Goshawk Mining Pty Ltd v Hellyer Metals Ltd & Anors [2025] TASSC 18

1. Rule 259 provides:

If a pleading does not disclose a reasonable cause of action or answer or shows that the cause of action or defence is frivolous or vexatious, the Court or a judge may order -

(a) that the action be stayed or dismissed or the pleading be struck out; and

(b) that judgment be entered accordingly."

1. The case against ANIG arises on the counterclaim filed by Hellyer and turns on the operation of ss 917B and 917E of the Corporations Act 2001 (Cth) (the Act), to make ANIG liable for the conduct of the second defendant by counterclaim, Saxby Capital Investments Pty Ltd (Saxby Capital), as its authorised representative.

1. The statutory requirements for making ANIG liable for the conduct of Saxby Capital are contained in s 917A of the Act. By that section, the conduct must be conduct "that relates to the provision of a financial service".

1. The following overview of the pleaded case appears in the written submissions of counsel for ANIG:

1. The statement of claim filed by [the plaintiff in the action], Goshawk Mining Pty Ltd (Goshawk) concerns a Business Sale Agreement between Goshawk and Hellyer, a condition precedent of which was that Hellyer would receive

investment funds of at least $15 million within a defined period. Hellyer envisaged obtaining the investment funds by way of a capital raising. The capital raising never occurred and Hellyer never obtained the investment funds.

1. Goshawk alleges that Hellyer breached contractual terms and/or repudiated the agreement because it failed to take steps to obtain the investment funds. Hellyer in turn counterclaims against Saxby Capital (and Goshawk, but those claims can be put to one side for present purposes).

1. Hellyer and Saxby Capital entered into an agreement (defined in the counterclaim as the Mandate) by which Saxby was to provide services in respect of the capital raising (counterclaim, [21]). However, as indicated, the capital raising never occurred. Hellyer's case against Saxby Capital is twofold.

1. First, Hellyer alleges that Saxby Capital made certain representations which induced Hellyer to enter into the Mandate. These are defined as the Investment Representation (counterclaim, [7]) and the Further Investment Representation (counterclaim, [12]). The two sets of representations essentially were to the effect that Saxby Capital had investors ready to make an equity investment of

$15 million if Hellyer appointed Saxby Capital as its adviser for the capital raising. Hellyer alleges that the representations were false and misleading or deceptive because Saxby Capital did not have investors ready to make the $15 million investment (counterclaim, (16]-[19]).

1. Secondly, Hellyer alleges that Saxby Capital failed to introduce any investor ready to make an investment and failed to arrange the equity investment, and therefore breached express or implied terms or common law duties by failing to use reasonable efforts to find investors and failing to exercise reasonable care and skill in assisting Hellyer in relation to the capital raising (counterclaim, [25]-[27]).

1. Hellyer pleads that the conduct of Saxby Capital in making the Investment Representation and Further Investment Representation, and in failing to use reasonable efforts to find investors, was conduct:

(a) related to the provision of a financial service;

(b) on which a third party could reasonably be expected to rely; and

(c) on which Hellyer did rely in good faith (counterclaim [29]),

such that ANIG is responsible for the conduct Saxby (whether or not it was authorised) and liable to Hellyer for the loss and damage caused by Saxby's conduct under s 917B and s917E of the Corporations Act (counterclaim [30]).

1. On 6 November 2024, ANIG sought particulars of the financial product or service said to have been provided and how the investment representation and further investments representation (collectively investment representations) related to that service.

1. On 12 November 2024, Hellyer's legal representatives informed ANIG's representatives that the investment representations related to an equity investment in Hellyer, the relevant financial product was shares and the relevant financial service was the provision of financial product advice and/or dealing in a financial product by arranging for a person to acquire or issued a financial product." (Footnotes omitted)

1. Counsel for ANIG submit that ss 917B and 917E of the Act only apply in the circumstances identified in s 917A(1). That is to say that the relevant conduct must be conduct that "relates to the provision of a financial service".

1. The submission runs that that the word "relates", like cognate terms such as "in relation to", is a word of broad import that signifies some relationship, correlation or connection between two specified subject matters: eg Australian Securities and Investments Commission v Narain [2008] FCAFC 120; (2008) 169 FCR 211 at [68]- [71], and that the degree of relationship or connection required is a matter of statutory construction. In that case, the Full Court held that for the purposes of s 1041H of the Act, the relationship is at the lower end of the spectrum so that an indirect or less than substantial connection is sufficient.

1. As noted, Hellyer claims by way of the particulars provided, that the financial service is financial product advice regarding, and/ or dealing in, Hellyer shares.

