Jiang v Slater & Gordon Ltd [2024] FCA 617 | Case summary

Federal Court of Australia|2024-06-12|Before: Shariff J

(in liq) [2016] FCAFC 60; (2016) 245 FCR 402 Huon Aquaculture Group Ltd v Secretary, Dept of Primary Industries, Parks, Water and Environment (No 2) [2018] FCA 89 Oztech Pty Ltd v Public Trustee of Queensland [2019] FCAFC 102; (2019) 269 FCR 349 Re Allied Queensland Coalfields Ltd; Super John Pty Ltd & Ors v Marsford Investments Pte Ltd (1997) 23 ACSR 427 Regional Publishers v Elkington [2006] FCA 1017; (2006) FCR 218 Research in Motion Ltd v Samsung Electronics Australia Pty Ltd [2009] FCA 320; (2009) 176 FCR 66 Saffari v Latitude Financial Services Australia Holdings Pty Ltd [2024] FCA 573 Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 SZSRR v Minister for Immigration and Border Protection [2017] FCA 328 Tamaya Resources Ltd (In Liq) v Deloitte Touche Tohmatsu (A Firm) [2016] FCAFC 2; (2016) 332 ALR 199 Teh v Ramsay Centauri Pty Ltd [2002] NSWSC 456; (2002) 42 ACSR 354 Wilson v Victoria [2023] FCAFC 204

Division: General Division

Registry: New South Wales

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Commercial Insolvency

Date of hearing: 2 May 2024

Counsel for the Plaintiff in NSD 442 of 2023: The Plaintiff appeared in person

Counsel for the Plaintiff in NSD 443 of 2023: Mr Jiang was granted leave to appear on behalf of the Plaintiff

Counsel for the Defendant: Ms L Rich

Solicitor for the Defendant: MinterEllison

AND: SLATER & GORDON LIMITED ACN 097 297 400 Defendant

NSD 443 of 2023 BETWEEN: KOSHIB INVESTMENT PTY LTD ATF KOSHIB FUND Plaintiff

AND: SLATER & GORDON LIMITED ACN 097 297 400 Defendant

order made by: SHARIFF J DATE OF ORDER: 12 June 2024

In NSD 442 of 2023: (a) The plaintiff's interlocutory application filed on 31 January 2024 be dismissed. (b) The proceedings be summarily dismissed. (c) The plaintiff pay the defendant's costs of the proceedings as agreed or taxed.
In NSD 443 of 2023: (a) The proceedings be summarily dismissed. (b) The plaintiff pay the defendant's costs of the proceedings as agreed or taxed, other than the defendant's costs of or incidental to the interlocutory application filed by the plaintiff on 8 June 2023. (c) By 4.00pm on 14 June 2024, the defendant is to indicate to my Associate via email whether, consistently with Order 2 of Halley J's Orders of 7 July 2023, it seeks a determination of its costs of or incidental to the interlocutory application filed by the plaintiff on 8 June 2023 to be payable on a lump sum basis and, if not, the costs of that application will be the defendant's costs as agreed or taxed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

A. INTRODUCTION 1 The plaintiff in proceedings NSD 442 of 2023 (Mr Jiang) and the plaintiff in NSD 443 of 2023 (Koshib Investment) were former shareholders of the defendant (Slater & Gordon) in each of the proceedings before me. Slater & Gordon is a legal practice that at one time was publicly listed on the Australian Stock Exchange (ASX). In February 2023, there was an off-market bid made by a private equity firm (Allegro) to acquire the entire shareholding in Slater & Gordon, which would also involve Slater & Gordon being relieved of its debt position. Ultimately, the bid led to the compulsory acquisition of the shares in Slater & Gordon by an entity associated with Allegro (Wright NomineeCo). 2 Mr Jiang is a private individual who purchased shares in Slater & Gordon at a time when it was listed on the ASX. Koshib Investment is the trustee of the Koshib Fund that also acquired shares in Slater & Gordon. The Koshib Fund appears to be a self-managed superannuation fund and its beneficiaries are Mr Jiang, his wife, his son and his daughter-in-law. 3 In proceedings NSD 442 of 2023 (Jiang Proceedings): (a) Mr Jiang commenced proceedings in this Court by way of an Originating Process (Original Jiang OP) and Concise Statement (Original Jiang CS), both filed on 22 May 2023; (b) on 28 November 2023, Mr Jiang filed a further document entitled "Concise Statement", which appears to have been an Amended Concise Statement (Amended Jiang CS); (c) on or about 29 January 2024, Mr Jiang filed an interlocutory application seeking leave pursuant to r 8.21 of the Federal Court Rules 2011 (Cth) (FC Rules) to file an amended originating process; (d) on 21 February 2024, I held a case management hearing at which, amongst other things, I sought to understand the state of the proceedings. I made orders on that day which, amongst other things, gave Mr Jiang an opportunity to serve and provide to the Court any amended originating process and further amended concise statement which he sought leave to rely upon; (e) on 6 March 2023, in accordance with orders made by me on 21 February 2024, Mr Jiang served: (i) a proposed Amended Originating Process (Proposed Jiang AOP) which he seeks to rely upon and in respect of which he seeks leave under r 8.21 of the FC Rules; and (ii) a proposed Further Amended Concise Statement (Proposed Jiang FACS) which he seeks leave to rely upon. 4 In proceedings NSD 443 of 2023 (Koshib Proceedings), Koshib Investment commenced proceedings in this Court by way of an Originating Process (Koshib OP) and Concise Statement (Koshib CS), both filed on 22 May 2023. These remain the only pleadings filed in the Koshib proceedings. Although Koshib Investment was at one time represented by a solicitor, this ceased to be the case in or about October 2023. Both prior to and since that time, Mr Jiang, who is a director of Koshib Investment, has sought leave to appear on its behalf. The grant of such leave was consistently opposed by Slater & Gordon, relying on r 4.01(2) of the FC Rules and applicable authorities including Flightdeck Geelong Pty Ltd v All Options Pty Ltd [2020] FCAFC 138; (2020) 280 FCR 479 at [116]. This opposition was not without merit. However, for the purpose of the hearing before me, I exercised my discretion to allow Mr Jiang to appear for Koshib Investment at the hearing on 2 May 2024. I considered this to be the most efficient course to take in the particular circumstances of the applications before me, and I considered that this course promoted the overarching purposes contained in s 37M of the Federal Court of Australia Act 1976 (Cth) (FC Act). 5 By an interlocutory application filed in each of the proceedings, Slater & Gordon seeks: (a) that the proceedings be dismissed pursuant to s 31A(2) of the FC Act and r 26.01(1) of the FC Rules; (b) in the alternative, that Slater & Gordon be removed as a party pursuant to r 9.08 of the FC Rules; (c) in the alternative, that the Originating Processes and Concise Statements in each of the proceedings be struck out pursuant to rr 6.01 and 16.21(1) of the FC Rules; and (d) that the plaintiffs pay Slater & Gordon's costs of the Jiang Proceedings as agreed or assessed (other than those which were subject to an earlier costs order dated 7 July 2023). 6 These applications are opposed by Mr Jiang and Koshib Investment. 7 Further, as I have noted above, in the Jiang Proceedings, Mr Jiang seeks leave to file and rely upon the Proposed Jiang AOP and the Proposed Jiang FACS. Slater & Gordon oppose the grant of such leave. Slater & Gordon contends that if such leave is not granted, the present proceedings should be dismissed. 8 Additionally, Slater & Gordon seeks the payment of its costs on a lump sum basis pursuant to earlier costs orders made by Halley J when his Honour was case managing these proceedings. I indicated to the parties that I would consider the question of costs after determining the applications that are before me. I will return to this question at the end of these reasons. 9 It falls to me to determine: (a) whether I should summarily dismiss the claims presently made in the Jiang and Koshib Proceedings, or, alternatively, strike out the pleadings in part or in whole; (b) whether I should grant leave to Mr Jiang in the Jiang Proceedings to rely upon the Proposed Jiang AOP and the Proposed Jiang FACS; and (c) depending on the conclusions I reach in relation to (a) and (b), whether I should remove Slater & Gordon as a party to the respective proceedings and otherwise dismiss the proceedings. 10 For the reasons that follow, I have decided that the proceedings should be summarily dismissed and Mr Jiang should not be granted leave to rely upon the Proposed Jiang AOP and Proposed Jiang FACS.

