Invast Financial Services Pty Ltd v Pseven International DWC LLC

National Practice Area: Commercial and Corporations

Sub-area: Commercial Contracts, Banking, Finance and Insurance

Solicitor for the Applicant: Garland Hawthorn Brahe

Counsel for the First Respondent: The First Respondent did not appear

Counsel for the Second Respondent: The Second Respondent did not appear

BETWEEN: INVAST FINANCIAL SERVICES PTY LTD Applicant

AND: PSEVEN INTERNATIONAL DWC LLC First Respondent

order made by: YATES J DATE OF ORDER: 22 July 2022

1. Pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) (the Act), the following questions be referred to a Registrar of the Court for inquiry and report as a referee: (a) the amount of damages to which the applicant is entitled as against the second respondent for the loss which the Court has found was suffered by the applicant because of the first respondent's contraventions of s 18(1) of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)) and the second respondent's involvement in those contraventions; (b) the interest to which the applicant is entitled on such damages under s 51A of the Act; and (c) the costs to which the applicant is entitled on a lump sum basis.
2. The inquiry be conducted in any way the referee thinks fit.
3. The proceeding be listed for further hearing on a date to be fixed after receipt of the referee's report. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 By an interlocutory application filed on 4 May 2022, the applicant, Invast Financial Services Pty Ltd, seeks an order for summary judgment against the second respondent, Musa Umar Choudhary, pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (the Act). In the alternative, the applicant seeks an order for default judgment against the second respondent, pursuant to r 5.23(2)(b) of the Federal Court Rules 2011 (Cth) (the Rules). 2 The principal proceeding was commenced against the first respondent, Pseven International DWC LLC, and the second respondent, on 17 August 2020 by the filing of an originating application supported by a concise statement. The applicant filed an amended concise statement on 10 November 2020. 3 On 21 December 2020, leave was granted to the applicant, pursuant to r 10.43 of the Rules, to serve the originating application and the amended concise statement, as well as other documents, on the first respondent and the second respondent in the United Arab Emirates through diplomatic channels and in accordance with the laws of that country. 4 Following the service of these documents, the first respondent and the second respondent appointed Australian lawyers, Edwards Mac Scovell, to represent them in this proceeding. In accordance with r 4.03, a notice of acting was filed on 23 March 2021. However, on or about 13 April 2021, the first respondent was deregistered. On 13 April 2021, Edwards Mac Scovell filed a notice of ceasing to act for the first respondent. The notice of ceasing to act stated that the last known address of the first respondent was Business Centre, Dubai World Central, P.O. Box: 390667, Dubai, United Arab Emirates. 5 On 12 May 2021, the second respondent filed a response to the amended concise statement. 6 On 2 June 2021, an order was made that the matter be referred to mediation before a mediator appointed by the parties, with the mediation to be held on or before 16 July 2021. Unfortunately, the mediation was not successful. 7 On 18 October 2021, an order was made by consent that the applicant file and serve any statement of claim on or before 29 November 2021. A statement of claim was not filed by that date. However, the applicant subsequently filed a statement of claim on 28 February 2022. The second respondent did not object to the applicant taking this course. On 4 March 2022, an order was made by consent that the question of costs of the second respondent thrown away by the amendment of the applicant's claim by the filing of the statement of claim, be reserved. 8 On 4 March 2022, orders were also made by consent that the (second) respondent file and serve his defence to the statement of claim on or before 1 April 2022, and that his evidence be filed and served on or before 2 May 2022. The matter was then listed for further case management on 1 April 2022. 9 It is apparent from the orders made on 4 March 2022 that the applicant's claim against the second respondent is now the claim formulated in the statement of claim. 10 On 16 March 2022, Edwards Mac Scovell filed a notice of ceasing to act for the second respondent. The notice of ceasing to act stated that the last known address of the second respondent was Business Centre, Dubai World Central, P.O. Box: 390667, Dubai, United Arab Emirates. 11 The second respondent has not filed a defence to the statement of claim, as ordered. He has also not filed any evidence. 12 On 2 May 2022, leave was granted to the applicant to file the present interlocutory application, made returnable for hearing on 1 June 2022. An order was made that service of the interlocutory application, an affidavit of default, and a copy of the Court's orders be effected on the second respondent by prepaid postal delivery at the address provided in the notice of ceasing to act filed on 16 March 2022. The order also required that service of these documents be effected on the second respondent by prepaid post to Unit 2416, Burj Khalifa, Dubai 89103 (the address given by the second respondent as his address as a director of the first respondent), and by electronic mail to the address ch@pseven.ae (the address given by the second respondent as his email address). 13 The evidence before the Court is that service has been effected on the second respondent in accordance with the orders made on 2 May 2022. 14 The second respondent has not appeared and has taken no steps to resist judgment being entered against him. 15 Section 31A of the Act provides, relevantly: (1) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is prosecuting the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding. (2) ... (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. (4) This section does not limit any powers that the Court has apart from this section. (5) This section does not apply to criminal proceedings. 16 Rule 5.23(2) of the Rules provides: (2) If a respondent is in default, an applicant may apply to the Court for: (a) an order that a step in the proceeding be taken within a specified time; or (b) if the claim against the respondent is for a debt or liquidated damages - an order giving judgment against the respondent for: (i) the debt or liquidated damages; and (ii) if appropriate, interest and costs in a sum fixed by the Court or to be taxed; or (c) if the proceeding was started by an originating application supported by a statement of claim or an alternative accompanying document referred to in rule 8.05, or if the Court has ordered that the proceeding continue on pleadings - an order giving judgment against the respondent for the relief claimed in the statement of claim or alternative accompanying document to which the Court is satisfied that the applicant is entitled; or (d) an order giving judgment against the respondent for damages to be assessed, or any other order; or (e) an order mentioned in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the Court in the proceeding in the time specified in the order. Note 1: The Court may make any order that the Court considers appropriate in the interests of justice - see rule 1.32. Note 2: An order or judgment under this Division may be set aside or varied. 17 Rule 5.22 stipulates when a party is in default: A party is in default if the party fails to: (a) do an act required to be done, or to do an act in the time required, by these Rules; or (b) comply with an order of the Court; or (c) attend a hearing in the proceeding; or (d) prosecute or defend the proceeding with due diligence. 18 Here, the applicant relies on the second respondent's default in failing to file a defence and his evidence, and in failing to appear at the hearing of the present application and the case management hearing that was listed at the same time.