1. Thus, counsel for ANIG argue that the pleaded facts and particulars do not establish the requisite connection. Their argument is developed in the following way in their written submissions:

• Financial product advice is defined in s 766B of the Act to mean a recommendation or statement of opinion that is intended to influence a person making a decision in relation to a financial product, here, Hellyer shares.

• The dealing in a financial product particularised by Hellyer is that of arranging for a person to acquire or issue Hellyer shares.

• The conduct said to have the requisite relation to such advice or dealing is the conduct of Saxby "referred to above in parts B and C of the counterclaim" (counterclaim [29]).

• Part B identifies the making of the Investment Representation and Further Investment Representation. Part C identifies failures, "in the premises of paragraphs 25 and 26", to use reasonable efforts to find investors and to exercise reasonable care and skill in assisting Hellyer in the Pre-IPO Raising. Given the confinement of the allegation to the premises of pars 25 and 26, the reference to assisting Hellyer must be taken to mean assisting by finding and introducing investors.

• It follows that the connection to the particularised financial services must be considered in respect of two categories of conduct, namely (i) making the Investment Representation and Further Investment Representation and (ii) failing to find or introduce investors.

• Neither category of conduct can relate to arranging for Hellyer shares to be issued or acquired because no such acts of arranging are pleaded. Indeed, the central complaint is that Hellyer shares were not issued and therefore never acquired.

1. As to a relationship with, or connection to, financial product advice, counsel for ANIG submit that as to the first category of conduct, the pleaded representations were not recommendations or statements of opinion intended to influence Hellyer in making a decision in relation to its shares and they did not, themselves, constitute financial product advice. Rather, counsel say, they are alleged to be representations to induce Hellyer to make a decision to appoint Saxby as its corporate advisor by executing the Mandate.

1. As to the second category of conduct, namely failing to find and introduce investors, counsel submit that the only "candidate" for relevant financial product advice is the Investment Representation and that representation was not financial product advice for the reasons already explained.

1. Counsel for ANIG submit that ANIG's argument proceeds upon an erroneous and unduly narrow reading of the phrase "conduct ... that relates to provision of a financial service" in s 917A of the Act.

1. Counsel submit that at the very least, the construction for which ANIG contends is not so clearly correct as to justify depriving Hellyer of the opportunity to advance its case against ANIG at trial. They submit that s 917A of the Act sits within a complex regulatory framework for financial services provided for by Ch 7 of the Act, and that the point taken by ANIG gives rise to a question of statutory construction that should not be determined on a summary basis.

1. These submissions were developed in greater detail in the written submissions made on behalf of Hellyer as follow:

"23 ANIG contends that the counterclaim does not identify, for the purposes of s 917A(1) of the Corporations Act, any alleged conduct of Saxby Capital that "relates to the provision of a financial service". This contention involves two steps. First, it is said that because Hellyer did not in fact issue any shares (or is not pleaded as having issued any shares), Saxby Capital's alleged wrongdoing did not relate to any provision of financial services involving arranging for Hellyer to issue shares. Secondly, ANIG asserts that neither the alleged misrepresentations by Hellyer nor its alleged failure to find or to introduce investors to Hellyer constituted the provision of a financial product service. The consequence, on ANIG's argument, is that ss 917B and 917E of the Corporations Act have no application to it in so far as the alleged wrongdoing of Saxby Capital is concerned.

1. It is convenient at the outset to address the second step in ANIG's argument. As has already been seen, arranging for a person to issue shares constitutes a dealing in a financial product, and therefore the provision of a financial service. And as has already been submitted, it is at least reasonably arguable that arranging for a company to issue shares constitutes a dealing in a financial product, even if the company ultimately does not issue shares. That being so, the act of finding or introducing investors to make an equity investment in Hellyer might be seen as a step taken as part of arranging for Hellyer to issue shares to such investors. Part of Hellyer's case is that Saxby Capital did not use reasonable efforts, or exercise reasonable care and skill, in finding or introducing investors to participate in an equity capital raising by Hellyer. There is thus conduct - in the form of a failure to use reasonable efforts or to exercise reasonable care and skill - and that conduct plainly "relates to" the provision of a financial service, in the sense that it was a failure properly to take steps to arrange for the issue of shares by Hellyer to new equity investors. It follows then that at least in relation to Hellyer's plea of a breach of contract or negligence by Saxby Capital, there is a sufficient plea of conduct that relates to the provision of a financial service, such that ANIG's application must fail.
2. As for the allegations of misleading or deceptive conduct, two points may be made. First, it must be borne in mind that s 766B(1) of the Corporations Act defines 'financial product advice' to include a recommendation or statement of opinion that could reasonably be regarded as being intended to influence a person in making a decision in relation to a particular financial product or class of financial products. In Australian Securities and Investments Commission v Park Trent Properties Group Pty Ltd (No 3) [2015] NSWSC 1527, Sackville AJA said:

'A person wishing to influence another person (the client) to make a decision relating to a financial product ... may do so in ways other than by express recommendations or explicit statements of opinion. Information or other material may be presented to the client in a form implying that the presenter favours or commends a particular course of action without saying so explicitly. Similarly information or other material may be presented in a form that implies that the presenter's view is that the contemplated course of action is likely to be beneficial to the client.'

