Compumod Investments Pty Limited as trustee for the Compumod Pty Limited Staff Superannuation Fund v A.C.N. 603 323 182 Limited

MARKOVIC J: 1 On 20 August 2020 Compumod Investments Pty Limited as trustee for the Compumod Pty Limited Staff Superannuation Fund commenced this proceeding under Part IVA of the Federal Court of Australia Act 1976 (Cth). 2 The statement of claim (SoC) filed at the time defines group members, on whose behalf the proceeding was commenced, as persons who subscribed to corporate bonds, either directly or through nominees or trustees, issued by A.C.N. 603 323 182 Limited (formerly Axsesstoday Limited) (Subject to a Deed of Company Arrangement) (AXL), the first respondent, under an offer specific prospectus and a base prospectus dated 26 June 2018 and who suffered loss or damage by or resulting from the conduct of AXL and PricewaterhouseCoopers Securities Limited (PwCS), the second respondent, the accounting advisor to AXL in connection with the prospectuses. 3 There are presently two applications before the Court for resolution: Compumod seeks leave to file an amended originating application and amended statement of claim; and, subject to the outcome of that application, PwCS seeks to strike out the SoC or the amended statement of claim without leave to re-plead or, in the alternative, seeks to strike out paras 80, 81 and 83 of the SoC without leave to re-plead. 4 AXL took no active role in these applications and, so far as the Court is concerned, has raised no issues in relation to the SoC or the proposed amended originating application or amended statement of claim.

BACKGROUND 5 The background to the proceeding is summarised in an affidavit sworn by Christopher Edward Moore, the solicitor for Compumod, on 29 January 2021. For the purpose of these applications Mr Moore's evidence was not in issue. 6 AXL, which was a publicly listed company on the Australian Stock Exchange (ASX), operated as a lender to small to medium sized enterprises. 7 On 26 June 2018 AXL offered to issue $50 million in simple corporate bonds described as "Axsesstoday Bonds - Series A, tranche 1" pursuant to the terms of an offer specific prospectus dated 26 June 2018 (Bonds). 8 The Bonds were interest paying, unsubordinated and unsecured debt obligations with an initial term of five years. They commenced trading on the ASX on 23 July 2018. The offer specific prospectus and the base prospectus (collectively, Prospectus) were lodged with the Australian Securities and Investments Commission (ASIC). Following registration of the Prospectus, the offer was open to both wholesale and retail investors. 9 In early September 2018 AXL became aware of a number of breaches of covenants under its syndicated facility agreement (SFA) with the Commonwealth Bank of Australia Ltd and Macquarie Bank Ltd (Syndicated Lenders), some of which were operative on or before 30 June 2018. 10 The Syndicated Lenders extended their forbearance on a number of occasions, with the last expiring on 5 April 2019. 11 On 7 April 2019 Glen Kanevsky, Sal Algeri and Vaughan Strawbridge were appointed as joint and several administrators of AXL and other companies in the AXL group. 12 It was subsequently resolved that AXL and other companies in the group enter into a deed of company arrangement (DOCA) under the terms of which investors received a payment of approximately 27 cents in the dollar, leaving a shortfall on their investment. 13 Mr Moore's evidence is that in the administrators' report to creditors dated 20 August 2019 they reported that the precipitating event which gave rise to the most significant breach of the covenants under the SFA was the introduction of a new accounting standard, AASB 9, which became mandatory from 1 July 2018 but which could have been voluntarily adopted at any time from its introduction in 2014. Mr Moore says that the principal effect of the new accounting standard related to the treatment of arrears. AXL changed its policy in relation to the writing off of arrears, the effect of which was to increase significantly its arrears ratio beyond that permitted by the covenants contained in the SFA. 14 In order to understand this it is useful to set out, in part, the explanation given by the administrators included under the heading "key events leading to the voluntary administration" (as written): On 7 April 2019 the Board resolved to appoint the Voluntary Administrators following the decision by the Syndicate Lenders to not extend the forbearance they had previously granted the Group in response to the Breach of Covenants. Based on our review of the Group's company records, it appears that Management and the Board first became aware of a breach in the Arrears Ratio Covenant under the SFA, as a result of a query raised by the Syndicate Lenders on 3 September 2018, regarding inconsistencies between the management accounts of the Consolidated Group, which had been submitted to the Syndicate Lenders in July 2018 to test covenants, and the statutory accounts of the Consolidated Group, which had been released to the market on 27 August 2018. The breach of the Arrears Ratio Covenant appears to have arisen as a result of the Consolidated Group adopting an amended arrears and impairment recognition policy consistent with the establishment of the SWF, industry standards and the transition to AASB 9. The new policy discloses all Receivables in arrears but not yet written off. Receivables are only written off if they are outstanding for greater than 365 days or if there is no prospect of recovery before then. The old policy automatically wrote off Receivables outstanding for a period greater than 120 days. … As a result of the adoption of the new policy the arrears ratio disclosed in the FY18 AFR increased to 7.67% of Receivables, compared to 3.25% under the old policy. Based on a review of the minutes of the Audit Committee meetings, Board meetings and general correspondence between Management and the Board, it appears that work performed in preparation for the adoption of the new policy was only performed post 30 June 2018. Before the finalisation of the audited FY18 AFR it appears there was discussion about the policy having a potential impact on the sufficiency of the existing provision for lease impairments, but there was a lack of clarity on the quantum of the impact. Following a request from the Syndicate Lenders, the Consolidated Group submitted an updated covenant certificate to the Senior Lenders on 6 September 2018, which confirmed a breach of the Arrears Ratio Covenant. The Syndicate Lenders granted the Consolidated Group a conditional waiver of the covenant breach to allow the Consolidated Group time to remedy the breach. On 9 September 2018 the Consolidated Group placed its securities (ordinary equity and SCB) in a trading halt on the ASX, following which it requested a voluntary suspension of its trading on 14 September 2018 to allow the Board time to undertake a strategic review of the Consolidated Group. During the performance of the strategic review a further four covenant breaches of the Syndicated Bank Facility, six covenant breaches of the Notes and two covenant breaches of the SCB were identified. A complete list of the Covenant Breaches can be found at Section 4.1.2.4. … A number of the Covenant Breaches identified applied retrospective to before/at 30 June 2018. As a result, the Consolidated Group withdrew its financial report released on 27 August 2018 and reissued these statements on 29 November 2018. The key change in the Reissued FY18 AFR was a reduction in profit after tax to $3.lm, which was a 55.7% decrease from the previously reported profit of $7m. This decrease was largely driven by a $3.8m increase in borrowing costs as a result of the Covenant Breaches. In addition, the Syndicated Bank Facility was re-classified as a current liability. … After considering, amongst others, the financial position of the Consolidated Group, the multiple events of default and the failed attempt to raise capital, the Syndicate Lenders notified the Consolidated Group on 5 April 2019 that they would not be able to extend any further forbearance to the Consolidated Group. (Emphasis in original.) 15 On or about 14 August 2020 the DOCA was terminated by the deed administrators under s 445C(d) and s 445FA of the Corporations Act 2001 (Cth). The form 5056 lodged with ASIC on 25 August 2020 states that the DOCA had been wholly effectuated.