Background 19 The applicant's claim concerns alleged contraventions of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act), the Australian Consumer Law (the ACL) (Sch 2 to the Competition and Consumer Act 2010 (Cth) (the Competition and Consumer Act), and the Australian Consumer Law (NSW) (the ACL(NSW)) (through operation of s 28 of the Fair Trading Act 1987 (NSW) (the Fair Trading Act)) by the first respondent and the second respondent in relation to representations that a margin call and other financial obligations would be met in respect of contracts for differences (CFDs) entered into between the applicant and the first respondent. 20 A CFD is a contract between two parties by which one party owes the other party the difference between the current value of an asset and its value at the time the contract was made. A share CFD tracks the price of an underlying share. 21 The applicant issued a Product Disclosure Statement (the PDS) in 2013 which describes a CFD in these terms: A contract for differences (CFD) is a contract with Invast to exchange the difference between the opening and closing values of a trading instrument, multiplied by the number of CFDs in the contract. CFDs can be contracts with an individual equity, Stock Index, bond, interest rate, inflation rate, commodity or currency pair as the underlying market. Invast generally bases the prices of the CFDs you trade with us on the prices of the Underlying Assets to which the CFDs relate. Our prices are generally based on the Underlying mid-market price and we apply a Spread having regard to factors such as the depth and liquidity in the market for the Underlying Asset. CFDs are Derivative products which allow you to make a profit or loss from fluctuations in the price of an Underlying Security or trading instrument, without actually owning the Security or instrument. To trade CFDs you must enter into a contract with Invast to exchange the difference between the opening value and closing value of the CFD, which is referenced to an Underlying Security or trading instrument. CFDs allow you to speculate on the rise or fall in the price of the Underlying Security or trading instrument. CFDs are traded on margin which allows you to receive the commercial benefits of trading in the Underlying Security or trading instrument while avoiding many of the costs of purchasing the Underlying Security or trading instrument. The potential gain (or loss) from CFDs is the net position of your opening position less your closing position (after taking into account notional dividend payments, commissions, interest and other payments). 22 In describing how a CFD works, the PDS states: When you enter into a CFD contract with Invast, the amount of profit or loss made on the CFD will be dependent upon, amongst other things such as commissions, interest payments and dividends, the difference between the price of the Underlying Security or trading instrument when the CFD is opened (entered into) and the price of the Underlying Security or trading instrument when the CFD is closed. Accordingly, as the price of the Underlying Security or trading instrument increases, the derived price of the corresponding CFD will also increase to reflect the movement of the Underlying. Similarly, a fall in the price of the Underlying Security or trading instrument will have a negative effect on the price of a CFD. 23 The PDS contains a section on opening and closing positions, which includes the following explanation: You will open a CFD position by either buying or selling a CFD with Invast. You will open by buying a CFD from Invast if you expect the Underlying Security or trading instrument to rise, the position you have is known as a "long" CFD position. You will sell a CFD to Invast if you expect the Underlying Security or trading instrument to fall and the position you have is known as a "short" CFD position. To Close Out a "long" CFD position, you sell the CFD. To Close Out a "short" CFD position, you buy the CFD.

The pleaded claim 24 As I have noted, the second respondent has not filed a defence to the statement of claim. It follows that he has not specifically denied the allegations of fact pleaded against him. These allegations of fact are therefore taken to have been admitted: r 16.07 of the Rules. 25 In summary, the pleaded, and now admitted, allegations are as follows. 26 On about 5 May 2017, the applicant and the first respondent entered into an agreement whereby the applicant agreed to provide trading services to the first respondent. This agreement was subject to an addendum dated 18 December 2017. 27 On 7 May 2019, the first respondent and the second respondent instructed the applicant to take a position of 220,000 share CFDs in HOME.NYS. This is a stock traded on the New York Stock Exchange (the NYSE). The applicant executed those instructions. As a result, the first respondent held a position of 220,000 CFDs in HOME.NYS. The CFD value was USD 5,107,918.21. At the time of taking this position, the cash balance in the first respondent's trading account with the applicant was USD 1,535,956.95. 28 On 17 May 2019, the first respondent and the second respondent instructed the applicant to take a position of a further 30,000 CFDs in HOME.NYS. The applicant executed those instructions. As a result, the first respondent then held a position of 250,000 CFDs in HOME.NYS. At that time, the CFD value was USD 5,802,444.42, and the first respondent's trading account with the applicant was USD 1,535,956.95. 29 At all times, the first respondent was required to maintain a margin of 15% on all positions in HOME.NYS. 30 At the close of trading on the NYSE on 5 June 2019, the first respondent's trading account with the applicant had a cash balance equivalent to USD 1,471,737.80. This account had a gross liquidated value (GLV) of USD 45,026.27 based on the price of the CFDs in HOME.NYS. 31 As at 11.20 pm (Sydney time) (9.20 am New York time) on 6 June 2019, the NYSE had not opened for trading. However, the pre-market prices available to the applicant indicated that the market was likely to open below where it had closed on 5 June 2019. It was likely that the first respondent's trading account GLV would be negative. If that happened, the applicant would sustain a loss which mirrored any amount below USD 0.00, unless and until the applicant received sufficient money to put the GLV figure back to USD 0.00 or better. 32 On 6 June 2019, prior to the opening of the NYSE trading day (9.30 am New York time), the first respondent and the second respondent represented to the applicant that they would send USD 1,500,000 to the applicant, with proof of that transfer, within 30 minutes, to maintain an open trading position in HOME.NYS instead of selling, and closing out, the first respondent's position (the first representation). 33 This was a representation with respect to a future matter. The first respondent and the second respondent did not have reasonable grounds for making that representation. The making of the representation was, accordingly, conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 12DA(1) of the ASIC Act, and s 18(1) of the ACL and the ACL(NSW). 34 On 7 June 2019 at 12.05 am (Sydney time) (10.05 am on 6 June 2019 New York time), the first respondent and the second respondent sent, by email to the applicant, a document described as "payment proof". This document represented that USD 1,500,000 had been sent by international wire transfer to the applicant's bank account. It also represented that the transfer would be processed and settled on 6 June 2019 UAE time, and that this amount would be credited to the applicant (the second representation). 35 In part, the second representation was a representation as to an existing matter (money had been transferred to the applicant). In part, the second representation was a representation with respect to future matters (the transfer would be processed and settled on 6 June 2019 UAE time, and credited to the applicant). The first respondent and the second respondent did not have reasonable grounds for making that representation. The first respondent and the second respondent did not send USD 1,500,000 to the applicant's bank account by wire transfer. The applicant did not receive the sum of USD 1,500,000. The making of the second representation was, accordingly, conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 12DA(1) of the ASIC Act and s 18(1) of the ACL and ACL(NSW). 36 The applicant suffered loss and damage because of the conduct in making the representations. After the opening of the NYSE on 6 June 2019, the price of HOME.NYS fell. However, because each representation had been made, the applicant did not exercise its contractual right to sell, and close out, the first respondent's position in HOME.NYS at or shortly after market opening. Had the applicant exercised that right at that time, the losses it suffered due to the fall in price of HOME.NYS would have been reduced. 37 The second respondent made the representations. He also made the representations on behalf of the first respondent. In this regard, he was the controlling mind of the first respondent and the person through whom the first respondent acted. The second respondent was, therefore, a person involved in the first respondent's contraventions.

