Norcast S.Ár.L v Bradken Limited

Date of hearing: 7, 8, 9 and 12 November 2012

Counsel for the Applicant: Mr C M Scerri QC and Mr M Borsky

Counsel for the Respondents: Mr N J Young QC and Mr S H Parmenter

Solicitor for the Respondents: King & Wood Mallesons

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 356 of 2012

JUDGE: GORDON J DATE OF ORDER: 19 MARCH 2013 WHERE MADE: MELBOURNE

1. The parties bring in orders to give effect to these reasons for judgment by 4:00pm on 26 March 2013. If the parties are unable to reach agreement, each should file and serve a copy of the proposed orders supported by a two page submission. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 356 of 2012

JUDGE: GORDON J DATE: 19 MARCH 2013 PLACE: MELBOURNE

INTRODUCTION 1 The Applicant, Norcast S.Ár.L (Norcast), sold Norcast Wear Solutions, Inc (NWS), a Canadian mining consumables company to 0913034 B.C. Ltd (BC), a special purpose subsidiary of Castle Harlan, Inc (Castle Harlan), for approximately US$190 million on 6 July 2011. Previously on 6 July 2011, Bradken Operations Pty Ltd (Bradken Operations), a subsidiary of the First Respondent, Bradken Limited (Bradken), had entered into a Subscription, Governance and Purchase Agreement (SGPA) with, among others, BC. Pursuant to the SGPA, Bradken Operations subscribed for 89.7% of the share capital in BC. Bradken Operations also acquired the right to call for the remaining shares in BC. Within hours of the sale by Norcast of NWS to BC, Bradken Operations exercised its right and acquired the remaining shares in BC. The total amount paid to Castle Harlan entities by Bradken was approximately US$212.4 million. The result - Bradken acquired NWS, its global competitor in the manufacture and supply of grinding mill liners. Grinding mill liners are consumable products used in the mining industry. 2 Norcast complains about Bradken's and Castle Harlan's conduct on and before 6 July 2011. Norcast alleges that the events on 6 July 2011 were the result of a bid rigging arrangement between Bradken and Castle Harlan, whereby Castle Harlan agreed to bid for NWS and Bradken agreed not to bid for NWS (Bid Rigging Arrangement) in contravention of ss 44ZZRJ and 44ZZRK of the Competition and Consumer Act 2010 (Cth) (the CCA). Had Bradken and Castle Harlan not entered into the Bid Rigging Arrangement, Norcast contends that Bradken would have made a bid for NWS in excess of the approximately US$190 million which BC ultimately paid for NWS. 3 Norcast further alleges that Castle Harlan and Bradken engaged in misleading or deceptive conduct during the course of the NWS sales process (Misleading or Deceptive Conduct) in breach of s 18 of Pt 2-1 of Sch 2 of the CCA (referred to as the Australian Consumer Law, the ACL). Norcast alleges that the Second Respondent, Mr Nick Greiner, and the Third Respondent, Mr Brian Hodges, were persons involved in either or both of the Bid Rigging Arrangement and the Misleading or Deceptive Conduct. 4 For the reasons set out below, both the Bid Rigging Arrangement claim and the Misleading or Deceptive Conduct claim are established. 5 This proceeding was commenced as a Fast Track proceeding. The disputed factual and legal issues are complex. At the conclusion of the hearing, the parties were informed that the Court would be unable to deliver judgment within six weeks of the conclusion of the trial: cf Practice Note CM8. The delay in delivery of the judgment was inevitable because the Minister did not provide the necessary consent for the extended territorial application of s 82 of the CCA and s 236 of the ACL until 14 March 2013: see [231] below. 6 The balance of these reasons for judgment are structured as follows: DESCRIPTION PARA(S) A The Statutory Scheme [7]-[17]

1. The Bid Rigging Arrangement provisions [7]-[16]
2. Misleading or Deceptive Conduct provisions [17] B The Issues [19]-[20]
3. The Bid Rigging Arrangement claim [19]
4. Misleading or Deceptive Conduct claim [20] C The Facts [21]-[207]
5. Introduction [21]
6. The Players [22]-[32]
7. 2002-2008 [33]-[47]
8. 2009 [48]-[55]

1. Bid Rigging Arrangement provisions 7 Part IV of the CCA addresses restrictive trade practices. The present case is principally concerned with Div 1 (ss 44ZZRA to 44ZZRV) entitled "Cartel conduct". 8 Section 44ZZRJ of the CCA, entitled "Making a contract etc. containing a cartel provision", provides: A corporation contravenes this section if: (a) the corporation makes a contract or arrangement, or arrives at an understanding; and (b) the contract, arrangement or understanding contains a cartel provision. (Emphasis added.) 9 Section 44ZZRK of the CCA, entitled "Giving effect to a cartel provision", relevantly provides: (1) A corporation contravenes this section if: (a) a contract, arrangement or understanding contains a cartel provision; and (b) the corporation gives effect to the cartel provision. (Emphasis added.) 10 "Cartel provision" is defined in s 44ZZRD of the CCA. Section 44ZZRD defines "cartel provision" for civil and criminal purposes. It replaced, and expanded, s 45A of the TPA. 11 Section 44ZZRD(1) provides as follows: (1) For the purposes of this Act, a provision of a contract, arrangement or understanding is a cartel provision if: (a) either of the following conditions is satisfied in relation to the provision: (i) the purpose/effect condition set out in subsection (2); (ii) the purpose condition set out in subsection (3); and (b) the competition condition set out in subsection (4) is satisfied in relation to the provision. 12 Section 44ZZRD sets out two conditions that must be satisfied in order for a provision of a contract, arrangement or understanding to be a cartel provision - one of the two forms of the purpose condition and the competition condition. There was no dispute that the particular relevant conditions in the present case were those in sub-ss 44ZZRD(3)(c)(i) and 44ZZRD(4)(a), (b) and (j). 13 Sub-sections 44ZZRD(3) and (4) relevantly provide: Purpose condition (3) The purpose condition is satisfied if the provision has the purpose of directly or indirectly: … (c) ensuring that in the event of a request for bids in relation to the supply or acquisition of goods or services: (i) one or more parties to the contract, arrangement or understanding bid, but one or more other parties do not; … Competition condition (4) The competition condition is satisfied if at least 2 of the parties to the contract, arrangement or understanding: (a) are or are likely to be; or (b) but for any contract, arrangement or understanding, would be or would be likely to be; in competition with each other in relation to: … (j) if paragraph (3)(c) applies in relation to an acquisition of goods or services - the acquisition of those goods or services; … (Emphasis added.) It is the substance, not the form, that is relevant in determining the purpose of a provision: sub-s 44ZZRD(10). 14 Of course, s 44ZZRD will not apply unless there is some form of contract, arrangement or understanding between two or more parties. The phrase, "likely to be", in both the purpose condition and the competition condition, permits the court to look at what is established on the facts and also to infer, from those facts, what was likely to be the position at or about the time the arrangement was made. "Likely" includes a possibility that is not too remote: s 44ZZRB. "Bid" is defined in s 44ZZRB to include "the taking, by a potential bidder or tenderer, of a preliminary step in a bidding or tendering process". 15 Sub-division D of Div 1 of Pt IV contains the exceptions and defences to, among others, ss 44ZZRJ and 44ZZRK. Section 44ZZRU of the CCA relevantly provides: (1) Sections 44ZZRF, 44ZZRG, 44ZZRJ and 44ZZRK do not apply in relation to a contract, arrangement or understanding containing a cartel provision, in so far as the cartel provision provides directly or indirectly for the acquisition of: (a) any shares in the capital of a body corporate; or (b) any assets of a person. … (2) A person who wishes to rely on subsection (1) in relation to a contravention of section 44ZZRJ or 44ZZRK bears an evidential burden in relation to that matter. (Emphasis added.) 16 Section 82 provides that a person who suffers loss or damage by reason of conduct in contravention of Pt IV may recover "the amount of the loss or damage by action against that other person or against any person involved in the contravention".

2. Misleading or Deceptive Conduct provisions 17 Part 2-1 of Sch 2 of the ACL addresses misleading or deceptive conduct. Section 18 of the ACL relevantly provides that: (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive. Section 18 reproduces s 52 of the old Trade Practices Act 1974 (Cth) (the TPA), save that the word "corporation" has been replaced with "person". Section 236 of the ACL provides that a person who suffers loss or damage "because of" a contravention of s 18 may recover "the amount of the loss or damage by action against that other person, or against any person involved in the contravention".

B THE ISSUES 18 The issues may be divided into two general categories - the Bid Rigging Arrangement claim and the Misleading or Deceptive Conduct claim.

1. Bid Rigging Arrangement claim 19 Eight issues arise in determining the Bid Rigging Arrangement claim: 1. Was there a request for bids within the meaning of s 44ZZRD(3)(c) of the CCA? 2. Were Bradken and Castle Harlan in competition, or likely to be in competition, with each other (but for the arrangement or understanding between them) in relation to the acquisition of the shares in NWS (ie, is the Competition Condition satisfied)? 3. Did Bradken and Castle Harlan make a contract or arrangement, or arrive at an understanding in relation to bidding for NWS? 4. Did the Bidding Agreement contain a provision which had the purpose of directly or indirectly ensuring that in the event of a request for bids in relation to supply or acquisition of goods or services, one party would bid but the other would not (ie is the Purpose Condition satisfied)? 5. Does s 44ZZRU of the CCA apply with the result that the cartel conduct prohibitions in ss 44ZZRJ and 44ZZRK are not engaged? 6. Is Norcast able to rely upon the conduct of Bradken and Castle Harlan engaged in outside of Australia and, further, can Norcast establish that Castle Harlan was carrying on business within Australia (see s 5 of the CCA)? 7. Was Bradken a person involved in Castle Harlan's contraventions within the meaning of s 75B of the CCA? Were Greiner and/or Hodges involved in either or both of Bradken and/or Castle Harlan's contraventions? 8. What was Norcast's loss and damage?

2. Misleading or Deceptive Conduct claim 20 In determining the Misleading or Deceptive Conduct claim, there are also eight issues: 1. Did Bradken engage in misleading or deceptive conduct by its silence? 2. Did Castle Harlan engage in misleading or deceptive conduct? 3. Did Norcast rely upon Bradken and/or Castle Harlan's representations? 4. Was Bradken a person involved in Castle Harlan's contraventions within the meaning of s 2(1) of the ACL? Were Greiner and/or Hodges involved in either or both of Bradken and/or Castle Harlan's contraventions? 5. Were either or both of Bradken's and/or Castle Harlan's representations conduct "in trade or commerce" either within Australia or between Australia and places outside Australia? 6. Does s 32(1)(d) of the Fair Trading Act 1987 (NSW), which extends the operation of that Act to "persons otherwise connected with this jurisdiction", assist Norcast? 7. What was Norcast's loss and damage? 8. If Bradken, Greiner and/or Hodges are liable as persons involved in Castle Harlan's contraventions, should there be an apportionment of liability between them and Castle Harlan and, if so, in what proportions?

1. Introduction 21 The relevant events took place around the world and across numerous time zones. Where relevant, the time zone in which a particular event took place is identified in brackets as Australian Eastern Standard Time (EST), Australian Eastern Daylight Savings Time (EDT), New York Time (NYT) or New York Daylight Savings Time (NDT). The only way to understand this case is to track the events, step by step. First, the players and then the events.

Norcast, NWS and Pala 22 Norcast has no premises, employees or Board of directors. It was incorporated in Luxembourg as a holding company for NWS and other related entities. Pala Investments Limited (Pala) is its ultimate holding company. Pala, like Castle Harlan, is a private equity fund. 23 Mr Michael Barton, a senior Vice President of Pala, gave evidence (Barton). Mr Richard Wilson, the former Chief Operating Officer of NWS (Wilson), and Mr Alan Bulckaert, the former President of NWS, also gave evidence (Bulckaert). There was evidence about two other key decision-makers within NWS and Pala: Mr Rick LaBelle, the former Chief Executive Officer of NWS (LaBelle), and Mr Jan Castro, the Chief Executive Officer of Pala (Castro). LaBelle and Castro did not give evidence. Contrary to Bradken's contention, there is no relevant adverse inference to be drawn against Norcast arising from its failure to call Castro. 24 Barton gave evidence about decision-making within NWS, Norcast and Pala. Barton's evidence was that, within Pala, there was a "manager" who was responsible for each investment. Prior to the sale of NWS, the manager responsible for Norcast (and NWS) was Mr Martyn Buttenshaw. Buttenshaw reported to Barton. Buttenshaw did not give evidence. 25 The decision to sell NWS was made following a recommendation from the management of NWS to the Board of NWS that they believed that it was an appropriate time to seek a disposal. That recommendation was referred to the ultimate shareholder, Pala. Once the decision had been made to sell NWS, Barton's evidence was that he was responsible for instructing NWS' advisers and conducting the sale, but that Castro was also involved and, on occasions when Barton was unavailable, Castro made decisions in his absence.

Bradken 26 Bradken is an Australian-based mining consumables company with various aspects of its business operating all over the world. It is listed on the Australian Securities Exchange (the ASX). 27 At the relevant time, Brian Hodges was the Managing Director of Bradken (Hodges) and Nicholas Greiner was a Director and Chairman of its Board of directors (Greiner). Both gave evidence. Mr Bradley Ward (Ward) also gave evidence. Ward held various positions within Bradken throughout the course of the events described below. Between September 2004 and September 2008, he was the General Manager, Mineral Processing based in Newcastle. In September 2008, he was appointed President, Bradken Products and Integration based in Kansas City. In July 2009, he was appointed President, Bradken Resource Products, again based in Kansas City. Ward currently holds the position of Executive General Manager - Mineral Processing and has done so since June 2012. There was evidence concerning other Bradken employees, including Mr Bruce Arnott, then Bradken's Chief Financial Officer, (Arnott) and Mr Stephen Bone, then General Manager, Mineral Processing (Bone). Arnott and Bone were not called to give evidence.

Castle Harlan and CHAMP 28 Castle Harlan is a New York-based private equity fund. Several Castle Harlan employees were involved in the acquisition of NWS, including Mr Leonard Harlan (Harlan), Mr Howard Morgan (Morgan) and Mr Anand Philip (Philip). Harlan was the Chairman of the Executive Committee of Castle Harlan. Morgan was a Co-President of Castle Harlan. Philip was a Vice-President of Castle Harlan. 29 Castle Harlan has an interest in a private equity fund in Australia called Castle Harlan Australia Mezzanine Partners Pty Limited (CHAMP). Castle Harlan owns Castle Harlan Australia LLC which is, in turn, a 50% shareholder in CHAMP. CHAMP and Bradken have a long history. In late 2001, entities associated with CHAMP (as part of a consortium) purchased Bradken from Smorgon Steel. Bradken was listed on the ASX in August 2004. Greiner is also a Non-Executive Director and Deputy Chairman of CHAMP. Prior to Bradken listing on the ASX, Greiner was a CHAMP nominated director of Bradken.

Other players 30 Three investment banks were involved, in one way or another, in the sale of NWS. Hodges gave evidence of his dealings, between 2009 and 2011, with Mr Gautam Chari of Merrill Lynch (Chari). Merrill Lynch was Bradken's investment banking adviser at the time. Chari was not called to give evidence. 31 Barton and Hodges also gave evidence regarding Mr Sean Walsh of Goldman Sachs (Walsh). Hodges's evidence was that he knew Walsh because Walsh replaced Chari when Chari left Goldman Sachs. Barton met Walsh during a business trip in late February 2011. Walsh told Hodges of the NWS sale process. Both Norcast and Bradken subpoenaed Walsh, but neither party called Walsh to give evidence. 32 Finally, UBS was retained by NWS to conduct the sale process. There was evidence concerning several UBS' employees, including Mr Michael Kousaie, an Executive Director (Kousaie), and David Han, an Associate (Han). Neither Kousaie nor Han were called to give evidence.