B. BACKGROUND 11 Based on the evidence before, I set out below the background facts. 12 On 23 February 2023, Slater & Gordon entered into a Bid Implementation Agreement with Wright NomineeCo which provided for Wright NomineeCo to make an off-market takeover offer for 100% of the ordinary shares in Slater & Gordon. Thereafter, Wright NomineeCo issued a Bidder's Statement and Slater & Gordon issued a Target's Statement. 13 By 11 April 2023, Wright NomineeCo had acquired 97.42% of the shares in Slater & Gordon. 14 On 17 April 2023, Wright NomineeCo served notices of compulsory acquisition under s 661B(1)(d) of the Corporations Act 2001 (Cth) (Corporations Act) on the remaining shareholders of Slater & Gordon, including the plaintiffs. 15 On 28 April 2023, the ASX removed Slater & Gordon from the Official List on the ASX pursuant to ASX Listing Rules 17.4 and 17.14, those rules providing for the removal of an entity from the ASX when a compulsory acquisition notice has been issued. 16 On 14 and 17 May 2023, Koshib and Mr Jiang respectively lodged their Originating Processes and a Concise Statement, which were accepted for filing on 22 May 2023, seeking relief under s 661E of the Corporations Act objecting to the compulsory acquisition. Slater & Gordon was the only named defendant in respect of both actions. 17 On 31 May 2023 and 2 June 2023 respectively, WrightNominee Co acquired Mr Jiang's and Koshib Investment's shares in Slater & Gordon pursuant to s 661B(1)(d) of the Corporations Act. 18 Neither Koshib nor Mr Jiang have at any time commenced proceedings against the bidder, Wright NomineeCo, being the party that sought to compulsorily acquire their shares and has since done so.

C.1 General principles 19 Section 31A of the FC Act relevantly provides: (2) 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 defending the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. (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. 20 The introduction of s 31A departed "radically" from earlier relevant heads of power, which required a finding that challenged proceedings, or aspects of those proceedings, would necessarily fail: Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 at [53]; cf General Steel Industries v Commissioner of Railways (1964) 112 CLR 125. The Court's discretion under s 31A is supported by r 26.01(1)(a) and (c) of the FC Rules. 21 In Spencer, Hayne, Crennan, Kiefel and Bell JJ stated at [25] that s 31A(2): … requires a practical judgment by the Federal Court as to whether the applicant has more than a "fanciful" prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success. 22 Hayne, Crennan, Kiefel and Bell JJ in Spencer emphasised at [51]-[53] that it is important to recognise that the combined effect of subsections (2) and (3) of s 31A is that the enquiry required is whether there is a "reasonable" prospect of successfully prosecuting the proceeding, not whether it is certain that the proceedings will necessarily fail. Their Honours stated at [59]-[60] that: In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like "clearly", "manifestly" or "obviously") as "frivolous", "untenable", "groundless" or "faulty". But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word "reasonable", in the phrase "no reasonable prospect", be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a "frivolous", "untenable", "groundless" or "faulty" claim. Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied there is "no reasonable prospect" of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly… 23 In Australia Securities and Investment Commission v Cassimatis [2013] FCA 641; (2013) 220 FCR 256, Reeves J considered the applicable principles, including the post-Spencer authorities. His Honour's examination of the authorities has been cited with approval in numerous subsequent authorities including by the Full Court in Wilson v Victoria [2023] FCAFC 204 at [24]. In Cassimatis, Reeves J stated at [47]-[48]: Accepting there can be no "hard and fast" rule about this, as a general principle… the moving party on an application for summary dismissal… is likely to succeed on its persuasive onus if it is able to demonstrate to the Court that the applicant's success in the proceeding relies upon a question of fact that can be truly described as fanciful, trifling, implausible, improbable, tenuous or one that is contradicted by all the available documents or other materials. Conversely, as a general principle, it is unlikely to succeed where, on a critical examination of all the available materials, the court is satisfied that there appears to be a real question of fact to be determined between the parties. This is more likely to be the case where the available materials include pleadings that raise factual disputes that can be truly described as significant, substantial, plausible or weighty. A real question of fact is also more likely to exist where the question/s of fact concerned is/are complex… Similarly, as a general principle, the moving party on an application for summary dismissal is likely to succeed on its persuasive onus if it is able to demonstrate to the Court that the applicant's success in the proceedings relies upon a question of law that is straightforward and confined, or is trite in the sense that it is well settled on authority, such that the question can be resolved summarily without the necessity for a full trial. On the other hand, the moving party would be unlikely to succeed if the Court is satisfied that the applicant's success in the proceedings relies upon a question of law that is serious or important, or is difficult and therefore likely to require lengthy argument for its resolution, or involves conflicting authority, or is apparently arguable, yet novel. 24 Whilst s 31A sets a lower bar, any summary determination has to be approached with caution: Cassimatis at [50]. The Court retains a discretion at all times as to whether to determine the proceedings summarily or to refer them to trial: Cassimatis at [50].

C.2 Application of principles to Concise Statements 25 Slater & Gordon's application for summary dismissal arises in a context where Mr Jiang and Koshib Investment have filed concise statements as the means by which to articulate their respective claims. 26 The function served by concise statements is distinct from that of traditional pleadings: Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2021] FCAFC 121; 287 FCR 388 at [140]-[154] (McKerracher and Colvin JJ). In Chadwick v State of New South Wales (Amendment Application) [2022] FCA 1138 at [14], Cheeseman J helpfully summarised the considerations and principles that apply to concise statements (drawn from Allianz): The purpose of a concise statement, in contrast to pleadings, is to enable the applicant to raise the key issues and key facts at the heart of the dispute and the essential relief sought from the Court (at [140]). A concise statement allows the Court to facilitate case management of proceedings from an early stage, and determine whether pleadings are necessary, such as to ensure the efficient conduct and disposition of the application (at [141]). Where a matter proceeds on a concise statement and concise response, issues are to be refined as the interlocutory processes of a matter progress, and are to be disclosed by other means and to the extent considered to be appropriate in the interests of fairness (at [144]). The role of a concise statement is not to be treated by pleading rules "unaffected by the new context and character of the concise statement" (at [148]). That context is, namely, the modern approach of Australian courts in emphasising case management to limit the use of courts for unfairness (at [146]). The Court is obliged to conduct proceedings in a manner consistent with the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible: FCA Act, s 37M. Parties must conduct proceedings consistently with the overarching purpose, and their lawyers must, in civil proceedings, assist their client to comply with their duty to do so: FCA Act, s 37N (at [147]). A concise statement may require amendment. For example, where a claim which is central to a party's case is not included or not adequately exposed in the concise statement. However, where a concise statement broadly expresses an issue, clarification may be sought, such as where the other party considers it unfair to its forensic preparation for the issue to remain stated broadly. Earlier disclosure may be required on the basis of fairness, such that orders will be made by way of case management (at [149]). A concise statement should not be expressed vaguely or imprecisely (at [153]). Similarly, a concise statement should not include material that is extraneous in terms of supporting a claim for relief capable of being made in the proceedings. (Emphasis added and the references included are those in the original which, in turn, are references to Allianz). 27 The High Court on appeal in Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2022] HCA 38; (2022) 97 ALJR 1 did not disturb the observations made about the functions served by concise statements, though Kiefel CJ, Edelman, Steward and Gleeson JJ observed at [83] that on the facts of that case a decisive point (relating to detrimental reliance) was not pleaded in the concise statement. 28 Whilst the formulation of a case in a concise statement serves as a means of getting to the heart of a dispute, it is not an excuse for "vagueness or imprecision in expression": Allianz at [153]. Irrespective of the form of the relevant document or its style, it is necessary for the pleading to adequately propound the cause of action or defence being relied upon. In Oztech Pty Ltd v Public Trustee of Queensland [2019] FCAFC 102; (2019) 269 FCR 349 at [28]-[30] (Middleton, Perram and Anastassiou JJ), it was observed: The question of whether a pleading adequately raises a claim or defence is not concerned with the expression of the pleading as a matter of style, or of phrasing, or the structure of the pleading. Neither is it concerned with the formality of the process by which the issues in the proceeding are identified; be it a statement of claim, statement of contentions, concise statement, points of claim or points of defence. The verbal formulation of the allegations of fact, or the contentions of law, need not conform to a particular style guide or to any pro forma template. The sole objective of a pleading is to clearly identify matters in dispute and difference by and between the parties to the dispute. This objective necessarily involves expressing the factual basis of each claim or defence. It is necessary that the legal elements of each cause of action or defence are expressed by reference to allegations of fact required to establish each element. It is not necessary to plead the legal conclusions that follow from the facts, but it is often convenient to do so. These are trite propositions but nevertheless vital to ensuring that the pleading serves its purpose. There should be no doubt about whether any particular cause of action is relied upon. At a minimum, the pleading should be pellucidly clear about the causes of action, or claims, relied upon by the applicant, including any claims made upon an alternative hypothesis. The explicit clarity with which a claim is expressed should ensure that there be no need for the opposite party to closely scrutinise the pleading in a process of textual construction to determine whether a particular fact is relied upon, or the purpose for which it is alleged, much less to decide whether a particular cause of action is raised. The same basic requirement applies to any defence raised in answer to a claim. (Emphasis added). 29 Further, irrespective of the form of the pleading, the question of summary dismissal is one which requires an examination of the reasonable prospects of successfully prosecuting the proceedings as opposed to the adequacy of the pleading. It is to be borne in mind that there is a distinction between an application for summary dismissal which is directed to the underlying prospects of success of the proceedings, whereas a strike out application is directed to the sufficiency of the pleadings or equivalent documentation: Abela v Minister for Home Affairs [2021] FCA 96 at [8] (citing Spencer at [23]). Where the evidence shows that a person may have a reasonable cause of action or a reasonable prospect of success, but the person's pleading does not disclose that to be the case, the Court may be empowered to strike out the pleading under r 16.21 of the FC Rules but is not empowered to summarily dismiss the proceeding under s 31A of the FC Act: Abela at [9] (citing Spencer at [23]). 30 In assessing whether each of the proceedings has reasonable prospects of success, I have taken into account the abovementioned principles, together with the overarching dictates of case management in this Court as provided for in ss 37M and 37N of the FC Act. In so doing, I have not been distracted by the form or style of the respective concise statements and instead have focussed on whether these documents together with the evidence that has been adduced satisfies me as to whether there are reasonable prospects of Mr Jiang and Koshib Investment successfully prosecuting the proceedings. In doing so, I have taken into account that Mr Jiang was a litigant in person and that he also appeared on behalf of Koshib Investment. The duty of the Court in these circumstances is to ensure that persons in the position of Mr Jiang and Koshib Investment have sufficient information about the practice and procedure of this Court: see Abela at [22] and the cases there cited. At the case management hearing on 21 February 2024, I made orders to ensure that Mr Jiang had every opportunity to put forward the best articulation of his existing and proposed claims, and submissions in support of those claims. What follows is my determination of the applications before me having ensured that Mr Jiang has had that opportunity.