The evidence 38 Apart from the admitted allegations of fact in the statement of claim, the applicant also relies on the evidence provided through the following affidavits, which were read at the hearing: Affidavit of Eun Ji Shin made 25 February 2022; Affidavit of Simon James McGahan made 28 February 2022; Affidavit of Peter Stewart Bickerton made 28 February 2022; Affidavit of Christopher Thomas Barnes made 28 February 2022; Affidavit of Gavin White made 28 February 2022; Affidavit of Brendon John Miller made 4 May 2022; Affidavit of Brendon John Miller made 30 May 2022. 39 The evidence before the Court was subsequently supplemented by an affidavit of service made by Anushka Pokharel on 21 June 2022. 40 Independently of the admissions taken to have been made, the evidence referred to in [38] above establishes the pleaded facts I have summarised. It also establishes the following additional facts. 41 From 2017 to 2019, the first respondent traded with the applicant regularly. The sizes of the trades were significant. The first respondent was sent margin call notifications on seven occasions between 2017 and 2018. On each occasion, the amount required to be paid by the first respondent was a six-figure sum in USD. The largest sum was USD 380,774. The smallest sum was USD 137,870. On each occasion, the margin call was attended to appropriately by the first respondent reducing its positions. 42 At all times, the second respondent was the only point of contact for the first respondent, and he was the only person authorised to provide instructions to the applicant. 43 When, on previous occasions, the first respondent paid money to the applicant, the second respondent sent a copy of the proof of payment by email. 44 The applicant's trade with the first respondent in relation to the CFDs was a Direct Market Access CFD trade. Under this methodology, the pricing of stocks that the applicant offers to the client is direct from the official exchange live price feeds, reflecting exact, live pricing of the relevant stocks on the exchange. The applicant instantaneously hedges each client trade with its prime broker, who also instantaneously hedges the applicant's trade on the relevant exchange. This is intended to mirror the experience of a client trading the physical stocks on the underlying exchange. 45 In 2019, the applicant's prime broker was Deutsche Bank. The applicant's trades with Deutsche Bank were the institutional equivalent of a CFD. This is called a DMA equity swap in which Deutsche Bank committed to hedging all the applicant's swap trades by executing them in the physical equities market stock exchange. When the first respondent initiated the trade with the applicant described above, the relationship was principal-to-principal. The applicant concurrently initiated a trade with Deutsche Bank, again on a principal-to-principal basis. 46 In light of these arrangements, when a client loses money, the applicant loses exactly the same amount of money with Deutsche Bank. If one of the applicant's clients fails to pay funds in accordance with a margin call, the applicant is required to cover the loss of the trade from its own funds if the client has been left with a negative GLV. 47 On 30 May 2019, the applicant determined that the first respondent did not hold enough equity to maintain its current open positions in relation to the CFDs in HOME.NYS, and that its account was close to, or had fallen into, margin call. This remained the position up to 6 June 2019 (Sydney time). 48 On 6 June 2019 at 5.26 pm (Sydney time), Mr Liu (who held the position of Associate Director - Client Coverage at the applicant) had a telephone conversation with the second respondent in which Mr Liu told the second respondent that he would have to close 232,000 CFDs in HOME.NYS in order to bring his free equity back to positive and no longer be in margin call. The second respondent stated that this meant that he had "lost all his money", and requested that the applicant call him once the market opened. Mr Liu said that he would pass on these instructions to Mr Barnes who, at that time, held the position of Director, Client Coverage with the applicant, and who was working the night shift in Sydney on that day. 49 On 6 June 2019 at 11.18 pm (Sydney time), Mr Barnes sent an email to Prime Services and Client Coverage stating that, unless anything changed, the first respondent was about to become a debtor for about USD 1.5 million based on pre-market prices. This prompted a telephone conversation between Mr Barnes and Mr Briscoe who was, at that time, the applicant's Chief Operating Officer. The upshot of this conversation was that Mr Briscoe contacted Mr White, the applicant's Chief Executive Officer. As Chief Executive Officer, Mr White oversees the daily management, operations, and governance of the applicant. Mr Briscoe informed Mr White of the position with the first respondent's account and said that he would speak to the second respondent about either sending money or agreeing to "cut positions". Mr White told Mr Briscoe that he would prefer to "cut positions" but that, if the second respondent sent money, the applicant could "hold off cutting". 50 Mr White gave this evidence with respect to his conversation with Mr Briscoe: I recall being nervous. The account was in a bad condition beyond what I was comfortable with and I was keen to close positions. I was content to hold off cutting positions on the basis that the client would send money to substantially cover his position. [The first respondent] was one of [the applicant's] largest trading clients. To my understanding [the first respondent] had had a good credit history with [the applicant], had always acted honourably, and in the past had always made payments to [the applicant] when requested to do so. 51 In a telephone conversation on 6 June 2019 at 11.28 pm (Sydney time), the second respondent informed Mr Barnes that he had spoken to Mr Briscoe. The second respondent told Mr Barnes that: he wished to send funds instead of reducing his positions; he would send USD 1.5 million; he would send these funds within 30 minutes; and he would also send proof of this funding. 52 Mr Barnes telephoned Mr Briscoe. Mr Briscoe said that he had spoken to the second respondent in an earlier telephone conversation and that the second respondent told Mr Briscoe that he would send USD 1,500,000. Mr Briscoe informed Mr Barnes that he (Mr Briscoe) had given the second respondent "a deadline of 30 minutes … midnight Sydney time, to send a receipt". 53 The market opened at 9.30 am New York time (11.30 pm Sydney time). 54 On 6 June 2019 at 11.35 pm (Sydney time) Mr Barnes sent an email to Prime Services and Client Coverage that both he and Mr Briscoe had spoken with the second respondent and that the second respondent would "fund in next 30 minutes (proof of funding/ receipt expected in that time)". 55 At around this time, Mr White and Mr Briscoe had a further telephone conversation concerning the first respondent's position. In that conversation, Mr White enquired as to why only USD 1,500,000 was being sent when, in fact, more funds were needed (about another USD 800,000) to get the first respondent out of margin and to hold its position. Mr Briscoe informed Mr White that he had spoken to the second respondent and that the second respondent had said that he only had USD 1,500,000 in his trading account and could not transfer more money to that account because of a bank holiday in the UAE. 56 Mr White gave this evidence with respect to this conversation with Mr Briscoe: My understanding at this time was that the client has agreed that he would send USD 1.5 million and would send proof of payment to [the applicant]. I also understood that the client had indicated to Mr Briscoe that all he had available and the relevant account at that time was USD 1.5 million and that the client had offered an explanation as to why that was the case, to the best of my knowledge, it was a bank holiday in the UAE which prevented him from immediately adding further funds into that account. I had also understood that additional funds in the order of about USD 800,000 would be paid by the client later once the banks had reopened. I also had understood based on the client's good history that the client had plenty of money and would be able to meet a large obligation. Having been informed of the account GLV, the fact that the client had agreed that he would send USD 1.5 million immediately together with proof of payment, and that there was an explanation for why it was that the client could only make a payment of USD 1.5 million at that time due to the bank holiday, and taking into account the client's good standing with [the applicant], I decided not to close out [the first respondent's] position in HOME.NYS at the open of the New York Stock Exchange. 