3. 2002 - 2008 33 2011 was not the first time Bradken had "interacted" with NWS. Hodges had been aware of NWS for many years. 34 In 2002, Bradken became concerned that NWS was bidding to sell grinding mill liners from its Canadian facilities into Australia at prices that were equivalent to dumping in contravention of the anti-dumping legislation. Following an application by Bradken in September 2002, the Minister for Justice and Customs accepted a recommendation of the Australian Customs Service (the ACS) and declared that anti-dumping measures be applied to the grinding mill liners exported by NWS from Canada to Australia. 35 Bradken was listed on the ASX on 18 August 2004. At that time, Bradken set a strategy of globalising its mining consumables business. Mill liners was one of its six main products. 36 In 2005, Bradken acquired Roche Castings Pty Ltd to become the sole domestic manufacturer of grinding mill liners in Australia. Following this acquisition, Bradken's primary competitor in the Australian market was PT Growth Asia, although in 2003 the ACS noted that the Australian industry members had "dominated the Australian market until the entry of Norcast at dumped prices. This was despite Growth Asia's presence in the market for some years". 37 In December 2005, Hodges asked Ward, then General Manager - Bradken Mineral Processing, to prepare a summary of the global market for grinding mill liners for presentation to the Board. The paper was presented to the Board on 14 December 2005. The paper was to inform the Board of the current state of the global steel and iron mill liner market and "flag possible future strategies and actions to further rationalise it". The paper described the suppliers and state of the market as follows: Until 2003 the global Steel and Iron Mill Liner market had been dominated by six (6) suppliers, at which time Elecmetal acquired Minneapolis Electric creating the ME-Elecmetal business. Bradken's acquisition of Roche Castings in 2005 further reduced the supply base to four (4) dominant players being: • ME - Elecmetal. Four foundry's in the USA and Chile with estimated Mill Liner sales of A$120M (46,000 tonnes), dominant in the USA and South America • Bradken. Mill Liner sales A$65M (23,000 tonnes), dominant in Australasia • Norcast. One foundry in Canada with estimated Mill Liner sales of A$63M, dominant in Canada and second position in the USA and South American markets • PT Growth Asia. One foundry in Indonesia with estimated Mill Liner sales of A$20M (10,000 tonnes) and a secondary, price focused supplier predominantly in Australasia and Africa. The paper identified NWS (or Norcast as it was referred to) as a potential acquisition target for Bradken. 38 Hodges pursued the idea and, on 19 April 2006, he presented to the Board a paper explaining the rationale for acquiring NWS. The paper explained that Bradken was keenly exploring the potential acquisition of NWS. The paper recorded NWS' earnings before interest, taxes, depreciation and amortisation (EBITDA) in 2004 and 2005 and then the acquisition rationale as follows: In 2005 Norcast achieved an EBITDA of C$13.4m (or 17.4%) on sales of C$77.1m, down from EBITDA of $13.9m (or 22.1%) on sales of C$63.1m in 2004. … Acquisition Rationale Bradken's interest in acquiring Norcast is based on both short and long term rationale: • Norcast plant and business is similar to the Roche Mining business and should be able to be readily integrated into Mineral Processing. One key difference is that it is currently selling through agents which we would seek to return to in-house salesmen. • further consolidation of the global Mill Liner supply base. The combined Bradken - Norcast and ME-Elecmetal would equally share 82% of the global market. • increased exposure to the South American mining market, the world's largest market which also has the largest growth forecasts. • the delivery of synergy benefits as follows: o Overhead restructuring - C$0.8m in year 1 and C$1.2m in year 2. o Sales commissions to agents of $2.8m would be converted to in-house salesmen over time, saving up to C$0.9m. o Elimination of the "metal surcharge" policy - conservatively estimated to deliver C$3.3m within a 3 year period. The basis of this is that higher alloy and raw material costs have largely stabilised at a new level, and given that we'd anticipate some medium term contracts (1-2 years) would include the metal surcharge as the basis of price setting a phased exit would be required. Our estimate is that a 30% Gross Margin on 2005's surcharge component of C$11 m would be available over time. o Rationalisation of the global market leading to a reduction in price suppression by the major global mining companies - C$2.3 m within a 3 year period. It is estimated that a 3% average improvement in price within a 3 year period could materialise against Norcast's existing sales. We have not factored any price improvements for Bradken's existing business due to competition levels in Australasia with low cost importers. o The growth occurring in the world market can be taken with marginal foundry volume increases. The current Norcast plant is operating at full capacity of 26,000t. Norcast quote that foundry capacity could be increased by 12,000t for between C$10m - C$20m. This could well suit Bradken for crawler shoes and liners for supply into this region and South America, where Canada has bilateral free trade agreements with Chile and is part of NAFTA. Norcast under previous ownership, but the same management, sold into Australia at low prices, significantly affecting our profitability until we successfully initiated anti dumping action which resulted in dumping duties in the order of 94% being imposed. While the upgrade of Adelaide will give us some defence in the future, acquiring Norcast should mean that the significant cost reductions from the Adelaide upgrade will more likely fall into profit. The current dumping decision will be reviewed in 2008. It is unlikely the Norcast management would view our approach favourably but we have had little personal contact. The acquisition of Norcast is another step in expanding Bradken and Mineral Processing. The foundry will provide a basis for addressing the North American Resources Market with other products including Crawler Shoes and Plate & Block products. A strong position globally in Mill Liners will allow cross selling of other products including crusher liners. (Emphasis in original.) The paper then assessed the current enterprise value of NWS and the corresponding price to earnings (PE) ratio and EBITDA multiple compared to Bradken. The paper included a table showing share prices based on different EBITDA levels and multiples. Hodges concluded that it would be possible to pay a 20% to 30% premium over the current NWS share price of $8.30 for Bradken to make an attractive bid. The acquisition options were outlined. A takeover bid was one option. The Board authorised Hodges to develop an acquisition strategy in relation to NWS. 39 In mid 2006, several potential acquisitions were being considered by Bradken - including AmeriCast Technologies, Inc (AmeriCast), a group of American foundry businesses, and NWS. 40 In relation to AmeriCast, in mid-2006 Hodges received a copy of the initial sales materials (or "teaser"). At that time, Hodges considered AmeriCast had one good, large jobbing foundry (a foundry that manufactures numerous types of castings according to a customer's specifications, rather than being designed for a specific product range, which permit longer runs at lower cost), but that AmeriCast as a group was not an appropriate acquisition target for Bradken. Hodges did not pursue the teaser further. Some weeks or months later, Hodges received a telephone call from Morgan. Morgan told Hodges that Castle Harlan had been short-listed in the AmeriCast sale process and was looking to make a final bid and go exclusive. Morgan asked Hodges to support Castle Harlan in conducting its due diligence. Hodges agreed and, along with Mr Andrew Allen, Bradken's General Manager Industrial, assisted Castle Harlan to validate the performance and capital equipment at AmeriCast's facilities and its technical expertise. 41 Once Castle Harlan had exclusivity in the negotiations with the vendor, Morgan asked Hodges whether Bradken would take a 20% equity share in AmeriCast should Castle Harlan succeed in acquiring it. 42 At the next Bradken board meeting on 21 September 2006, under the heading "Acquisition Opportunities", the minutes record that Greiner suggested that Bradken should be prepared to take on opportunities which fitted within Bradken's business model and needed to take a long term strategic view. The first two opportunities listed were AmeriCast and NWS. The minutes set out the strategy: (i) Americast The Board authorised … Hodges to commence negotiations to participate in the acquisition of Americast, including an appropriate option/last right of refusal to purchase the business at the end of private equity ownership. A final proposal will then be forwarded to the Board for consideration. Action: … Hodges (ii) [NWS] Bradken is awaiting the results of the next [NWS] quarterly report due to be released in 6 weeks, at which time a strategy will be reviewed based on the outcome. (Emphasis in original.) 43 In November 2006, Bradken acquired approximately 17% of AmeriCast, the balance being held by entities associated with Castle Harlan and AmeriCast management. 44 At about the same time, during mid-2006, Hodges had a number of discussions with NWS' chairman, Mr Terrence Reid, about the possibility of Bradken acquiring NWS. In May 2006, Bradken offered to acquire NWS at a price of $8.50 per share. On 5 August 2006, Reid telephoned Hodges and stated that Bradken's offer was not sufficient to proceed to due diligence. Hodges reported to the Bradken board on 24 August 2006 that "[t]he discussions with Norcast have temporarily ceased, with their view that our offer was insufficient for us to continue to due diligence." The Board adopted a wait and see approach at its meeting on 21 September 2006: see [42] above. 45 On 19 January 2007, Hodges received a telephone call from the head of Investment Banking at TD Securities, a Canadian investment bank. The banker told Hodges that TD Securities was advising the NWS Board and wanted to know whether Bradken remained interested in NWS. Hodges told the TD Securities representative that Bradken was not interested in entering an auction process for the sale of NWS but could revise its offer of $8.50 per share "and stretch above if compelling synergies". TD Securities did not call back. Hodges reported to the Bradken Board on 22 March 2007 that NWS had received a bid of C$9.30 from a private equity group. The minutes record that the Board did not consider that bid price to be "earnings accretive to Bradken". Hodges subsequently learnt that NSW had been acquired by Pala at a price of C$9.30 per share. As NWS had been acquired by a private equity group, Hodges expected that it would come back on the market at some point in the future. 46 In January 2008, Bradken applied to the ACS for a continuation of the anti-dumping measures against grinding mill liners imported from Canada. On 31 July 2008, the anti-dumping measures were continued by the ACS. The ACS' report stated that "Bradken claims it is now the only large scale manufacturer of grinding mill liners in Australia following Bradken's acquisition of the other Australian producers" 47 On 28 July 2008, NYT (29 July 2008 in Australia), Castle Harlan announced the sale of the remaining interest in AmeriCast to Bradken. The deal closed in early August 2008.

4. 2009 48 By early 2009, NWS was performing well. Barton formed the view that there were limited further steps that Pala could take to grow NWS organically and that Pala should sell the business or seek to expand it through acquisitions. The economic conditions were poor. Barton was not confident that it would be possible to sell NWS for an attractive price. He was also concerned about the downside value risks in having a failed sale process widely publicised. As a result, Barton decided to test the market "via a targeted and limited sale process, and at the same time explore options for NWS to grow through acquisitions". National Bank Financial (which had advised Pala in 2007 on its acquisition of NWS) was retained to conduct the sale process and prepare sale materials, including a confidential information memorandum (IM). The IM was dated April 2009. Potential purchasers that appeared to be performing well enough in the difficult economic conditions to be able to afford to acquire NWS for an attractive price were identified by National Bank Financial as [company A, B, C , D and E]. Those parties were contacted. Bradken was not approached. NWS did not receive suitable interest and the sale process ended on 25 May 2009. NWS decided to focus on acquisitions. 49 About the same time, Bradken was still on the acquisitions path. On about 17 July 2009, Hodges instructed Ward to contact a number of consumables businesses to identify whether they could be acquisitions for Bradken. One of the companies Ward contacted was NWS to ascertain whether Pala was interested in selling. On 29 July 2009, Ward telephoned Bulckaert. Bulckaert was unavailable and Ward left a message asking him to call. Bulckaert returned his call later that day. Bulckaert and Ward discussed Bulckaert's role with NWS, the previous management of NWS and the way the NWS business was tracking. Bulckaert told Ward that the appropriate person to speak to in terms of the possible sale of NWS was Barton and that he would tell Barton to expect a call from Ward or Hodges. Ward reported the call to Hodges. Bulckaert telephoned Barton and told him he had been contacted by Ward, that Bradken was interested in acquiring NWS and he had given Ward Barton's contact details. 50 The same day, Barton sent an email to Castro, informing him of Bradken's interest in NWS. Later that day, Barton spoke with Castro and Bulckaert separately by phone. The form of Pala's response to Bradken's enquiry was discussed. Barton, Castro and Bulckaert agreed that Barton would convey what was described as Pala's "standard" message in response to unsolicited approaches - although NWS was "not in active sale mode" at that time, "Pala is a financial investor, so its assets are always for sale - for the right price". 51 After receiving Ward's email, Hodges telephoned Chari. Hodges' evidence was that Chari offered to call Barton. Barton gave evidence that he received a telephone call from an employee at Merrill Lynch on 30 July 2009. Barton could not recall the name of the employee. The Merrill Lynch employee told Barton he was acting for Bradken and that Bradken was interested in acquiring NWS. Barton's response was that although NWS was "not in active sale mode" at that time, "Pala is a financial investor, so its assets are always for sale - for the right price". 52 Chari subsequently called Hodges and told him that from his enquiries he understood that Pala's investment in NWS was going well and that during the global financial crisis NWS was one of the only things that was creating cash-flow for Pala, that NWS had lots of possible "bolt on" acquisitions, and that Pala was therefore not then looking to sell. On 1 August 2009, Hodges sent an email to Ward telling him that Pala was not looking to sell at that time. However, Hodges also told Ward that Pala would have to consider selling if Bradken made a "high offer". Hodges did not stop there - he told Ward to consider winning one of NWS' customers "without dumping of course" or acquiring "a foundry with the write [sic] foot print in the right location". Ward replied saying that he would "work towards a plan C". 53 Barton reported on his discussion with Merrill Lynch in an email to Castro of 30 July 2009. Barton stated that "[o]ne thing he kept coming back to was our entry multiple. He said he thought this would be difficult to match at present." Barton's evidence was that this was a reference to how many multiples of NWS' EBITDA Norcast had paid when it acquired NWS, and the indication Barton received from the Merrill Lynch representative that Bradken could not afford the same multiple of NWS' current EBITDA. Barton noted in his email that the Merrill Lynch representative did not know of the "entry multiple" that Norcast paid when it acquired NWS. That fact was important from Barton's perspective because that information was publicly available. Barton told Castro that he assumed the Merrill Lynch representative had not done his homework and was "just posturing". 54 Five days later, on 6 August 2009, Castro nevertheless asked Barton for "an acquisition analysis at various premia for Bradken taking Norcast". Barton understood this to be a request for analysis of how much Bradken might be willing to pay for NWS. Castro stated that he suspected that Bradken may have been waiting for NWS' results to come out before coming back to them. Some preliminary analysis was performed by Michael Psihogios, the Business Development Manager for NWS (Psihogios). Ultimately, however, no further approach was made by either Merrill Lynch or Bradken. 55 As the evidence discloses, each was waiting for the other.

5. 2010 56 In February 2010, NWS acquired the assets of Swanmet Engineering Pte Ltd (Swanmet), a grinding mill liner manufacturer in Malaysia and Singapore. That acquisition enabled NWS to re-enter the Australian market. Despite that acquisition, LaBelle wanted to sell NWS. On 21 March 2010, LaBelle drafted a paper entitled "Australian Road Trip" regarding his plans to solicit offers for NWS, including from Bradken. LaBelle did not give evidence. Barton was cross examined about the paper. His evidence was that LaBelle's conduct was unauthorised and, although he was aware of meetings with potential buyers, the conduct was actively discouraged by the Board of NWS. 57 Nothing substantive then happened for a number of months. Then, in late 2010, Pala again began exploring options for the sale of NWS. Since it had been acquired by Pala, NWS' output had increased by 30% and it was the second largest supplier of grinding mill liners in the world, with an approximate global market share of 16%. With the acquisition of the Swanmet assets, NWS also had the opportunity to start supplying into Australia - the largest market for grinding mill liners in the world - without customers having to pay anti-dumping duties. 58 This is a critical point in the history of this matter. Barton's evidence was that rather than conduct a limited sale process as in 2009, Pala this time wished to "cast the net widely", with the sale process being open to all potential purchasers, including competitors and potential competitors (called "strategics") and private equity funds (called "financial sponsors"). On 1 October 2010, a paper was presented to the NWS Board concerning the potential sale of NWS. An "illustrative dual track process" for the sale was described as follows: … • Norcast Management believes a Dual Track exit process as summarized below should be considered: - 1) Targeted Sale: Two phase, limited buyers contacted - 2) IPO: Slightly delayed vs. Targeted Sale; public kick-off only after LOI stage with Targeted Sale Barton was cross examined about this paper. He stated that the process that was outlined was a recommendation only and neither approach was adopted. 59 Under the heading "Sale Process Considerations", the following table appeared: Deal Items Business Items • Market: • Industry: - Tight • Tight controls on customer/competitor knowledge (limit to priority only?) • Buyer Universe: • Norcast Knowledge: - 3-4 priority candidates • Knowledge to be limited to small group - 8-9 secondary • When site visits occur, select managers to be informed • Valuation (% discount TBD): • Systems: • Comps: • Plug-in ready in reporting, sales, accounting • Bradken range of 7-9x • Precedents: • Organization: [CONFIDENTIAL MATERIAL EXCISED] • No significant gaps (except AUD sales team, which is underway?