D.1 The claims articulated in the Original Jiang OP and Original Jiang CS 31 Mr Jiang's claim was commenced in May 2023 pursuant to the Original Jiang OP and the Original Jiang CS. By these documents, Mr Jiang sought relief only under s 661E(1) of the Corporations Act. The Original Jiang CS sought an order that Mr Jiang's shares in Slater & Gordon "not be compulsorily acquired by Wright NomineeCo Pty Ltd at $0.55 per share". 32 The Original Jiang CS recites matters going to the facts of the takeover offer and compulsory acquisition notice being issued by Wright NomineeCo: see [3]-[10]. It sets out reasons for regarding the "bidder's offer of $0.55 per share" as being "significantly lower than all the above valuation": at [18]. 33 The essence of the claims that Mr Jiang has sought to articulate in the Original Jiang CS is that the price paid by the bidder for his shares ($0.55) was not fair value. He claims that this price was said to be supported by a valuation provided in the Kroll Report, which was intended to be an "independent" valuation in support of the bid. In submissions before me, Mr Jiang contended that the Kroll Report was not, in fact, independent, as the bidder and Slater & Gordon had already determined the price and the Kroll Report did not actually engage in an independent valuation. In the Original Jiang CS at [13], Mr Jiang asserts that equity analysts such as Morningstar had valued the shares at $1.15 in April 2023. Mr Jiang asserts that applying different valuation methodologies including by reference to net tangible assets, current assets, enterprise value, intrinsic value, and also by examining the share price movements, the fair value of shares in Slater & Gordon was much higher than the price offered by the bidder and assessed in the Kroll Report: Original Jiang CS at [12]-[18]. 34 In terms of the relief sought, Mr Jiang states that "[w]e hereby apply to the Court for an order that" his shares "not be compulsorily acquired by the bidder, because $0.55 per share is not fair value for the securities": Original Jiang CS at [11]. As indicated above, the Original Jiang CS identifies that the "application is made under Section 661E(1)" of the Corporations Act: see page 3.

D.2 The claims articulated in the Amended Jiang CS 35 Mr Jiang subsequently filed the Amended Jiang CS in November 2023. As noted above, this document was entitled "Concise Statement" but appears to be an Amended Concise Statement. As best as I understand Mr Jiang's submissions, he filed the Amended Jiang CS to respond to criticisms made by Slater & Gordon as to the content of the Original Jiang CS and to address the fact that by the time of its filing his shares had in fact been acquired. The Amended Jiang CS claims similar relief to that in the Original Jiang CS in that the part of the document entitled "The relief sought from the Court (and against whom)", Mr Jiang claims the following: (a) the 10,875 shares Mr Jiang held in Slater & Gordon not be compulsorily acquired at $0.55 per share; (b) Slater & Gordon pay financial compensation for the difference between $0.55 per share and the fair value of Slater & Gordon; and (c) an order that Slater & Gordon pay all costs for the legal proceeding. 36 Whilst the relief claimed is largely the same across both the Original Jiang CS and the Amended Jiang CS, the latter document contains additional detail and assertions beyond those contained in the former. The new assertions are directed to the conduct of both Slater & Gordon and its directors, including that: (a) Slater & Gordon breached Rule 3.1 of the ASX Listing Rules by failing to announce material information that it had received notice of a takeover bid (at [30]); (b) the directors of Slater & Gordon breached their duties by unanimously recommending its shareholders sell to the bidding company (at [31]); (c) the directors of Slater & Gordon misled shareholders (at [32]); (d) the directors of Slater & Gordon facilitated market manipulation (at [33]) and they benefited from the transaction (at [34]). 37 These new assertions suggest that Mr Jiang wished to bring additional claims against Slater & Gordon and potentially others. However, at the time that Mr Jiang filed the Amended Jiang CS, he had not amended, or sought to amend, the Original Jiang OP. As noted above, the Original Jiang OP only sought relief under s 661E of the Corporations Act. Consistently with this, the part of the Amended Jiang CS entitled "The primary legal grounds for the relief sought" contains the entry, "Section 661E(2) of the Corporations Act". This indicated that, although Mr Jiang had in the Amended Jiang CS made further assertions of wrongdoing, his only claim, and the only cause of action he was seeking to propound, was one under s 661E of the Corporations Act. 38 Slater & Gordon appeared to accept that Mr Jiang did not require leave of the Court or its consent to file the Amended Jiang CS given that at that time pleadings had not closed, and r 16.51(1) of the FC Rules provides that a party may amend a pleading once at any time before that time. However, Slater & Gordon contended that to the extent that the Amended Jiang CS made claims beyond those contained in the Original Jiang OP, this was not permissible by reason of r 16.02(4) of the FC Rules, which provides that "[a] party is not entitled to seek any additional relief to the relief that is claimed in the originating application". 39 Although I accept Slater & Gordon's contention that Mr Jiang needed leave to make new claims in the Amended Jiang CS, I propose to consider that document as a whole in respect of whether there are reasonable prospects of Mr Jiang successfully prosecuting the proceedings.

D.3 The case articulated in the Koshib Proceedings 40 The Koshib OP and Koshib CS filed by Koshib Investment are in near identical terms to the Original Jiang OP and Original Jiang CS, save for changes reflecting Koshib Investment as the holder of a different number of shares in Slater & Gordon. Again, by these documents, the sole claim advanced by Koshib Investment is under s 661E(1) of the Corporations Act. Koshib Investment seeks relief in the same nature as Mr Jiang.