THE PROCEEDING 16 In its originating application Compumod seeks recovery of damages and loss as against AXL pursuant to s 729(1) of the Corporations Act for breach of s 728(1) of the Corporations Act or, in the alternative, pursuant to s 1041H of the Corporations Act and s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act); and as against PwCS pursuant to s 729(1) of the Corporations Act for being involved in AXL's breach of s 728(1) of the Corporations Act or, in the alternative, pursuant to s 1041H of the Corporations Act and s 12DA of the ASIC Act. 17 In summary, in the SoC Compumod alleges, among other things, that the Prospectus omitted to disclose a number of matters including the effect of the mandatory application of AASB 9 from 1 July 2018 on AXL's accounts (referred to as the Prospectus Omissions) and that the Prospectus contained misrepresentations in relation to, among other things, the effect of the application of AASB 9 on the financial position of AXL (referred to as the Prospectus Misrepresentations). Compumod also alleges that the compulsory application of AASB 9 and its alleged effects were each a new circumstance that AXL was required to disclose in accordance with s 728(1) of the Corporations Act (referred to as the New Circumstances). 18 As against AXL, Compumod alleges at [72] to [79] of the SoC that: (1) it was a person: (a) making an offer of securities under the Prospectus within the meaning of s 728(1) and s 729(1) of the Corporations Act; (b) who was or ought to have been aware that the Prospectus Omissions were materially adverse from the point of view of an investor; or (c) alternatively who was or ought to have been aware that the Prospectus Misrepresentations were materially adverse from the point of view of an investor; (2) further or alternatively it did not have reasonable grounds for making the Prospectus Misrepresentations within the meaning of s 728(2) of the Corporations Act; (3) further or alternatively it was a person who was, or ought to have been, aware that the effect of the New Circumstances was materially adverse from the point of view of an investor; (4) as a result of the matters set out at (1)-(3) above, AXL contravened s 728(1) and s 728(4) of the Corporations Act and, by reason of s 729(1) (Table, Item 1) of the Corporations Act, any person who suffers loss or damage by reason of AXL's contravention may recover the amount of the loss or damage from AXL. I take the reference to s 728(4), which is an error (which is repeated in the proposed amended statement of claim) as there is no such subsection, to have been intended to be a reference to s 728(2); and (5) in the alternative by reason of the Prospectus Omissions and the Prospectus Misrepresentations or, alternatively, the failure to disclose the effect of the New Circumstances, AXL engaged in conduct which was: (a) in relation to financial products within the meaning of s 1041H of the Corporations Act; and (b) in trade or commerce in relation to financial services within the meaning of s 12DA(1) of the ASIC Act: (i) likely to induce persons in Australia to subscribe for or purchase financial products; and (ii) misleading or deceptive or likely to mislead or deceive in contravention of s 1041H(1) of the Corporations Act and s 12DA(1) of the ASIC Act. 19 As against PwCS, Compumod alleges at [80] to [83] of the SoC that: (1) it provided accounting advice and prepared or advised in relation to the ratios for inclusion in the Prospectus and passages in the Prospectus in relation to the accounts, assessed the likely effect of AASB 9 and AASB 15 on the accounts for the purposes of the Prospectus, reviewed the Prospectus and provided accounting advice to the effect that the introduction of AASB 9 would not change the accounting and knew or ought to have known that the effect of AASB 9 would be as pleaded at paras 32 to 35, 38 and 43 to 49 of the SoC, permitted the Prospectus to use its name as the accounting advisor and alternatively either failed to inform AXL that it had not assessed the likely impact of AASB 9 or wrongly assessed its impact; (2) by reason of those matters, PwCS was a person involved in AXL's contravention of s 728(1) of the Corporations Act within the meaning of s 729(1) and pursuant to s 729(1) (Table, Item 6) any person who suffers loss by reason of AXL's contravention of s 728(1) may recover the amount of that loss or damage from PwCS; (3) in the alternative, by reason of PwCS performing accounting services upon which the information was presented in the Prospectus, PwCS engaged in conduct which was: (a) in relation to financial products within the meaning of s 1041H of the Corporations Act; (b) in trade or commerce in relation to financial services within the meaning of s 12DA(1) of the ASIC Act; (c) likely to induce persons in Australia to subscribe for or purchase financial products; and (d) misleading or deceptive or likely to mislead or deceive in contravention of s 1041H(1) of the Corporations Act and s 12DA(1) of the ASIC Act. 20 It is convenient at this point to set out the relevant statutory provisions on which Compumod relies. 21 Section 728(1) of the Corporations Act prohibits a person from offering securities under a disclosure document if there is a misleading or deceptive statement in, among other things, the disclosure document, an omission from the disclosure document of material required by ss 710, 711, 712, 713, 713C, 713D, 713E, 714 or 715 of the Corporations Act or a new circumstance that has arisen since the disclosure document was lodged and would have been required by ss 710, 711, 712, 713, 713C, 713D, 713E, 714 or 715 of the Corporations Act to be included in the disclosure document if it had arisen before the disclosure document was lodged. 22 Sections 710, 711, 712, 713, 713C, 713D, 713E, 714 and 715 are in Div 4 of Ch 6D of the Corporations Act which sets out the disclosure requirements for and content of a prospectus. 23 Section 729 of the Corporations Act provides that a person who suffers loss or damage because an offer of securities under a disclosure document contravenes s 728(1) may recover the amount of the loss or damage from a person referred to in the table included in s 729 if the loss or damage is one for which the table makes the person liable. Insofar as PwCS is concerned, Compumod relies on item 6 of the table which provides that a category of "people liable on disclosure document" is "a person who contravenes, or is involved in the contravention of," s 728(1) and makes those persons liable for damage caused by that contravention. 24 Section 79 of the Corporations Act provides that a person is involved in a contravention if and only if the person has, among other things, been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to, the contravention: see subs (c). 25 On or about 30 September 2020 PwCS through its solicitors, Ashurst, sought further and better particulars of the SoC. Compumod provided a response to that request through its solicitors, Hicksons Lawyers, on or about 21 October 2020. 26 Thereafter, on 6 November 2020 and 27 January 2021, Compumod served drafts of a proposed amended statement of claim on PwCS. It is the later version of the draft amended statement of claim, which I will refer to as the draft ASOC, which Compumod seeks leave to file. 27 Compumod says that the amendments to the draft ASOC fall into three categories. The first category concerns those amendments which seek to correct AXL's name because it has, since the commencement of the proceeding, changed its name to Universal Equipment Technology Limited, and typographical errors. No complaint is made by PwCS about them and they can be put to one side. The second category relates to the addition of a new claim against PwCS in relation to an alleged failure by it to identify breaches of the "Arrears Ratio Covenant", included at paras 42A to 42F of the draft ASOC. The third category involves the particularisation of the knowledge of PwCS in relation to AXL's alleged contraventions. 28 In his affidavit Mr Moore observes that one of PwCS's complaints is that there is a lack of particularity about the advice given by it to AXL as pleaded in para 80 of the SoC (and the draft ASOC). In relation to that complaint, Mr Moore says candidly that Compumod is unable to provide more precise particulars until discovery has been given. Mr Moore says that Compumod invited PwCS to provide further clarity in respect of the advice it provided but, as at the date of swearing his affidavit, it had not received any response to that invitation. Compumod otherwise does not have access to the documents in the possession of AXL and PwCS for the purpose of particularising that aspect of the claim.