(Emphasis added.) 60 At the same time, Bradken was considering NWS as a potential acquisition target. In a perfect world, the two would have collided. They did not. On 1 October 2010, Hodges spoke by telephone with Chari of Merrill Lynch on a range of topics including NWS. Chari told Hodges that there was a new person at Merrill Lynch who was ex-NWS who wanted to talk to Hodges about NWS. Chari also told Hodges that NWS was doing fine, with an EBITDA of $20 million following the acquisition of the Swanmet assets, and that he expected a sale in the middle of 2011. Chari also told him that NWS had run an unsuccessful sale process in 2009. Finally, Chari told Hodges that Castro did not like Bradken on two fronts - over the anti-dumping investigation and the fact NWS thought that Bradken would only pay a price equivalent to 7 times NWS' EBITDA: see [59] above. Consistent with Chari's advice, on 12 October 2010, Joe Belan of Merrill Lynch telephoned Hodges. Belan had recently left NWS. Belan told Hodges that Pala would be selling NWS in the first half of 2011. 61 In late October 2010, UBS and another potential adviser, Scotiabank, each made presentations to Pala and NWS. The UBS presentation noted the risk of confidentiality in the sale process and listed Bradken as "Potential Buyer: Sensitive". Then, on 2 November 2010, [company F] wrote to LaBelle and offered to buy NWS for $170 million. Barton was cross-examined regarding the [company F's] letter. Barton's evidence was that the letter was received as a result of LaBelle's unauthorised discussions with potential buyers. Encouraged by LaBelle, [company F] had contacted Barton in late 2010. Barton gave evidence that he told [company F] that NWS would be offered for sale in early 2011 but, if [company F] submitted a "significant" offer, [company F] might be able to curtail that process. The [company F] letter was, in Barton's view, [company F's] attempt to submit a "significant" offer. 62 In November 2010, Chari telephoned Hodges and told him that Pala had been approached with a "knock out offer" for NWS in the mid $170 millions and Pala was thinking of "exiting by a selective process". Hodges' evidence was that he understood the reference to a "selective process" to mean that NWS would be sold by a similar method to the selective process in 2009. 63 Six days later, on 8 November 2010, Barton rejected [company F's] offer: Unfortunately, the maximum value you indicate in your letter is, at best, the minimum value we would consider in any sale process. As such, it would not make sense for us to deviate from our existing plan at this point in time, as we are confident of generating more value either within a sale process or by continuing with the next stage of our strategy. 64 On 14 December 2010, Psihogios of NWS emailed UBS. Psihogios told UBS that NWS had been continuing to prepare for an "exit process in early 2011". Psihogios requested a follow up to the October meeting. Psihogios outlined the essential elements at that stage as follows: Process: We have decided to go with a comprehensive, yet tightly controlled strategic sale only. We are no longer interested in a dual track process. Timing: Targeting first contact to buyers (teaser) in late January 2011, and a full CIM to follow in mid February. Financial Advisor: To be upfront, we are approaching a select group of advisors to present to us. We are looking for the right team, experience, and commitment at a competitive fee. (Emphasis added.) Bradken submitted that this document evidenced a tightly controlled but selective sales process. I reject that description. The document speaks for itself. The decision was to adopt "a comprehensive, yet tightly controlled strategic sale". The question was: what did that mean?

