[107] Lockhart J said, in relation to relief pursuant to s 82 of the then TPA:

"Also, a perusal of the provisions of Pts IV and V, the contravention of which gives rise to an entitlement to an applicant for compensation for loss or damage, points to the conclusion that applicants may claim compensation when the contravener's conduct caused other persons to act in a way that led to loss or damage to the applicant**.** Examples are s 46 which concerns the misuse of market power by corporations; s 47 relating to the practice of exclusive dealing; also s 48 which is concerned with resale price maintenance."

• [277] In Marks,[108] Gummow J referred to Janssen-Gilag Pty Limited and stated:

"[102] These considerations, reflecting the apparent scope and purpose of the statute, militate against the presence of any legislative intention that before the court comes to assess the amount for which applicants are to be compensated under s 82 it first must identify any relevant general common law rules or analogies, understand the reasons that led to their development, and then seek to adapt or adopt them consistently with the scope and purpose of the legislation."

• [278] Similarly, in Awad v Twin Creeks Properties Pty Ltd,[109] Allsop P (with whom Macfarlan JA and Sackville AJA agreed) stated:

"[43] ... Relief under the TPA, s 87, should be viewed not by reference to general law analogues but by reference to the rule of responsibility in the statute that is directed against misleading and deceptive conduct... Involved in that rule of responsibility is the public policy of protection of people in trade and commerce from being misled, and the width of the powers given by the TPA that are apt to be employed in a manner conformable with the just compensation or protection of the representee. Whether or not to grant a form of rescission under s 87, or to limit a plaintiff to damages under s 82, is a question in the nature of a discretion to be approached by reference to the facts of the particular case, the policy and underpinning of the TPA and the evaluative assessment of what is the appropriate relief to compensate for, or to prevent the likely suffering of, loss or damage "by" the conduct ... An approach that is limited mechanically around a but for causation enquiry will be likely not to involve a full evaluative assessment of the appropriate relief."

• [279] The plaintiff states that their approach is consistent with the approach set out in Awad as:

(a) the short selling undertaken by Oasis and Glaucus depended on the contraventions alleged against the defendants;

(b) those contraventions were integral to the success of the short selling; and

(c) the Parliament has determined that certain activities (such as the contraventions in this case) undertaken in possession of "inside information" are unlawful.

• [280] In the circumstances, I accept that it is not fanciful for the plaintiff to contend that:

(a) part of the policy of the insider trading provisions is to prevent persons from engaging in market manipulation that derives directly from such contraventions; and

(b) that the prohibitions are designed to prevent profit from those contraventions, or to compensate loss arising by them, as in this case.

• [281] I accept that the policy of the Act and the relevant provisions does not conclusively prevent the plaintiff from testing the allegations at trial and that, as a result of the contraventions, and the consequent short selling, the plaintiff suffered damage through:

(a) a decrease in the value of its Blue Sky shares; and

(b) the lost opportunity to sell its Blue Sky shares at a higher value.

• [282] Accordingly, I accept that, at the very least, the plaintiff's claims that the defendants' conduct caused the plaintiff's loss are arguable and appraise the defendants of the case to be met. Therefore, the basic functions of a pleading have been fulfilled.[110]
• [283] Further, section 1317HA(2) of the Act provides that profits made by any person resulting from the contravening conduct are to be included in determining the damage suffered by a person. The plaintiff submits that s 1317HA(2):

(a) brings within the compensatory scheme of the section a claim for profits made which would not otherwise necessarily fall within the formula "damage suffered by the corporation";[111]

(b) empowers the Court to compensate for profits made from a contravention without proof of a corresponding loss; and

(c) deems any profit to be a loss suffered by the claimant.

• [284] In this case, the profits will differ between the defendants and are not able to be further particularised before disclosure and expert evidence, but they remain a head of damage which the plaintiff is entitled to claim.
• [285] Such a position, the plaintiff submits, reflects Parliament's view (consistent with the novel statutory norms relating to insider trading) that persons affected by insider trading, or the misuse of inside information, should be entitled to compensation, irrespective of whether loss in fact arises. In my view, such a position is arguable and not fanciful, particularly considering the dearth of cases considering these provisions.
• [286] Accordingly, leave to replead is not refused based on the defendants' concerns relating to causation.
• [287] As to the complaint that the pleading rolls up allegations into a big lump, paragraph 97C pleads that each of the contraventions referred to in paragraphs 45, 61, 75, 89, and 93 were part of, facilitated, or enabled the short selling. Paragraph 97F then pleads that, by reasons of the matters in paragraph 97 to 97E, each of the contraventions referred to in paragraphs 45, 61, 75, 89 and 93 resulted in the plaintiff's loss referred to in paragraphs 98(b)(i) and (ii).
• [288] As to these contraventions referred to in paragraph 97C and 97F:

(a) paragraph 45 relates to the Oasis parties;

(b) paragraph 61 relates to Credit Suisse

(c) paragraph 75 relates to Argonaut;

(d) paragraph 89 relates to Euroz Hartleys; and

(e) paragraph 93 relates to the Glaucus parties.