THE APPLICATIONS 29 Compumod seeks leave to file the draft amended originating application pursuant to r 8.21 of the Federal Court Rules 2011 (Cth) and the draft ASOC pursuant to r 16.53 of the Rules. 30 Rule 8.21 of the Rules permits an applicant to apply to the Court for leave to amend an originating application for any reason, including to correct a mistake in the name of a party to a proceeding or to correct the identity of a party to a proceeding. I note that the only amendment sought in the amended originating application is to change the name of AXL to its current name, Universal Equipment Technology Limited, and to amend one typographical error. 31 Rule 16.53 of the Rules provides that, unless r 16.51 which sets out when a party may amend a pleading without leave applies, a party must apply for leave of the Court to amend. 32 The general approach on application for leave to amend a pleading, is that leave to amend will be granted unless the proposed amendment would be futile, such that it would be liable to be struck out or the issue sought to be added is unlikely to succeed: see Caason Investments Pty Ltd v Cao (2015) 236 FCR 322 at [21]. 33 PwCS seeks to strike out the SoC, or alternatively the draft ASOC, pursuant to r 16.21(1) of the Rules which permits a party to apply for an order that all or part of a pleading be struck out on the ground that the pleading: (a) contains scandalous material; (b) contains frivolous or vexatious material; (c) is evasive or ambiguous; (d) is likely to cause prejudice, embarrassment or delay; (e) fails to disclose a reasonable cause of action or defence or other case appropriate to the nature of the pleading; or (f) is otherwise an abuse of the Court's process.

THE PROPOSED AMENDMENTS 34 It is convenient to set out the nature of the amendments in the draft ASOC insofar as they are relevant to PwCS's opposition to the grant of leave to file the draft ASOC and its application to strike out the SoC. 35 The first relevant amendment is the addition of the new claim in relation to the failure to identify breaches of the "Arrears Ratio Covenant" which is pleaded at paras 42A to 42F of the draft ASOC. 36 To understand that claim it is necessary first to set out paras 19 to 21 of the draft ASOC which concern the SFA and the definition of the term "Arrears Ratio Covenant". Those paragraphs provide: 19. On about 9 November 2016, AXL entered into a syndicated facilities agreement with (inter alia) the Commonwealth Bank Australia Limited (CBA), Macquarie Bank Limited (MBL) (together, the Syndicated Lenders) and CBA Corporate Services (NSW) Pty Ltd as agent to the Syndicated Lenders (Agent) (the SFA). 20. Pursuant to the SFA the Group was provided various facilities by the Syndicated Lenders (Syndicated Banking Facility) including: a. a revolving credit facility; b. a bank guarantee facility; c. an overdraft facility; d. a corporate credit card facility. 21. Pursuant to the SFA the Group covenanted to maintain an arrears ratio of 4% or less (Arrears Ratio Covenant), which was to be calculated by reference to AXL's financial reports prepared in accordance with, inter alia, the accounting standards referred to in paragraph 17. 37 Paragraphs 32 to 40 of the draft ASOC set out certain representations made in the Prospectus, including at para 40 that section 3.7 of the offer specific prospectus recorded that PwCS had provided accounting services for the Offer. Paragraphs 41 and 42 plead that: 41. Those accounting services referred to in paragraph 40 as provided by PwCS included, and were reasonably understood by a reader of the Prospectus as including, preparation of or approval of: a. the pro forma balance sheet pleaded in paragraph 34; b. the ratios pleaded in paragraph 35; c. the representations pleaded in paragraphs 36 and 37; d. the statements about the basis of preparation of AX.L's accounts to 31 December 2017 and the pro forma balance sheet pleaded in paragraph 34; and e. the statements about the risk associated with a change in the accounting standards pleaded in paragraph 38. 42. Section 3.8.5 on page 24 of the Offer Specific Prospectus recorded, as was the fact, that PwCS consented to be named Accounting Advisor for the Offer. (Underlining and strikethrough omitted.) 38 Paragraphs 42A to 42F of the draft ASOC provide (as written): 42A. At all material times up to about 6 September 2018 the Group had adopted an accounting policy that automatically wrote off receivables outstanding for a period of greater than 120 days (the Old Policy). 42B. The Old Policy did not accord with the Accounting Standards and in particular clauses 58 - 70 of AASB 139, on the basis that: 42B.1 it did not seek to engage, either adequately or at all, with the requisite assessment for determining impairment; 42B.2 instead adopting a fixed rule of fully impairing any debt which had been in default for 120 days regardless of prospect of recovery; 42B.3 which in turn had the effect of understating both receivables and arrears. 42C. The effect of the Old Policy was such that as at the time the 2017 Proforma Balance Sheet was prepared, receivables and arrears as stated in the 2017 Proforma Balance Sheet were significantly less than if they had been determined in accordance with the Accounting Standards, as pleaded in paragraphs 46-48 below. 42D. Had the 2017 Proforma Balance Sheet been prepared in accordance with the Accounting Standards (instead of the Old Policy), AXL would have been in breach of (inter alia) the Arrears Ratio Covenant. Particulars See paragraphs 50-53 below 42E. The 2017 Proforma Balance Sheet was prepared by PwCS. 42F. At no time prior to the issuance of the Prospectus did PwCS identify the matters pleaded in paragraphs 428, 42C and 42D above. (Underlining omitted.) 39 In summary as explained by Compumod, paras 42A to 42F set out the failures of the policy adopted at the time the Prospectus was drafted, referred to as the Old Policy, by reference to the Accounting Standards, in particular cll 58 to 70 of AASB 139. The effect of that alleged failure is pleaded at para 46 of the draft ASOC which provides: 46. Prior to the application of AASB 9, and by the application of the Old Policy, the Group's provisions for the impairment of receivables for the year ended 30 June 2018 were as follows: a. Current - ($1,247,206) b. Non-current - ($2,648,775) Particulars AXL Annual Report 2018, Note 13, page 69. 46A. Following the matters pleaded below at paragraphs 50 to 53, AXL adopted a new accounting policy whereby receivables were only to be written off if they were outstanding for greater than 365 days or if there was no prospect of recovery before then (New Policy). 46B. The New Policy would have conformed with AASB 139 had it applied prior to 30 June 2018 and conformed with AASB 9 from 30 June 2018. (Underlining and strikethrough omitted.) 