57 Mr White also gave this evidence: Had I appreciated at that time that [the second respondent], and [the first respondent], would not be sending USD 1.5 million to [the applicant], contrary to what [the second respondent] had represented, then my decision would have been to immediately close out [the first respondent's] trading position in HOME.NYS, and sell all of [the first respondent's] position in that stock, to minimise any losses to be suffered by [the applicant]. 58 If instructions had been given to close out the first respondent's trading position in HOME.NYS then, based on Mr White's evidence, I accept that it would have taken approximately 10 minutes for all 250,000 shares to be sold. This estimate is based on Mr White's opinion as an investment banker and the fact that large volumes of HOME.NYS were sold by the first applicant later that day in a very short time - Mr White said "almost instantly". 59 After the NYSE opened, the price of HOME.NYS fell, and continued to fall throughout the day. 60 At around 11.43 pm on 6 June 2019 (Sydney time), Mr Briscoe and Mr Barnes discussed the first respondent's trading position and estimated that, by that time, the first respondent had a negative equity of approximately USD 1.8 million. 61 By 11.54 pm, the applicant had not heard from the second respondent. However, on 7 June 2019 at 12.05 am (Sydney time) - that is, 11 minutes later - the second respondent sent an email to Mr Barnes (and others at the applicant) with a screenshot of an "International Wire Transfer" confirmation as purported proof that the first respondent had sent USD 1.5 million to the applicant. Mr Barnes reviewed the screenshot and, in an email to Mr Briscoe sent on 7 June 2019 at 12.10 am (Sydney time) said "receipt looks ok". However, Mr Barnes also said: "Ideally we could use another 500K+ though". (The applicant later appreciated that there are some anomalies with the screenshot. Later investigation revealed that, in fact, no funds had been sent by the first respondent to the applicant.) 62 At around this time, Mr White and Mr Briscoe were considering the levels at which the applicant would need to begin to "trim" the first respondent's position in HOME.NYS. Mr White gave this evidence: I was concerned by the fact that 1.5 million was not enough and was concerned that [the second respondent] might not send any additional funds if we moved too aggressively and I wanted to ensure [the applicant] acted at certain price levels to minimise losses as the price levels continued to move. 63 On 7 June 2019 at 12.30 am (Sydney time), Mr Barnes informed Mr White and Mr Briscoe that the first respondent was running a large loss of approximately USD 2,000,000. By 12.33 am, the first respondent's account had a negative GLV of approximately USD 2,090,000 million. At this time, Mr White was considering what to do. He was acting on the understanding that the second respondent had sent USD 1,500,000 which was "good money" and that the first respondent owed the applicant approximately USD 500,000. At 12.54 am, Mr White instructed Mr Barnes to prepare to begin liquidating the first respondent's positions once the price of HOME.NYS reached USD 8.50. 64 On 7 June 2019 at 2.09 am (Sydney time), Mr White instructed Mr Barnes to sell 100,000 HOME.NYS shares once they began trading at USD 8.50. At this time, the applicant (through Mr Briscoe) was endeavouring to contact the second respondent by telephone, but the second respondent was not answering Mr Briscoe's calls. Mr White wanted the second respondent to make his own decision about the first respondent liquidating its position. 65 On 7 June 2019 at 2.24 am (Sydney time), Mr Briscoe instructed Mr Barnes to sell 50,000 HOME.NYS shares at USD 8.71. The instruction to sell appears to have originated from the second respondent. 66 On 7 June 2019 at approximately 2.49 am (Sydney time), Mr Briscoe instructed Mr Barnes to sell another 50,000 HOME.NYS shares at USD 8.50. Once again, the instruction to sell appears to have originated from the second respondent. 67 Throughout the early hours of 7 June 2019 (Sydney time), the applicant continued liquidating the first respondent's position in HOME.NYS shares. At the end of trading on that day, 200,000 HOME.NYS shares had been sold on the first respondent's account, leaving 50,000 HOME.NYS remaining. 68 On 7 June 2019 at 3.57 am (Sydney time), Mr Briscoe sent an email to the second respondent, stating: Hello Musa Following on from our conversation, your current gross liquidation value on the account is negative USD2.265mio. You have sent USD1.5mio so we will require approximately USD800k in additional funds at this point to bring the account back to a positive liquidating value. Please note you have 50t HOME remaining as a position so this required transfer amount may change. If you would like to place a stop on the remaining 50t position, please respond to this email with an instruction and the client coverage team will place this order for you. Best Nick 69 The applicant sent a follow-up email to the second respondent at 4.28 am noting that the price of HOME.NYS shares had dropped past USD 7.50. The second respondent did not answer these emails. 70 On 8 June 2019, Mr Briscoe sent an email to the second respondent requesting that funds be transferred to bring the first respondent's account back to a positive GLV and to provide a margin for the 50,000 HOME.NYS shares that were still owned. The email stated: Hello Musa Following Friday's close, your gross liquidation value is negative USD2.290mio. You have sent USD1.5mio so to bring your account back to a positive GLV and provide margin for the +50t HOME positions you still have, we will require USD847k as a transfer. As I am sure you are aware, HOME had a relatively stable session on Friday and closed little changed from Thursday so the transfer amount is also little changed. Once you have made the transfer today, please forward a receipt through. Many thanks Nick Briscoe 71 By 12 June 2019, no funds had been received from the first respondent. Mr Briscoe issued an instruction that the first respondent's remaining 50,000 shares in HOME.NYS be sold when the market in the United States opened. The shares were sold accordingly at an average price of USD $7.729, leaving the first respondent's account with a negative GLV of USD 2,285,213. 72 As at 17 June 2019, the first respondent's account with the applicant had a negative balance of USD $2,286,383.37. 73 On 10 July 2019, NAB sent a letter to the applicant confirming that the first respondent had not transferred the sum of USD 1.5 million into the applicant's account, as represented. 74 I am satisfied on the evidence before me that the first respondent did not transfer funds of USD 1,500,000 to the applicant on or after 6 June 2019 and that the first respondent remains indebted to the applicant in respect of the liabilities it had assumed under the CFDs it held with the applicant in respect of HOME.NYS shares. 75 I am also satisfied that the applicant was induced not to close out the first respondent's position in the CFDs for HOME.NYS by the representation that funds of USD 1,500,000 would be, and had been, sent to it. I am satisfied that, but for the making of that representation, the applicant would have closed out the first respondent's positions when the United States market opened on 6 June 2019, and that the shares the subject of the CFDs would have been sold on market in the first 10 minutes of market opening.