1. To the extent then that the alleged misrepresentations by Saxby Capital constituted information favouring a decision by Hellyer to appoint Saxby Capital as a corporate advisor in relation to equity fund-raising, those misrepresentations were arguably recommendations or statements of opinion that could reasonably be regarded as intended to influence Hellyer in making a decision about a class of financial products, namely, shares in Hellyer itself. Thus, the representations allegedly made by Saxby Capital arguably constituted 'financial product advice', with the result that the making of those representations involved 'the provision of a financial service' within the meaning of s 766A(1)(a) of the Corporations Act.

1. Secondly, it must be emphasised that Saxby Capital's alleged representations involved assertions as to its capacity within a short time frame to arrange for new investors to make a $15 million equity investment in Hellyer. In other words, the pleaded representations were about what might be achieved as a consequence of the provision by Saxby Capital of a financial service to Hellyer. It is, at the very least, arguable that making a representation about the benefits that would flow to a client as a result of providing that client with a financial service is 'conduct ... that relates to the provision of a financial service'. It is certainly plausible, as a matter of ordinary English. Accordingly, ANIG's submissions do not afford a proper basis for striking out any part of the case pleaded by Hellyer against it.

1. The matters outlined above serve also to highlight the fact that ANIG's contentions proceed upon the premise that the words 'conduct ... that relates to the provision of a financial service' in s 917A(1) of the Corporations Act should be read to mean something along the lines of 'conduct in the course of providing a financial service', or 'conduct that constitutes the provision of a financial service'.

1. It is on this basis that ANIG, in contending that the representations that were allegedly made by Saxby Capital did not amount to conduct that related to the provision of a financial service, seeks to emphasise that they were representations made in advance of any financial service being provided, being representations made in order to induce Hellyer to appoint Saxby Capital as a corporate adviser for the purpose of assisting in the raising of capital.

1. The same premise underpins ANIG's contention that neither Saxby Capital's alleged misrepresentations nor its failure to find or introduce new investors constitute the provision of any financial product advice.

1. It has already been submitted that the representations allegedly made by Saxby Capital arguably constituted 'financial product advice'. Nonetheless, even if this were incorrect, there is no reason why, when construing and applying s 917A of the Corporations Act, the phrase 'conduct ... that relates to the provision of a financial service' should be read to mean 'conduct that constitutes the provision of a financial service'. In Australian Securities and Investments Commission v Narain [2008] FCAFC 120 Jacobson and Gordon JJ made the following observations concerning the expression 'in relation to' as it appears in s 1041H of the Corporations Act:

'[68] There is a wealth of authority for the proposition that the expression "in relation to" is extremely wide and that its meaning will be determined by the context. The leading authorities were collected and stated by Beaumont and Lehane JJ in Joye v Beach Petroleum NL (1996) 67 FCR

275 at 285; see also Australian Competition and Consumer Commission v Maritime Union of Australia [2001] FCA 1549; (2001) 114 FCR 472 at [68] per Hill J.

• [69] As those cases point out, the words "in relation to" signify the need for there to be some relationship or

correlation between the two subject matters that are specified.

• [70] But as Hill J observed in ACCC v Maritime Union of Australia at [68] there will always be a question of degree involved where the issue is the relationship between those matters.

• [71] What must be borne in mind is that, as Beaumont and Lehane JJ said in Joye, the context will determine whether the relationship must be direct or substantial or whether an indirect or less than substantial connection will be sufficient: Joye at 285 (citing a number of decisions of the High Court)'.

1. As ANIG observes in its submissions at [18], the requisite relationship was held in Narain to be at the lower end of the spectrum so that an indirect or less than substantial connection was sufficient in the context of s 1041H. Significantly, ANIG does not point to any contextual matter that would support reading the words 'that relates to' in s 917A in a narrower or more restrictive fashion than has been accepted for the phrase 'in relation to' as it appears in s 1041H. On the contrary, there is every reason to think that s 917A - and with it, Division 6 of Part 7.6 of the Corporations Act - was intended to operate broadly. After all, s 917B assigns responsibility to a financial services licensee for the conduct of an authorised representatives, irrespective of whether or not that conduct was within authority. In other words, s 917B was intended to attribute to a financial services licensee responsibility for a broad range of the conduct of its authorised representatives. This alone militates against a reading of s 917A (which serves as the gateway to s 917B) that gives s 917B and the other provisions of Division 6 a narrower operation than their language is capable of supporting."