40 At paragraphs 50 to 53 of the draft ASOC Compumod alleges that in July 2018 the AXL group submitted its management accounts for the year ended 30 June 2018 to the Syndicated Lenders to test, among other things, the Arrears Ratio Covenant; on or about 27 August 2018, AXL issued the statutory accounts and annual report for the AXL group for the same period; and on or about 3 September 2018 the Syndicated Lenders raised a query about inconsistencies between the FY18 management accounts and the FY18 annual report. Following that query AXL and the AXL group reported to the Syndicated Lenders that the effect of adoption of AASB 9 or, alternatively, the New Policy was that the arrears ratio calculated in accordance with the SFA was 7.67%, rather than 3.25% 41 Paragraph 66 of the draft ASOC sets out the alleged omissions from the Prospectus and includes: In the premises pleaded at paragraphs 42A to 42D, 43 to 49 and 53 to 54 the Prospectus: a. omitted to disclose: … v. the Old Policy did not conform with AASB 139 in the period to 30 June 2018 and AASB 9 from 1 July 2018 as pleaded at paragraph 42B to the effect pleaded at paragraphs 42C to 42E: vi. that the application of the Old Policy misrepresented AXL's financial position such that as at the date of the 2017 Proforma Balance Sheet, the true financial position of AXL was such that it was: 1. in breach of various covenants including the Arrears Ratio Covenant: 2. dependant upon senior lenders not exercising their rights so as to continue to trade; 3. alternatively, insolvent. b. contained misrepresentations to the effect that: … vii. the application of the Old Policy misrepresented AXL's financial position such that as at the date of the 2017 Proforma Balance Sheet, the true financial position of AXL was such that it was: 1. in breach of various covenants including the Arrears Ratio Covenant; 2. dependant upon senior lenders not exercising their rights so as to continue to trade; 3. alternatively, insolvent. (Underlining omitted.) 42 As set out above, two claims are pleaded against PwCS. First, that it was involved in AXL's contraventions of s 728; and secondly, in the alternative, that in providing accounting services in relation to the Prospectus PwCS engaged in misleading or deceptive conduct in contravention of s 1014H of the Corporations Act or s 12DA of the ASIC Act (or apparently that it was involved in AXL's contravention of s 1041H of the Corporations Act and s 12DA of the ASIC Act, although whether such a claim is in fact made is less than clear). The second relevant set of amendments are at paras 80 to 83 of the draft ASOC which concern PwCS's liability in relation to the claims made against it. 43 As to the first claim, at paras 80 to 82 of the draft ASOC Compumod alleges that (as written): 80. As a matter of fact, PwCS: a. provided the accounting services as pleaded in paragraphs 40 and 41; b. prepared, or advised in relation to, the proforma accounts including the 2017 Proforma Balance Sheet for inclusion in the Prospectus; c. advised that the 2017 Proforma Balance Sheet had been prepared in accordance with the recognition and measurement principles presecribed in Accounting Standards other than in respect of the adjustments to reflect the proposed bond issue as if it had occurred as at 31 December 2017; d. prepared, or advised in relation to, the ratios for inclusion in the Prospectus including in relation to the proper application of any policy of writing off receivables in accordance with applicable accounting standards and practice; e. prepared, or advised in relation to, the passages of the Prospectus directed to the accounts of AXL and the method of preparation of the pro forma accounts pleaded in paragraphs 32 to 35 and 38 above; f. assessed the likely effect of AASB 9 on the accounts of AXL for the purposes of the Prospectus; g. assessed the likely effect of AASB 15 on the accounts of AXL for the purposes of the Prospectus; h. reviewed the Prospectus and provided accounting advice to the effect that the introduction of AASB 9 would not "change the accounting" as pleaded at paragraph 33 above; i. knew, or ought to have known, that the effect of AASB 9 would be as pleaded at paragraphs 32 to 35, 38 and 43 to 49 above; j. permitted the Prospectus to use its name as the named accounting advisor; k. alternatively, either: i. failed to ascertain that the 2017 Proforma Balance Sheet was not prepared in accordance with the recognition and measurement principles prescribed in Accounting Standards other than in respect of the adjustments to reflect the proposed bond issue as if it had occurred as at 31 December 2017: ii failed to inform AXL that it had not assessed the likely impact of AASB 9; iii. wrongly assessed the likely impact of AASB 9 in that PwCS did not consider that AASB 9 would have any material impact on the recorded recievables when in fact adoption of AASB 9 had the impacts pleaded at paragraphs 43 to 49 above; or iv. failed to inform AXL that from as early as the time of the 2017 Proforma Balance Sheet AXL was in breach of the Arrears Ratio Covenant. 81. By reason of the matters pleaded in paragraph 80 above, PwCS was, by those acts or omissions, directly or indirectly, knowingly concerned in or a party to, and consequently was a person who was involved in, AXL's contravention of s 728(1) of the Corporations Act within the meaning of s 729(1) (Table, Item ‍6) of the Corporations Act. Particulars Further particulars of the knowledge of an individual or individuals will be provided after discovery. 82. By reason of s 729(1) (Table, Item 6) of the Corporations Act, any person who suffers loss or damage by reason of AXL's contravention of s 728(1) of the Corporations Act may recover the amount of the loss or damage from PwCS. (Underlining omitted.) 44 As to the second claim, at para 83 of the draft ASOC Compumod alleges that (as written): 83. Further, or alternatively, by reason of it performing accounting services pleaded in paragraphs 40, 41, 42 and 80 upon which the information was presented in the Prospectus as pleaded at paragraphs 33 to 39, PwCS engaged in conduct which was: a. in relation to financial products within the meaning of subsections 1041H(1) and 1041H(2)(b) of the Corporations Act; b. in trade or commerce, in relation to financial services within the meaning of s12DA(1) of the ASIC Act; c. likely to induce persons in Australia to subscribe for or purchase financial products; d. misleading or deceptive, or likely to mislead or deceive, in contravention of: i. s1041H(1) of the Corporations Act; ii. s12DA(1)of the ASIC Act in that by acting as pleaded in paragraphs 40-42 and 80 PwCS caused, allowed or permitted the Prospectus to be published, or participated in publication of the Prospectus, to potential investors which: iii. contained the Prospectus Misrepresentations which were misleading for the reasons pleaded in paragraphs 42A to 42F, 43 to 49 and 53 to 54: and iv. involved the Prospectus Omissions which were misleading in the circumstances of the publication of the Prospectus and the matters pleaded in paragraphs 67 and 68. (Underlining omitted.)