THE CLAIM FOR DAMAGES 76 In its written submissions, the applicant advances its claim for damages on three bases. The first basis relates to the first representation. The second and third bases relate to the second representation. 77 As to the first representation, the applicant submits that it is entitled to damages representing its reliance losses. As the applicant put it in submissions, it relied on the first representation to its detriment when deciding not to close all positions which the first respondent held in HOME.NYS at the opening of the NYSE on 6 June 2019. It submits that its loss is the difference between the loss that it suffered by closing all the first respondent's positions when it did (which finalised on 12 June 2019), and the loss it would have suffered had it closed all the first respondent's positions earlier - namely, within the first 10 minutes of market opening on 6 June 2019. 78 As to the second representation, the applicant structures its claim on the basis that the representation had both present and future aspects, each leading to a separate head of loss and damage. 79 The applicant submits that the aspect of the representation that USD 1.5 million had been sent to its account was, at the time it was made, a present representation that was false. The making of that false representation was contravening conduct. It submits that the loss it suffered was the absence of that payment, namely USD 1,500,000. As it puts it, it did not receive USD 1,500,000 because of the contravening conduct. It therefore contends that it is entitled to payment of USD 1,500,000 as damages. 80 The applicant submits that the aspect of the representation that the transfer would be processed and settled on 6 June 2019 UAE time, and credited to the applicant, was also false. The making of that representation was also contravening conduct. The applicant submits that, by reason of this separate contravention, the applicant left some of the first respondent's positions in HOME.NYS open on the basis that USD 1,500,000 would arrive in its account. The applicant submits that this is a further loss, distinguishable from the reliance loss referred to above. The applicant submits that it is also a loss that is additional to the loss of USD 1,500,000 it claims. 81 I observe that the alleged losses referred to in [79] and [80] above do not appear to have been pleaded in the statement of claim.