D.4 Claims under s 661E in the Jiang and Koshib Proceedings have no reasonable prospects of success 41 As noted above, both the Original Jiang CS and the Amended Jiang CS make claims and seek relief under s 661E of the Corporations Act. The same position applies in relation to the Koshib OP and Koshib CS. In my view, these claims have no reasonable prospects of success as against Slater & Gordon. 42 Section 661E is contained within Part 6A of the Corporations Act and concerns the compulsory acquisition of shares by a bidder in a target company following a successful takeover bid following which the bidder holds at least 90% of the relevant shares of the target. Section 661A allows such a bidder to issue a compulsory acquisition notice to the holders of the remaining shares in the relevant target entity under s 661B. 43 The purpose of the predecessor to these provisions under the (then) Corporations Law was considered by Sheller JA (with whom Meagher JA agreed) in Elkington v Shell Australia Ltd (1993) 32 NSWLR 11. There it was explained that the predecessor to s 661A (being s 701 of the Corporations Law) enabled an offeror who owned 90% or more of a company to acquire the holding of a dissenting minority of less than 10%, and that the concern of the legislature reflected in the provisions was that the offeror should not be prevented by that minority from acquiring total ownership of the shares. The object of the legislation was to, in effect, "prevent an oppression of the majority by the minority": at 19C-F. The provisions reflected a legislative policy enabling 90% shareholders to compulsorily acquire the remaining 10% of the shares in a company and were designed to assist the 90% shareholder to achieve total ownership. 44 The legislature has enacted some protections for minority shareholders in the case of such a compulsory takeover. These are reflected in s 661E, which provides as follows: (1) The holder of securities covered by a compulsory acquisition notice under section 661B may apply to the Court for an order that the securities not be compulsorily acquired under subsection 661A(1). The application must be made before the later of: (a) the end of 1 month after the holder is given notice under section 661B; or (b) the end of 14 days after the holder is given a statement under section 661D if the holder asks for it. (2) The Court may order that the securities not be compulsorily acquired under subsection 661A(1) only if the Court is satisfied that the consideration is not fair value for the securities. Note: See section 667C on valuation. (3) If the Court makes an order under this section in relation to an acquisition of securities, the order applies to all holders who have applications to the Court pending for an order under this section in relation to the acquisition. 45 As will be evident from the text of s 661E(1), it permits the holder of the securities covered by the compulsory acquisition notice to apply to the Court for an order that the securities "not be compulsorily acquired" under s 661A(1). Further, such an application "must" be made before the later of the end of 1 month "after the holder has given notice under section 661B" or the "end of 14 days after the holder has given a statement under section 661D if the holder asks for it". If an application is made, s 661E(2) empowers the Court to exercise a discretion - as reflected by the use of the word "may" - to make an order that "the securities not be compulsorily acquired under subsection 661A(1)" but only "if the Court is satisfied that the consideration is not fair value for the securities". 46 It is apparent from the text of s 661E that it is concerned with a dispute as between the (minority) holder(s) of the securities covered by a compulsory acquisition notice and the (majority) holder seeking to so acquire the remaining securities. In one of the few authorities to have considered the provision, Barrett J in Teh v Ramsay Centauri Pty Ltd [2002] NSWSC 456; (2002) 42 ACSR 354 described the dispute at [63] as involving "an entirely one-on-one dispute as to who should own certain property". Barrett J's description is apt. An application under s 661E will naturally be a dispute as between shareholders - majority and minority - as to whether one is to be stopped from compulsorily acquiring the shares of the other. The company in which the securities are held is not a party to such a dispute, though it may have an interest. The company in which the shares are held may well oppose or recommend the bid to its shareholders, but it is not the entity that seeks to acquire the shares or seeks to pay for them. 47 It is the evident purpose of s 661E to deal with an inter-shareholder dispute, specifically one about whether the minority shareholder's shares are being acquired by the majority at "fair value". This is further reinforced by the fact that s 661E(2) empowers the Court to make an order that the relevant securities "not be compulsorily acquired". Such an order could only sensibly be directed to the party seeking to acquire the shares, and not to the company in which the shares are held. It is the bidder that seeks to acquire the shares and pay consideration for them, not the target company. 48 It may be accepted that under the statutory scheme, the target company is required to take certain procedural steps when a compulsory acquisition occurs. These steps are set out in s 666B of the Corporations Act and include that the company must register the transfer of the securities the subject of a compulsory acquisition notice and hold the consideration on trust for the previous owner. Nothing about those procedural steps makes the target company the entity that is susceptible to an order under s 661E(2) and (3). 49 Counsel for Slater & Gordon drew my attention to other cases involving applications made under s 661E or its former equivalent, s 701 of the Corporations Law. It was contended that in none of these was the target company made a party to the proceedings. In Ramsay the only parties to the proceedings were the shareholder and the bidder who had issued the compulsory acquisition notice. The company in whom the shares were held was not a party. In Regional Publishers v Elkington [2006] FCA 1017; (2006) FCR 218, the target company was not a party, only the bidder and the shareholders who had been issued with the compulsory acquisition notice were parties. In Elkington v Shell Australia (1992) 10 ACSR 568 (a decision of McLelland J upheld by the NSW Court of Appeal) the target company was not a party, only the bidder and the shareholder objecting to the compulsory acquisition notice were parties. The same was the case in Elkington v Vockbay Pty Ltd (1993) 10 ACSR 785, Eddy v WR Carpenter Holdings Ltd (1985) 10 ACLR 316 and Re Allied Queensland Coalfields Ltd; Super John Pty Ltd & Ors v Marsford Investments Pte Ltd (1997) 23 ACSR 427. The examples from other cases are not determinative of the issue raised in this application, but the position taken in each of these cases by the litigating parties stands to reason. 50 Based on the foregoing, it follows that an action brought under s 661E will not lie against the target company in which the shares are held. This is fatal to the claims being advanced by Mr Jiang and Koshib Investment. It follows that the causes of action in both the Jiang and Koshib Proceedings have no reasonable prospects of success as against Slater & Gordon. 51 Given the conclusions I have reached it is not necessary for me to further deal with Slater & Gordon's contentions that s 661E(2) only empowers the Court to make an order that the relevant securities not be compulsorily acquired, and does not empower the Court to force the bidder to pay more by way of consideration. These questions do not arise for determination given that I have concluded that no cause of action lies against Slater & Gordon.

D.5 The additional claims made in the Amended Jiang CS do not have reasonable prospects of success 52 As noted above, the Amended Jiang CS appears to make additional assertions beyond those contained in the Original Jiang CS. I am satisfied that these additional assertions do not disclose any cause of action that has reasonable prospects of success. 53 The first of the additional assertions contained in the Amended Jiang CS is that Slater & Gordon breached Rule 3.1 of the ASX Listing Rules because it did not "immediately disclose the receipt of a notice of intention" of the takeover bid as soon as the Board had come into possession of that information, or ought reasonably to have come into possession of that information: Amended Jiang CS at [30]. Even allowing for the fact that the assertion has been made in a concise statement, it is not supported by any contention of fact or law that meaningfully connects it to some cause of action as against Slater & Gordon. It would appear that Mr Jiang was seeking to make an assertion that Slater & Gordon had contravened s 674 of the Corporations Act as to its continuous disclosure obligations by not disclosing the intended takeover bid upon its receipt, but the elements of such a cause of action are not addressed let alone articulated even in a summary way. Given the vagueness and imprecision of the assertions made, I am not satisfied that this part of the Amended Jiang CS raises any sensible cause of action in this regard. I am therefore not satisfied that the assertion made in the Amended Jiang CS at [30] discloses a cause of action that has reasonable prospects of success. 54 The balance of the new and additional assertions raised in the Amended Jiang CS at [31]-[34] are allegations, at best, as against the directors of Slater & Gordon. Leaving to one side whether any of these assertions meaningfully disclose a cause of action, I am not satisfied that they disclose any cause of action as against Slater & Gordon. Accordingly, I am not satisfied that the Amended Jiang CS at [31]-[34] discloses a cause of action that has reasonable prospects of success.

D.6 Conclusions as to summary dismissal 55 In the Jiang Proceedings, I am satisfied that, by reference to the case articulated in the Original Jiang OP, the Original Jiang CS and Amended Jiang CS, the proceedings as presently constituted against Slater & Gordon have no reasonable prospects of success. It follows that unless I grant leave to Mr Jiang to file the Proposed Jiang AOP and the Proposed Jiang FACS, the Jiang Proceedings should be dismissed. 56 In the Koshib Proceedings, I am satisfied that, by reference to the case articulated in the Koshib OP and the Koshib CS, the proceedings as presently constituted against Slater & Gordon have no reasonable prospects of success. It follows that the Koshib Proceedings should be dismissed.

E. ALTERNATIVES - STRIKE OUT AND REMOVAL OF SLATER & GORDON 57 Given the findings I have made and the conclusions I have reached about summary dismissal, it is not necessary for me to address Slater & Gordon's contention that the concise statements in the Jiang and Koshib Proceedings should be struck out or that it be removed as a party from both proceedings. 58 For completeness, had I not been satisfied as to summary dismissal, I would have ordered that the concise statements in each of the Jiang and Koshib Proceedings (being the Original Jiang CS, the Amended Jiang CS and the Koshib CS) be struck out under r 16.21(1) of the FC Rules. That is because these concise statements do not disclose a reasonable cause of action and are embarrassing. 59 I would have also ordered that Slater & Gordon be removed as a party to both proceedings. That is because I am satisfied that Slater & Gordon is not a proper party to the cause of action pleaded by Mr Jiang and Koshib Investment and no relief could be sought against Slater & Gordon in respect of the claims (such as they are) that have been raised in both proceedings: see Electronic Industries Imports Pty Ltd v Public Curator of the State of Queensland [1960] VR 10 at 10-11; Dudley (Liquidator) v RHG Construction Fitout & Maintenance Pty Ltd [2019] FCA 1355 at [52]-[53]; Huon Aquaculture Group Ltd v Secretary, Dept of Primary Industries, Parks, Water and Environment (No 2) [2018] FCA 89 at [44].