• [289] In my view, the 6SOC asserts with appropriate efficiency each contravention that is relied upon.

• [290] The defendants state that the 6SOC discloses no reasonable cause of action, and is otherwise embarrassing and vexatious, and an abuse of process.
• [291] The defendants state the 6SOC introduces the following propositions:

(a) the fall in the price of Blue Sky shares following publication of the Glaucus Report was not due to the market reaction to the report, but instead due to the short selling in which the defendants are alleged to have engaged (with advance knowledge that a short report would be released in late March 2019);

(b) the opportunity lost by the plaintiff is to sell their shares free from the alleged effect upon the price of Blue Sky shares of the alleged short selling by the defendants, after the Glaucus Report was published; and

(c) by being denied the opportunity to sell their shares at higher proceed after 28 March 2018, without the presence of short selling depressing the price of the shares, the plaintiff suffered damage referable to the price at which they could have sold their shares several weeks earlier (by no later than mid-March 2019).

• [292] Paragraph 97A asserts that the plaintiff and the group members would have sold some or all of their shares in Blue Sky after 31 March 2018 at a price between $12.00 and $13.20. Thus, the defendants submit paragraph 97A states that the Blue Sky share price collapsed after 28 March 2018, not because of the market reaction to the Glaucus Report, but because of the short selling actions of the defendants.
• [293] The defendants raise a number of issues with this plea, including that it is inconsistent with:

(a) paragraph 97 which asserts that the plaintiff and group members would have sold their Blue Sky shares earlier in the period between 1 and 12 March 2018; and

(b) the 5SOC which asserted that the plaintiff and group members would have sold their Blue Sky shares mid-March 2018.

• [294] The defendants state that the plaintiff's plea in paragraph 97A that the share price collapsed after 28 March 2018, not because of the market reaction to the Glaucus Report, but because of the short selling actions, discloses no reasonable cause of action for the following reasons:

(a) the pleaded definition of "Inside Information" asserts that knowledge that a short report would be published was market-sensitive information, but in the counterfactual now asserted, publication of the short report did not affect the share price (and the thing that did affect the share price was short selling by Oasis);

(b) the pleaded description of "short selling" and "short reports" brought about a decrease in the price of securities and not a selling and buying of shares (irrespective of the publication of the short report);

(c) a counterfactual founded upon the information defined as the "Inside Information" (that a short report would be published in late March 2018) being "generally available" makes no sense because the statutory provisions impose no obligation upon any of the defendants to publicise inside information;

(d) there are inconsistencies between paragraph 97 and 97A;

(e) the proposition that, if it were generally known that a short report about Blue Sky would be published in late March 2018, the Plaintiff and every other shareholder of Blue Sky (who owned shares in March and April 2018) would have moved to sell all of their Blue Sky shares by no later than mid-March 2018 is inconsistent with the actual course of events (in which none of those shareholders sold even after the report was published) and is directly contrary to statements previously made by or concerning the plaintiff (as to Mr Sowerby's confidence in the business and his refusal to sell after the Glaucus Report was published), such that evidence in support of such a proposition is required to be adduced if leave to amend is sought to make this allegation;

(f) the proposition that if the plaintiff and every other shareholder of Blue Sky had, upon becoming aware of the impending publication of a short report, moved to sell all their Blue Sky shares, they would have found buyers willing to pay $13.20 per share is not seriously arguable;

(g) the plaintiff's attempt to quantify its loss, and the loss of every other shareholder of Blue Sky in March and April 2018, by reference to the (arbitrarily chosen) $5.62 share price as at 5 April 2018 makes no sense;

(h) the proposition that buyers would have existed in the market to purchase all of the plaintiff and group members' shares at the pleaded price of $12.00 to $13.20 after 31 March 2018, following publication of the Glaucus Report, without those sales affecting the share price, is incredible and untenable;

• [295] The defendants state that the proposition that the pleaded short selling by the defendants depressed the Blue Sky share price is untenable as the decrease in the Blue Sky share price after 28 March 2018 can only have been caused by market participants offering to sell Blue Sky shares (in large quantities) at prices buyers were unwilling to accept.
• [296] However, the defendants highlight that Oasis is not alleged to have offered any Blue Sky share for sale after the Glaucus Report was published. It is instead alleged that Oasis sold Blue Sky shares before the Glaucus Report was published and then acted to buy Blue Sky shares after the report was published.
• [297] Accordingly, the defendants state that:

(a) this conduct cannot logically be the cause of the decrease in the Blue Sky share price after 28 March 2018 on which the Plaintiff relies; and

(b) the pleaded short selling cannot have caused a decrease in the Blue Sky price after the Glaucus Report was published.