CONSIDERATION 45 PwCS opposes Compumod's application to amend the SoC in the form of the draft ASOC on a number of bases and only presses its strike out application in the event that the Court dismisses Compumod's amendment application because, on its case, substantially the same deficiencies apparent in the draft ASOC are found in the SoC. Not surprisingly, there is a significant degree of overlap between PwCS's submissions in support of its strike out application and those in opposition to Compumod's amendment application, albeit that the former consider the same alleged deficiencies but through the lens of r 16.21 of the Rules and the applicable principles. 46 Relevantly, Compumod accepts that if leave to amend in the form of the draft ASOC is not granted, it follows that the SoC is defective given that PwCS's objections to the amendments are based on what PwCS says are deficiencies in the SoC. As I understand Compumod's position, it is that if leave to amend in the form of the draft ASOC is not granted, I would accede to PwCS's application to strike out the SoC. However, should that occur, Compumod says it should be granted leave to re-plead. 47 It is therefore necessary to address two questions: first whether leave to amend in the form of the draft ASOC should be granted; and secondly, if leave to amend is refused and the SoC is struck out, whether Compumod should be given leave to re-plead.

Should leave to amend be granted? 48 As I have already observed PwCS makes a number of complaints about the draft ASOC, which I will address by category. 49 The first category, described in oral submissions as PwCS's principal complaint, concerns the way in which accessorial liability is pleaded against it in paras 80 and 81 of the draft ASOC. 50 PwCS observes that while the SoC alleges that it was "involved" in AXL's contravention of s 728(1) of the Corporations Act, without specifying the nature of that involvement, in para 81 of the draft ASOC Compumod pleads that it was "knowingly concerned" in the alleged contraventions of AXL. PwCS contends that it would only have been knowingly concerned in a contravention by AXL if it intentionally participated in the contravening conduct with actual knowledge of the essential facts that constituted the contravention, relying on Yorke v Lucas (1985) 158 CLR 661 at 667. It says that given the alleged underlying contravention by AXL is making misleading or deceptive statements or omissions, Compumod would only establish that PwCS was knowingly concerned in that contravention if it had actual knowledge that the statements or omissions said to be misleading or deceptive were, in fact, false, misleading or deceptive, referring to Yorke v Lucas at 667-668, and 670-671. 51 PwCS submits that Compumod's submissions proceed on the erroneous assumption that a party may be knowingly concerned in misleading or deceptive conduct even in circumstances where it does not know that the representation in issue was misleading, deceptive or false. It says that Compumod's error is reflected in the proposed amendments to para 80(k) as set out in the draft ASOC, in which it seeks to allege that PwCS "failed to ascertain that the 2017 Proforma Balance Sheet was not prepared in accordance with the recognition and measurement principles prescribed in the Accounting Standards". Even assuming that allegation to be true as a factual matter, PwCS would not be knowingly concerned in any contravention by AXL arising from the non-compliance of the 2017 Proforma Balance Sheet with the relevant Accounting Standards because, on that assumption, it did not have actual knowledge of the relevant non-‍compliance and so did not have knowledge of all of the essential elements of a contravention. PwCS submits that the same analysis applies to para 80(k)(iii) of the draft ASOC. 52 Similarly, PwCS submits that in order for it to be knowingly concerned in any contravention by AXL by reason of the matter pleaded at para 80(k)(iv) it would had to have had actual knowledge that, from as early as the time of the 2017 Proforma Balance Sheet, AXL was in breach of the Arrears Ratio Covenant and there is no allegation that it had such knowledge. 53 Compumod accepted in oral submissions that in order to succeed on its claim that PwCS was involved in AXL's contravention of s 728(1) it must establish that PwCS knew of the facts giving rise to the contravention by AXL and that the traditional way of pleading an allegation of being involved in a contravention was to focus on the knowledge of the person said to be involved, at the expense of that which was done. But here para 80 of the draft ASOC pleads the facts, that is what in fact PwCS was engaged to do and what it did in terms of the accounting aspects of the Prospectus, albeit at a level of generality, and para 81 "pulls it all together". Compumod submits that, if it makes out the facts, that is sufficient to establish that PwCS was knowingly concerned in or party to the contraventions by AXL, and that it is not required to plead that PwCS knew the representation was misleading or ultimately to prove that fact, referring to Colin R Price & Associates Pty Limited v Four Oaks Pty Limited (2017) 251 FCR 404 (Colin R Price) at [89]. 54 Yorke v Lucas concerned a claim for breach of s 52 of the Trade Practices Act 1974 (Cth) (TPA) arising from the sale of a business including, as against Mr Lucas, a claim that he was involved in the contravention of s 52 by his company by reason of s 75B(a) and s 75B(c) of the TPA. Section 75B of the TPA was relevantly in the same terms as s 79 of the Corporations Act. The High Court considered whether there was a requirement of intent on the part of a person, based upon knowledge of the material facts, alleged to be "involved in a contravention" within the meaning of s 75B(a) or s 75B(c) of the TPA. 55 In relation to s 75B(a) of the TPA, the equivalent of s 79(a) of the Corporations Act, at 667-668 the plurality said: If par. (a) of s. 75B imports the requirements of the criminal law, it is clear in the light of Giorgianni v. The Queen that Lucas could only be brought within that paragraph if he intentionally aided, abetted, counselled or procured a contravention by the Lucas company of s. 52 of the Trade Practices Act. Upon the findings of the trial judge, however, Lucas lacked the knowledge necessary to form the required intent. A ‍contravention of s. 52 involves conduct which is misleading or deceptive or likely to mislead or deceive and the conduct relied upon in this case consisted of the making of false representations. Whilst Lucas was aware of the representations - indeed they were made by him - he had no knowledge of their falsity and could not for that reason be said to have intentionally participated in the contravention. The appellants sought to meet this difficulty by submitting that s. 75B(a) should not be construed in accordance with the requirements of the criminal law and that no intent was necessary in order to constitute a person an aider, abettor, counsellor or procurer within the meaning of that paragraph. A contravention of s. 52, it was said, requires no intent and it follows that there is no reason why intent should play any part in secondary participation in a contravention of that section. The nature of the prohibition imposed by s. 52 is, however, governed by the terms in which it is created and the context in which it is found. Section 75B, on the other hand, in speaking of aiding, abetting, counselling or procuring, makes use of an existing concept drawn from the criminal law and unless the context requires otherwise, there is every reason to suppose that it was intended to carry with it the settled meaning which it already bore: cf. Barker v The Queen. Nor is there any reason to suppose that because the application of s. 75B may occur in conjunction with a provision such as s. ‍52, which requires no intent, it must also be construed so as to dispense with intent as an element of aiding, abetting, counselling or procuring. In Giorgianni v. The Queen it was held that secondary participation required intent based upon knowledge, notwithstanding that the statutory provision creating the principal offence imposed strict liability. (Footnote omitted.) 