1. Counsel for Hellyer also submit that in the amended defence to counterclaim, filed 5 November 2024, on behalf of Goshawk and Saxby Capital, the following is pleaded at [26]: "The Second Defendant says that steps were taken to arrange equity investment." In particulars separately provided by Saxby Capital, it is further said that these steps involved "[c]alls, emails and text messages to potential equity investors and/or intermediaries to potential equity investors between approximately 12 October 2023 and 4 December 2023." Accordingly, it is submitted that there is a question of fact in the action as to whether Saxby Capital took any steps to arrange an equity investment in Hellyer (which necessarily involved the issuing of shares by Hellyer), and if so, the sufficiency of those steps, having regard to the duties owed by Saxby Capital under contract and at law.

1. That being so, it is submitted that even if ANIG were correct in its submission that, for the purposes of s 917A(1) of the Act, there must be an actual (as distinct from a proposed) provision of financial services, to which the impugned conduct of an authorised representative must relate, the pleadings in this action give rise to a factual question as to whether, and to what extent, such financial services were provided, in the form of arranging for Hellyer to issue shares.

1. Thus, it is argued that ANIG's assertion that there was no financial service provided turns, at least in part, on the resolution of that factual question and that being so, it is inappropriate that the Hellyer's claim be dismissed summarily or struck out.

1. Rule 259 of the rules was most recently considered by this Court in State of Tasmania v MFC [2021] TASFC 6. There, Martin AJ with whom Blow CJ and Wood J agreed, set out at [15], the following time honoured passage in the judgment of Barwick CJ in General Steel Industries v Commissioner of Railways [1964] HCA 69; (1964) 112 CLR 125 at 128-130:

"The plaintiff rightly points out that the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion. I have examined the case law on the subject, to some of which I was referred in argument and to which I append a list of references. There is no need for me to discuss in any detail the various decisions, some of which were given in cases in which the inherent jurisdiction of a court was invoked and others in cases in which counterpart rules to Order 26, r 18, were the suggested source of authority to deal summarily with the claim in question. It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense'.

At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or 'so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument'; 'so to speak apparent at a glance'.

As I have said, some of these expressions occur in cases in which the inherent jurisdiction was invoked and others in cases founded on statutory rules of court but although the material available to the court in either type of case may be different the need for exceptional caution in exercising the power whether it be inherent or under statutory rules is the same. Dixon J (as he then was) sums up a number of authorities in Dey v Victorian Railways Commissioners where he says: 'A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But 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, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.' Although I can agree with Latham CJ in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed."

1. Argument was certainly necessary in this case in Hellyer's endeavor to "evoke the futility" of ANIG's argument. Indeed, detailed argument and reference to decided cases was required on both sides in order to demonstrate the respective points made. But there was no lay down misère on either side.

1. Neither party were able to refer to any authority that established the position they contended for. In fact, the most instructive decision in my view was Narain (above) which favors Hellyer's proposition that an indirect or less than substantial connection was sufficient in the context of s 1041H of the Act, and there is no contextual matter that would support reading the words "that relates to" in s 917A in a narrower or more restrictive fashion than has been accepted for the phrase "in relation to" as it appears in s 1041H.

1. From the authorities to which I was referred by Mr Barnett SC in his oral submissions on behalf of ANIG, I formed the view that the point he was arguing was a novel point and that the law concerning the statutory regime of the Act was still evolving. Mr Ng SC for Hellyer accepted those propositions, but then he might be expected to. In my view the point is worthy of consideration at an appellate level and were I to exercise my discretion in favour of ANIG, that opportunity would be denied to Hellyer save in the narrower context of an appeal against my decision. Any such appeal would still be uninformed by all of the available evidence going to the pleaded facts.

1. In my view, there is a real question of law to be determined, and potentially questions of fact, to be resolved at trial and I ought not to take the step of terminating Hellyer's rights which are dependent on that resolution.

1. It was submitted to me that were I not to strike out Hellyer's counterclaim, I should at least strike out the impugned passages of the pleading and give leave to replead. I have considered that course and Mr Ng's belated concession that any pleading can always be improved. In the end, I have reached the view that the facts pleaded and the particulars provided, clearly raise the claim contended for and that the claim may be said to enjoy prospects of success as pleaded. Hellyer, of course, would proceed at its peril if the pleading could be expressed more fully as opposed to more elegantly.