The Legal Basis for liability 82 There are some matters to note about the way in which the applicant has pleaded and, in submissions, advanced its case on liability against the second respondent.

Which legislation applies? 83 The applicant has pleaded contraventions of the ASIC Act (specifically, s 12DA(1)) and analogous provisions of the ACL and ACL(NSW) (specifically, s 18(1)). However, the ACL does not apply, as a law of the Commonwealth, to the supply, or possible supply, of services that are "financial services" or to the supply, or possible supply, of products that are "financial products": s 131A of the Competition and Consumer Act. 84 The position does not appear to be the same in relation to the ACL(NSW). The text of the ACL is picked up by s 27 of the Fair Trading Act and applied as a law of New South Wales by s 28. However, I have not been referred to any provision of the Fair Trading Act that corresponds to s 131A of the Competition and Consumer Act. It would seem, therefore, the ACL(NSW), as a law of New South Wales, is not limited in its application in the way that the ACL is limited, in its application, as a law of the Commonwealth. Further, s 12AE(1) of the ASIC Act provides that Subdiv D of Pt 2 Div 2 of the Act (which contains s 12DA) is not intended to exclude or limit the concurrent operation of any law of a State or Territory. 85 There is, however, a particular difficulty with the applicant's case based on contravention of s 18(1) of the ACL(NSW). Section 32(1) of the Fair Trading Act provides: (1) The Australian Consumer Law (NSW) applies to and in relation to - (a) persons carrying on business within this jurisdiction, or (b) bodies corporate incorporated or registered under the law of this jurisdiction, or (c) persons ordinarily resident in this jurisdiction, or (d) persons otherwise connected with this jurisdiction. 86 The applicant contends that the ACL(NSW) applies to the second respondent by dint of para (d) - namely, that the second respondent is "otherwise connected with" New South Wales. It contends that the words "connected with" are broad and should be given a wide construction. Even if that be so, the applicant does not explain, let alone plead, how, as a matter of fact, the second respondent is connected with New South Wales. In my view, the connection, if it exists, must be one that is real and of substance, as opposed to one that is contrived or fanciful. 87 It is, perhaps, arguable that the second respondent is "otherwise connected with" New South Wales because of his personal dealings, over time, with the applicant in New South Wales. However, in the absence of detailed and focussed evidence on this topic, and any developed argument on what is clearly a difficult, and perhaps contentious, question, I am not persuaded that the second respondent is "connected with" New South Wales within the meaning of s 32(1)(d) of the Fair Trading Act. I therefore propose to deal with the present application as one based on the alleged contravention of s 12DA(1) of the ASIC Act and/or s 18(1) of the ACL as a law of the Commonwealth. 88 Turning to that aspect of the case, the terms "financial product" and "financial service" are defined in s 2 of the ACL. These definitions, in turn, refer to the definitions of "financial product" and "financial service" in ss 12BAA and 12BAB, respectively, of the ASIC Act. The applicant starts with ss 12BAB(1)(b) and (7)(b). Relevantly to the present case, it contends that it provided a financial service to the first respondent because it issued financial products - namely, it entered into CFDs with the first respondent. It then contends that each CFD was a financial product by dint of s 12BAA(1)(a) of the ASIC Act read with s 12BAA(4). In this regard, it contends that each CFD was a facility through which the first respondent made a financial investment within the meaning of s 12BAA(4): in other words, the first respondent gave money or money's worth (referred to in s 12BAA(4) as the "contribution") to the applicant which the applicant used to generate a financial return or other benefit for the first respondent, in circumstances where the first respondent had no day-to-day control over the use of the contribution to generate the return or benefit. 89 The question of whether the CFDs entered into by the applicant and the first respondent were financial products within the meaning of s 12BAA(1) of the ASIC Act is a difficult one. On balance, I am not satisfied that they were. To my mind, it is doubtful (to say the least) that the "contribution" was, itself, used by the applicant to generate a financial return for the first respondent. It is also doubtful that the first respondent had no day-to-day control over the use of the "contribution", given its ready ability to reduce or close out positions. 90 There is also a difficulty presented by the terms of s 131A of the Competition and Consumer Act itself. So far as material to the present case, s 131A simply provides that the ACL "does not apply … to the supply, or possible supply, of services that are financial services, or of financial products". Even if, in the present case, CFDs are taken to be financial products for the purpose of s 12BAA(1) of the ASIC Act, the impugned conduct is not the supply or possible supply of financial products. The impugned conduct is, relevantly, conduct in relation to the first respondent's contractual obligation to the applicant to meet margin calls and other financial commitments in respect of CFDs already entered into. 91 For this reason, I am not persuaded that: (a) s 12DA(1) of the ASIC Act applies to the impugned conduct; or that (b) the operation of s 18(1) of the ACL is excluded. I therefore propose to consider the second respondent's liability by reference to the application of s 18(1) of the ACL to the impugned conduct.

What is the basis for the second respondent's liability? 92 As advanced in submissions, the applicant's primary case against the second respondent is that he is a principal contravener (that is, at all times the second respondent was acting in his own right). 93 One reading of the statement of claim accommodates the case of the second respondent acting as a principal: the applicant alleges that the second respondent made the first representation and the second representation: see also paras 20 - 29, and 34 - 43, of the statement of claim. However, this way of putting the case has consequences for the alternative way in which, in its submissions, the applicant seeks to attribute liability to the second respondent - namely, as a person involved in the first respondent's alleged contraventions of s 12DA(1) of the ASIC Act: see para 44 of the applicant's written submissions and paras 30, 31, 44, and 45 of the statement of claim. The confinement, in submissions, of the applicant's alternative case to the second respondent's involvement in contravention of s 12DA(1) of the ASIC Act is, perhaps, a reflection of its contention that s 12DA(1) of the ASIC Act is engaged to the exclusion of s 18(1) of the ACL. However, I do not understand the applicant to have abandoned its pleaded case, which extends to the second respondent's involvement in the first respondent's contravention of s 18(1) of the ACL (assuming that s 12DA(1) of the ASIC Act does not apply). 94 In order to analyse the alternative bases on which the applicant advances its case against the second respondent, it is necessary to understand the distinction between liability as a principal contravener and liability as a secondary contravener (that is, liability as an accessory). It is convenient to commence this analysis by considering the applicant's alternative case that the second respondent is liable as an accessory - namely, as a person involved in the first respondent's contraventions. 95 It is trite that, at general law, a person cannot be liable as an accessory to another person's contravention unless the other person's contravention is established: Mallam v Lee (1948) 80 CLR 198 at 210. In the present case, this means that the second respondent cannot be liable as a person involved in the first respondent's contraventions of, say, s 18(1) of the ACL unless the first respondent's liability for contravention of that provision is also established. How is the first respondent's liability established? 96 In its statement of claim, the applicant pleads that the first respondent also made the first representation and the second representation. But this begs the question of how it is said that the first respondent, itself, made the two representations. There are no express allegations pleaded in the statement of claim in this regard beyond the bare allegation of "making" the representations. One must start, therefore, with the nature of corporate personality at general law. 97 In Tesco Supermarkets Ltd v Nattrass [1972] AC 153, Lord Reid said (at 170): I must start by considering the nature of the personality which by a fiction the law attributes to a corporation. A living person has a mind which can have knowledge or intention or be negligent and he has hands to carry out his intentions. A corporation has none of these: it must act through living persons, though not always one or the same person. Then the person who acts is not speaking or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company. There is no question of the company being vicariously liable. He is not acting as a servant, representative, agent or delegate. He is an embodiment of the company or, one could say, he hears and speaks through the persona of the company, within his appropriate sphere, and his mind is the mind of the company. If it is a guilty mind then that guilt is the guilt of the company. It must be a question of law whether, once the facts have been ascertained, a person in doing particular things is to be regarded as the company or merely as the company's servant or agent. In that case any liability of the company can only be a statutory or vicarious liability. 98 Earlier, in Lennard's Carrying Co Ltd v Asiatic Petroleum Co. Ltd [1915] AC 705, Viscount Haldane LC said (at 713): My Lords, a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation. That person may be under the direction of the shareholders in general meeting; that person may be the board of directors itself, or it may be, and in some companies it is so, that that person has an authority co-ordinate with the board of directors given to him under the articles of association, and is appointed by the general meeting of the company, and can only be removed by the general meeting of the company. 99 The statement of claim hints at how it is said, in the present case, that the first respondent made the two representations. 100 First, paragraph 3 of the statement of claim pleads that, at all material times, the second respondent: (a) was the sole manager of the first respondent and held a position equivalent to a director of a company under Australian law; (b) was the sole shareholder of the first respondent; and (c) was the controlling mind of the first respondent. These allegations are superfluous if they are not pleaded for the purpose of establishing the first respondent's liability. 101 Secondly, the statement of claim makes clear that the physical acts in making the two representations were undertaken and performed by the second respondent, no-one else. 102 Thirdly, the statement of claim makes no allegation that the first respondent is vicariously liable for the second respondent's acts through some expanded concept of corporate responsibility. 103 In addition to these matters, the statement of claim makes clear that the applicant's contractual relationship was with the first respondent, not with the second respondent: see paras 5 and 6. This is the foundation on which the statement of claim proceeds. 104 The applicant's case, as pleaded, must be that the first respondent's liability arises from the fact that, at all material times, the second respondent's conduct was, in law, the first respondent's conduct - in other words the second respondent's mind and acts were the first respondent's mind and acts. If so, the second respondent's conduct in making the two representations does not render him liable as a principal contravener of s 18(1) of the ACL. However, the fact that the second respondent's mind and acts were the first respondent's mind and acts (such that the first respondent is liable for the contraventions) does not absolve the second respondent from liability in respect of those contraventions as a person involved in them: Hamilton v Whitehead [1988] HCA 65; 166 CLR 121 at 127 - 128. 105 Although advanced as an alternative, the case that the second respondent was a person involved in the first respondent's alleged contraventions is the one that finds greatest support in the statement of claim, which must be read harmoniously to take into account the case pleaded against the first respondent. It is also the case that finds greatest support in the evidence on which the applicant relies. That is the basis on which I shall proceed.