56 The plurality went on to observe at 670 the following in relation to s 75B(c) of the TPA, the equivalent of s 79(c) of the Corporations Act (see [24] above): There can be no question that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention. It cannot, therefore, be suggested that Lucas falls within the first limb of par. (c). It might be thought possible to construe the express requirement of knowledge as extending not only to being "concerned in" but also to being "party to" a contravention. However, there are two reasons, in our view, why it is inappropriate to do so. First, the natural construction of par. (c) is to regard the word "knowingly" as qualifying only the words "concerned in" which immediately follow it. The punctuation strongly suggests such a construction. Secondly, the word "knowingly" would be an unnecessary qualification of the words "party to". In the context of the paragraph, a person could only properly be said to be "party to" a "contravention" if his participation was in the context of knowledge of the essential facts constituting the particular contravention in question. Whilst it is not a contradiction in terms to speak of a person being "party to" something of which he is unaware, some indication is needed to convey such a meaning. There is nothing in the paragraph itself which would point to any conclusion other than that the words "party to" are used to refer to a participant in the nature of an accessory. Moreover, the wider context of the whole section leads to the same conclusion. … 57 As noted at [53] above, Compumod submits that pleading the essential facts of the alleged contravention does not require it to show and thus plead that PwCS knew that the representation was misleading or deceptive, relying on Colin R Price. 58 Colin R Price concerned a dispute between investors jointly engaged in a property development project where each investor owned units in a unit trust which, in turn, owned the project. One issue that the Full Court (Rares, Murphy and Davies JJ) addressed in that case was whether various unit holders were knowingly concerned in unconscionable conduct engaged in by the trustee of the unit trust. At [89], the Full Court observed: On our view of the evidence, Mr Power and/or Mr Reynolds were personally involved in all stages of Twentieth Green's conduct and each of them knew the essential facts that together constitute the contravention found. It was their knowledge of Mr Price's vulnerability and his poor bargaining position, Mr Power's unfair tactics and undue pressure, and their taking advantage of Mr Price's predicament that made Twentieth Green's conduct unconscionable. The appellants were not required to show that Mr ‍Power and/or Mr Reynolds knew or recognised that the facts constituted unconscionable conduct: Yorke v Lucas (1985) 158 CLR 661 at 667 (Mason ACJ, Wilson, Deane and Dawson JJ); Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [48] (Gummow, Hayne and Heydon JJ). 59 Relevantly, in Yorke v Lucas at 667 the plurality said: To form the requisite intent he must have knowledge of the essential matters which go to make up the offence whether or not he knows that those matters amount to a crime. … 60 Likewise, in Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53, which concerned, among other things, allegations that various employees had been knowingly concerned in or party to breaches by their employers under the TPA, at [48] Gummow, Hayne and Heydon JJ said: … In the end the argument was only that McAuliffe and Law ''did not know that the principal's conduct was engaged in for the purpose or had the likely effect of substantially lessening competition … in the market as defined''. It is wholly unrealistic to seek to characterise knowledge of circumstances in that way. … In order to know the essential facts, and thus satisfy s 75B(1) of the [TPA] and like provisions, it is not necessary to know that those facts are capable of characterisation in the language of the statute. (Footnote omitted.) 61 While the principle relied upon by Compumod is undoubtedly correct, its application here means only that Compumod does not need to show that PwCS knew that the essential facts of AXL's contravention, including the falsity of the representations made, were capable of characterisation in the language of s 728(1) of the Corporations Act. The falsity of the representation itself, however, remains an essential fact constituting a contravention of that provision. That much is made clear from the plurality's conclusion in Yorke v Lucas at 668 (see [55] above) that, despite Mr Lucas' knowledge of the representations in question, he could not have intentionally participated in the contravention because he had had no knowledge of their falsity. 62 Thus it will be necessary for Compumod to prove knowledge on the part of PwCS of the essential facts constituting the alleged contravention by AXL of s 728 of the Corporations Act in order to establish that PwCS was involved in that contravention, including PwCS' knowledge that the representations made by AXL were false. While that is obviously a matter that Compumod must establish at the trial if it is ultimately to succeed, on the present applications PwCS raises the separate question of the sufficiency of the pleading. 63 Division 16.4 of the Rules concerns particulars. Rule 16.43 relates to conditions of mind of a party which, for the purposes of the rule, means knowledge. Rule 16.43(1) provides that a party who pleads a condition of mind must state in the pleading particulars of the facts on which the party relies. Compumod says that it has pleaded the facts as presently known to it, that a number of the issues complained of are matters for particulars which are within the knowledge of PwCS and that further particulars will be provided after discovery. That issue, that is the lack of particularisation, is addressed further below but for present purposes so much can be accepted. However there is in my view a more fundamental issue which is the absence of any pleading as to the actual knowledge of PwCS of the alleged breach by AXL of s 728 of the Corporations Act, even based on the facts as known to Compumod. 64 While the draft ASOC pleads the fact and the nature of the accounting services provided by PwCS for "the Offer" (see paras 40, 41 and 80) and what PwCS allegedly failed to identify in the performance of the accounting services for "the Offer" insofar as the Arrears Ratio Convenant is concerned (see paras 42F and 80(k)(iv)), it does not plead any facts going to PwCS's knowledge of the contravention by AXL. The pleading in relation to the provision of the accounting services for the Offer, which Compumod says is the conduct by which PwCS was involved in AXL's contravention, does not do that. 65 That this is so can be illustrated by an example. In para 80(k)(iv) of the draft ASOC (see [43] above) Compumod alleges that PwCS failed to inform AXL that, from as early as the time of the 2017 Proforma Balance Sheet, AXL was in breach of the Arrears Ratio Convenant. As PwCS identifies, Compumod does not allege that PwCS knew that AXL was in breach of the Arrears Ratio Covenant and, accordingly, knew that AXL engaged in misleading conduct. 