• [298] Further, the defendants state that the proposition that short selling by the defendants depressed the Blue Sky share price is untenable because the volume of shares subject to alleged short selling (806,160 share sales and 641,373 share purchases) is minimal compared to the 77 million Blue Sky shares outstanding at the time of publication of the Glaucus Report.
• [299] The defendants state that the 6SOC does not allege any actual short selling by the Glaucus parties. Rather, the defendants state it contains a bare assertion, short of any material facts, to the effect that Mr Aandahl (for example) procured Glaucus (in ways not particularised), or unidentified employees and associates of Glaucus (also in ways not particularised), to dispose of and then acquire, unidentified Blue Sky shares, at unidentified points in time.
• [300] Further, the defendants raise that no material facts in the 6SOC are alleged by which they procured Oasis' short selling. Accordingly, the defendants submit that the new causation pleading is incapable of disclosing a cause of action under s1317HA.
• [301] The defendants stress that the causal link (as framed in 6SOC) is the short selling and the collapse in price. Accordingly, the Glaucus Report and the contraventions had no effect on the share price:

"MR O'SULLIVAN: And in terms of logical difficulties, if the Glaucus report has no effect on the share price, which is the theory of 97E because they want all of the drop in the price down to $5.62 to come from short selling - that's what they need to prove. If that's the case, the Glaucus report has not, in fact, affected the price of the shares, and if that's true, knowledge a short report would come out can't be price-sensitive information. It can't be price-sensitive information because on this theory, this counterfactual - when the report does come out, it's actually not the report that depresses the price. It's the alleged short selling.

So the problem of - the causal problem is a - not only one of pleading in the way our learned friend, Mr Beecham, has explained, but it's also a logical problem. It's a logical problem because if it's true, the inside information that's pleaded in paragraph 39 lacks the necessary quality that it has to have."

• [302] The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes according to law as quickly, inexpensively, and efficiently as possible.
• [303] A pleading is likely to cause prejudice or embarrassment to defendants if it is patently untenable, is susceptible to various meanings, contains inconsistent allegations, includes various alternatives which are confusingly intermixed, contains irrelevant allegations or includes defects which result in it being unintelligible, ambiguous, vague, or too general.
• [304] The 6SOC pleads the:

(a) contravention by the defendants as the disposal of shares with the benefit of inside information; and

(b) compensation in relation to damage resulting from the contraventions and profits made by the contraventions of the defendants.

• [305] The 6SOC is framed in such a way that the short selling of the shares, the preparation of the report and the inside information cannot be divorced from each other.
• [306] I accept the plaintiff's submission as to the consequence of the interdependence between these important pillars of their case:

"MR DUNNING: Then one turns to say, "Well, is there a pleading of the causation of the loss?" And as - I'm about to move to the pleading of causation of the loss. What is to be noticed by the manner in which those allegations are pleaded is that one cannot divorce the short selling of the shares from the preparation of the report and the inside information that such a report would be. That's the manner in which the case is framed.

And it's no answer to that to pick out just bits of it and say, "Well, this is all about short selling, and that's not unlawful," or, "This is all about the delivery of the report." The contravention is the disposal of shares with the benefit of inside information. And if that occurs, as is alleged here, in circumstances where those disposals and that inside information was part and parcel of the taking of short positions, therefore the disposals, which would never have occurred but for the report - the two are interdependent. There's no point in taking short positions, in this case, unless the report was issued so that the shares could be brought back immediately after. So there's - the way the case is framed, it is not isolated in the way our friends say."