The relevant statutory provisions 106 Bearing in mind these observations, the relevant statutory provisions of the ACL are as follows. 107 Section 18(1) of the ACL provides: (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. 108 Section 4 relevantly provides: (1) If: (a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and (b) the person does not have reasonable grounds for making the representation; the representation is taken, for the purposes of this Schedule, to be misleading. (2) For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by: (a) a party to the proceeding; or (b) any other person; the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary. (3) ... (4) ... 109 Section 236(1) provides: (1) If: (a) a person (the claimant) suffers loss or damage because of the conduct of another person; and (b) the conduct contravened a provision of Chapter 2 or 3; the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention. 110 The meaning of "involved" is given by s 2, which provides: … a person is involved, in a contravention of a provision of this Schedule or in conduct that constitutes such a contravention, if the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced, whether by threats or promises or otherwise, the contravention; or (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention. 111 Establishing a contravention of s 18(1) of the ACL does not involve proof of any mental element. However, in order to establish the liability of a person said to have been involved in the contravention, it is necessary for the moving party to establish that the person was intentionally involved in the principal's contravention and had knowledge of the essential matters that make up the contravention, whether or not that person also knew that those matters were a contravention: Yorke v Lucas [1985] HCA 65; 158 CLR 661.

Summary judgment 112 Section 31A(1) of the Act permits the Court to give judgment in favour of an applicant where it is satisfied that the respondent has no reasonable prospect of successfully defending the proceeding. In Spencer v Commonwealth of Australia [2010] HCA 28; 241 CLR 118, Hayne, Crennan, Kiefel, and Bell JJ remarked (at [58]): 58 How then should the expression "no reasonable prospect" be understood? No paraphrase of the expression can be adopted as a sufficient explanation of its operation, let alone definition of its content. Nor can the expression usefully be understood by the creation of some antinomy intended to capture most or all of the cases in which it cannot be said that there is "no reasonable prospect". The judicial creation of a lexicon of words or phrases intended to capture the operation of a particular statutory phrase like "no reasonable prospect" is to be avoided. Consideration of the difficulties that bedevilled the proviso to common form criminal appeal statutes, as a result of judicial glossing of the relevant statutory expression, provides the clearest example of the dangers that attend any such attempt. 113 Plainly, s 31A calls for the exercise of a practical judgment on the question posed by the provision. However, as Reeves J observed in Australian Securities and Investments Commission v Cassimatis [2013] FCA 641; 220 FCR 256 at [46], each application for summary judgment must be determined according to its particular circumstances, including the stage at which the proceeding has reached. In this present case, the stage has been reached where the second respondent has been ordered to file a defence and the parties have been ordered to file their evidence. The second respondent has not advanced a defence to the allegations in the statement of claim or any evidence, let alone any evidence which, if it were to be admitted at a final hearing, would contradict the applicant's claim against him. 114 Having regard to the admissions taken to have been made, and the uncontradicted evidence which has been adduced in the present application, I am satisfied that: (a) The first representation and the second representation were made through the instrumentality of the second respondent. (b) When the second respondent made the first representation and the second representation, he was acting as and for the first respondent. Therefore, the first respondent made the representations. (c) The first representation was false at the time it was made. I infer that the second respondent had no intention of causing the first respondent to send, and therefore the first respondent had no intention of sending, USD 1,500,000 to the applicant at that time or in the immediate future. The second respondent knew the falsity of the first representation. The making of this representation was conduct, in trade or commerce, that was misleading or deceptive. (d) In order to reach the finding in (c), it is not necessary to rely on the fact that the first representation was a representation with respect to a future matter. However, for completeness, I accept that it was a representation with respect to a future matter for the purposes of s 4 of the ACL, and that the first respondent, acting through the second respondent, had no reasonable grounds for making that representation. (e) The second representation was false at the time it was made. I rely on the finding in (c). In addition, I find that the second respondent did not cause the first respondent to send, and therefore the first respondent did not send, USD 1,500,000 by wire transfer to the applicant's bank account. Once again, the second respondent knew the falsity of the second representation. The making of the second representation was conduct, in trade or commerce, that was misleading or deceptive. (f) In order to reach the finding in (e), it is not necessary to rely on the fact that aspects of the second representation were representations with respect to future matters - namely, that the funds would be processed, settled, and received in the applicant's bank account for its credit. However, for completeness, I accept that these aspects were representations with respect to future matters for the purposes of s 4 of the ACL, and that the first respondent, acting through the second respondent, had no reasonable grounds for making those representations. (g) The conduct referred to in (c) and (e) contravened s 18(1) of the ACL. (h) The applicant suffered loss by reason of the contraventions referred to in (g). (i) The second respondent was involved in the contraventions referred to in (g) within the meaning of s 236(1) of the ACL. He made the representations as and for the first respondent with, as I have found, actual knowledge of their falsity. 115 In light of these findings, I am satisfied that the second respondent has no reasonable prospect of successfully defending the proceeding and that the applicant is entitled to judgment against the second respondent for damages to be assessed. 116 As to the question of loss, I am satisfied that the applicant suffered loss by reason of the making of the first representation, in that it relied on truth of that representation and, in the expectation that funds in the amount of USD 1,500,000 would be sent to it, decided not to close all positions which the first respondent held in HOME.NYS at the opening of the NYSE on 6 June 2019. Had that representation not been made, I am satisfied that, at the opening of the NYSE on 6 June 2019, the applicant would have closed all positions which the first respondent held in HOME.NYS. I am satisfied that this would have occurred within the first 10 minutes of trading. As events transpired, the applicant stayed its hand until it had no reasonable option but to close those positions in the face of mounting losses. Those losses continued until the last position of 50,000 HOME.NYS shares was closed on 12 June 2019. 117 I am satisfied that the loss suffered by the applicant is the difference between the loss that it suffered by closing all the first respondent's positions when it did (which finalised on 12 June 2019), and the loss it would have suffered had it closed all the first respondent's positions earlier - namely, within the first 10 minutes of market opening on 6 June 2019. There is no evidence before me that would lead me to conclude that the applicant did not act reasonably in the protection of its own interests when staying its hand at market opening on 6 June 2019 or, later, when closing the first respondent's positions in HOME.HYS when it did. 118 While I accept that the making of the second representation is conduct that was misleading or deceptive, and gives rise to a separate contravention of s 18(1) of the ACL, I do not accept that, as a result of this separate contravention, the applicant suffered any loss that is separate from and additional to the loss it suffered as a result of the first contravention (the making of the first representation). 119 In particular, I do not accept that the non-receipt of the amount of USD 1,500,000 represents, ipso facto, a loss by the applicant of the same amount of money. Further, I do not accept that the second contravention gives rise to any reliance loss that is distinguishable from the reliance loss it suffered as a result of the first contravention. Indeed, for the purpose of analysing loss, the contravening conduct arising from the making of the second representation was a continuation of the loss arising from the making of the first representation. The applicant's contention that it suffered separate and additional loss is, in substance, an invitation to double-count the loss it suffered by reason of the first contravention.