F.1 Identifying the proposed claims in the Proposed Jiang AOP and the Proposed Jiang FACS 60 The Proposed Jiang FACS makes a number of assertions of fact and thereafter intermingles these with a number of allegations as to contraventions of various provisions of the Corporations Act, the Australian Consumer Law (ACL) and the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). 61 Counsel for Slater & Gordon submitted that on a fair and generous reading of the Proposed Jiang AOP and the Proposed Jiang FACS, the claims that Mr Jiang appears to raise are as follows: (a) a claim to stop the compulsory acquisition of his shares under s 661E of the Corporations Act: Proposed Jiang FACS at [33] and Order 2 of the Proposed Jiang AOP (Compulsory Acquisition Claim); (b) a claim that Slater & Gordon contravened ss 619 and 623 of the Corporations Act (which relate to the formal requirements of making a takeover bid): Proposed Jiang FACS at [31], with no corresponding order sought in the Proposed Jiang AOP relating to this claim (Takeover Requirements Claim); (c) a claim that Slater & Gordon contravened its continuous disclosure obligations under s 674 of the Corporations Act: Proposed Jiang FACS at [28], with no corresponding order sought in the Proposed Jiang AOP relating to this claim (Continuous Disclosure Claim); (d) claims: (i) that Slater & Gordon made misleading representations with respect to future matters and engaged in misleading and deceptive conduct apparently under: (A) s 670A of the Corporations Act, in respect of which relief appears to be sought pursuant to s 670B, although this connection is not pleaded: Proposed Jiang FACS at [29] and [34], and Orders 1 and 3 of the Proposed Jiang AOP; and (B) ss 1041C, 1041E, 1041F and 1041H of the Corporations Act, in respect of which relief appears to be sought pursuant to s 1041I, although this connection is not pleaded, and s 1041I does not apply to s 1041C (which is a prohibition against false trading and market manipulation in respect of which relief would normally be sought, if applicable, under s 1317HA): Proposed Jiang FACS at [29] and [34] and Orders 1 and 2 of the Proposed Jiang AOP; (ii) under ss 12BB, 12DA, 12DB(1)(a), 12DB(1)(b), 12 DB(1)(g) and 12DB(1)(h) of the ASIC Act, in respect of which relief appears to be sought pursuant to s 12GF of the ASIC Act, although this connection is not pleaded: Proposed Jiang FACS at [29] and [34] and Orders 1 and 2 of the Proposed Jiang AOP; and (iii) under ss 18 (misleading conduct in trade or commerce), 21(1) (unconscionable conduct in trade or commerce in connection with the supply or acquisition of goods or services (other than to or from a listed company)) and 29(1)(b), (1)(d) and (1)(i) (misleading or false representations in trade or commerce in connection with the supply or promotion of goods or services - that they are of a particular standard, quality, value or grade, that a particular person has agreed to acquire goods or services, and with respect to the price of goods or services) of the ACL, in respect of which relief appears to be sought under s 236 of the ACL, although this connection is not pleaded: Proposed Jiang FACS at [29] and [34] and Orders 1 and 2 of the Proposed Jiang AOP, (Misleading and Unconscionable Conduct Claims); (e) a market manipulation claim under s 1041A of the Corporations Act, which is an offence, although no entitlement to relief in relation to this contravention is pleaded (s 1317HAis not pleaded, for example): Proposed Jiang FACS at [30], with no corresponding order in the Proposed Jiang AOP relating to this claim (Market Manipulation Claim); and (f) a claim for breach of directors' duties by Slater & Gordon under ss 180, 181, 182 and 183 of the Corporations Act, although no provision is pleaded in respect of entitling Mr Jiang to recover any loss or other relief in respect of this alleged breach: Proposed Jiang FACS at [32], with no apparent order sought in the Proposed Jiang AOP relating to this claim (Directors' Duties Claim). 62 In his written submissions, Mr Jiang did not take issue with the categorisation of his proposed claims in this way. Having examined the Proposed Jiang AOP and Proposed Jiang FACS, I consider that Counsel for Slater & Gordon has commendably and fairly sought to identify the claims that Mr Jiang proposes to make. It is these claims to which I have turned my mind in determining whether to grant leave.

F.2 Applicable principles 63 The onus lies upon Mr Jiang, as the party seeking to amend, to satisfy the Court that grounds exist for exercising the discretion in his favour. 64 Rule 8.21 of the FC Rules confers a discretion on the Court to grant leave to amend an originating application: Tamaya Resources Ltd (In Liq) v Deloitte Touche Tohmatsu (A Firm) [2016] FCAFC 2; (2016) 332 ALR 199 at [122]. The principles applicable to the grant of such leave were recently considered by Perry J in Saffari v Latitude Financial Services Australia Holdings Pty Ltd [2024] FCA 573 at [15]-[18]. 65 Rule 16.53 of the FC Rules confers a discretion on the Court to grant leave to amend a pleading where such leave is required (that is, where r 16.51 does not apply). The principles applicable to the grant of leave to amend a pleading pursuant to r 16.53 were set out in Allstate Life Insurance Company v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 at 36 and Research in Motion Ltd v Samsung Electronics Australia Pty Ltd [2009] FCA 320; (2009) 176 FCR 66 at [22]. 66 Generally, either in the case of an amendment to an originating process or a pleading, leave will be refused where the amendment would be futile because it would not disclose any reasonable cause of action, seeks to raise a case that is misconceived in point of law, is embarrassing, or is otherwise liable to be struck out: Research in Motion at [22]-[23]; Allstate Life Insurance at 36; SZSRR v Minister for Immigration and Border Protection [2017] FCA 328 at [48]; Latitude Financial at [18]. 67 The Court must exercise its discretion to grant leave to amend in accordance with the overarching purpose in s 37M of the FCA Act: see Latitude Financial at [17] and the cases there cited.

F.3 The Compulsory Acquisition Claim 68 The Proposed Jiang AOP and Proposed Jiang FACS seek to stop the compulsory acquisition of Mr Jiang's shares under s 661E of the Corporations Act: Proposed FACS at [33] and Order 2 of the Proposed Jiang AOP. 69 For the reasons I have outlined above in Part D.4, I am satisfied that the Compulsory Acquisition Claim has no reasonable prospects as against Slater & Gordon. The Claim is misconceived in point of law and I do not grant leave to Mr Jiang to bring it.

F.4 The Takeover Requirements Claim 70 The Takeover Requirements Claim asserts that Slater & Gordon contravened ss 619 and 623 of the Corporations Act: Proposed Jiang FACS at [31]. 71 Sections 619 and 623 of the Corporations Act relate to the formal requirements of making a takeover bid. Section 619 provides that all offers made under an off-market bid must be the same, subject to certain specified exceptions. Section 623 provides that a bidder, or an associate of a bidder, must not give or offer or agree to give a benefit to a person that is likely to induce the person to accept an offer under the bid or dispose of securities where the benefit is not offered to all holders of the securities in the bid class. Non-compliance with s 623 is an offence. 72 It is apparent from the text of ss 619 and 623 that they relate to the conduct of the bidder, being the person who makes a takeover offer. Slater & Gordon was not the bidder. The Proposed Jiang FACS does not disclose the basis upon which a case could be maintained against Slater & Gordon in respect of the requirements imposed on the bidder. 73 The Takeover Requirements Claim as sought to be pleaded by Mr Jiang is misconceived and it would be futile to grant him leave to bring this Claim.