• [307] The defendants state that paragraph 97A (where the plaintiff would have sold its shares after 31 March 2018 but for the alleged short selling), is inconsistent with the plaintiff's actual conduct, by which no shares were sold following publication of the Glaucus Report.
• [308] Further, the defendants state that paragraph 97A is inconsistent with the plaintiff's position taken in other litigation and inconsistent with sworn statements filed by Mr Sowerby in United States litigation where he stated that he didn't sell any shares in Blue Sky because he was committed to the company.
• [309] Accordingly, the defendants state the plaintiff should have adduced evidence to support their application. In Jonker v Thomas International Ltd,[112] Derrington J considered the circumstances when evidence should be adduced:

"[27] It can be accepted that where the question is whether the pleading discloses a reasonable cause of action or defence, the Court need only consider the allegations in the pleading (Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 91, 109; General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, 129 and Imobilari Pty Ltd v Opes Prime Stockbroking Ltd [2008] FCA 1920; (2008) 252 ALR 41, [5]). That is because on an application of that nature, which concerns whether the pleading can succeed as a matter of law, the Court assumes the truth of the allegations made and draws all the necessary inferences in favour of the non-moving party. That approach does not apply where the question is whether the pleading is likely to cause prejudice, embarrassment or delay in the proceedings or might otherwise be an abuse of process.

[28] On an application such as the present, it does not appear that the material which the court might consider is as limited as Counsel for Thomas International suggests. Where it is alleged that all that the party's pleading has done is to make allegations which are wholly without substance and unable to be particularised, it would be an odd thing if, on an application to strike out the pleading (or on the usual cross-application for discovery before particulars are provided), the non-moving party were unable to adduce evidence of the existence of a good cause of action or defence. In such situations the party defending the application to strike out (or seeking to obtain discovery prior to providing particulars) ought to adduce what evidence it can to indicate that it has or, perhaps, believes that it has, a good cause of action or defence as the case may be. The principles which apply where a discovery application is defended on the basis that the proceedings are of a fishing nature apply mutatis mutandis to a strike out application of the kind which is before the Court. In Trade Practices Commission v CC (New South Wales) Pty Ltd [1995] FCA 1418; (1995) 58 FCR 426 the Commission was able to point to evidence which supported the existence of the claimed cause of action even though particulars of the allegations were not able to be provided at the time. For this reason the Court was satisfied that the allegations which could not be particularised were not speculative. In relation to the prohibition of using discovery for the purposes of "fishing", Lindgren J said:

What is meant is that discovery must not be used for the purpose of ascertaining whether a case exists, as distinct from the purpose of compelling the production of documents where there is some evidence that a case exists.

[29] The last part of that sentence is important in the present context. Where all that the Court has before it on an application to strike out (or on an application for discovery) is a bald allegation in the pleading which cannot be appropriately particularised and an absence of evidence that a case exists, the allegation is embarrassing and should not stand and no orders for discovery should be made in respect of it (see also the observations of Brennan J in WA Pines Pty Ltd v Bannerman [1980] FCA 79; (1980) 41 FLR 175, 181).

[30] A similar approach was followed in Matthews v SPI Electricity Pty Ltd (No 12) [2014] VSC 131, [41], where Derham AsJ observed that no attempt had been made to adduce any evidence to establish that the plaintiff had any basis for knowing, or even suspecting, the matters in question (at [42]). Had such evidence been procured it would appear that the result would have been different. By comparison, in Egg and Egg Pulp Marketing Board v K H Korp [1963] VicRp 52; [1963] VR 378, 381 the Court accepted that the allegations in the pleading were defined with sufficient precision to overcome the suggestion that the applicant was merely "fishing" for a case. Here, by contrast, Thomas International has not pleaded with sufficient particularity to overcome the conclusion that it is fishing for a case and nor has it sought to adduce any evidence which might suggest that it has a substantial defence based upon material from which inferences might be drawn. That is, it does not attempt to identify the facts from which the necessary inferences can be drawn.

[31] Thomas International has made allegations in this matter that ACT made representations to various entities. It admits it is not able to identify those entities. It merely describes them as customers of ACT. It cannot identify the persons who made the representations or their connection with ACT such that it might be said that the representations were made on its behalf. Moreover, Thomas International has not sought to advance any basis whatsoever for knowing, or even suspecting, that there existed customers to whom representations were made by ACT. It is difficult to escape the conclusion that this is a "fishing expedition" by Thomas International. It does not presently know whether any representation was made to various entities but it seeks discovery for the purposes of ascertaining whether that allegation can be sustained. Importantly, it did not adduce any evidence to found a belief or suspicion that the representations were made to former customers. The pleading appears to be simply a foundation on which to obtain discovery to ascertain whether or not any case exists rather than a pleading based upon evidence supporting an established case. On the material which is before the Court the present appears to be a situation where Thomas International has made an allegation without any basis for it (which is plainly impermissible). This is not a case where the allegations made were ex facie soundly based on the best particulars which were available (see Murphy v Victoria [2014] VSCA 238; (2014) 45 VR 119 at [35])."[113]

• [310] In my view, the circumstances of this case are not akin to Jonker.
• [311] The 6SOC provides particulars of the contraventions and the loss and compensation. Paragraph 97A pleads that were it not for matters referred to in paragraph 97B to 97E, the plaintiff and group members would have sold some, or all of their shares in Blue Sky after 31 Match 2018 at a price between $12.00 and $13.20. Then paragraphs 97B to 97E plead that:

(a) Oasis and Glaucus engaged in short selling of Blue Sky shares;

(b) each of the contraventions as pleaded against the defendants were part of, facilitated, or enabled the short selling;

(c) the short selling caused a reduction in the price of Blue Sky shares after 28 March 2018 and deprived the plaintiff an opportunity to sell its shares after this date at the price as pleaded in the 6SOC; and

(d) the short selling caused the plaintiff's loss as pleaded in the 6SOC.