6. 2011 65 On 11 January 2011, NWS, Pala and UBS met. Later that day, UBS and NWS entered into an agreement for the sale process of NWS. UBS' Canadian office, UBS Securities Canada, Inc, was appointed to act as exclusive financial adviser and capital markets adviser to NWS in connection with the sale. On 12 January 2011, the NWS Board resolved to appoint UBS Canada as financial adviser for what was described as the "Strategic Alternatives Process". 66 Barton gave evidence as to what he understood the "Strategic Alternatives Process" to entail. The process involved two rounds. Once potential purchasers had signed a non-disclosure agreement (NDA), they entered the first round. At that stage, they would receive an Information Memorandum (IM), containing a detailed overview of NWS' business, including its facilities, the market in which it operated, its performance, growth prospects and strategies. Buyers were then required to submit a "preliminary non-binding indication of interest" (Indicative Offer) for the acquisition of NWS, which was to include, among other things, a proposed purchase price. 67 Based on the Indicative Offers, Norcast would admit a limited number of potential purchasers to the second round of the process. The second round involved, among other things, a presentation from NWS' management and visits to NWS' manufacturing facilities in Mont-Joli, Quebec and Malaysia and the Swanmet distribution facility in Singapore. The remaining participants would then be asked to submit a "Bid Letter" that stated final offers (among other things) and any proposed amendments to a draft Share Purchase Agreement. 68 On 17 January 2011, UBS supplied NWS with an initial buyers list. The buyers were divided into five categories - Sensitive 1, Sensitive 2, Tier 1, Tier 2 and Financial Sponsors - and ranked. Bradken was classified as "Sensitive 1". It was the only buyer in that category. Barton gave evidence that "sensitive" was a classification used to describe strategic buyers who may wish to use information obtained in the sales process to NWS' detriment. The next day, 18 January 2011, Psihogios emailed UBS and requested "an overview of considerations (info disclosed, contact, etc) and recommendation of how we tailor the process for sensitive vs. general buyers". 69 On 19 January 2011, Kousaie of UBS replied. The email included this statement about Bradken: This is an important point that we'd like to reflect on a little further over the coming weeks as we learn more about the particular sensitivities re: some of the information and some of the bidders. Below are some preliminary views to give you an idea of how we're leaning: 1) ROUND 1 - BRADKEN: from what you've told us so far, it seems clear that we definitely need to handle Bradken differently, given their knowledge of your business and their status as one of your key competitors. "Handling them differently" could mean excluding them completely from the first phase of the sale process (that is, we don't offer them a [NDA]), or it could mean offering them a heavily redacted [NDA]. Based on what you've told us so far, I'm leaning towards the former option, but we should definitely think some more about this. Obviously, if Bradken is serious, I want to make sure they get a fair shot to bid. But we all need to be comfortable that their interest is credible and that they're not just fishing for info that would ultimately hurt the value of Norcast. … 70 Barton read UBS' email. He decided to treat Bradken differently to other potential purchasers. For purchasers other than Bradken, Barton instructed UBS to contact each of them by telephone, inform them of the sale process, send them a "teaser" document that had been prepared and inform them that if they wanted to enter the sale process, they must first execute a NDA. Barton decided that Bradken would not be included in the buyers list or contacted in the same way. At that time, Barton's intention was that UBS was to make Bradken aware of the sale process informally. Barton's aim was that Bradken would thus be aware of the process but would only enter it if it was genuinely interested in acquiring NWS. An updated buyers list was circulated within NWS and Pala on 1 February 2011. Bradken remained listed first and classified as "Sensitive 1". 71 Bradken was still interested. In a report to the Board dated February 2011, Hodges listed NWS as an acquisition opportunity. 72 By early February 2011, UBS had structured the sale process. On 10 February 2011, the project materials were circulated. The materials included an updated buyers list. Bradken remained listed first and classified as "Sensitive 1". The material also included a timeline. There were to be three stages in the timeline process: (1) initial preparations, (2) a marketing and sale process and (3) negotiations and announcements. The second stage is important for present purposes. It included several steps: Contact potential buyers Distribute teaser Negotiate and execute [NDA]s Distribute [IM] and bid letter to selected buyers Prepare management presentation Prepare draft sale and purchase agreement ("SPA") Receive non-binding bids Evaluate received non-binding bids Contact buyers and invite into 2nd round Prepare diligence schedule and [agreement] with buyers Provide and manage electronic data room access Distribute SPA to potential buyers Management presentations and site visits Respond to buyers information request Receive final offer and marked-up SPA Select preferred bidder(s) (Emphasis in original.) 73 On 17 February 2011, Barton emailed UBS and the relevant personnel at Pala and NWS in relation to the draft materials. In relation to the buyers list, Barton's instructions were: As discussed, please drop Bradken. UBS's relationship manager for Bradken should ensure they know the process is happening, but they need to ask if they want in. We also need to consider what goes to [company D, C] etc., but can do this at a later date. 74 By 23 February 2011, the draft materials - the teaser, the NDA, the calling script, the buyers list - were complete. Han provided copies of the documents to Pala and NWS. Han's email stated: … 3) Bradken has been removed [from the Bidders List] as previously discussed. Based on our conversation with Rick Labelle this afternoon, our plan for now is to not even notify them of the process. However, we understand that Rick will be discussing further with the Pala team to make sure that everyone is fully comfortable with the tactics (and messaging). Specific items that we should consider are: * Does Pala/Norcast want Bradken in the process at all? * If yes, under what conditions (ie: is signing an [sic] NDA sufficient, or does Pala/Norcast also need to see an indicative bid (even without access to info) from Bradken as a sign that they are serious? * If they are admitted into the process, what information (if any) should they not see at this stage Barton's evidence was that Han's email misstated his earlier instructions in relation to Bradken: see [70] above. 75 Also of interest was the calling script attached to Han's email. It described the sale process in the following terms: Key messages … UBS is running a traditional 2-stage sale process for the business with preliminary expressions of interest to be due in late March If you are interested in looking at this opportunity, we can send you a [NDA] for execution Q&A with potential buyers: … Q: How competitive is the process? A: While Norcast is approaching a select group of potential acquirers, it has received several indications of interest already from both strategic and financial buyers in that group Q: Asset or share deal? A: Norcast is requesting indication of bid value on an Enterprise Value basis, with any adjustments for net debt to be made later in the process with the remaining potential acquirer(s). Norcast will only consider a share deal. 76 Castro responded to Han's email on the same day. He stated: … On Bradken, we do not want them in the process at all at this point. I believe we can expect them to be quite aggressive in response to our sales process as it is, and have doubts about whether they would put a serious offer on the table. At this point, only if they came knocking with a specific proposal that looked quite interesting (they know the business well enough to know what they would pay for it) would I believe that it would be worthwhile revisiting this approach. 77 Barton was extensively cross-examined regarding his instruction to "drop Bradken" and Castro's subsequent email. His evidence was that he did not want UBS to contact Bradken directly and volunteer the teaser to Bradken because the teaser contained non-public information. Barton later accepted that the teaser did not contain confidential information and, further, that recipients were not bound to keep it confidential. In relation to Castro's email, Barton's evidence was that he understood it to be a direction that, consistent with his earlier email, Bradken should be made aware of the process informally but should not be offered the teaser without Bradken having first expressed interest. Norcast and Bradken each offered different explanations for this behaviour. Norcast contended that, because of Bradken's status as the most obvious buyer and the risk of its misuse of non-public information, Barton's strategy was to force Bradken to make the first move, thus improving Pala's bargaining position. Bradken submitted that Pala and NWS deliberately excluded Bradken as retaliation for Bradken's earlier anti-dumping action, which had caused NWS to be excluded from the Australian market. As will become apparent, it is unnecessary to choose between these contentions in resolving the disputed legal and factual issues. 78 The next day, 24 February 2011, UBS began contacting buyers on the buyers list and distributing the teaser. The same day, Barton met with Walsh of Goldman Sachs. Barton told Walsh of the NWS sale process being run by UBS. Walsh told Barton that Bradken was a client of Goldman Sachs and that he would like to pass on information about the sale process to Bradken. Barton sent Walsh a copy of the teaser but asked him not to send it to Bradken. Barton's evidence was that he hoped that Walsh would disobey his instruction and provide the teaser to Bradken. 79 The meeting with Walsh achieved its objective because at 7:43pm on 24 February 2011 (EDT), Hodges received the following email from Walsh: … I understand that [P]ala have just launched the sale process for Norcast. UBS are running it. Apparently EBITDA of USD$20m. Happy to chat live if you would like. Hodges went into action immediately and forwarded the email to his senior management team. He forwarded the email at 9:22pm (EDT) to Ward, Bone and Enda Sheridan of Bradken. At 11:15pm (EDT) Ward emailed Bone and stated that he would call him late Friday morning (EDT) to discuss. 80 At 10:41pm on 24 February 2011, in response to an enquiry from Castro about whether the teaser had gone out that day, Barton stated that he had spoken the previous day to Goldman Sachs. Barton did not specifically refer to Bradken. 81 Unsurprisingly, despite UBS approaching a "select group of potential buyers", in late February 2011 Hodges received a telephone call from Chari at Merrill Lynch. Chari asked Hodges if he had seen the teaser for NWS. Hodges had not. 82 On 25 February 2011, Hodges telephoned Walsh. Hodges could not recall the precise words of the conversation but gave evidence that Walsh said words to the following effect: At a recent meeting about another matter with some overseas people I was told about the Norcast sale process. UBS is acting for the seller and are running a process for selected acquirers for Norcast and have sent teasers out. Bradken is not being included in that process. Pala doesn't like Bradken. 83 Hodges asked Walsh why Pala did not like Bradken. Walsh said he did not know. Hodges made a contemporaneous note of his conversation with Walsh. The note records: Sean - UBS - where - Pala - who knows them well - where is the issue (what level) Hodges' evidence was that the reference to "where" was a question as to which UBS office was managing the sale. The note "who knows them well" was a reminder to him to consider who may be close enough to Pala to learn more and the note, "where is the issue (what level)," was a question as to what level in the Pala organisation had the problem with Bradken - was it a personal or commercial issue? Walsh's call was significant. Hodges then knew of the existence of the sales process. Bradken's contention that Walsh was in substance telling it "you're not invited, don't even bother trying to bid" is rejected. The contention is irrelevant. It provides no answer to the statutory provisions: see [224] below. 84 The steps then taken by Hodges on 25 February 2011 were critical. First, Hodges decided Bradken should tell Castle Harlan that NWS was up for sale. Hodges' evidence was that he did so because he considered it was in Bradken's interests for NWS to be available to it as a possible acquisition. Hodges' evidence was that he took that step because: … [72] … I formed the view that Bradken was being specifically excluded from the Norcast sale process by Pala, rather than it being an oversight by UBS. [73] As Bradken was considering [Company X and Y] as alternate acquisition targets at the time, and [Company Y], I did not want to spend time and money on engaging in the sale process and on due diligence if Pala had issues with Bradken, and intended to keep it out of the process. I therefore did not see any benefit to Bradken in approaching Pala or UBS directly as Pala appeared to have no intention of letting Bradken acquire the business. [74] … Based on my experience with private equity firms, including the time during which Bradken was owned by a consortium involving CHAMP and Bradken's acquisition of AmeriCast, I believed that if a private equity firm did succeed in acquiring Norcast it would at some point be interested in selling the business again. In contrast, if Norcast was acquired by a strategic bidder (a company in the same or similar business), it may not come to market again. As I had a good relationship with Castle Harlan, and they had previously invested in a similar business (AmeriCast), Castle Harlan was the obvious private equity firm for me to contact in respect of the Norcast sale process. (Emphasis in original.) 85 Second, Hodges called Chari at Merrill Lynch and asked him to try and find out why Bradken was not being included in the NWS sale process, to identify what issues Pala had with Bradken and to find out more about the sale process. 86 Third, Hodges called Greiner to tell him that NWS was for sale and that Bradken was being excluded. Hodges and Greiner discussed the possible reasons for the exclusion and concluded it must be Pala, not UBS. They decided that there was little point approaching Pala directly. Hodges proposed that they tell Castle Harlan so that Castle Harlan would be interested in NWS and then "we might get another chance in a few years' time". Greiner agreed with that approach. 87 Fourth, Hodges visited Bone. The visit was recorded in an email Bone sent to Ward at 9:38am on 25 February 2011 (EDT) which attached a synergies analysis that had been completed in January 2005. Bone recorded the visit in the following terms: Just had a visit from [Hodges]. Big picture is very interesting and will fill you in when you call. We will need to update the attached which you did back in 2005 plus add other upsides if we buy them and downsides if we don't. 88 Later the same day, Bone sent Ward an updated synergies analysis of NWS, using the $20 million EBITDA figure mentioned by Walsh. The email stated: I had a quick (and I mean quick!) go at the Norcast synergy savings / costs per attached. Tab 2 is just trying to calculate commission savings. Funny enough worked out at $2.8 mill as previous. I sort of added 5% YOY increase to the salary / bonus / expenses in most areas. I also put in a draft sales forecast for Lost sales in Australasia if Swanmet gets going especially after 2013 when antidumping duties may come off. So if we get Norcast the GM on these sales should go into the case. Also put in some minor OEM increased sales if we had Swanmet. Anyway, first cut and see what you think. I would guess Norcast NAM / SAM sales growth will also add some big $ to the case. The next day, 26 February 2011, Ward exchanged emails with Bone and others within Bradken in relation to Bone's analysis. His comment was that the synergy numbers were "pretty big". 89 Fifth, at 12:13pm on 25 February 2011 (EDT), Hodges received from Chari a draft script for use in a discussion with Pala. The script took the form of a call to Pala either by Merrill Lynch or by Hodges. The email read "[a]s discussed this morning, [please] find attached a proposed script re: call into Pala. Will call later this afternoon to discuss." Hodges' evidence was that he did not ask Chari to prepare the script and he disregarded it when he received it because of the view he had already formed and discussed with Greiner - Bradken would not bid for NWS but would instead tell Castle Harlan of the sales process. 90 Sixth, Hodges received an email from Greiner at 4:57pm that read "PS Howard [Morgan of Castle Harlan] arrives in Sydney on Sunday and I have left him a message to contact me re the IM for Norcast". Greiner's evidence was that he did in fact leave a message for Morgan to call him regarding the IM. 91 For a company not interested in buying NWS, that was a lot of activity in one day directed to that end - the acquisition of NWS. 92 The next day, 26 February 2011, UBS provided Pala and NWS with an update on its progress in contacting potential buyers. Bradken was not on the list. At that time, 26 potential buyers had been contacted. Contact had not yet been made with 10 potential buyers. Of the potential buyers contacted, 23 were yet to respond, two were negotiating a NDA, none had received the IM and one had said that it was not interested. 93 Over the weekend, Chari was busy obtaining information on Hodges' behalf. On Saturday, 26 February 2011, Hodges received an email from Chari: Spoke with joe re: norcast. He is trying to get some [additional intelligence]. Will hopefully have some more colour later today/tonight. The next day, Chari sent Hodges a further email noting that "[t]here are sensitivities that will need to be managed". Hodges replied within an hour of Chari's second email. His response: "[o]k, that's fine". 94 On Monday, 28 February 2011, Hodges was again busy. First, he spoke with Chari. Chari told Hodges that his impression was that Bradken was not included in the sale process because it was a competitor of NWS and because it was not liked by Pala. Second, Hodges told Ward of Chari's advice. Third, Hodges also spoke with Greiner and told him that Chari's advice was that Bradken had been excluded from the process. 95 Fourth, Hodges called Morgan. Hodges could not recall the precise terms of the conversation but gave evidence that the conversation was to the following effect: Hodges: Have you heard that Pala is running a sale process for [NWS]? Morgan: No. Hodges: UBS has the mandate, but I don't know which office. Bradken is excluded from the process and has not been contacted, which is a disappointment as we have always had it as an acquisition target. The EBITDA is $20M. Morgan: I'll get the teaser. 96 This version of events was inconsistent with Bradken's Fast Track Response. It summarised what occurred as follows: [I]n late February or early March 2011, in the belief that Bradken was excluded from the NWS sales process, Bradken approached Castle Harlan and advised Castle Harlan of the NWS sales process, that UBS was running the process that Bradken was excluded from participating in the NWS sale process and that Bradken was interested in acquiring NWS; Particulars Mr Hodges spoke with Howard Morgan of Castle Harlan by telephone in late February or early March 2011. The material substance of the conversation was to the effect alleged. (Emphasis added.) A careful reader will notice that the critical passage (in italics) did not appear in Hodges' evidence. Morgan was not called to give evidence. 97 At 12:31am on 28 February 2011 (NYT, 2:31pm EST), Morgan emailed Philip. The subject was entitled "New Deal". Morgan's instructions were that NWS had hired UBS to run a sales process and Castle Harlan wanted to get into the process. Morgan instructed Philip to "action asap". The last line read "I can explain more via phone". Philip responded at 10:11am (NYT) "Will do". Morgan replied stating "keep me posted - I may see Brian Hodges tonight". 98 The steps taken by Morgan were at odds with Hodges' version of events. Hodges' evidence was that, as Castle Harlan had not received the teaser, he did not expect that Morgan would be able to obtain it because he considered that Castle Harlan would be excluded either by reason of their dealings with Bradken in respect of AmeriCast or due to it being a selective process. On the other hand, Hodges' evidence was that he hoped that, if Castle Harlan was able to get into the sales process and was ultimately successful in acquiring NWS, a deal could be done between Bradken and Castle Harlan at some point, potentially along the lines of AmeriCast. Finally, Hodges' evidence was that, at this time, he did not expect that a deal would necessarily be reached between Bradken and Castle Harlan and considered Castle Harlan to be free to offer the NWS business to others. 99 Yet, at the same time, Bone continued to work on the synergies analysis and sent further analyses to Ward and Mr Roy Roux, Bradken's Vice President Sales, Resources in the United States. On 2 March 2011, Ward responded to Bone's analyses and provided answers to Bone's questions. Their work culminated in an email from Ward to Bone which read: … my understanding is we won't be allowed into the race regardless (Pala must really hate us to not even want another horse in the race regardless of price !) but we've done the work so might as well run it past [Hodges] to make sure. (Emphasis original.) Bone responded "[y]ep, the synergies and payback are looking very good so I am sure [Hodges] will want to put a juicy offer on the table somehow!" Ward responded saying that he agreed. 100 The same day, 2 March 2011, Castle Harlan telephoned the New York offices of UBS Canada and expressed interest in participating in the competitive sale process of NWS. UBS informed Pala and NWS (Barton, LaBelle and others) of the inbound inquiry from Castle Harlan. The response from LaBelle was that he did not object other than to note that the number of private equity firms may slow the process as they tended to consume lots of time. Barton's response was more directed. He stated: … My view on Castle Harlan is that we do send it [the teaser], but ensure the NDA is sufficiently tight that there's no way Bradken could get the [IM] from them. May be worth flagging this specifically. Unfortunately, they are one of the few realistic buyers, so we shouldn't exclude. We're only talking about a teaser at this stage, which I know Bradken will already have from Goldman (I gave it to them last week in Sydney). Let's review Castle Harlan again if they want to sign and [sic] NDA and get the [IM]. At 2:39pm on 2 March 2011 (NYT), UBS provided Castle Harlan with a copy of the teaser. Morgan provided the teaser and the draft NDA to Hodges and Greiner at 5:11pm on 3 March 2011 (NYT). At 5:19pm (NYT), Greiner responded to Morgan stating that he looked forward to discussing further when Morgan received the IM. At 5:32pm (NYT), Hodges forwarded the teaser to Ward, Sheridan, Bone and Mr Tom Armstrong, Bradken's Chief Operating Officer, Engineered Products, with an instruction "[p]lease do not share we have this". 101 On 3 March 2011, Bone and Ward continued to work on the synergies spreadsheet. A "final spreadsheet" was sent by Bone to Ward and Roux. The accompanying email recorded that he had taken Hodges through the spreadsheet "with no changes". Ward replied to Bone asking "[w]hat's [Hodges's] ultimate view, is he going to get Goldman's to make an approach on our behalf or ?" Bone's response to Ward is instructive: [Hodges] says we will need to pay nearly $200 mill to get it and at a multiple of over 7 years (Brett [Davis, Bradken's Commercial Manager] still to confirm that) [Hodges] is not too sure buying at that price is worth it. [CONFIDENTIAL REFERENCE TO POTENTIAL BETTER DEAL EXCISED.] I have to have another discussion with [Hodges] tomorrow on PTG so [Hodges] contemplating the bigger picture. I still think [Hodges] will throw a reasonable number at it to get the buy price up as high as possible! So if others buy it, it will be well above normal rate. (Emphasis added.) 102 Other employees of Bradken were also working on the possibility of buying NWS. At 5:36pm on 3 March 2011 (EDT), Mr Brett Davis, Bradken's commercial manager, provided Hodges with what were described as "[s]oft [c]opy of Norcast [s]heets" - the synergies analysis. At 5:52pm (EDT), Hodges provided the analysis to Chari. Chari worked on the analysis and, on 4 March 2011, returned it to Hodges with a discounted cash flow (DCF) analysis built in and linked to the synergies sheet so that Hodges could change the assumptions. Hodges then immediately sent Chari's DCF analysis to his senior management team. The senior management team were not mere processors of information. Hodges was extensively cross-examined regarding this activity. He eventually conceded that the purpose was to ascertain what NWS might be worth. 103 At 1:07am on 4 March 2011 (EDT, the morning of the previous day in Kansas City), Ward emailed Hodges (and others) and posed a solution: "[o]k, given Pala's attitude towards [Bradken] maybe a joint move very much led by [Castle Harlan] would be the best path?" The response, if any, was not in evidence. Ward then emailed Hodges at 7:35am on 5 March 2011 (EDT, the afternoon of the previous day in Kansas City) saying "financially compelling if we can get in the game." Again, Hodges response to Ward, if any, was not in evidence. Hodges did however, 47 minutes later at 8:22am (EDT), email Morgan stating "just to confirm we see strong synergy and need to talk further on [NWS] when your schedule allows". 104 During the late afternoon of 5 March 2011 (EDT), the email traffic between Hodges and Morgan is instructive. Morgan's response (at 3:58pm, EDT) to Hodges' email sent at 8:22am (EDT) was to ask Hodges and Greiner a question: "[w]ait for book to arrive - or not?" The "book" was, of course, a reference to the IM. Hodges' response two minutes later (at 4:00pm, EDT) to Morgan and Greiner was - "[y]es definitely hoping [Castle Harlan] can bid for the business". Thirty-five minutes later (at 4:35pm, EDT), Greiner replied to Morgan asking him to call him over the weekend as it "might cut thru a bit". This point in the chronology is important. If Hodges had even remotely been considering the possibility that Bradken would still bid for NWS, he would not have encouraged Castle Harlan to also bid. The form and content of the various communications are consistent only with an arrangement whereby Castle Harlan would bid, and Bradken would not bid, for NWS (the Bidding Provision). 105 Two days later, at 1:42pm on 7 March 2011 (EDT), Hodges forwarded a draft financial analysis, incorporating Chari's comments of 4 March 2011 (see [102] above), to Greiner. Hodges' explanation of the analysis is instructive: See NPV in the attached model at $277m verses [sic] $175m supposed One[S]teel offer that started the process. Base EBITDA is supposed to be $20m. Can we discuss how we might work with [Castle Harlan] on this as I think this is best, likely only chance. (Emphasis added.) The idea that Bradken had to "work with" Castle Harlan was the subject of discussion between Hodges and Greiner at about this time. In particular, they discussed the minimum cost that Bradken might have to pay to Castle Harlan should Castle Harlan succeed in acquiring NWS and Bradken then acquired NWS from Castle Harlan. 106 The events of Tuesday, 8 March 2011, were critical. First, Greiner met with Harlan in Sydney. Greiner's evidence was that he told Harlan of the NWS sale process and that, while Bradken was interested in the company, it had been excluded from the process. Greiner could not recall the precise terms of the conversation but did recall that Harlan said that he would speak with Morgan and said words to the effect that he would "be keeping an eye on [NWS], and hope[d] … some mutually satisfactory deal [could] be done". Bradken submitted that there was no arrangement or understanding between Bradken and Castle Harlan at this point in time. Indeed, Bradken went so far as to contend that there was "no more than a hope that Castle Harlan may decide to get involved and make a bid, and, if it did, there was a possibility that Bradken and [Castle Harlan] could come to some arrangement in the future". That evidence is rejected. Greiner's evidence was that he did not discuss the terms of any possible arrangement with Castle Harlan with Harlan. The fact that terms were not yet finalised does not detract from the fact that the content of the various communications were consistent only with the Bidding Provision, namely an arrangement whereby Castle Harlan would bid, and Bradken would not bid, for NWS. The events later that day and following are consistent with that finding. 107 Next, Greiner met with Bill Ferris, the Chairman of CHAMP. Greiner asked him about his view on the level of return that a private equity fund would expect. Bradken's contention that Greiner asked that question only because a private equity fund is always a potential seller is rejected. Greiner wanted to know because of the Bidding Provision - he wanted to know how much the arrangement was going to cost Bradken. Finally, Greiner immediately reported to Hodges on his discussion with Harlan. The whole of the report is important: … I outlined the situation as best we know it. His over-arching conclusion was that [Castle Harlan] would be happy to do a transaction of any sort with Bradken and had complete faith in you and me. He had a couple of thoughts: • He was obviously concerned to ensure that [Castle Harlan] did not run any significant reputational risk through an arrangement such as we have discussed. • Conceded that if we bought it within a year they could re-use the capital which would be a significant plus. • Is good friends with one of the Russian oligarchs in New York and wondered if he was familiar with the relevant Russian oligarch in Zurich, whose name of course I did not know. We would obviously need to be careful about any such inquiry. • He will be back in New York at the end of next week and undertook to catch up with [Morgan] at that time. I said that of course the primary discussion should be between [Hodges] and [Morgan]. • I also asked Bill on a no names basis what sort of return was appropriate for someone in [Castle Harlan]'s putative position. He said that the top of the range was of course private equity's desire to earn a twenty five percent IRR but that given the essentially risk free nature of what I painted this could be less. • Also obviously if Castle Harlan get two uses of the same money that is relevant as well. • I think your and my guess that the "cost" is probably in the ten to twenty million dollar range is close to the mark. (Emphasis added.) Again, Bradken's contention that this was no more than a "hope" that Castle Harlan might get involved is rejected. Greiner's evidence that he only told Harlan of the sale process because it was a "normal, sensible, polite, Chairman like thing to do" is also rejected. As these contemporaneous documents record, Castle Harlan was happy to do a transaction of any sort with Bradken. The "arrangement", which had previously been discussed between Hodges and Greiner, was put by Greiner to Harlan. The purpose of putting "the arrangement" to Harlan was to gauge his response. Greiner accepted during cross-examination that he and Hodges were hoping that Castle Harlan would bid for NWS. Harlan had only two concerns - reputational risk to Castle Harlan from "an arrangement as we have discussed" and Castle Harlan's internal rate of return. Harlan was not called to give evidence. 108 At 2:37pm on 9 March 2011 (EDT), Hodges received a further email from Davis. Davis had re-run the numbers on NWS using a tax rate of 26.5%. The NPV had increased to $293.2 million. On 10 March 2011 (EDT), Hodges tried to call Morgan. Morgan's mail box was full and he could not leave Morgan a message. At 8:26pm (EDT) Hodges sent an email to Morgan and asked how NWS was progressing. He told Morgan that "I understand that [the IMs] have likely gone out." In the meantime, UBS sent Castle Harlan an updated draft of the NDA. 109 On 11 March 2011, UBS sent a letter to potential buyers of NWS setting out the process and procedures for submitting a preliminary non-binding indication of interest or a "Letter of Intent" or "Proposal" for the acquisition of NWS (the UBS Process Letter). The UBS Process Letter stated that although the Proposal would not be legally binding, UBS required the Proposal to be executed by a senior officer of the offeror. The letter went on to state that in order to enable NWS to "select a limited number of interested parties with which to conduct a more in-depth due diligence review, UBS [had] been asked to solicit indications of interest from interested parties, outlining the terms and conditions of a Transaction". Bids were due by 5:00pm on 31 March 2011. 110 At 11:15am on 12 March 2011 (EDT, the evening of 11 March 2011 in New York), Morgan sent an email to Hodges telling him that he would know more on Monday, 14 March 2011. At that time, Castle Harlan had not signed the NDA and therefore had not been provided with a copy of the IM. 111 On 14 March 2011, Hodges prepared a briefing paper for Bradken's Board. Hodges' paper provided the following commentary on events thus far: Attached is the teaser for [NWS]. We have looked at this asset previously when it was owned by the Canadian Income Fund and subsequently sold to PALA. We understand that OneSteel approached PALA and made a $175 million preemptive bid which precipitated the current process. Bradken has been excluded from the process which is said to be because we took dumping procedures against them. Currently the business has an EBITDA of $20 million and Bradken has synergies of potentially $16 million after a few years meaning we can pay a significant premium for the business. I wish to keep the Board abreast of plans and progress with this asset. 112 15 March 2011 was critical. On 15 March 2011, Castle Harlan and UBS executed the NDA. Under the terms of the NDA, Castle Harlan was obliged to keep information it received from NWS confidential to it and its "representatives". On or around 15 March 2011, Hodges spoke by telephone with Morgan. Morgan told Hodges that Castle Harlan had negotiated an amendment to the NDA which removed the need for Castle Harlan to disclose the identity of its advisers and removed the indemnity proposed by UBS. These amendments were important. Morgan told Hodges that these amendments would permit Bradken to advise Castle Harlan without requiring Castle Harlan to disclose that fact to Pala or NWS, if Bradken was willing to do so. Hodges told Morgan that both he and Ward would assist Castle Harlan to the extent permitted by the NDA. 113 At 2:15pm on 15 March 2011 (NDT), UBS provided the UBS Process Letter (see [109] above) and the IM to Castle Harlan. At 2:35pm (NDT), Morgan emailed Hodges and told him that the NDA language had "got tangled", but that the "materials [were] due soon". Two hours later, at 4:35pm (NDT), the message from Morgan to Hodges was direct and clear - "[t]he eagle has landed". Minutes earlier, at 4:28pm (NDT) on 15 March 2011, Hodges had received the executed NDA and the UBS Process Letter from "HDEWITTM@aol.com". I find that this was Morgan's personal email address. That finding is based on the fact that he ended his Castle Harlan correspondence "Howard D Morgan". Later that day, Morgan sent an email to Philip stating that "[t]his is definitely LIVE". 