F.5 The Continuous Disclosure Claim 74 The Continuous Disclosure Claim asserts that Slater & Gordon contravened its continuous disclosure obligations under s 674 of the Corporations Act: Proposed Jiang FACS at [28]. 75 Section 674 of the Corporations Act requires an entity bound by the ASX Listing Rules to notify the ASX of information if the following applies: (a) the disclosure to the ASX is required by the ASX Listing Rules; (b) the information is not generally available; and (c) the information is information that a reasonable person would expect, if generally available, to have a material effect on the price or value of the entity's shares. 76 The Proposed Jiang FACS asserts at [28] that: By the conduct referred to in paragraphs 5, 9 and 12 above, the Respondent contravened Section 674 of the Corporations Act 2001 (Cth) and Rule 3.1 of the ASX Listing Rules: "Once an entity is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity securities, the entity must immediately tell ASX that information". 77 Paragraphs 5, 9 and 12 of the Proposed Jiang FACS make the following assertions: 5. In November 2022, the Respondent secured $126 million settlements in class actions against CBA, Westpac, and ANZ. The Respondent did not make announcement of any of the settlements on Australia Securities Exchange (ASX). … 9. Also on 24 February 2023, the Respondent announced that "it has entered into a Bid Implementation Agreement (BIA) with Allegro Funds Pty Ltd (Allegro) for a recommended off-market takeover offer at $0.55 cash per share (Offer) by funds managed by Allegro to acquire all of the issued fully paid ordinary shares in Salter & Gordon." Prior to 24 February 2023, the Respondent had not announced on ASX the receipt of a proposed off-market takeover. The total value of the takeover bid announced on AXS was only $77.59 million. … 12. On 3 March 2023, the Bidder's Statement was released. It stated that the Bidder had entered into Debt Purchase Deeds and related agreement with Super Senior Facility (SSF) Lenders, who owned more than 90% of SGH shares, to purchase 75% of their outstanding debt interests in the Respondent "at a purchase price of less than 100 cents per dollar outstanding less the Offer Price paid for any of their SGH Shares to the extent accepted into the Offer". This indicates that the SSF Lenders, who were the Respondent's major shareholders, were offered a packaged price to sell their debt interests and shares together to the Bidder, and that whether the shares were sold at $0.55/share or $0.99/share did not make any difference to the SSF Lenders. The Respondent did not make any announcement of this information on ASX. (Emphasis in original). 78 It is evident from the above extracts that Mr Jiang's Continuous Disclosure Claims all hinge on establishing that the three items of information referred to in the Proposed Jiang FACS at [5], [9] and [12] were not disclosed. The Proposed Jiang FACS do not make it clear when these items of information should have been disclosed, but it would appear from his oral and written submissions that Mr Jiang contends that such information should have been disclosed prior to the announcement made to the market about the takeover bid. 79 Slater & Gordon contends that leave should not be granted to Mr Jiang to bring these claims as they are doomed to fail given that each of the matters specified in the Proposed Jiang FACS at [5], [9] and [12] were, in fact, either disclosed prior to or at the time that information was released to the market about the fact of the takeover bid or were not matters that Slater & Gordon was obliged to disclose (as opposed to the bidder). 80 I propose to deal with the issue of whether to grant leave to Mr Jiang to bring the Continuous Disclosure Claim by reference to each item of information that he claims led to the contravention of s 674 of the Corporations Act.

The class action settlement information 81 The first aspect of the Continuous Disclosure Claim relates to the alleged non-disclosure by Slater & Gordon that it had secured class action settlements against CBA, Westpac and ANZ of $126 million. 82 Slater & Gordon contends that this information was already generally available. The evidence before me establishes that Slater & Gordon published a media release on its website on 14 November 2022 detailing the terms of the $126 million settlements with CBA, Westpac and ANZ. 83 My attention was also drawn to a copy of an article published in the Australian Financial Review on 14 November 2022 reporting on the proposed settlements. There is also evidence before me that the settlements were mentioned and reported on at the time of the announcement of the takeover offer on 24 February 2023. 84 Slater & Gordon submitted, and I accept, that there is no obligation under s 674 to disclose matters that are already generally available to the market: s 674(2)(c)(i). The Full Court in Grant-Taylor v Babcock & Brown Ltd (in liq) [2016] FCAFC 60; (2016) 245 FCR 402 at [52] stated that s 674 does not require disclosure of information that is generally available and has come into the public domain. The Full Court stated at [119] and [121] that this would include information that is readily observable, even if no one had actually observed it. I am satisfied that this was the case in relation to disclosure of the settlements of the class action claims about which Mr Jiang complains there was non-disclosure. 85 The Proposed Jiang FACS does not disclose the basis upon which it is contended that in view of these facts, Slater & Gordon contravened s 674 of the Corporations Act in relation to this information. Mr Jiang's written submissions at [33] asserted that the class action settlements were not "generally available" prior to 24 February 2023. As best as I could ascertain, it was Mr Jiang's contention that the information should have been disclosed in more specific terms and in a targeted ASX release. I do not agree with Mr Jiang's contentions. The evidence before me establishes that the information was disclosed and was generally available. It was the subject of a media release issued by Slater & Gordon in November 2022. 86 I am not satisfied that leave should be granted to Mr Jiang to bring the Continuous Disclosure Claim insofar as it relates to the alleged non-disclosure of the class action settlement information asserted by Mr Jiang.

The receipt of the takeover bid information 87 The next claim made by Mr Jiang is that Slater & Gordon failed to disclose the takeover bid from Allegro and Wright NomineeCo. 88 Slater & Gordon contended that this too is a claim that is doomed to fail or has no reasonable prospects of success. In support of this contention, Slater & Gordon submitted that: (a) ss 632 and 633 of the Corporations Act specify that a takeover bid is to be announced by the bidder, not the target company, and not complying with the steps outlined in s 635 is an offence of strict liability: s 633(8); (b) it is an offence under s 631 to publicly announce a proposal to make a takeover bid and then not to proceed with it within 2 months of that announcement, and the terms of the takeover offer must be the same or not less favourable than those publicly announced, which demonstrates a legislative intention that potential or incomplete, as opposed to actual and complete, takeover offers should not be announced; (c) whilst ASX Listing Rule 3.1 gives as an example of information that "could" be required to be disclosed the giving or receiving of a notice of intention to make a takeover offer, ASX Listing Rule 3.1A contains exceptions to Rule 3.1 being that: (i) the information concerns an incomplete proposal or negotiation: 3.1A.1; (ii) the information is confidential: 3.1A.2; and (iii) a reasonable person would not expect the information to be disclosed: 3.1A.3. (d) each of these exceptions applied until the execution of the "Bid Implementation Agreement" on 23 February 2023 such that the information that there had been a takeover bid could not be released prior to that time. This is because ASX Listing Rules Guidance Note 8 at 5.4 and footnote 154 states that negotiations are incomplete unless and until a legally binding agreement has been entered into or the entity is otherwise committed to proceeding, and that where there is a bilateral proposal to make a friendly takeover bid, it is to be disclosed when the parties have entered into an agreement to proceed with the takeover bid; (e) Slater & Gordon complied with the ASX Listing Rules. The Bid Implementation Agreement was entered into on 23 February 2023 and Slater & Gordon announced to the ASX that that Agreement had been entered into on 24 February 2023. That the Bid Implementation Agreement negotiations were confidential is evident in cl 8(a) of the Agreement, which provides, amongst other things, that the substance of negotiations concerning the Bid Implementation Agreement are strictly confidential; and (f) a reasonable person would not expect the fact of the negotiations of the Bid Implementation Agreement to be disclosed prior to entrance into that Agreement, as a reasonable person would expect such negotiations to be kept confidential and not disclosed until they had been completed. 89 The evidence before me establishes that: (a) the Bid Implementation Agreement was entered into on 23 February 2023; (b) on 22 February 2023, Slater & Gordon requested an ASX trading halt pending the making of an announcement regarding its Half-Year Results and "a potential major transaction"; (c) the trading halt came to an end on 24 February 2023, and at that time Slater & Gordon made the announcement disclosing the entrance into the Bid Implementation Agreement with Wright NomineeCo on that day. 90 The Proposed Jiang FACS does not disclose the basis upon which it is contended that the information about the takeover bid should have been disclosed at an earlier time. 91 In his written submissions at [29], Mr Jiang contended that "receipt of a notice of intention to make a takeover offer" is information that would influence investors in deciding whether or not to acquire the target company's shares. Mr Jiang contended that Rule 3.1 of the ASX Listing Rules applied to "information concerning the receipt of a takeover proposal". Further, in his written submissions at [31]-[32], Mr Jiang contended that Slater & Gordon should have disclosed and announced the takeover bid as soon as Slater & Gordon knew that it was being made. I apprehended from this submission, and Mr Jiang's oral submissions, that his proposed case is that Slater & Gordon should have disclosed the fact of the bid at the point in time that it first received an approach from Allegro. Mr Jiang contended in his written submissions at [30] that if this had occurred, it would have improved the bargaining position of Slater & Gordon in getting a fair and reasonable price for the shares held by its shareholders. The logic of this submission was that a market announcement of an approach by a bidder would lead to an increase in the market price for shares and thereby induce the bidder to in turn increase the price offered to shareholders for the proposed acquisition. 92 There are many difficulties with the case that Mr Jiang proposes, not least that it runs counter to the idea of market integrity. The evidence before me is that the "bid" was not in fact formalised until the Bid Implementation Agreement was entered into. Prior to that point in time, it had not been formalised. In that sense, there was no offer. The disclosure of a non-binding and incomplete confidential offer or bid is at odds with ASX Listing Rule 3.1A which provides that information does not need to be disclosed where, amongst other things, it concerns an incomplete proposal or negotiation. Further, as Slater & Gordon points out, the ASX Listing Rules Guidance Note 8 at 5.4 and footnote 154 state that negotiations are incomplete unless and until a legally binding agreement has been entered into or the entity is otherwise committed to proceeding. Where there is a bilateral proposal to make a friendly takeover bid, it is to be disclosed when the parties have entered into an agreement to proceed with the takeover bid. To accept Mr Jiang's contentions would be to ignore what the guidance in the ASX Listing Rules seeks to guard against, being the disclosure of incomplete and confidential negotiations that have not resulted in any binding offer being made. 93 I am not satisfied that I should grant leave to Mr Jiang to bring such a claim as it is misconceived in fact and law.