• [312] Then paragraph 97F wraps it all up by pleading that for the matters pleaded in paragraphs 97 to 97E, each of the contraventions as pleaded against the defendants resulted in the plaintiff's loss as pleaded in paragraphs 98(b)(i) and (ii) in the 6SOC.
• [313] Justice Freeburn in Brisbane Airport Corporation Pty Ltd v Airservices Australia & Anor[114] set out what is the ultimate purpose of the pleading:

"[25] The borders between material facts and the evidence are sometimes a little hazy and minds may differ on where the boundaries lie between the two concepts. In some cases, a question of degree may be involved. As Jacob and Goldrein state in their text: "The ultimate purpose of the pleading is to define the issues in dispute and to place the defendant in the position of knowing the case it must meet. In that sense the pleading rules are a part of the requirement of procedural fairness."

[26] Here, it is difficult to see why the six sets of details specified in paragraph 36 of ASA's submissions are required by the rules of pleading and procedural fairness. What is being required are further details rather than material facts. A plaintiff is not required to bake the statement of claim according to a recipe specified by the defendant. The requirement is merely that the essential ingredients be present in the pleading."

• [314] The defendants may say that, at trial, the plaintiff's position won't be accepted as correct. Evidence may be called by the defendants that undermine the plaintiff's case, including, for example, previous statements made by Mr Sowerby and evidence that Euroz Hartleys may have engaged in long selling, and not short selling. However, that is a matter for the trial and not for this application.
• [315] In my view, as a matter of pleading, the 6SOC sets out the factual skeleton by identifying the manner in which the decision to dispose of shares is tied to the expectation of the delivery of the report, unknown to the market, for the purpose of making profit and the plaintiff pins its colours to the mast as to how it seeks to prove the compensation sought.
• [316] The defendants state that, pursuant to paragraphs 97 and 97A,[115] the 6SOC now brings compensation on two inherently inconsistent bases and on its face, these versions are embarrassing and vexatious as the defendants have to respond to a case that says:

(a) on the one hand, as per paragraph 97, the plaintiff (and all other group members) would have moved to sell all of their Blue Sky shares before the Glaucus Report was published, upon being given advance notice of that fact; and,

(b) on the other hand, as per paragraph 97A, they would also have waited until the report came out and then sold their shares afterwards.

• [317] Rule 154(1) of the UCPR allows inconsistent allegation or claims in a pleading only if they are pleaded as alternatives. Boddice J (as his Honour then was) in Groves v Groves[116] set out;

"[16] A party is able to advance inconsistent allegations or claims, if pleaded as alternatives. Accordingly, that fact, of itself, is no basis to refuse leave to amend. However, the defendants submit the proposed pleading does not merely advance inconsistent cases in the alternative. It pleads inconsistent factual allegations, with the plaintiff's primary case remaining being based on the plaintiff having no recollection of signing the documents, and not believing she did, and the proposed amendments relying on allegations that the plaintiff did sign the documents. It is submitted this breaches the rule that a pleading not contain inconsistent factual allegations. This rule applies whether or not the inconsistent facts are pleaded as alternatives. The defendants contend that the plaintiff is required to elect between those inconsistent positions.

[17] Viewed as a whole, the proposed amendments do not involve making inconsistent factual allegations in the one claim. The plaintiff seeks to plead an alternate case in the event the defendants succeed in their allegation that the plaintiff signed the guarantees as alleged. Whilst such a position will provide significant challenges, particularly where the plaintiff's credit is already squarely in issue having regard to the lack of expert evidence to support her primary case, the pleading does not offend pleading rules.

[18] The proposed pleading pleads an alternate case in the event the defendants' case succeeds. It does so by seeking to rely upon a history of relationship rather than pleading facts specific to the circumstances of the actual signing of the particular guarantee. As such, it does not plead, positively, facts inconsistent with the primary case. It would be a different matter if the plaintiff sought, by way of alternate case, to plead that she recalled the circumstances in which she signed the particular guarantee. That form of plea would breach the rule as it would amount to pleading inconsistent sets of facts in the alternative in circumstances where one of those versions must be known to be false."