66 To the extent that the draft ASOC fails to plead any facts or matters in relation to PwCS's knowledge of the alleged contravention by AXL, PwCS's criticism is borne out and I would not grant leave to Compumod to file it. 67 The second category concerns Compumod's ability to improve upon its pleading of PwCS's knowledge in light of its criticism based on Yorke v Lucas, which I accept, and the requirement to plead actual knowledge. A question that arises is whether that is merely a matter for particularisation. First, PwCS submits that this is a matter of pleading and that actual knowledge of the elements of the contravention is an essential ingredient for any allegation that PwCS was knowingly concerned in a contravention by AXL. PwCS says it follows that, if Compumod cannot properly make an allegation as to its actual knowledge, it cannot plead all of the material facts necessary to allege that it was knowingly concerned in any contravention by AXL. 68 Secondly, PwCS submits that even if the issue is one of particularisation, it is no answer to a failure to provide particulars that the true facts are known to it. It submits that the purpose of particulars is to put the opposing party on notice of the case it is required to meet, which may be different from the true facts of the case, referring to Keshi Pty Ltd v Firefly Press (Australia) Pty Ltd [2008] FCA 440; (2008) 246 ALR 166 at [30], and that in the present case the essential allegations are not pleaded. 69 PwCS submits that the proposed amendments to para 83 of the draft ASOC only serve to make the unfairness of the misleading or deceptive conduct claim more obvious. It contends that insofar as Compumod alleges that PwCS: (1) "caused, allowed or permitted" the publication of the Prospectus, the facts relied upon in support of that ultimate conclusion are not identified despite the cross-reference to paras 40-42 and 80 of the draft ASOC. Nothing in those paragraphs supports the proposition that PwCS "caused, allowed or permitted" the Prospectus to be published; (2) contravened s 1041H of the Corporations Act and s 12DA of the ASIC Act because it participated in the publication of the Prospectus, the allegation is hopelessly vague and it is unclear what "participated" means in this context. If all that is meant is that PwCS performed services in connection with the preparation of the Prospectus, the allegation is insufficient to support the ultimate legal conclusion because merely performing services in connection with the preparation of a prospectus cannot, without more, constitute misleading or deceptive conduct. 70 PwCS also submits in relation to para 83 of the draft ASOC that the allegation appears to be foreclosed by inclusion of express statements in the Prospectus to the effect that PwCS did not "cause, permit or authorise" the issue of the Prospectus. 71 PwCS submits that it is also apparent from the observation at [20] of Compumod's submissions that its misleading or deceptive conduct case against PwCS is advanced on the basis of some conduct by PwCS rather than statements in the Prospectus alone. That conduct is not identified save that PwCS consented to be named as accounting advisor which, of itself, cannot be sufficient. 72 Insofar as this is a complaint about the way in which its knowledge is pleaded for the purposes of the claim at paras 80 and 81 of the draft ASOC, it is addressed above. 73 To the extent that it concerns the need for further particularisation, Compumod says that the information which would be the subject of such particulars, for example, the identity of the persons who did the work or the granular nature of the work undertaken, is within the knowledge of PwCS or AXL and that it will be provided after discovery. 74 As noted at [68] above, PwCS relies on Keshi to support its submission that it is no answer to a failure to provide particulars to say that the relevant information is within the knowledge of the party seeking the particulars. That case concerned a request for particulars. At [30] McKerracher J said: In relation to the argument that the respondents know the answer to the particulars sought it has been held that it is no objection to an application for particulars that the applicant must know the true facts of the case better than his opponent. He is entitled to know the outline of the case that his adversary will try to make against him, which may be something very different from the true facts of the case: Palmos v Georgeson [1961] Qd R 186 at 193; see also Turner v Dalgety & Co Pty Ltd (1952) 69 WN (NSW) 228 at 229. On the other hand it has also been held that particulars will not be ordered where "the matters in respect of which the party who seeks particulars already knows the matters on which the other party is relying": Lawson v Perpetual Trustee Co Ltd (1959) 76 WN (NSW) 367 at 368; see also Harbord v Monk (1878) 9 Ch D 616; 38 LT 411 (Harbord); Keogh v Incorporated Dental Hospital of Ireland [1910] 2 Ir R 577. 75 In Sadie Ville v Deloitte Touche Tohmatsu (A Firm) [2017] FCA 1202; 123 ACSR 223, in the context of a strike out application, at [64] Moshinsky J observed in relation to the particulars provided in the statement of claim in issue in that proceeding that they "only provided limited detail as to the allegations" in the paragraphs the subject of complaint but continued as follows: However, in circumstances where discovery has not yet taken place, and Sadie Ville has not otherwise had access to the audit files, other than in the specific instances referred to in these reasons, it is appropriate to defer requiring Sadie Ville to provide further and better particulars of these paragraphs until after discovery has taken place. 76 At [65] his Honour observed that the pleading was expressed in clear and logical terms and set out the elements that needed to be established for the applicant to make out its case. His Honour observed that whether it did so at trial was another matter. At [66] his Honour said: Further, from a case management perspective, and consistently with the overarching purpose set out in s 37M of the Federal Court Act, the pleading is, in my view, expressed in terms which are conducive to the orderly conduct of the proceeding, including its pre-trial processes. One is able to see the overall structure of the case that is sought to be made. The pleading, while long, is a manageable length. In the context of this case, including the nature of the claims that are made, and subject to the matters discussed in these reasons, the PSASOC provides a satisfactory basis for the conduct of the proceeding, at least at this stage. If, following discovery and the delivery of further particulars, there is any lack of clarity about the case to be met, or any other deficiency (eg, a want of logic) in the pleading, that is a matter that can, of course, be raised at that time. 77 I accept that there are only limited particulars provided in the draft ASOC. However, much of the information which will form part of the particulars is not known to Compumod but is self-‍evidently within the knowledge of PwCS and AXL. That is, in some areas in which PwCS says that it requires further particularisation to understand the case against it, PwCS, as the party who gave the advice on the Prospectus, is in a better position to know the matters on which Compumod relies. Compumod will provide further particulars after discovery. If, after discovery, the provision of any further particulars and or the filing of evidence, PwCS asserts that there is still a lack of clarity about the case it has to meet or other deficiency in the pleading, it can raise that issue at that time: see Sadie Ville at [66]. 