114 At 5:16pm on 15 March 2011 (NDT, 8:16am the next day in Australia), Hodges sent the UBS Process Letter and the executed NDA to Ward. Hodges then spoke to Ward. Hodges told Ward that Castle Harlan was a possible bidder for NWS. Hodges told Ward that he considered that, under the NDA, Ward could assist Castle Harlan as an adviser but that Ward should have Castle Harlan verify that view. Hodges told Ward to assist Castle Harlan in reviewing the NWS business and answering any questions Castle Harlan might have. Hodges also asked Ward to consider the realistic earnings and synergies that might apply should Bradken acquire NWS from Castle Harlan at some point. Hodges told Ward that he was the only person at Bradken with whom Ward could discuss NWS. 115 At 6:14pm on 15 March 2011 (NDT), Ward emailed Morgan and told him that he had spoken to Hodges and was available to go to New York to speak with Castle Harlan. Ward set out his preference for travelling to New York but asked Castle Harlan to advise. The next day, at 11:55am on 16 March 2011 (NDT), Morgan responded asking Ward what days the following week suited him. 116 In effect, Bradken had entered the bid process through the back door. 117 Over the course of 16 and 17 March 2011, UBS, Pala and NWS revisited the issue of not having Bradken "in the process". UBS raised the question directly with Barton and LaBelle. LaBelle told UBS that Bradken were to be left in "but with a specific pre-agreed format". UBS then outlined four options for including Bradken. LaBelle replied stating that Barton would respond on behalf of NWS. On 17 March 2011, Barton responded stating: Please don't do anything on Bradken. I will just deal with them (indirectly). My understanding is they know of the process, but also have an idea of our value expectations and won't/can't pay. 118 On 18 March 2011, Ward made arrangements for his trip to New York to act as a "consultant" to Castle Harlan. After confirming with Philip that they would meet on Wednesday, 23 March 2011, Ward asked Hodges whether Bradken should enter into a separate confidentiality arrangement with Castle Harlan. Hodges responded telling Ward to confirm with Castle Harlan that, as a consultant, Ward's involvement would not need to be disclosed but he would be obliged to keep information confidential. Having obtained instructions from Hodges, at 7:56pm on 18 March 2011 (NDT), Ward emailed Philip stating: Our view of the [NDA] is that I could be signed up by [Castle Harlan] as a consultant, agreeing to comply with the [NDA] conditions, but there's no requirement on you to disclose me as a consultant to the seller. 1. Do you agree? 2. If so can you provide a document for me to review / sign? 119 At 8:19pm (NDT), less than half an hour later, Philip responded to Ward and Hodges: As an advisor to us on this transaction, Bradken falls under the definition of Representative. Not only do I believe we don't have to disclose our Representatives, this [NDA] does not require our Representatives to sign a joinder to our [NDA]. Consequently, I believe we could share information with you without you needing to sign anything as long as you agree to be bound under our [NDA] terms. If you are wondering, the sellers probably agreed to this treatment because Castle Harlan agreed in the [NDA] to be responsible for our Representatives' breaches of any confidentiality. So while we might normally ask a Representative to sign a joinder for our own benefit in case they breach the [NDA], given the relationship here between us, it isn't necessary. And probably best this way for the paper trail too. The terms of the email are significant for at least three reasons. First, the parties were in agreement regarding the non-disclosure of the Bradken's involvement. Second, Philip's view was that the nature of the relationship between Castle Harlan and Bradken did not require Bradken to execute a "joinder" of the NDA. Third, and no less importantly, the "paper trail" was of concern. At 8:52pm (NDT), Philip sent a further email adding: "[t]hat said, we should probably put something in place between us that is outside the purview of the sellers. We can go through the details on Wed[nesday]." 120 The significance of those three matters was reinforced less than an hour later. Ward forwarded copies of the emails between him and Philip to Hodges. Hodges responded that: I agree all round, therefore I also can have the [IM] and they have not joined [Castle Harlan] and [Bradken] yet, all sounds good. 121 As is readily apparent, a part of the arrangement was that Castle Harlan would obtain access to the IM and then "share" it with Ward. Hodges also wanted to access it. The result - Bradken overcame what Hodges described to Greiner on 20 March 2011 as "information issues for [Bradken]". 122 This aspect of the arrangement had another distinct advantage for Bradken - Pala and NWS did not and would not know that Bradken was involved. As Hodges noted, Pala and NWS had not "joined [Castle Harlan] and [Bradken] yet". From the outset, Castle Harlan was concerned about its reputational risk: see [107] above. That concern did not abate and, at 8:34pm on 18 March 2011 (NDT), between Philip's two emails to Ward that evening, Morgan sent an email to Philip stating that since Castle Harlan was responsible under the NDA with UBS, it would be fair for Castle Harlan "to be indemnified against [Bradken's] actions". At 9:04pm (NDT), Ward sent an email to Philip confirming arrangements for a separate confidentiality agreement. 123 Ward's work on NWS also continued. He was a "consultant" to Castle Harlan. On 19 March 2011, Ward asked Davis to send him the final version of Bradken's synergies analysis on NWS. Why? He needed to ensure that he had the most up to date copy of the synergies analysis for his review in New York. Davis responded on 20 March 2011 attaching a copy of the synergies analysis. Davis told Ward that the analysis was the same as the previous version but now included an evaluation spreadsheet under the "DCF" tab that replaced the Bradken capital expenditure evaluation spreadsheets. The model still relied on the $20 million EBITDA figure obtained from Walsh. 124 There was a side step. On 20 March 2011, Hodges received information from Bradken staff that a foundry was possibly for sale. Hodges emailed Greiner and suggested that if the foundry was available, Bradken preferred the foundry to Norcast. The outcome of that enquiry was not in evidence. 125 In any event, on Monday, 21 March 2011 at 8:30am (EDT), Bradken's Board met in Newcastle and Hodges presented his briefing paper of 14 March 2011: see [111] above. Hodges evidence was that he told the Board that Bradken had been excluded from the NWS sale process because of the anti-dumping action it had taken against Pala (NWS). 126 That concern did not alter Hodges' conduct. At 2:48pm (EDT) that afternoon (21 March 2011), Hodges emailed Ward. The email is instructive: You and I should be able to get [IM]'s now. We need to upgrade our model for their underlying performance. [Castle Harlan] need to get an independent foundry consultant to accompany them on the [due diligence], we should remain unseen, the consultant will appear normal to [NWS] and they wont look elsewhere. But in no way let even the consultant know we are there. 127 On 22 March 2011 at 3:09pm (EDT), Ward responded: Yes agree, my plan was going to be: Get a Consultancy Agreement in place first up on Wednesday Then ask for a copy of the IM (which I'd send you a copy of) Then without disclosing anything give [Davis] the basic underlying numbers as "revised estimates" and get him to update the DCF model Do you agree, or are you think I should ask Anand for the IM now (before a Consultancy Agreement's in place) ? I understand on the foundry consultant (and confidentiality there and everywhere !) Assume you'd know who they'd want to use, and if so are they someone we'd be happy with ? Would you be available your am Wednesday for a chat? I wouldn't mind covering any specific "do's and don'ts" you can think of.. [sic] I'm confident in what I need to do but anything critical you can think of I'd be happy to field. The position was clear - Bradken, and Ward and Hodges in particular, had solved the "information issues" - they would have access to the IM. Ward was apparently unconcerned that, by "[giving] [Davis] the basic underlying numbers" he might breach the terms of the NDA between Castle Harlan and NWS. But that aspect alone was insufficient. Bradken needed to ensure that Pala, NWS and Norcast did not know that it was involved. And they were Hodges' instructions to Ward in this order - get the information, update the analysis and get a consultant to attend the due diligence to make it look as though only Castle Harlan is involved. Not only was the consultant not to know that Bradken "is there" but the secrecy extended "everywhere". 128 23 March 2011 was a critical day. Ward was in New York at Castle Harlan's offices and he was busy. He met with Philip. Ward read a hard copy of the IM that Castle Harlan had received from UBS. The EBITDA for 2010 was $13.5 million and the EBITDA forecast for 2011 was $19.3 million. Ward logged in to the NWS data room and reviewed NWS' monthly reports. The data room had been set up by UBS for the purpose of the sale process and, in particular, to enable potential purchasers to undertake due diligence. Castle Harlan was able to obtain electronic access to that data room. At the conclusion of his review, Ward gave Philip and Morgan a verbal summary of his views of the NWS business. Ward's evidence was that he told them that: 1. NWS was a good business, but with a different model; 2. the IM overstated how much money NWS could make; 3. NWS would find it difficult to enter the Australian market; 4. NWS' safety record was poor; 5. NWS operated in a strong market but there were good synergies with Bradken; and 6. "it was a business Bradken would love to have". Ward's evidence was that, aside from his verbal report to Morgan and Philip, he did not share the value of the synergies that Bradken had identified in relation to NWS with Morgan or Philip or anyone else at Castle Harlan. 129 During the course of the afternoon, Ward signed a confidentiality agreement with Castle Harlan. The evidence did not disclose whether the agreement was signed before or after Ward reviewed the NWS materials. It was one line which read: "I have reviewed the confidentiality agreement dated as of March 15, 2011 between Castle Harlan, Inc. and [NWS] and agree to be bound by its terms". 130 Castle Harlan remained concerned about its exposure. At 4:21pm on 23 March 2011 (NDT), Morgan emailed Philip and Mr Irem Metin at Castle Harlan. The subject of the email was "[w]hat do you think?" The email stated: Re: General Indemnity for Review of Acquisitions From time to time, [Castle Harlan], may provide to certain employees of [Bradken] and/or its subsidiaries … information regarding potential acquisitions, provided such Bradken employees agree to be bound by the terms of any confidentiality agreement that [Castle Harlan] has executed with regard to such information. Bradken may have an opportunity to become a coinvestor in some of these acquisitions, and, therefore, indemnifies [Castle Harlan] for the actions of its employees that violate any relevant CA. When appropriate, Bradken will also agree to be directly bound by a relevant CA. On or about 23 March 2011, Hodges executed an indemnity in that form on behalf of Bradken. Hodges also executed a confidentiality agreement with Castle Harlan on the same terms as the agreement with Ward. 131 Bradken submitted that Ward's activities on 23 March 2011 and, in particular, his review of the IM and the data room, were as an adviser to Castle Harlan. Bradken submitted that Bradken's potential interest in NWS only arose if Castle Harlan should decide to bid and on-sell and that Bradken was simply confirming its interest in NWS, subject to many conditions and discretions of Castle Harlan. Those submissions are rejected. Pursuant to the Bidding Provision, the purpose of Ward's activities was to review the information which Castle Harlan had obtained by its participation in the sales process to enable Castle Harlan to submit a bid. 132 On 25 March 2011, Chari sent an email to Hodges. The email was short: "[a]pologies - my [meeting] went for much longer than expected. Given its getting close to 6pm and weekend travel, I can fill you in on Sunday on a couple of topics. Assume Neutron bid went in." "Neutron" was the Bradken project name for the NWS acquisition. Hodges replied 20 minutes later: "Ok, but bid due next [W]ednesday I am told." 133 On Monday, 28 March 2011, Ward sent an email to Philip entitled "Catch up call". Ward stated that he wanted to call Philip "to run through findings / current thoughts / status tomorrow". They arranged to speak the following afternoon. Ward told Philip that the main issues to be discussed during that call were "[t]he subject you mention[ed] plus round 1 valuation / strategy". Ward denied that he discussed Bradken's valuation of the NWS business at any time with Castle Harlan. Ward did not recall the telephone discussion with Philip referred to in his email and, when the email was shown to him during cross-examination, he said he was "very surprised". 134 Three days later, on Thursday, 31 March 2011, Castle Harlan submitted a letter of interest to UBS to purchase NWS on a debt-free, cash-free basis based upon a total enterprise value of US$190 million subject to due diligence. Castle Harlan's offer was the highest. Castle Harlan's offer stated that the source of equity financing for the transaction would be Castle Harlan Partners V (CHPV), a private equity investment partnership controlled and managed by Castle Harlan. The letter further stated that: CHPV, our active fund for new investments, can commit to 100% of the equity investment with no required approval beyond that of Castle Harlan. In addition, we enjoy trusting and long-standing relationships with a number of middle market lenders. We have had conversations with a number of these parties, including lenders which have familiarity with [NWS], and we would select the most appropriate lender among these to provide the debt financing in this transaction. 135 By 12:48pm on 4 April 2011 (NDT), Ward could no longer stand the suspense. He emailed Philip. It was one line -"[a]ny news or feedback? If yes let me know and I'll call ... if not a simple email back with a no and when you expect we will get something would suffice?" Two minutes later, Philip responded "[n]othing yet. Will let you know as soon as I hear". Ward was not enquiring about the weather. Ward's evidence that he was not aware of the terms of the bid, had not discussed the terms of the bid with Castle Harlan and was not aware that Castle Harlan were making the bid is rejected. It was contrary to the contemporaneous documentary record and, in particular, the recorded events of 28 March and 4 April 2011. 136 At 2:42pm (NDT), Philip emailed Ward: "[g]ood news. Please call. I will try and loop in [Morgan] when you call." Again, the contention that Ward was not aware of the terms of the bid, had not discussed the terms of the bid with Castle Harlan and was not aware that Castle Harlan were making the bid is rejected. He was directly and centrally involved in the making of the bid and in determining the steps that were then to be taken in the second stage of the sale process. Consistent with that understanding, Ward telephoned Philip. Ward agreed to go to New York again. Ward's evidence that it was during this telephone call that he first discovered that Castle Harlan had made a bid at US$190 million is rejected. It is contradicted by the contemporaneous documentary record. 137 On 4 or 5 April 2011, Hodges was told that Castle Harlan was through to the second round. Each of Hodges and Greiner gave evidence that neither of them discussed the bid with Castle Harlan before it was put in, did not know that the bid was going to be put in, did not know the price or non price terms of the bid and, in particular, did not know the EBITDA multiple that Castle Harlan had applied or its EBITDA estimate. That evidence may be put to one side. Why? Because arrangements were put in place to ensure that Bradken, through Ward, had obtained access to the IM, had assisted in the formulation of the bid and that the bid would be made. Bradken knew the contents of the bid: see also [268(12)] below. Further, the precise value of the bid was immaterial. In a two-stage sale process, Castle Harlan's bid needed to be sufficient to ensure it progressed to the second round. The Bidding Provision was an arrangement whereby Castle Harlan would bid and Bradken would not. 138 It is therefore unsurprising that Hodges' evidence was that, at this point (4 or 5 April), he determined that Bradken could not and would not enter the bidding process. It was unnecessary for Bradken to do so. Bradken had successfully entered the bidding process through the back door. However, Hodges did not rest on his laurels. He personally took direct and immediate steps to close the deal. At 4:02pm on 5 April 2011 (EST), he emailed Morgan in the following terms: I would like to reach agreement on our latest opportunity and thought it may best be done by getting together. I could come to the US next week if required. Are you available, when and where. (Emphasis added.) Hodges did not recall speaking to Morgan again until 17 or 18 May 2011. 139 A critical issue between the parties was whether, by this date, Castle Harlan and Bradken had made an "arrangement". Norcast submitted that the arrangement was made in late February and early March 2011 and that what remained to be resolved was limited to the fee and an indemnity. Bradken rejected that contention. Bradken contended that the "opportunity" referred to by Hodges arose because Castle Harlan had "off its own bat" lodged an expression of interest and got through to the second round. The "opportunity" referred to by Hodges is described by him as "our opportunity". Bradken's position is not supported by the contemporaneous record. Indeed, Bradken's position at trial is contradicted by the contemporaneous record. 140 On 1 April 2011, UBS circulated a presentation summarising the first round bids which had been received. Castle Harlan's bid was not included. On 5 April 2011, UBS circulated a summary of its discussions with each of the bidders. The feedback from Castle Harlan was: 1) CASTLE HARLAN - we spoke to them yesterday (following the script that we discussed) - they are excited about the opportunity - they will revert with dates for the management meeting/site visit … FOLLOW-UP ITEMS/QUESTIONS … 3) Lenders: the sponsors are going to want to include potential lenders as part of the diligence team (including the management presentation). Castle Harlan has already mentioned that they'd like to work with Scotia[bank]. This is pretty normal, but your counsel may want to double-check that lenders are covered under the NDAs 141 Barton's reply, in relation to Castle Harlan's approach to Scotiabank was: "[t]his is fine. We've an excellent relationship with Scotia[bank] and I think they'll sing the praises of both Norcast and Pala." On 7 April 2011, UBS provided an updated presentation of the first round bids which included Castle Harlan's bid. The "financing source" listed for Castle Harlan's bid was described as "[c]ombination of equity contribution by Castle Harlan and debt financing by third-party". 142 On 6 April 2011, Chari emailed Hodges. Chari was obviously aware of the NWS sale process and, in particular, of the Bidding Rigging Arrangement: … - If Neutron step 1 happens in the next little while, and our share price remains at current levels, we may want to consider pre-emptive financing (after step 1 happens) to avoid market moving against us at the time of step 2. This is an important consideration particularly given the volatility in your stock price - Only difference (positive) for you is that you potentially have both straight equity and cb as sources of financing and a different structure on equity maybe more appropriate if we look to raise $200m+/- Chari was not called to give evidence. The email, however, speaks for itself. The references to "step 1" and "step 2" were not references to the two stages of the NWS sale process. Rather, they were references to a two-staged process through which Bradken hoped to acquire NWS - named "Project Neutron". Step 1 involved Castle Harlan bidding for and acquiring NWS. Step 2, which raised the risk of the "market moving against us", involved Castle Harlan transferring NWS to Bradken. 143 Ward remained directly involved. At 5:26pm on 8 April 2011 (NDT), Philip had "a couple of updates" and asked Ward to call him. Ward agreed to call. Philip did not give evidence. Ward did not give evidence of what was said. 144 On 11 April 2011, Ward travelled to New York "to continue [his] review". He described his trip as follows: In reviewing the data-site over the course of [12 April 2011] and the morning of 13 April 2011, I was focussed on operational issues that I had not had time to fully consider during my previous visit, such as environmental reports, key contracts and legal issues, as well as the latest monthly Norcast management reports. Before I left, I met with Mr Philip briefly. While I cannot now recall the details of our discussion, I recall providing [Philip] with a general update on what I had reviewed and telling him that I did not find anything startling and that I retained my view that [NWS] was a good business. 145 Merrill Lynch remained as an adviser to Bradken. Hodges asked Arnott to consider how Bradken would finance a "significant acquisition". In response to that request, on 20 April 2011, Arnott provided a presentation prepared by Merrill Lynch. The subject of the presentation was "Project Asteroid" and "Project Neutron". Merrill Lynch assessed NWS' enterprise value at $215 million. Merrill Lynch's assumptions and synergies were based on Bradken's forecasts. 146 On 20 April 2011, Ward was told by Philip that Castle Harlan had updated information and that he would receive the information by courier that week. Ward did not give evidence of what he received. 147 The Bradken Board met on 21 April 2011. The Board considered three acquisition opportunities which included NWS. Chari presented to the Board on the ways to fund a possible acquisition of NWS and one other acquisition possibility. The analysis undertaken by Merrill Lynch and presented to the Board was detailed. The analysis was predicated upon a NWS "enterprise value" of between $200 to $230 million and "fees and expenses" of $20 million. Greiner was cross-examined regarding the Merrill Lynch presentation. Greiner's evidence was that he could not recall from where Merrill Lynch had obtained those figures. The presentation begins with a statement that: "Neutron assumptions and synergies based on Bradken management forecasts". 148 On 26 April 2011, UBS wrote to the four potential bidders for NWS and invited them to submit a final offer by 27 May 2011. A copy of the draft Share Purchase Agreement (SPA) was attached. Hodges' evidence was that he was not aware of this letter until after the proceedings commenced. Ward obtained a copy of the draft SPA from Philip before the end of April 2011. Why? Because Bradken needed to understand the terms upon which its surrogate bidder, Castle Harlan, would acquire NWS. If Ward was a mere consultant, access to the SPA was unnecessary. UBS requested that the final offer contain the following details: … In order to be deemed complete, your Bid Letter must review all key matters relating to the proposed Transaction, including clear statements with respect to the following: … 2. Financing: Provide a description of all the sources of funding for the purchase of the Company and an indication of the timing and status of funding commitments. If applicable, your Final Offer should include fully committed financing letters, capable of being executed, and a list of contacts, with telephone numbers, for your source(s) of financing, with whom any financing arrangements can be discussed in detail. 3. Acquiring Entity: Describe the acquiring entity or entities as the case may be, including a listing of shareholders, and the general size and operations of the entity or entities. … 10. Advisors: Include a list of the names and organizations of the outside advisors retained for the transaction, including financial advisors, brokers, agents, lawyers and accountants. 149 Three days later, 29 April 2011, Hodges made arrangements to be in New York on 16 and 17 May 2011. Ward was told of the arrangements by Hodges' executive assistant. Ward's response is instructive: The "Americans" have confirmed they're available Tue 16th and Wed 17th May ... and they know they'll need to be ready, one of those situations where we can't do it for them so guess we have trust that will be the case. Ward accepted that the reference to "the Americans" was a reference to Castle Harlan. The email is further contemporaneous evidence of two matters - the secrecy surrounding the connection between Bradken and Castle Harlan and the way in which that was reflected in the paper trail and, secondly, that there was an arrangement between them that Castle Harlan would bid and Bradken would not. As Ward said, it was "one of those situations where we can't do it for them". 150 The fact that Castle Harlan had to make the bid was not left to chance. In early May 2011, Ward contacted Philip and said that 17 and 18 May 2011 were suitable dates for Bradken and Castle Harlan to meet "so long as SPA, critical [due diligence] items and Valuation Model [were] very well advanced by then" (emphasis in original). Ward asked Philip to confirm those facts before the dates were locked in. Philip responded that it was "all fine". Ward described that exchange in an email to Hodges on 3 May 2011. 151 Save for those matters mentioned above, there was a paucity of evidence relevant to Ward's activities following his 11 April 2011 trip to New York. Norcast commenced separate proceedings against Castle Harlan in the United States seeking production and disclosure of documents. Castle Harlan produced, among other things, three bundles of handwritten notes. The documents produced by Castle Harlan were able to be used by Norcast in these proceedings. Norcast sought to tender two bundles of notes. The first bundle begins with the word "Norcast" and proceeds by way of summaries of discussions between people variously identified as "ATP", "Brad", "HDM", "Jeff", "Doug" and so on. The notes are dated between 28 April 2011 and 3 June 2011. Large portions of the notes are redacted. One note, titled "ATP → re: Brad Ward" and dated 4 May 2011 records the following: Really want this Cannot do funding agreement w/o disclosure How long can we hold + need 1 pr for capital gains Will cover all costs Want to fund 100% equity Scotia → flexible capital structure over equitize [sic] b/c of cyclicaliby [sic] What is Bradken going to pay us $15-20m fee range 152 Bradken objected to the tender of the handwritten notes on two grounds; that the author of the notes was unknown and the possible ground for admitting the notes was not identified. The source of the handwritten notes is known - Castle Harlan. The subject being addressed in the notes is identifiable from the contents of the notes. However, from the face of the notes, it is not possible to determine what they in fact record. Taking the note extracted at [151] above, although the reference to "ATP" is a reference to Philip and the note concerns Ward of Bradken, it is not possible to determine if the note records a conversation Philip had with Ward or Philip had with someone else about Ward. Further, it is not possible to determine the author of the note - is it Philip himself or someone else? And, of course, Philip did not give evidence. The same criticisms could be made of the second bundle of notes which are in a different hand writing. In other words, it is not possible to identify the "representation" in the document, who made the representation, whether the person who made the representation had or might reasonably be expected to have had personal knowledge of the asserted fact or if the representation was made on the basis of information supplied (directly or indirectly) by a person who had or might reasonably be expected to have had personal knowledge of the asserted fact: cf s 69 of the Evidence Act 1995 (Cth) (the Evidence Act). Moreover, no consideration was given, or was able to be given, to whether s 78 of the Evidence Act was relevant: Lithgow City Council v Jackson (2011) 244 CLR 352 at [18]. The onus of demonstrating the conditions of admissibility of evidence under the Evidence Act lies on the tendering party: Lithgow at [17]. Norcast failed to discharge that onus. Indeed, it did not address it. For those reasons, the tender of the two bundles of notes is rejected. 153 Before Bradken's visit to New York, Castle Harlan attended to some of the "critical due diligence items" described in the UBS letter, which included site visits to NWS' facilities in Canada, Singapore and Malaysia and a management presentation. Bulckaert and Wilson gave evidence of what occurred during the visits and presentation. 154 On 5 May 2011, NWS gave the Castle Harlan staff a management presentation, and on 6 May 2011, took Castle Harlan on a tour of NWS' facility in Mont-Joli, Quebec. Morgan, Philip, Mr Kevin Egolf of Castle Harlan and Metin attended both the management presentation and the site visit. Mr Doug Petten of Scotiabank attended the management presentation. Bulckaert gave evidence that, during the management presentation, Morgan spoke about Castle Harlan's business and mentioned the AmeriCast deal and the subsequent sale of AmeriCast to Bradken. Bulckaert's evidence was that he asked Morgan whether Castle Harlan represented Bradken in relation to the NWS sale process. Morgan's response was no. 155 On 9 May 2011, Ward and Philip spoke by telephone. At that time, Castle Harlan expected the meetings with Hodges and Ward on 17 and 18 May would start at 11:30am on Tuesday, 17 May and continue until 2:00pm on Wednesday, 18 May. 156 On 12 May 2011, Greiner emailed Morgan. The subject of the email was "Norcast". Greiner asked to speak to Morgan so that he could get Morgan's views directly. Morgan said he would try but "privacy may be an issue". Greiner responded: "[I] will be happy [with] yes/no to my [questions]". Neither Greiner nor Morgan gave evidence of what transpired. 157 The second site visit was held on 12 and 13 May 2011 when Castle Harlan staff visited NWS' facilities in Singapore and Malaysia. Morgan, Harlan and Philip from Castle Harlan attended as well as a foundry consultant. Wilson prepared a contemporaneous report of the visit: How it went We started out from the Crowne Plaza at 10. [Castle Harlan] wanted to stop by their Singapore office to say hello. It is actually a CHAMP office, 3 or 4 guys plus a receptionist work there. They aren't involved in this transaction, and in fact, clearly didn't even know about it. We went to the Sing[apore] office and reviewed the marine castings. Howard knows a fair bit about FPSO and FSO. [Harlan's] enthusiasm for the marine business showed well and we had some very good dialogue around the photographs. Looked at the stuff in the shipping area. Track shoes, crusher parts, grizzly boxes. They seemed pretty interested. Had lunch at the Marina, then drove to Melaka. [Castle Harlan] requested that I drive with them so that I could answer some questions that Jim Folk (the foundry consultant) had gleaned from his time in the dataroom. I had expected a bunch of pretty technical questions, but they were not too tough. Two or three about the process, two or three about the business, and a couple about the foundry. Jim is a pretty reasonable guy, and clearly [Castle Harlan] is using him to vouch for the credibility of our expansion plan (more on that later). We got the hotel, went for a walk in the 35 degree 100 percent humidity. We to dinner at the Nyona restaurant. Went to bed at 9. Arrived at foundry at 9:15. TY Tan gave a 30 minute presentation about our APQP activities. Not too many questions. [Morgan] seemed to think it was important to see the test castings, so we showed him a pile we have kept at Swanmet. We then headed for the foundry. First stop was the pattern shop. In hindsight, the stars were aligned that we had the Avion order in the pipeline. We told them that in another 7 days we'd be pouring liner castings, but at least we were able to show them the patterns. I think this went a long long way to then accepting the credibility of our plan. Fairly uneventful tour through the plant. The plant look[ed] AWESOME! Best I have ever seen it. Tan did a super job of the tour. They asked him a lot of questions about stuff we had given in the management presentation, and as far as my eaves dropping could tell, he gave the right answers. I bluntly asked [Morgan] what he thought, and he said "it's clean and organized and looks better than most foundry's [sic] he has been in." Keeping in mind that [Morgan] has been in a lot of foundries. We went to plant 2 where there was some activity happening, but less that plant 1 (which was our strategy). We saw the new core shooter and chromite separator. They look great. I thought that Jim would be really interested in looking at our infrastructure, but I had to force him to look at the transformers, spectrometers, compressors and so on. (OK, Call me a nerd). Jim did ask a couple [of] questions about the capacity of moulding area we had spec'd from IMF. When I told him we were only thinking about 20 moulds per day, he said he thought that was pretty slow for that type of equipment. He said "you've got loads of melting capacity, lots of moulding capacity, you could probably do lots more than that." It was perfect! My response was, "you're absolutely right, but we have presented an extremely conservative approach which we have 100% confidence in being able to achieve" [sic] in two years". "As we grow the business beyond 2013, there is no doubt we can add flasks and cooling space and continue to leverage all of this equipment even further". It was very clear to me that Jim's main mission was to validate that we indeed would have the capacity to execute the plan we had presented. I think this conversation was the highlight of the tour as it gave the whole plan credibility. We then toured the welding area. Jim did say that he felt we were doing a lot of welding repair on our manganese castings (which we are). I concurred with his opinion but said that we were quite aware that some improvements in the plant 1 moulding process would be necessary, but we had spent our time this year on the developing the liner process and improving productivity. We returned to the conference room. They needed to leave by 12:00 for their next appointment. We had box lunches for them to have in the car on their way to KL. What we learned -They actually had 2 hire cars pick them up. [Morgan] and [Philip] were going to visit one of their investor's, the Malaysian Sovereign Wealth Fund. It might just be possible that a potential investment in Malaysia would make them look pretty good to this investor. Jim was going somewhere else, very possibly to Yoon steel, but we are only guessing. -I asked if [Castle Harlan] had a Bradken play as their end game. [Morgan] was pretty straightforward in saying no. Apparently they had plans to do the Americast [sic] deal on their own and then Bradken came along for the ride at the last minute on Bradken's request, not theirs. The bought Americast [sic] from the PE firm that had re-structured it out of ch 11. 11. They then shed to loser foundries as the core ones were all making money. He said the stars simply aligned later and braken [sic] was able to buy them. -I prompted about HE and CME a couple times and got no feedback. -I asked [Morgan] and [Philip] then about why they thought a PE to PE transaction would deliver value. They see themselves as a Growth Equity play. They really like the space, they are bullish about mining and mining supply. They agree with us that there is a zero chance of anyone building a Greenfield foundry, so they also agree that supply will be constrained. -Their basic thesis is the same as ours, take a $120 M revenue company, add $30 M to the top line (which they also agree is realistic), and put $10 (or more) on the bottom. Three to five years. Done. Not a bad plan ???? (Emphasis added.) 158 Wilson's witness statement also provided a summary of the visit. In relation to his discussion with Morgan about Bradken, Wilson's evidence was that: [8] During this visit I asked [Morgan] a number of questions about Castle Harlan's plans for NWS. Since I knew that Castle Harlan was a private equity company, I was keen to know what Castle Harlan might be thinking of doing with NWS, including whether it wanted to sell NWS quickly after its acquisition, and if so, to whom. I was concerned that if NWS was sold to a competitor of NWS that already had an experienced management team, my role may become redundant. On the other hand, if Castle Harlan intended to retain NWS, I expected that it would need to retain the current management team, or find a new one, so I would have been more likely to have a future with the company. [9] [Morgan] said words to the effect that Castle Harlan did not have plans or intentions to sell NWS. He said that if Castle Harlan was successful in its bid to acquire NWS, they had several thoughts about what could be done with the company, and would need experienced people to run it. [Morgan] and [Philip] mentioned that they were very comfortable with the foundry sector, and had been watching the company for some time. They said that they believed that NWS had a good opportunity to grow and that value could be created by doing so. [Morgan] and [Philip] asked my thoughts about what I could do with NWS and if I would be prepared to stay on and work with them. I said that I agreed that NWS had an excellent opportunity to grow its sales book and that I would be happy to stay on. We discussed the possibility of NWS growing its annual sales by about $30 million within a few years (adding approximately $10 million annually to the bottom line). [10] I specifically asked [Morgan] whether Castle Harlan was planning to sell [NWS] to Bradken, as they had done with [AmeriCast]. I asked this because I knew that Castle Harlan had a close relationship with Bradken, and that when Castle Harlan acquired AmeriCast, it sold the company to Bradken less than a year later. With that in mind, I suspected that Castle Harlan might have intended to sell NWS to Bradken. I had discussed this suspicion with [Psihogios] and [Labelle] prior to the site visits in May 2011. [11] In response to this specific question, [Morgan] said words to the effect that while Castle Harlan did sell AmeriCast to Bradken very quickly, this was not Castle Harlan's original intention. He said that the quick sale on to Bradken happened only because circumstances arose at the time which made a sale attractive. I recall him using the words "the stars simply aligned later". (Emphasis added.) 