• [318] The plaintiff has pleaded the two bases as alternatives.
• [319] The 6SOC, taken as a whole, does not involve making inconsistent factual allegations in the one claim. Paragraphs 97 and 97A provide pathways as to the orders sort in paragraph 98.
• [320] The paramount consideration in determining an application to amend pleadings is justice.[117] In Hartnett, Applegarth J when identifying principles relevant to an application for leave to amend stated at [27]:

"9. Justice requires consideration of the prejudice caused to other parties, other litigants and the court if the amendment is allowed. This includes the strain the litigation imposes on litigants and witnesses_._"

• [321] The defendants contend there is an undeniable prejudice against them in having to repeatedly consider revised pleadings alleging serious misconduct. However, I note the very early stage of this application. This is not a case like Aon, where the litigation was advanced. In my view, there is no prejudice to grant leave to amend other than that the defendants do not care to answer the case against them.
• [322] I note the words of Freeburn J in Brisbane Airport Corporation v Airservices Australia:[118]

"[26] ... A plaintiff is not required to bake the statement of claim according to a recipe specified by the defendant. The requirement is merely that the essential ingredients be present in the pleading."

• [323] In my view, the essential ingredients are present in this claim.
• [324] I consider the pleading raises an arguable case, and there are clearly strongly contested factual and legal matters to be determined. But I am not persuaded that the plaintiff should be summarily foreclosed from prosecuting this claim as set out in the 6SOC.

• [325] The plaintiff is granted leave to file and serve an Amended Claim in the form exhibited to the affidavit of Dr William Elliott Wild filed on 18 December 2024.
• [326] The plaintiff is granted leave to file and serve an Amended Claim and Statement of Claim in the form annexed to its reply submissions filed on 6 May 2025.
• [327] The question of costs is adjourned to a date to be fixed.

[1] As the proceeding continues to be a representative proceeding, it is, therefore, subject to Pt 13A of the Civil Proceedings Act 2011 (Qld).

[2] Supreme Court of Queensland proceeding 3644/24 (the Oasis Proceeding).

[3] The consolidated statement of claim was filed 30 July 2024.

[5] Australian Securities and Investments Commission, "Activist Short Selling Campaigns in Australia" (Information Sheet, 31 May 2021) https://asic.gov.au/regulatory-resources/markets/short-selling/activist-short-selling-campaigns-in-australia/.

[7] The "trading" and "procuring" prohibitions.

[10] Corporations Act 2001 (Cth) s 1317J(3A).

[11] However, the plaintiff also accepts that managed proceedings are commonly conducted on the basis that leave is required for all proposed amendments to pleadings: The Beach Retreat Pty Ltd v Mooloolaba Marina Ltd [2008] QCA 224, at [38] (in respect of a proceeding on the Supervised Case List); LM Investment Management Ltd (in liq) v EY (No 2) [2018] QSC 226, at [8]-[9] (in respect of a proceeding on the Commercial List).

[12] (2009) 239 CLR 175, at 214 [102].

[13] Similar comments were made by Applegarth J in Hartnett v Hynes [2009] QSC 225, at [21].

[14] [2010] FCAFC 101; (2010) 187 FCR 261.

[15] [2009] QSC 225, at [27] (based upon the principles set out by the High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175).

[16] Monto Coal 2 Pty Ltd v Sanrus Pty Ltd as trustee of the QC Trust & Ors [2014] QCA 267, at [73]-[74].

[17] Hartnett v Hynes [2009] QSC 225, at [11], citing UCPR r 5(1), (2).

[18] Hartnett v Hynes [2009] QSC 225, at [12].

[19] [2022] FCAFC 60.

[20] As Philippides J (as her Honour then was) set out in Barr Rock Pty Ltd v Blast Ice Creams Pty Ltd & Ors [2011] QCA 252, at [27]-[28].

[21] Banque Commerciale SA (In liq) v Akhil Holdings Ltd (1990) 169 CLR 279, at 286-287, citing Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in liq) [1916] HCA 81; (1916) 22 CLR 490, per Isaacs and Rich JJ at 517.

[22] Thiess Pty Ltd v FFE Minerals Australia Pty Ltd [2007] QSC 209, at [37], applying Meckiff v Simpson [1968] VicRp 7; [1968] VR 62, at 70.

[23] QIC Logan Hyperdome Pty Ltd & Anor v Briridge Pty Ltd & Anor [2011] QSC 43, at [10]. See UCPR r 149.

[24] UCPR r 157; Bruce v Odhams Press Ltd [1936] 1 KB 697, at 712; Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd [2010] QSC 249, at [44].