The superior facility lenders information 94 Mr Jiang's final claim that Slater & Gordon contravened s 674 relies upon the assertion that Slater & Gordon failed to disclose certain arrangements between Wright NomineeCo and "superior senior facility lenders". 95 During the course of oral submissions, Mr Jiang contended that the significance of this was the fact that these "superior senior facility lenders" were also major shareholders in Slater & Gordon and obtained a greater value for their shares than other shareholders. Insofar as this is said to have resulted in a contravention of s 674 of the Corporations Act, Mr Jiang's contention was that there was no disclosure of the arrangements between these lenders and the bidder, Wright NomineeCo, including the "Debt Purchase Deeds" that were entered into. 96 Slater & Gordon contends that this information was, in fact, disclosed to the market in the Bidders Statement released on 3 March 2023. Slater & Gordon further contends that it was not a party to the agreement that was entered into between Wright NomineeCo and the superior facility lenders, and it was not a matter for it to disclose. In any event, Slater & Gordon further contends that it was a matter that was also disclosed in its ASX Announcement made on 24 February 2023 relating to the Bid Implementation Agreement as that release disclosed under the heading "Arrangements in relation to [Slater & Gordon's] super senior facility debt" that Wright NomineeCo had advised that it had "made private treaty offers" to the holders of Slater & Gordon's super senior facility debt. 97 On the evidence before me, it appears that the entrance into the Debt Purchase Deeds was part of the takeover bid made by WrightNominee Co. The subject matter of the arrangements was disclosed in the announcement to the market relating to the Bid Implementation Agreement on 24 February 2023. Further, the Bidders Statement disclosed to the market by the ASX Announcement made by Wright NomineeCo on 3 March 2023 stated that it had entered into Debt Purchase Deeds with super senior facility lenders representing more than 75% of the outstanding debt interests in the super senior facility. The Bidders Statement does not refer to the date the Deeds were entered into but states that they provide for the lenders to sell their debt interests in the super senior facility at a price less than 100 cents per dollar outstanding less the offer price paid for any of their Slater & Gordon shares to the extent the lenders accept the takeover offer. The Bidders Statement also states that the super senior facility lenders remained free to vote and dispose of any interest in Slater & Gordon shares as they may determine in their absolute discretion, and no super senior facility lender had any obligation to accept the takeover offer. 98 The Proposed Jiang FACS does not disclose in a meaningful way the information that Slater & Gordon was obliged to disclose about the arrangements between the bidder and the relevant lenders, as opposed to what the relevant bidder may have been required to disclose and did disclose. I am not satisfied that the Proposed Jiang FACS discloses a reasonable cause of action against Slater & Gordon in relation to this conduct. 99 It would appear that Mr Jiang's real complaint is that the super senior facility lenders, who were also majority shareholders, obtained greater value for their shares than other shareholders. Mr Jiang pointed to the fact that it was announced that the takeover bid was valued at $150 million (equal to $1.06 per share on issue), but the total value received by shareholders was $77 million (apparently equal to $0.60 per share as asserted by Mr Jiang). Mr Jiang contended that this demonstrated that the superior facility lenders and others had extracted all the value and received greater consideration for their shares than other shareholders. Mr Jiang also contended that the announcement of the total value of the acquisition was misleading. To the extent that this is Mr Jiang's true claim, it misconceives the facts. The super senior facility lenders may also have been shareholders. The evidence before me discloses that in their capacity as shareholders they received the same consideration for their shares as all other shareholders, being $0.55 per share. The fact that in a different capacity, as lenders, they entered into separate arrangements with the bidder to settle the debts outstanding to them does not alter the distinct consideration they received for their shares. Any arrangement and payments made to them on account of the debts were made not in their capacity as shareholders, but as lenders. The fact that there were such arrangements was disclosed by both Slater & Gordon and Wright NomineeCo.

Conclusion as to Continuous Disclosure Claim 100 I am not satisfied that Mr Jiang's Continuous Disclosure Claim as contained in the Proposed Jiang FACS has any reasonable prospects of success as against Slater & Gordon. As noted above, Mr Jiang's Continuous Disclosure Claim hinges on the fact the three items of information should have been disclosed at an (unspecified) time before the announcement to the market of the takeover bid. For the reasons I have set out above, I am not satisfied that Mr Jiang should be granted leave to bring this claim. 101 As a result of the conclusions that I have reached, it is not necessary for me to deal with Slater & Gordon's further contentions that Mr Jiang's claim does not identify what loss he suffered as a result of the alleged contraventions, or that such loss is not pleaded in a way that is meaningfully connected to the alleged contraventions of s 674.

F.6 Misleading Conduct Claims 102 The Proposed Jiang FACS makes a number of overlapping claims in relation to alleged misleading and deceptive and unconscionable conduct claims against Slater & Gordon, as well as relying upon a number of related contraventions of various provisions of the Corporations Act and ASIC Act. 103 The Proposed Jiang FACS pleads at [29] and [34] that: 29. By the conduct referred to in paragraphs 5, 8, 9, 11, 12, 13, 14, 18 and 19 above, the Respondent made misleading representations with respect to future matters, and engaged in misleading and deceptive conduct; therefore, contravened Sections 4, 18, 21(1), 29(1)(b), 29(1)(d), and 29(1)(i) of The Australian Consumer Law, Schedule 2 of the Competition and Consumer Act 2010 (Cth), Sections 670A, 769C, 1041C, 1041E, 1041F and 1041H of the Corporations Act 2001, and Sections 12BB, 12DA, 12DB(1)(a), 12DB(1)(b). 12DB(1)(g), and 12DB(1)(h) of Australian Securities and Investments Commission Act 2001 (Cth). The BIA was false or unconscionable, because the takeover price of the Target had not yet been agreed upon. … 34. Pursuant to Sections 670B and 1041I of the Corporations Act 2001 (Cth), Section 236 of The Australian Consumer Law, Schedule 2 of Competition and Consumer Act 2010 (Cth), and Section 12GF of Australian Securities and Investments Commission Act 2001 (Cth), the Applicant seeks to recover from the Respondent the economic loss suffered as a result of the Respondent's contravening conduct. 104 Slater & Gordon contends that it is impermissible to plead the purported claims in this rolled-up fashion. It further contends that: Nowhere is it explained what misleading representations are alleged to have been made, why they are said to relate to future matters, what matters are said to constitute misleading and deceptive conduct, nor how it is alleged the long list of provisions across three pieces of legislation have been contravened by [Slater & Gordon]. Further, there is no pleading of reliance or causation, and no way of deciphering from the pleading how it is alleged that Mr Jiang suffered loss as a result of the myriad of contraventions alleged, nor why he is entitled to relief against [Slater & Gordon] in the nature of the relief he seeks. The Proposed [Jiang AOP] and Proposed [Jiang] FACS therefore do not comply with the requirements for pleadings as summarised above. It follows that there is no basis upon which the presently proposed pleading of the Misleading Conduct Claims could be allowed to be filed and prosecuted. Mr Jiang's application for leave to file the Proposed [Jiang OP] and Proposed [Jiang] FACS should therefore be dismissed in so far as it relates to the Misleading Conduct Claims. Further, the filed [Amended Jiang CS], which includes an earlier version of the Misleading Conduct Claims (albeit that no statutory provisions are referred to within it) should be struck out to the extent it includes those claims or misleading allegations. The [Original Jiang] OP as filed includes no Misleading Conduct Claims. In addition, no leave to replead should be granted as it would be futile and is at odds with the overarching purpose set out in s 37M of the FCA Act. 105 Slater & Gordon's contentions are well made, even allowing for the fact that the Misleading Conduct Claims have been raised in a proposed concise statement and not a strict pleading. 106 Doing my best to understand the Misleading Conduct Claims that are advanced in the Proposed Jiang FACS, it is not possible to determine why it is alleged that each of the various asserted representations made by, or conduct on the part of, Slater & Gordon was misleading and deceptive, unconscionable or otherwise gave rise to a contravention of the various provisions of the assorted statutes that are pleaded. 107 Some of the Misleading Conduct Claims are cross-referenced to the factual allegations relating to the items of information which Mr Jiang relies upon in support of the Continuous Disclosure Claims: Proposed Jiang FACS at [5], [9] and [12]. In other respects, the conduct relied upon relates to the announcement that the takeover bid was a $150 million buyout, that Slater & Gordon's directors had recommended the takeover offer and had done so on the basis of the "independent" Kroll Report, that Slater & Gordon had issued fully paid ordinary shares following the exercise of performance rights by its directors shortly after the bid announcement, that the directors and the senior facility lenders had benefitted from the acquisition, that the Kroll Report contained errors, and that it was highly likely that the Kroll Report was prepared in advance by the bidder and was not independent: Proposed Jiang FACS at [8], [11], [12], [13], [14], [18] and [19]. 108 The allegations are rolled-up and Mr Jiang does not articulate the basis for any of them. The Proposed Jiang FACS does not disclose, for example, why it is said that the directors' opinion recommending the bid was misleading or deceptive. The allegation that the Kroll Report was not independent appears to be based on two assertions. The first being that the Kroll Report was not "independent" because the bidder had already determined the price and the Report was merely a means by Slater & Gordon and the bidder to justify that price. The second being an assertion that the Kroll Report contained errors, primarily because Mr Jiang contends that the valuation method used by Kroll did not align with his own assessment of, amongst other things, Slater & Gordon's net tangible assets, enterprise value, EBITDA and share price history. Even if some or all of these allegations were to be accepted (to the extent that they have been meaningfully expressed), the Proposed Jiang FACS does not disclose other elements of the relevant causes of action. In particular, the Proposed Jiang FACS does not disclose how any such statements or conduct, if misleading or unconscionable, were relied upon and were causative of loss suffered by Mr Jiang. Fundamental to this is how Mr Jiang contends that, had this conduct not been engaged in, the bidder, Wright NomineeCo would have acquired his shares at a greater price, which is the claim he makes in the Proposed Jiang FACS at [35]-[37]. During the oral hearing, I gave Mr Jiang the opportunity to explain why the bidder would have necessarily increased the bid price for each share. Mr Jiang submitted in effect that the bidder would have been forced to pay a higher price. 109 I am not satisfied that the Proposed Jiang FACS discloses the necessary elements of the causes of action that underlie the Misleading Conduct Claims. Although it may be accepted that a concise statement is not intended to be a pleading in a strict sense, the paragraphs of the Proposed Jiang FACS in which the Misleading Conduct Claims are raised are vague and imprecise, and fail to address each of the elements of the various causes of action that Mr Jiang asserts. 110 As a result, I am satisfied that Misleading Conduct Claims contained in the Proposed Jiang FACS are embarrassing in the sense that they do not articulate these claims with any precision and fail to disclose any reasonable cause of action. I do not consider that it would be a proper exercise of my discretion to grant leave for Mr Jiang to make the claims.