Default judgment 120 In light of the conclusion that I have reached in relation to s 31A of the Act, it is not necessary for me to determine the applicant's application for default judgment against the second respondent. Even so, I am satisfied that the present case is one in which it would be appropriate to enter default judgment if judgment were not to be entered in reliance on s 31A. 121 In its written submissions, the applicant relied on my summary of the relevant principles in Chamberlain Group, Inc v Giant Alarm System Co, Ltd (No 2) [2019] FCA 1606 at [13] - [14]: 13 The power to give judgment against a defaulting party is undoubtedly discretionary. The discretion must be exercised cautiously. Where the defaulting party is a respondent to a pleaded claim, the giving of judgment for final relief on the application will deliver complete success to the applicant without investigation of the merits of the pleaded claim: ACOHS Pty Ltd v Ucorp Pty Ltd [2009] FCA 577 at [27]. There is no requirement that the act or acts of default be intentional or amount to contumelious conduct. There is no requirement that the act or acts of default result in inordinate or inexcusable delay. That said, such features, if present, will be relevant to the exercise of the Court's discretion. So too will conduct that persuades the Court that the defaulting party is manifesting an inability or unwillingness to cooperate with the Court and the other party or parties to the proceeding. 14 Rule 5.23(2)(c) requires the Court to be satisfied that the applicant is entitled to the relief claimed in the statement of claim. This requirement has been interpreted as meaning that the Court must be satisfied that "on the face of the statement of claim" the applicant is entitled to the relief that is claimed. It is not a requirement that the applicant prove its claim by way of evidence. Put another way, the facts alleged in the statement of claim are taken to have been admitted: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146; 161 FCR 513 at [42]. If, on inspection of the statement of claim, the Court is satisfied that the applicant would be entitled to the relief sought then this requirement of r 5.23(2)(c) will be met: CNIP Pty Ltd v Chan & Naylor Norwest Pty Ltd (No 2) [2011] FCA 1170 at [18]-[19]; Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [23]. The Court may permit further evidence to be adduced, but not evidence that would alter the pleaded case: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427; 236 ALR 665 at [45], [48]-[50]; United Broadcasting International Pty Ltd v Turkplus Pty Ltd (No 2) [2010] FCA 1413 at [42]-[44]; Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352; 195 FCR 1 at [62]-[63]. 122 I am satisfied that the second respondent is in default by not filing a defence to the statement of claim as ordered, and by not attending the hearing of the present application (noting that the proceeding was also listed for case management at the same time). I note, further, that the second respondent is also in default by not attending the case management hearing on 2 May 2022. 123 I am not persuaded that the second respondent is, necessarily, in default by not filing evidence by the stipulated date. It is possible that he might have made the forensic decision not to rely on any evidence in his defence. I do not construe the orders made on 4 March 2022 as requiring the second respondent to advance evidence in his defence. Rather, those orders required him to file any evidence he proposed to advance in his defence. The failure of the second respondent to file evidence is of little moment given the established acts of default to which I have referred. Further, these acts of default also lead me to conclude that the second respondent is in default by not defending the proceeding with due diligence.

The assessment of damages 124 As discussed in the course of the hearing, I will refer the assessment of damages, for the loss I have found, for inquiry and report by a Registrar of the Court acting as a referee under s 54A of the Act. The assessment is to include pre-judgment interest under s 51A of the Act.

Costs 125 The applicant is entitled to its costs. It seeks a lump sum award. I am satisfied that such an award is appropriate. I will also refer the question of the amount of such costs for inquiry and report by a Registrar of the Court, acting as a referee. I certify that the preceding one hundred and twenty-five (125) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Yates.