[25] See, eg., Colston v McMullen [2011] QSC 60.

[26] Gall v Domino's Pizza Enterprises Ltd (No 2) [2021] FCA 345; (2021) 150 ACSR 387, at [18].

[27] [2019] QSC 248, at [15].

[28] Spencer v Commonwealth (2010) HCA 28; (2010) 241 CLR 118, at 131-132 [24] per French CJ and Gummow J, citing Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, at 99.

[29] Corporations Act 2001 (Cth) s 1317K.

[30] See Hartnett v Hynes [2009] QSC 225, at [12], [13], [16], [27]; Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, at [99]-[101].

[31] Hartnett v Hynes [2009] QSC 225, at [25].

[32] Althaus v Australian Meat Holdings P/L & Anor [2006] QSC 56, at [21]. See also Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jacques (No 2) [2017] QSC 251; [2018] 3 Qd R 28 per Jackson J, at [85], [86].

[36] Paragraph 98(b) and 101(e) of 6SOC.

[38] Paragraph 97E(c) and 97F(a) of 6SOC.

[42] Althaus v Australian Meat Holdings P/L & Anor [2006] QSC 56, at [21]; See also Lanai Unit Holdings Pty Ltd v Mallesons Stephen Jaques (No 2) [2017] QSC 251; [2018] 3 Qd R 28 per Jackson J at [85]-[86].

[43] [2006] QSC 56.

[44] [2006] QSC 191, at [8].

[45] [2002] 1 Qd R 145.

[46] Thomas v State of Queensland [2001] QCA 336, at [16]; Borsato v Campbell [2006] QSC 191, at [10].

[47] Central Sawmilling No. 1 P/L & Ors v State of Queensland [2003] QCA 311.

[48] [2017] QCA 259.

[49] Corporations Act 2001 (Cth), s 1043A(1)(c).

[50] Corporations Act 2001 (Cth), s 1043A(1)(d).

[51] Corporations Act 2001 (Cth), s 1043A(2).

[52] Corporations Act 2001 (Cth), s 1042A(1).

[53] Corporations Act 2001 (Cth), s 1043A(1)(a).

[54] Corporations Act 2001 (Cth), s 1043A(1)(b).

[55] Corporations Act 2001 (Cth), s 1043A(1)(c) and (d).

[56] (2015) 301 FLR 230.

[57] Renshaw v New South Wales Lotteries Corporation Pty Ltd [2018] NSWSC 1954, at [140] (Walton J). See also Blue Dog Group Pty Ltd v Australian Securities & Investments Commission [2024] QSC 233, at [38], [45] (Bradley J).

[58] PFJV Pty Ltd v Bartter Enterprises Pty Ltd [2022] QSC 110, at [14]-[19].

[59] Corporations Act 2001 (Cth) s 1042A(2).

[60] [2011] WASCA 132; (2011) 251 FLR 286.

[61] [2007] FCA 963; (2007) 160 FCR 35.

[62] ASIC v Citigroup Global Markets Australia Pty Ltd (No 4) [2007] FCA 963; (2007) 160 FCR 35, at [537]-[544].

[63] Ampolex Ltd v Perpetual Trustee Company (Canberra) Ltd & Ors (No 2) (1996) 20 ACSR 649, at 658-659.

[64] Mansfield v The Queen [2012] HCA 49; (2012) 247 CLR 86, 96 [31]-[32] (Hayne, Crennan, Kiefel and Bell JJ).

[65] R v Mansfield [2011] WASCA 132; (2011) 251 FLR 286, at 310-311 [113]-[114] (Buss JA, with whom McLure P agreed).

[66] R v Farris (2015) 301 FLR 230, at 273 [174]-[176].

[67] [2021] QSC 35; (2021) 7 QR 377. See also Mio Art Pty Ltd v Macequest Pty Ltd [2013] QSC 211, at [194]-[198].

[68] [2014] FCAFC 15; (2014) 219 FCR 322.

[69] [2018] QSC 233.

[70] [2014] VSCA 238; (2014) 45 VR 119.

[71] [1999] QSC 191; [2000] 2 Qd R 594.

[72] See also Luna & Co Australia Pty Ltd ATF the Thompson Family Trust v Yuen's Retail Pty Ltd [2023] FCA 365, at [16] and Eggerth v EPI International Pty Ltd [2017] FCA 1547.

[73] Noting that Corporations Act 2001 (Cth) s 1043A is a financial services civil penalty provision (as described in s 1317J(3A)).

[74] On this basis, if the Plaintiff is unable to establish that it is a person who "suffers damage" in relation to a contravention, it will have no standing on which to seek a compensation order.