78 The third category concerns particular deficiencies which PwCS submits (in support of its strike out application) are present in the SoC and which have not been remedied in the draft ASOC. They are: (1) a general and overarching deficiency in the SoC (and the draft ASOC) with the allegations against it which arises because the alleged "matters of fact" pleaded in para 80 do not individually or cumulatively suffice to establish that PwCS was "involved in" any contravention by AXL of s 728(1) of the Corporations Act or that it engaged in misleading or deceptive conduct. Rather, PwCS contends that para 80 only contains a series of disparate alleged facts and that the connection between those facts and the pleaded contraventions in paras 81 to 83 are unarticulated; (2) the failure in subparas 80(a) to 80(f) of the SoC (or paras 80(a), (b) and (d) to (g) of the draft ASOC) to plead the effect or substance of any advice that PwCS is alleged to have provided to AXL. PwCS submits that the mere fact that it provided accounting services to AXL in connection with the Prospectus or may have advised on particular matters is not, of itself, sufficient to establish that it was involved in any alleged contravention by AXL; (3) in addition, in relation to para 80(f) (or para 80(g) of the draft ASOC), which pleads that PwCS "assessed the likely effect of AASB 15 on AXL's accounts for the purposes of the Prospectus", there is no allegation in the SoC (or the draft ASOC) that the effect of AASB 15 was wrongly assessed or that there was any omission or misrepresentation in relation to AASB 15. That being so the allegation in para 80(f) contains an irrelevant allegation that goes nowhere; (4) two difficulties are said to arise with para 80(g) of the SoC (or para 80(h) of the draft ASOC) in which it is alleged that PwCS provided advice to the effect that the introduction of AASB 9 would not change the accounting as pleaded at para 33 of the SoC. The first difficulty concerns para 33 of the SoC which includes a quotation from the Prospectus. PwCS says that it is clear from the quotation that the statement that "the accounting will not change under the new standard" related specifically to the transaction costs there described and was not a general proposition that AASB 9 would not change the accounting of any aspect of AXL's business. The second difficulty is Compumod's concession that it is unable to give particulars of the advice provided by PwCS, an inability which is also apparent from para 80(j) of the SoC. PwCS says that this demonstrates that Compumod does not currently know what advice PwCS gave to AXL about the effect of AASB 9 and, accordingly, does not have a proper basis to plead the matters alleged in para 80(g) of the SoC; (5) in relation to para 80(h) of the SoC (or para 80(i) of the draft ASOC), which pleads that PwCS "knew or ought have to have known, that the effect of AASB 9 would be as pleaded" in various paras of the SoC, PwCS says that insofar as the allegation is that it had actual knowledge of that effect, Compumod is required to identify the natural persons whose knowledge is said to be imputed to it and to provide the particulars relied upon in respect of that allegation but it has declined to do so. PwCS also says that, insofar as the allegation is that it ought to have known the effect of AASB 9, it is irrelevant because constructive knowledge is not sufficient to establish that a party was knowingly concerned in another party's contravention. It is also irrelevant to any misleading or deceptive conduct claim as knowledge is not an element of such a claim; and (6) the allegation in para 80(i) of the SoC (or para 80(j) of the draft ASOC), which pleads that PwCS permitted the Prospectus to use its name as the named accounting advisor, does not grapple with the circumstance that the Prospectus expressly provided that PwCS had not "made any statements in the Offer Documents or any statement on which a statement made in the Offer Documents is based", did not authorise or cause "the issue of the Offer Documents" or make any representation or warranty, express or implied, as to the fairness, accuracy or completeness of the information in the Offer Documents and, to the maximum extent permitted by law, expressly disclaimed and took no responsibility for any statements in or omissions from the Offer Documents other than references to its name. 79 In relation to those matters: (1) to the extent the deficiency raised at [78(1)] is a complaint about the way in which PwCS's involvement in AXL's contravention of s 728 of the Corporations Act is concerned, it is addressed at [66] above and to the extent it is a complaint about the lack of particulars it is addressed at [77] above; (2) the deficiencies set out at [78(2)], [78(4)], to the extent that it is a complaint about a lack of particulars, and [78(5)] are complaints about a lack of particulars and are addressed generally at [77] above; (3) the deficiency set out at [78(3)], to the extent not already addressed, is a matter for trial; (4) the deficiency set out at [78(4)], to the extent that it raises an issue about and the effect of the statement at section 3.3.1 of the offer specific prospectus, is a matter to be considered at trial in the context of all of the relevant evidence and not on an application of this nature. If the statement has the meaning contended for by PwCS then Compumod may fail in all or part of its claim but that is not a matter that ought to be dealt with on these applications; and (5) the effect of any disclaimer in the Prospectus is also a matter to be considered at trial in the context of all of the relevant evidence. 80 It follows from the matters set out above that I will refuse Compumod leave to amend the SoC in the form of the draft ASOC to the extent that it is deficient in the manner identified at [50]-[66] above.

Should Compumod be given leave to re-plead? 81 PwCS submits that while courts generally grant leave to re-plead in circumstances where the whole or part of the proceeding is struck out, that course is not appropriate where no reasonable amendment can cure the alleged defect. It says that Mr Moore's evidence makes plain that Compumod has pleaded its case against PwCS as best it can, based on matters known to it, and that it is not in a position to advance any case based on the substance of the advice said to have been provided by PwCS to AXL. It submits that in those circumstances granting leave to re-‍plead would be futile because PwCS is not in a position to plead a claim that complies with the Rules. 82 In this case I have refused leave to amend because of a deficiency in one aspect of the pleading as against PwCS. I do not accept that it would be futile to permit Compumod an opportunity to re-plead its claim to take account of and attempt to remedy that matter, particularly as it does not necessarily depend on the provision of particulars at this stage.

CONCLUSION 83 Compumod's application to amend its statement of claim in the form of the draft ASOC is refused but only to the extent of the deficiency identified at [50]-[66] above. It should be given leave to re-plead to address that issue as well as, to the extent necessary to provide clarity, the matters raised at [18(4)] and [42] above and all typographical errors. Its amended statement of claim should be filed and served within three weeks of the publication of these reasons. It should also be granted leave to file and serve its amended originating application in the form annexed to its amended interlocutory application filed on 15 March 2021. 84 That then leaves PwCS's strike out application. As I have already observed, Compumod conceded that if it fails in its application to amend, which it has in part, the SoC should be struck out as against it. However, given the conclusion I have reached in relation to Compumod's leave application at [80] above and the alternative relief sought by PwCS on its strike out application (see [3] above), only paras 80 to 83 of the SoC should be struck out and leave to re-plead should be granted. It follows that an order in those terms should be made. 85 Within 14 days of the date of publication of these reasons, the parties should provide to my associate draft orders reflecting these reasons. If the parties are unable to agree on the form of orders then, within that timeframe, each party is to provide its proposed draft orders. In the event that the parties cannot agree on a form of orders, the proceeding will be listed before me on 26 August 2021 at 9.30 am. 86 Costs usually follow the event. As PwCS has succeeded in large part I would ordinarily make an order that Compumod pay its costs of the application to amend and of PwCS's strike out application. However, in the event that either party proposes a different order I will defer the resolution of the question of costs of the applications until the next case management hearing when I will hear the parties on costs unless proposed consent orders are submitted in the meantime. I certify that the preceding eighty-‍six (86) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Markovic.