159 What occurred at the management presentation and the site visit is important. Castle Harlan shared Bradken's desire to keep Bradken's involvement a secret. Castle Harlan conducted itself as if it was intending to hold NWS for some time following its acquisition. That is not surprising. As noted above, even Castle Harlan's own foundry consultant was not told of Bradken's involvement. Further, on two occasions Morgan sought to dissuade NWS from drawing any connection between Castle Harlan and Bradken. Bradken submitted that Morgan did not directly respond to Wilson's questioning and, in that sense, he told no untruth. I reject that submission. Bradken further submitted that Wilson's witness statement and his report were inconsistent. Wilson's report contains the statement that Morgan was "pretty straightforward in saying no", but his witness statement does not. Where there are inconsistencies, I accept Wilson's contemporaneous report, not his witness statement. 160 On 14 May 2011, Hodges made a note of a conversation with Greiner. The note was not put to Hodges during cross-examination. Bradken did not object to its tender. The note was largely redacted, save that it recorded that: → "N. Greiner" - Spoke to [Morgan] - Worried if both go under a bus. 161 On 16 May 2011 (the day before the meetings in New York), Morgan emailed Hodges and told him to call. Again, whether the call took place and, if so, what was said, was not in evidence. 162 The following day, 17 May 2011 (and continuing on 18 May 2011), Hodges and Ward met with Morgan and Philip at Castle Harlan's New York offices. Greiner knew the meetings were being held. At these meetings, Castle Harlan provided Hodges and Ward with the information they had obtained from the management presentation and the two site visits. The four discussed whether Castle Harlan would acquire NWS and whether it would then be possible for Bradken to acquire it from Castle Harlan. Both Hodges and Ward gave evidence that the discussions were heated and, at the conclusion of the meetings, no concluded agreement for Bradken to acquire NWS from Castle Harlan had been reached. Nevertheless, the negotiations between Bradken and Castle Harlan had reached an important point. Hodges gave evidence that, following the meetings on 17 and 18 May 2011, he no longer considered that Bradken was free to enter to the NWS sale process. If Pala or NWS had approached Bradken after that time, and asked Bradken to submit a bid, Hodges' evidence was that he would have felt obliged to disclose Bradken's involvement up to that point with Castle Harlan's bid. Further, Hodges' evidence was that he left those meetings expecting that Castle Harlan would make a final bid for NWS. Accordingly, irrespective of the stage of negotiations for an on-sale of NWS from Castle Harlan to Bradken, from that point onwards: 1. Hodges considered that Bradken was committed to not making a bid; and 2. Hodges expected that Castle Harlan would make a bid. In fact, he accepted that the purpose of his trip to New York was, in part, to assist Castle Harlan with its bid. 163 During the remainder of May 2011, Ward and Philip spoke by telephone several times. Ward's evidence was that those discussions concerned the terms of the proposed SPA. Ward recalled that Philip asked him on a number of occasions about "the status of a deal between Castle Harlan and Bradken". Ward's response was, on each occasion, the same. He told Philip he was asking the wrong person. 164 Work at UBS, Pala and NWS also continued during May 2011. Kousaie provided Barton with an update on 19 May 2011. In relation to Castle Harlan, the update was as follows: … CASTLE HARLAN [Philip] * Continuing to do their diligence work across all areas * Feedback from both site visits was positive * Working on the SPA and trying to be "fair and reasonable" with their mark-up * The only diligence item that he flagged was an environmental matter that their counsel raised; he wouldn't provide more details, but said that they'd deal with this in the SPA * An important issue for us to monitor will be their financing plans. It doesn't sound like they'll be levering-up the business too much (it actually sounds like they're not going to push much above the $45m limit on your current facility); it also sounds like they plan to work exclusively with Scotia[bank] on the financing - I view both of these as positives. But, he mentioned something about "probably not having the final debt financing commitments in place by next week" (the equity financing will be committed). I told him that this would hurt their bid as we don't want to take-on this financing risk. He said that they'll try to mitigate this as best they can; I pushed him to try to eliminate the risk fully * He concluded the call my stressing their high level of interest (he asked about 5 times "are we well-positioned?" and he noted repeatedly that they've dedicated a lot of time/resources to this); he also indicated that if they are the preferred bidder, they will want exclusivity (this isn't surprising, though he was especially forceful on this point: "we won't proceed after May 27 if we don't get exclusivity") 165 At 10:00am on 23 May 2011 (EST), Bradken held a Board meeting. The minutes record that: 6.7 Capital Management The Board discussed the high level of capital expenditure and possible acquisitions leading to [Hodges'] proposal to undertake a placement for these purposes. The Board authorised an equity placement of up to the 15% limit (approximately $150m) subject to proposed conditions and wording, which will be circulated for approval by the Board. Action: Brian Hodges (Emphasis original.) 166 Kousaie provided Barton with another update on 24 May 2011. In relation to Castle Harlan, the update was that Castle Harlan "[c]ontinue[d] to work hard to finish their diligence review" and sought guidance in relation to three specific areas, including "financing". Kousaie reported that Castle Harlan was proposing to eliminate the need for a financing condition in the SPA in exchange for a lower purchase price. Barton's response: "[t]hese guys have done enough deals to know what will and will not be successful. They're just fishing for info on how confident we are on the process". 167 At 11:17am on 26 May 2011 (EST), Philip called Hodges and left a message with Hodges' executive assistant. The message was to "[p]lease telephone - [s]aid 'you'd know what it's about'". Hodges did not give evidence about whether the call took place or what was discussed. 168 On 27 May 2011, the day that final bids were due, Greiner sent an email to Harlan: I am in my final Citi Board Meeting so wont be able to call this evening as I had intended. As I am leaving for Europe tomorrow for a couple of weeks, I just wanted to ensure that as far as you and I JKC are concerned, the [Castle Harlan]/Bradken arrangements are satisfactory. I understand from [Hodges] that after some argy bargy between [Morgan] and himself that is indeed the case. By raising the money ahead of time Bradken is in a position to effectively de-risk the deal for [Castle Harlan]. We are also of course happy to co-operate on the question of where the money flows within the [Castle Harlan] universe. I am grateful for [Castle Harlan's] co-operation in this matter. Don't believe there will be any issues going forward but I can of course be reached by email if necessary. (Emphasis added.) 169 Greiner was cross-examined regarding his email. His evidence was that the reference to "[Castle Harlan]/Bradken arrangements" was a reference to the on-sale of NWS from Castle Harlan to Bradken, rather than the Bidding Provision. 170 Harlan forwarded the email to his partner, Mr John Castle, and Morgan. Morgan's response later that morning was that: "[w]e are firm on total consideration of $25m in fees, gains and post closing advisory contracts and [Bradken] is at $20m. With new structure and most $ available from [Bradken] up front, I would live [with] $20, but will keep plugging." 171 Later on 27 May 2011, Castle Harlan submitted its final bid for NWS (the Final Bid Letter). The terms of the Final Bid Letter are important: … [Castle Harlan], on behalf of Castle Harlan Partners V, LP. ("CHPV"), is pleased to present this proposal in response to your letter, dated April 26, 2011, relating to the acquisition of [NWS] and its subsidiaries ("Norcast" or the "Company"). The terms of our proposal are as follows: 1. Purchase price: We would propose an enterprise valuation of US$190 million in cash at closing for 100% of the outstanding stock of the Company, on a fully diluted basis, and on a debt-free, cash-free basis. Our view on valuation remains unchanged from our initial indication of interest, which underscores our assurance of delivering value and certainty to the selling shareholders. … 2. Financing: We would not require any financing conditions to consummate this transaction. 3. Acquiring Entity: The acquiring entity would be a corporation controlled in the sole investment discretion of CHPV. A commitment to deliver the purchase price proceeds at Closing will be provided. … 10. Advisors: Please refer to Appendix C for a list of names and contacts of our outside advisors. (Emphasis in original.) Ward was not listed as an adviser in Appendix C. 172 Only two companies submitted final bids. Castle Harlan's final bid was the larger of the two by a significant margin. Greiner, Hodges and Ward all gave evidence that they did not see Castle Harlan's final bid prior to it being submitted, did not have any input into the bid and were not aware of it being made until after 27 May 2011. I reject that evidence. 173 On 1 June 2011, Pala, NWS, Norcast and Castle Harlan entered into an exclusivity agreement by which the parties agreed to negotiate exclusively for a period of 14 days. Castle Harlan requested and obtained an important amendment to the proposed confidentiality regime as noted in the exclusivity agreement. 174 In early June 2011, Philip called Ward and told him that Castle Harlan had been granted exclusivity and that Castle Harlan had sought and obtained an amendment to the confidentiality regime to permit Bradken to undertake due diligence. On 2 June 2011, Bradken Operations entered into a confidentiality agreement with Castle Harlan. 175 In early June 2011, Ward and Arnott arranged to go to New York together on 13 and 14 June 2011. On 6 June 2011, Arnott provided Ward with his comments on their proposed trip: … Comment on the Canadian Project are as follows - We would sign a shareholders' agreement by the time they sign the SPA. Mike Barker from Mallesons will handle this. Any put or call will have to be subject to [due diligence] - I assume that once we sign the shareholders agreement we will have access to the [due diligence] … - We will be able to provide the majority of the funding for closing but don't want to own it at that stage, a combination of equity and debt could be provided with [Castle Harlan] having voting control - We will have to announce at closing and will need to think about what we announce - For various reasons we think we need some form of gap between [Castle Harlan] closing and [Bradken] taking ownership, this may be a week or more? - [Hodges] has been talking to [Morgan] re the commercial deal which is yet to be finalised 176 At 6:18pm on 9 June 2011 (NDT), Philip provided the first draft of the SGPA to Ward and Arnott. He also provided a draft "proposed structure chart". Arnott had concerns. At 8:53am on Friday, 10 June 2011 (NDT), Arnott sent an email to Hodges, Ward and Bradken's lawyers setting out his concerns: … Comments and options 1. The shareholders agreement (SA) that [Castle Harlan] have put together is basically committing [Bradken] to fund the purchase to the tune of $175m, with only an opt out for a material adverse effect. The document is so tight that once committed even with termination rights it would be [sic] need to be disclosed. This is a zero risk document for [Castle Harlan] 2. The issue of providing some of the funds as debt is probably dead as it has issues on both sides. By contributing the funds as equity we would have a 90% ownership of the acquisition vehicle which, even without voting rights, would trigger [Bradken] to consolidate the company and [NWS] from the date of closing. … 177 Arnott sent Philip an email at 1:15pm (NDT) noting that: The shareholders agreement that you have provided provides a level of commitment that will make it difficult for us not to disclose, even if we had a [due diligence] out. We will be discussing the issues over the weekend with [Hodges] and our lawyers to develop our preferred approach and will advise ASAP. Bradken was in a difficult position. It wanted to reach an agreement to acquire NWS from Castle Harlan before Castle Harlan concluded its deal to acquire NWS from Pala. However, as a public company, Bradken had disclosure obligations. The proposed arrangement would have required Bradken to disclose the deal with Castle Harlan and thereby alert Pala and NWS to its involvement. 178 At 6:07pm on 10 June 2011 (NDT), Hodges sent Morgan an email asking him to call Hodges. Morgan's reply the next day was that he would call back in the afternoon of 11 June 2011 (NDT). Hodges did not give evidence of whether the call took place or what was discussed. 179 At 11:12pm on 11 June 2011 (NDT), Arnott sent Hodges and Ward his latest earnings per share calculations for the NWS acquisition. His calculations were based on a purchase price of US$215 million, which included a US$20 million fee to Castle Harlan. 180 Prior to the commencement of the meeting on 13 June 2011, on the afternoon of 12 June 2011 (NDT), Hodges had a telephone conversation with Ward and Arnott in which he relayed his instructions. Hodges have evidence that those instructions were as follows: (a) the deposit of $25 million had to be an equity commitment, and not a fee to Castle Harlan, and had to be refundable if the sale by Pala to Castle Harlan did not complete; (b) Bradken would not agree to indemnify Castle Harlan against claims relating to any on-sale to Bradken or any actions by Castle Harlan throughout the sale process; (c) Bradken wanted to pay as little as possible above Castle Harlan's final bid price; and (d) Bradken required confirmation from Castle Harlan that it could access Castle Harlan's due diligence materials and the transaction documents for the purposes of Bradken's own due diligence for any on-sale. (Emphasis in original.) 181 Also during that afternoon, Arnott and Philip had an email exchange regarding Bradken's ability to access the due diligence materials. Philip's advice was that Arnott "should do [his] own diligence to satisfy [himself] on this point". More importantly, however, Philip included a demand that Bradken "indemnify [Castle Harlan] and hold [Castle Harlan] harmless if any party takes issue with [Castle Harlan] and/or [Bradken] regarding [Bradken's] involvement". That was the first time an indemnity had been proposed. Arnott had further concerns. He sought advice from Hodges, Ward and Mr Michael Barker, a partner at Mallesons Stephen Jaques, Bradken's lawyers. Ward replied at 6:51pm (NDT): "that's the first time [an indemnity has] been raised." 182 Hodges then spoke to Morgan. He provided a report on their discussion at 9:45pm (NDT): I spoke at length to [Morgan]. He says he is not negotiating just looking to help us navigate, anyway he may after our talk. He will be ok to ask us to be a co investor and will take responsibly [sic] that he can do that and show us why. He wants us to indemnify him if we misuse the de [sic] information? They will be happy with the $ 25m at risk first from us and are expecting us to fund and announce at close. [Morgan] not sure but thinks we have longer than 30 june to close. He rang me back and said they needed to check the Language in the Exclusivity as it may not allow for [due diligence] until after the SPA is signed. 183 On 13 June 2011, Ward and Arnott met with Philip at Castle Harlan's New York offices. At the conclusion of the day, Ward sent an email summarising his view of the negotiations: We think progress on the 3 documents today is positive and a couple of key issues are: $25m Equity Contribution We can't see how we could put this into anything but the acquisition vehicle and will require that to be legitimate commitment to co-invest i.e equity. We see this $25m as being part of our $175m commitment to enable close … Indemnity As discussed we are comfortable with providing indemnity that we won't breach the CA and other obligations of confidentiality, but both parties need to be satisfied with the [Castle Harlan / Bradken] arrangement Timing for [Castle Harlan / Bradken] SPA We too see benefit in signing this at or near closing and should explore further 184 Philip replied at 8:57pm (NDT): Brad - happy to come back to the office tonight so we can move the discussion along, but #1 and 3 are not the business deal we are willing to accept as I mentioned several times today. I thought we were already past these points but [Arnott] obviously has a different view. I've already discussed it with [Morgan] so he and I are internally aligned there. You may want to discuss with [Hodges] because otherwise we don't have an agreement. We are open to discussing a more favorable economic agreement for us if you wish us to take these additional risks but at the range we are discussing we cannot accept. We can go pens down if you wish but if you plan to reach agreement, it simply is not going to happen based on your proposal. Please advise on how you wish to proceed. 185 Ward sent Philip's reply to Hodges and arranged to call Hodges in 45 minutes. Hodges, Ward and Arnott spoke by telephone later that evening. Hodges told them that he would ask Greiner to speak directly with Castle Harlan. Hodges sent Greiner an email at 10:56pm (NDT): You should have correspondence from [Ward] which you need to read down. Essentially [Castle Harlan] are pens down with the SPA due to be signed Wednesday in NY. Issues are they want $25m outside the deal and not as an equity contribution by us. Mallesons and us are struggling and believe we cannot agree. They still seek indemnity against anybody taking action against them for al edged [sic] things they may have done. We need a circuit breaker, would like advice or help or both. 186 At 2:23am on 14 June 2011 (NDT), Greiner sent an email to Harlan and Morgan. His email is important: I am in Singapore and getting second hand information, but am concerned to not have Norcast fall over at the last hurdle. My sense in raising the [Castle Harlan] option originally was that Bradken would pay a winning price (M$190 as it turns out) plus an amount to [Castle Harlan] ($M$20 maximum plus costs). Bradken was not concerned how [Castle Harlan] dealt with its fee plus costs, but Bradken's involvement would not be disclosable [sic] to the ASX until the deal was effectively done. As Bradken has all the necessary cash, there would be no cash requirement for [Castle Harlan]. I understand our discussions are bogged down over the M$20 plus costs payment. Bradken must absolutely get "value" for this. That means in effect a "call" on all Norcast shares for M$190 and full access to information flows and any interim decisions, plus of course agreement for the return of M$20 fee no deal occurs presumably the final [Castle Harlan] purchase and sale would be back-to-back at one time and Bradken would disclose on that day. We are indifferent to where the M$20 plus costs go as long as we receive value in the above terms. [Castle Harlan] presumably mirrors the above with a "put" and the same agreed terms. The indemnity issue sounds a bit like a lawyers picnic from a Singapore perspective. Who but the vendor has any possible standing and they are getting the price and terms they want? And [Castle Harlan] are the only ones who have dealt with the vendor to date. Anyway, let's agree the "deal" first. If it does not look a lot like what I have sketched out, I don't see how we do it. … At the end of the day it boils down to a mutually acceptable and defensible basis for the payment to [Castle Harlan]. (Emphasis added.) 187 Greiner was extensively cross-examined regarding this email. It was put to Greiner that the reference to "raising the [Castle Harlan] option originally" was a reference to his discussion with Harlan on 8 March 2011. Greiner did not provide a satisfactory answer. He was evasive and hostile and eventually contended that he did not recall what he meant. I reject his evidence. I accept that he was referring to his conversation with Harlan on 8 March 2011: see [106] above. 188 At 2:45am (NDT), Hodges provided Ward and Arnott with further instructions. He echoed Greiner's sentiment that Bradken "must get value" for its $20 million payment. In relation to the indemnity, Hodges comments were that "[s]ounds like [Castle Harlan] over the top and we shouldn't under right [sic] their misconduct". The last line of Hodges' email is important. Hodges said that "I believe [Castle Harlan] should do a deal but if they won't we need to step up when the SPA deadline passes and go to UBS/PALA and offer to sign for the same amount". Hodges' evidence during cross-examination was that, if the deal with Castle Harlan had failed, at the end of the exclusivity period he would have "step[ped] into Castle Harlan's place" and made an offer directly to Pala and NWS of US$190 million. 189 Morgan responded to Greiner's email at 7:58am on 14 June 2011 (NDT). Morgan's email addressed two issues: confidentiality and Castle Harlan's proposed fee. In relation to the latter, Morgan noted that: … I have been clear [with Hodges] that economics needs to reflect the actual equity $ exposure, which has gone way up since initial discussions, but he asked that we defer resolution and not base it on what "might be the case", but rather wait until we know what "is the case". With our long history and trust, I was willing to do it this way. But we are there now, and the equity commitment "is" massively larger. In our first discussions many months ago, I indicated that the nature of any economics would need to be appropriate for the final equity commitment from us. In a deal like this, we would probably not pay more than, say, $112m (7x$16m ttm ebitda). And we would not put up more than, say, $56m (50% equity). With the balance provided by a lender. Such balance was about the level the debt market was prepared to provide, based on discussions and proposals, but the existing lender was unable to provide a commitment in time. BTW, there would have been significant cost to pass on in relation to this debt alone. So, an original understanding of a $20m premium was predicated on our taking about $56m of equity risk. In contrast the equity risk will be more like $170m. So we feel a larger premium from [Bradken] is appropriate. … It is worth noting value discussions, and the $190m base price we negotiated was at least $10m below the top of [Hodges'] range. (Emphasis added.) 190 Morgan's email was put to Greiner during cross-examination. Greiner's evidence was that he understood Morgan's email to be an attempt by Morgan to "chisel" him. He denied that any "initial discussions" or "first discussions" took place, at least with him. He accepted, however, that Morgan must have been referring to an understanding between Castle Harlan and Bradken, reached at some earlier time, pursuant to which Bradken had agreed to pay a fee of $20 million. As to the reference to "the top of [Hodges'] range", Greiner denied that he had any discussions with Hodges as to what would be an appropriate range of values for NWS. Greiner's evidence was that he simply trusted Hodges to determine the value himself and that he took comfort from the fact that final approval rested with the Board. 191 Morgan's email was not put to Hodges during cross-examination. 192 By 1:05pm on 14 June 2011 (NDT), Ward and Arnott had progressed negotiations. Ward sent Hodges an update. The structure was described as follows: … 1. [Bradken] signs commitment for $25m and pays to CH Investor LLC as deposit for equity investment (with call on [Castle Harlan] equity in Bidco). Pay at or just prior to SPA, refundable if [Castle Harlan[ does not go ahead with transaction and not refundable if [Bradken] fails to fund purchase. 2 & 3. [Castle Harlan] call $20m of investor funds to go into CH Investor LLC as voting shares prior to closing. 4. [Bradken] puts $175m into Bidco as non-voting shares prior to closing 5. Close. • Bidco pays $190m for [NWS] and $5m costs • Pala announces sale to market • At close [Bradken] signs SPA with CH [I]nvestor [LLC] to purchase their shares in Bidco for $40m • [Bradken] announces acquisition to market 6. Approx 1 week later [Bradken] closes transaction with CH [I]nvestor LLC by paying additional $15m with $25m already deposited. In relation to the proposed indemnity, Bradken and Castle Harlan were still apart. Castle Harlan sought an indemnity to protect it "if anyone comes after [Castle Harlan] due [Bradken] involvement". Ward forwarded his earlier email to Greiner at 2:54pm (NDT). Greiner sent Hodges an email at 4:06pm (NDT, 6:06am in Australia). Greiner said that he would call Hodges after 7:00am (EST). Neither Greiner nor Hodges gave evidence of whether that call took place or, if so, what was said. 193 By 5:22pm (NDT), however, Ward's tone was less optimistic. He sent an update to Hodges which reported that: … [Morgan] keeps contradicting, talking about "you protect me on damages to me from your misuse of the information", which we are fine with […] and then adding a much broader rider that we cover them if someone sues because they didn't like [Bradken] involvement. In addition to the indemnity issue, Castle Harlan were seeking a larger fee. In Ward's view, "they're getting $20m for delivering the deal, doubling their money within a week for taking the miniscule risk that we don't stump up $175k and they have to fund and close". 194 At 5:42pm (NDT) Ward sent the proposed indemnity clause he had received from Castle Harlan to Hodges. Ward knew that Bradken's response was likely to be negative to the clause, but he feared another "pens down" position from Castle Harlan would result. Hodges forwarded Ward's email to Greiner three minutes later. Hodges' evidence was that he discussed the indemnity with Greiner and they agreed that Greiner would raise it with Morgan directly. Greiner's email to Morgan at 6:23pm (NDT) was in evidence. Greiner's position was that Bradken "can't argue with your 'you protect me on damages to me from your misuse of the information'" but that Bradken would not agree to anything further. At 7:40pm (NDT), Ward sent a revised version of the confidentiality agreement (which included the indemnity) to Philip. It is unclear whether that version was executed or whether further amendments were required. Nevertheless, Castle Harlan was sufficiently confident with the protection that it had obtained that, at 9:58am on 15 June 2011 (NDT), Egolf sent a copy of the IM to Ward by email. Ward forwarded the IM to Hodges and Arnott with the following comment: "[Castle Harlan] remain[s] edgy about distribution despite CA and we need to limit distribution anyway. Password is 'march'." UBS had implemented a password protection on the PDF copy of the IM when it was originally distributed to Castle Harlan in March 2011: see [113] above. 195 Negotiations as to the terms of the deal and, in particular, the SGPA, continued on 15 June 2011. At 12:25pm (NDT) Ward sent Hodges a draft Board paper entitled "Investment in Norcast". A deal was close and Hodges needed to obtain Board approval. The draft paper included the following description of the deal: … We have been approached by [Castle Harlan] to invest in the acquisition, and following [Castle Harlan] entering into the exclusivity agreement Bradken has signed a confidentiality agreement with [Castle Harlan], allowing Bradken access to the confidential information, including the [Castle Harlan] due diligence. Following a high level review of the due diligence, we have not found any "deal breakers" that would stop Bradken investing in the acquisition and to further look at purchasing 100% of Norcast eventually. It is recommended that Bradken invests US$25m as an upfront commitment to invest in Norcast with an option to move to 100% in the future. The attached document cover the investment with the document to be signed before [Castle Harlan] sign the SPA and the funds provided at that time. … High Level View of a possible 100% Acquisition Based on the following assumptions • a possible acquisition price of $215m, • using the $150m equity raising with the balance as debt to fund the transaction • Significant synergies starting at $4.8m year 1 moving to $13m in year 4 EPS in year one is decretive by 1%, with 1% accretion in each of the following years. Despite Ward's awareness of the restriction upon his use of the information in the IM (see [118]-[120] and [127] above), and his direction that "we need to limit distribution anyway" (see [194] above), the draft Board paper included high-level information on the NWS business which had been extracted from the IM. Later on 15 June 2011, Ward left New York and returned to Kansas City. Of course, the statement in the Board paper that Bradken had "been approached by [Castle Harlan] to invest in NWS" was false. Bradken had approached Castle Harlan: see [84], [86], [90] and [95] above. 196 At 12:39pm on 15 June 2011 (NDT), Ward provided an update to Hodges of where matters then stood. The deposit agreement was ready to be executed, once Board approval had been obtained. The SGPA was ready for review by Bradken's lawyers. There were still several outstanding issues. Castle Harlan was still seeking an increase in its fee from $20 million to $25 million and a broad indemnity. Further, timing was tight. The exclusivity period was shortly due to expire and Castle Harlan needed Bradken to have placed $25 million on deposit by then, otherwise Castle Harlan would not sign the agreement with Pala and NWS and the opportunity would be lost. 197 Given the status of its negotiation with Bradken, on 15 June 2011 Castle Harlan sought and obtained an extension of the exclusivity period until 5:00pm on 17 June 2011. Negotiations between Bradken and Castle Harlan continued. There were to be two agreements: a deposit agreement, pursuant to which Bradken would pay $25 million to the "CHI investor", and the SGPA. Ward and Philip exchanged emails regarding the drafting of those agreements. Bradken remained concerned that the language of the indemnity in the SGPA was too broad. 198 On the morning of 17 June 2011 (EST), Hodges spoke to Morgan. Hodges summarised their discussion in an email to Ward and Arnott sent at 12:41pm (EST). Hodges said that: "[Morgan] has now given up officially on the dollars and is about to on the indemnity". 199 At 3:00pm on 17 June 2011 (EST), Bradken held a Board meeting. Hodges presented the paper which Ward had prepared. The minutes record that: The Directors approved further exploring the investment in Norcast via [Castle Harlan] with the payment of a US$25 million deposit and the signing of the Deposit Agreement with [Castle Harlan] in order to secure the investment opportunity with [Castle Harlan]. At 4:20pm (EST) Hodges sent Ward an email which said simply that "[w]e have [B]oard approval". Bradken entered into the deposit agreement that day. 200 Also on 17 June 2011, Norcast and BC entered into a SPA. The SPA was addressed to "Sunshine Acquisition LLC" (Sunshine). Sunshine was a Delaware limited liability company which held 100% of the issued share capital in BC. BC agreed to pay US$190 million (subject to various deductions) for all of the shares in NWS. BC was a newly created entity without any assets. Castle Harlan was required to, and did, provide a letter setting out its commitment to fund the acquisition of NWS by BC. That letter is important, it included the following relevant passage: … Subject to the terms and conditions hereof and to the satisfaction (or waiver by the Purchaser) of the other conditions for the benefit of the Purchaser set forth in Section 7.1 of the Purchase Agreement, Castle Harlan Partners V, L.P. ("CHP V") (together with certain of its affiliates) shall on the Closing Date make an equity contribution in immediately available funds to the Purchaser of One Hundred Ninety Million Dollars (US$190,000,000), less the amount of any cash equity or debt contribution(s) made to the Purchaser on or prior to the Closing Date by others (CHP V's equity or debt contribution being referred to as the "Equity Contribution"). 201 On 22 June 2011, Bradken's right under the deposit agreement to demand a refund of its deposit expired. To protect itself against the forfeiture of the deposit, Bradken executed a deposit side letter agreement which committed to the terms of the SGPA that would be executed on the closing of the transaction between Norcast and Castle Harlan. Attached to the side letter agreement was a copy of the SGPA in the form that had been negotiated by the parties. Hodges' evidence was that the only outstanding issue at that point was the amount of deal fees Bradken would pay Castle Harlan. 202 The closing date under the SPA was 6 July 2011. Bradken and Castle Harlan also planned to execute the SGPA on 6 July 2011, with Bradken to make an announcement of its investment shortly thereafter. There were significant logistical difficulties. Pala was based in Switzerland, Castle Harlan in New York and Bradken in Newcastle. Ward travelled to New York on 5 July 2011. There were also sensitivities to manage. Bradken was required to disclose its entry into the SGPA. Bradken and Castle Harlan expected that Bradken's announcement of the deal would trigger intense public interest, not to mention Pala's interest. On 1 July 2011, Philip sent Ward a draft "FAQ" which was designed to outline Bradken and Castle Harlan's coordinated approach to the questions they expected to be asked. On 5 July 2011, Ward provided his feedback, which included redrafting the following question and answer: When did Bradken get involved? After Castle Harlan was granted exclusivity on the transaction Bradken were approached to see if they were interested as a co investor as occurred in the AmeriCast acquisition. Bradken were interested and started reviewing the due diligence. Ward was cross-examined regarding the FAQ document. His evidence was that he did not have authority to prepare such a document and that it was likely that Arnott or Hodges would have instructed him to make any amendments. Ward accepted that the answer to the question extracted above was false. 203 Prior to closing, Bradken and Castle Harlan also coordinated on the content of Bradken's ASX announcement. Ward provided a draft on 27 June 2011. Ward's comments were that: … • We have to disclose the [NWS] acquisition cost and due to its relative size cannot combine that cost with the other acquisition, assuming the other proceeds and is announced concurrently. • We're hoping the A$ amount muddies the water and helps somewhat. • We do have to announce who we're buying the business from [Castle Harlan] Ward provided Philip with the final draft announcement at 8:02am on 6 July 2011 (NDT). 204 At 5:00pm on 6 July 2011 (EST, 3:00am in New York), Bradken held a Board meeting. The meeting lasted 30 minutes. The sole subject matter of the meeting was the entry by Bradken Operations into the SGPA with Castle Harlan. The Board approved the execution of the SGPA and the provision of a further US$190 million to fund Bradken Operations' obligations under the SGPA. 205 At 6:30am on 6 July 2011 (NDT), Ward attended Castle Harlan's New York offices. He had earlier received an email from Arnott at 3:50am (NDT) confirming that the acquisition had been approved and that all necessary documentation had been executed. At 6:45am (NDT) Ward sent an email to Hodges and Arnott confirming that executed documentation had been exchanged with Castle Harlan and the funds transfer was to occur in 30 minutes. Ward noted that "[a]s agreed won't pass on call notice until [Castle Harlan] close with Pala." At midday (NDT), Barton sent an email to Philip confirming the receipt of all payments due to Norcast under the SPA. At 12:50pm (NDT) Ward sent Hodges and Arnott a further email confirming that the call notice had been handed over and that Pala had released their press release regarding the sale of NWS to Castle Harlan. As mentioned at [200]-[201] above, upon the issue of the call notice, Sunshine was required to transfer its remaining interest in BC to Bradken Operations. 206 Later on 6 July 2011 (NDT, 7 July 2011 in Australia), Bradken made an announcement to the ASX regarding the deal. 207 On 7 July 2011, Barton called Kousaie. Following the call, Kousaie sent Barton an email to confirm that UBS did not contact Bradken regarding the NWS sales process. Barton also contacted Walsh to ask whether Walsh ever provided the teaser to Bradken. Walsh sent Barton an email to confirm that he did not provide the teaser to Bradken but did informally mention the sale process.