[75] Which is a financial services civil penalty provision (as described in Corporations Act 2001 (Cth) s 1317HA(1)(a)).

[77] See discussion in Agricultural Land Management Ltd v Jackson (No 2) [2014] WASC 102; (2014) 48 WAR 1, at [449]-[451] (Edelman J), citing Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 179 FLR 1, at [707]-[710], [721] and [724] (Giles JA, with whom Mason P and Beazley JA agreed) in respect of the use of similar wording in s 1317H.

[78] Agricultural Land Management, at [449]-[451] (Edelman J), citing Adler, at [707]-[710], [721] and [724] (Giles JA, with whom Mason P and Beazley JA agreed). See also Agricultural Land Management, at [394].

[79] LM Investment Management Ltd (receiver apptd) (in liq) v Drake (2019) 350 FLR 17, at [142]-[148], referring to Agricultural Land Management.

[80] Section 1020B. Australian Securities and Investments Commission, "Short Selling" (Regulatory Guide, October 2018), RG196.5.

[81] See Australian Securities and Investments Commission, "Short Selling" (Regulatory Guide, October 2018), RG196.3.

[82] Lewis v Australian Capital Territory [2020] HCA 26; (2020) 271 CLR 192, at [151], [178] (Edelman J).

[83] [2020] HCA 26; (2020) 271 CLR 192.

[84] [2016] FCA 1553.

[85] [2020] HCA 27; (2020) 271 CLR 151.

[86] Referring to Banque Commerciale SA (en liq) v Akhil Holdings Ltd (1990) 169 CLR 27.

[87] [2017] FCA 1202; (2017) 123 ACSR 223.

[88] Corporations Act 2001 (Cth) s 1317HA(1)(b).

[89] BHP Group Ltd v Impiombato [2021] FCAFC 93; (2021) 286 FCR 625, at [102].

[90] Corporations Act 2001 (Cth) s 9.

[91] At [94(b)], citing Trilogy Funds Management Ltd v Sullivan (No 2) [2015] FCA 1452; (2015) 331 ALR 185, at 330 [713].

[92] Janssen-Gilag Pty Limited v Pfizer Pty Limited (1992) 37 FCR 526, at 529 . See also Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494, at 528-29 (Gummow J); ACN 002 402 (Manager Appointed) (in liq) (formerly known as Tome Bros Pty Ltd, t/a Tome Bros Real Estate) v Ken Crossman & Co Pty Ltd (2023) 296 FCR 241, at [19] (Markovic, Anderson and McElwaine JJ); Chowder Bay Pty Ltd v Paganin [2018] FCAFC 25, at [61] (Besanko, Markovic and Lee JJ).

[93] [1998] HCA 69; (1998) 196 CLR 494.

[94] Marks v GIO Australia Holdings [1998] HCA 69; (1998) 196 CLR 494, at 528 [101]-[102] (Gummow J).

[95] Marks v GIO Australia Holdings [1998] HCA 69; (1998) 196 CLR 494, at 505 [24] (Gaudron J). See also at 509-10 [33]-[38] (McHugh, Hayne and Callinan JJ).

[96] Corporations Act 2001 (Cth) s 760A(c).

[97] See also Corporations Act 2001 (Cth) s 1317HB, s 1317HC and s 1317HE which are in similar terms to s 1317H and s 1317HA and concern market integrity rules, client money reporting rules, financial benchmark rules and Passport Rules.

[99] [2017] QSC 339, at 4.

[100] [2023] QSC 254, at [45].

[102] Paragraphs 61, 75 and 89 of the 6SOC.

[108] [1998] HCA 69; (1998) 196 CLR 494; see also Gaudron J at [24] and McHugh, Hayne and Callinan JJ at [33]-[38].

[109] [2012] NSWCA 200. See also Jacfun Pty Ltd v Sydney Harbour Foreshore Authority [2012] NSWCA 218, at [55] (Allsop P, Macfarlan and Barrett JJA agreeing at [71] and [74]).

[110] Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82, at [7]; Eggerth v EPI International Pty Ltd [2017] FCA 1547, at [4].

[111] Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; (2012) 200 FCR 296, at [630], applied in Oliana Foods Pty Ltd v Culinary Co Pty Ltd (In Liq) [2020] VSC 693, at [414].

[112] [2017] FCA 1397.

[113] Jonker was cited by Brown J (as her Honour then was) in Adani Mining v Pennings [2024] QSC 302.

[114] [2025] QSC 54.

[115] As set out in paragraph [231] and [232] of these reasons.

[116] [2011] QSC 411.

[118] [2025] QSC 54.