F.7 The Market Manipulation Claim 111 The Proposed Jiang FACS contends that Slater & Gordon engaged in market manipulation under s 1041A of the Corporations Act: Proposed Jiang FACS at [30]. 112 Section 1041A prohibits a person from taking part in a transaction that has or is likely to have the effect of creating or maintaining an artificial price for trading in financial products on a financial market. A contravention of the section is an offence and a civil penalty provision. 113 Slater & Gordon relied upon the High Court decision in DPP v JM [2013] HCA 30; (2013) 250 CLR 135, a criminal case, where the accused was charged with buying shares for the express purpose of keeping the share price high for that day so that a bank could not call in a loan. The High Court stated at [70] that "market manipulation is centrally concerned with conduct, intentionally engaged in, which has resulted in a price which does not reflect the forces of supply and demand". 114 Slater & Gordon contended that Mr Jiang's claim was unmaintainable as it did not plead any of the essential grounds which would permit the Court to make sense of the claim. It further submitted that the factual matters relied upon in the Proposed Jiang FACS at [30] by cross-reference to paragraphs [5], [9], [11], [12], [13], [18] and [19] did not meaningfully establish the elements of a cause of action. 115 The Market Manipulation Claim relies upon largely the same cross-references to the conduct relied upon in support of the Misleading Conduct Claim: see Proposed Jiang FACS at [30] and [5], [9], [11], [12], [13], [18] and [19]. However, the added issue here is that the Proposed Jiang FACS does not address the elements of the serious assertion as to market manipulation under s 1041A of the Corporations Act. As a result, I am satisfied that the Proposed Jiang FACS is embarrassing in the sense that it does not articulate the elements of the Market Manipulation Claim with any precision and fails to disclose any reasonable cause of action. I do not consider that it would be a proper exercise of my discretion to grant leave for Mr Jiang to make this claim.

F.8 The Directors Duties Claim 116 Finally, Mr Jiang advances a claim for breach of directors' duties by Slater & Gordon under ss 180, 181, 182 and 183 of the Corporations Act: Proposed Jiang FACS at [32]. 117 It is not made clear how such a claim could be brought against Slater & Gordon. Slater & Gordon is not a director. I am satisfied that this claim has no reasonable prospects of success and that leave should not be granted to Mr Jiang to bring it.

F.9 Conclusion as to the Proposed Jiang AOP and the Proposed Jiang FACS 118 For the reasons which I have given, I do not grant leave to Mr Jiang to file the Proposed Jiang AOP and the Proposed Jiang FACS. The claims sought to be raised by these documents fail to disclose a reasonable cause of action, or seek to raise claims that are misconceived in point of law, have no reasonable prospects of success, are doomed to fail, are embarrassing or are otherwise liable to be struck out.

G. DISPOSITION 119 For the foregoing reasons, I am satisfied that the existing pleadings in each of the Jiang and Koshib Proceedings should be summarily dismissed. I am not satisfied that I should grant leave to Mr Jiang to file the Proposed Jiang AOP and Proposed Jiang FACS. It follows that both proceedings must be dismissed. 120 Save in relation to one matter, Mr Jiang and Koshib should respectively pay Slater & Gordon's costs of the applications before me to be agreed or taxed. 121 The one outstanding matter concerns Order 2 made by Halley J on 7 July 2023 that Slater & Gordon's costs of responding to an interlocutory application by Koshib Investment to appear other than by a lawyer be determined on a lump sum basis (Lump Sum Costs Order). His Honour deferred determination of the quantum of any such costs to a later date. Consistently with Order 2 of Halley J, Slater & Gordon did press a lump sum costs order. That question was later referred to me when these matters were allocated to my docket. 122 Slater & Gordon raised the Lump Sum Costs Order at the case management hearing before me on 21 February 2024. I noted that the parties had filed submissions and evidence in support of their respective positions on this issue, but indicated that I would defer all questions of costs until the determination of the applications before me. Those applications having now been determined, I also need to deal with the question arising under the Lump Sum Costs Order. 123 It may be that, upon delivery of this judgment, Slater & Gordon no longer presses for a determination of quantum under the Lump Sum Costs Order and is content with an order for costs for the entirety of the proceedings as agreed or taxed. However, Halley J having made such an order in respect of a discrete interlocutory dispute, Slater & Gordon is entitled to seek a determination under that order if it so chooses. Accordingly, I will order that, by 4.00pm on 14 June 2024, Slater & Gordon indicate to my chambers via email whether it seeks a determination pursuant to the Lump Sum Costs Order. If it does, I will determine that discrete question on the papers already filed. If it does not, I will order that Mr Jiang and Koshib Investment pay Slater & Gordon's costs of that application as agreed or taxed. I certify that the preceding one hundred and twenty-three (123) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Shariff.

Corporations Act 2001(Cth)ss 180, 181, 182, 183, 619, 623, 631, 632, 633, 635, 661A, 661B, 661E, 670A, 670B, 674, 1041A, 1041C, 1041E, 1041F, 1041H, 1041I, 1317HA

Australian Securities and Investments Commission Act 2001(Cth)ss 12BB, 12DA, 12DB(1)(a), 12DB(1)(b), 12

Federal Court of Australia Act 1976(Cth)ss 31A(2), 37M, 37N

Federal Court Rules 2011(Cth)rr 4.01(2), 6.01, 8.21, 9.08, 16.02(4), 16.21(1), 16.51, 16.53, 26.01(1)

Jiang v Slater & Gordon Ltd

At a glance

Court

Decision date

Before

Source

Judgment (40 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (31)