Introduction 208 Bid rigging is sometimes referred to as "collusive tendering". It may take many forms. 209 The provisions now found in the CCA which prohibit bid rigging were originally introduced into the Trade Practices Act 1974 (Cth) (the TPA) by amending legislation in 2009: Trade Practices Amendment (Cartel Conduct and Other Measures) Act 2009 (Cth) (the TP Act). The TP Act received royal assent on 26 June 2009 and the relevant provisions commenced on 24 July 2009. The primary purpose of the TP Act was to "introduce criminal penalties and parallel civil sanctions for serious cartel conduct": Explanatory Memorandum, Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008 at [1.1] (the EM). The EM explained that "serious cartel conduct" was a term which incorporated what the Organisation for Economic Co-operation and Development defined as "hard core" cartel conduct, namely, "an anticompetitive agreement, anticompetitive concerted practice, or anticompetitive arrangement by competitors to fix prices, make rigged bids (collusive tenders), establish output restrictions or quotas, or share or divide markets by allocating customers, suppliers, territories, or lines of commerce": EM at [1.3]. 210 However, the TP Act also sought to codify some forms of "serious cartel conduct" (including bid rigging) which had previously been caught by s 45 of the TPA: EM at [1.4]-[1.6]. The TP Act introduced a revised structure. Division 1 was inserted immediately before the former s 45: EM at [1.13]. Division 1 included the criminal and civil prohibitions on "serious cartel conduct". The TP Act also introduced the notion of a "cartel provision", now found in s 44ZZRD. 211 As explained earlier, s 44ZZRD sets out two conditions that must be satisfied for a provision of a contract, arrangement or understanding to be a cartel provision - one of the two forms of the purpose condition and the competition condition. There was no dispute that the particular relevant conditions in the present case were those in sub-ss 44ZZRD(3)(c)(i) and 44ZZRD(4)(a), (b) and (j). 212 For there to be a contravention of ss 44ZZRJ and 44ZZRK, there were a number of hurdles that Norcast had to overcome.

Was there a request for bids within the meaning of s 44ZZRD(3)(c)? 213 An essential element of the purpose condition in s 44ZZRD(3)(c) being relevantly satisfied was "the event of a request for bids in relation to the supply or acquisition of goods or services": see [13] above. 214 Norcast submitted that the "request for bids" comprised the sale process for NWS established by UBS during February 2011, together with the confidential sales materials prepared by UBS and provided to potential buyers of NWS during February and March 2011. 215 Bradken submitted that: 1. there was no request for bids; 2. it genuinely believed it had been excluded from the sale process; and 3. there was no request for bids in Australia nor any request for bids in relation to the supply or acquisition of goods or services in Australia. I will deal with each limb in turn.

In the event of a request for bids 216 Bradken's primary submission was that the Court must find that there was relevantly a "request for bids" in the NWS sale process to Bradken. Bradken submitted that the "request for bids" referred to in s 44ZZRD(3)(c) must, as a matter of statutory construction, be a request directed to the parties to the alleged contract, arrangement or understanding. 217 There were two limbs to Bradken's submission. First, Bradken submitted that for there to be a "request", there must be some "act of asking for something to be given, or done", or some communication asking for something to be provided. Bradken referred to the Macquarie Dictionary and cited two authorities in support of that proposition: ECH Incorporated v Halliday (2011) 192 FCR 281 at [36] and Pileggi v Australian Sports Drug Agency (2004) 138 FCR 107 at [35] and [37]. 218 Second, Bradken submitted that the expression "request for bids" in s 44ZZRD(3)(c) denotes a request directed to more than one person for them to participate in a bidding process of some kind. Bradken further submitted that the persons referred to in paragraph (3)(c)(i) to (v) are persons to whom the request may be directed, and they must be persons who are able to bid in response to that request. So, for example, Bradken submitted that as a whole, sub-s (3)(c) contemplates a competitive process, with the bids to be made, received and considered pursuant to the procedure established for that process. Bradken submitted that the concern of the cartel conduct provisions in this context was to ensure that that competitive bidding process was not manipulated by bidders or potential bidders who were within the scope of that process by means of a proscribed contract, arrangement or understanding. At a practical level, Bradken submitted that it "would be an error" for the Court to conclude that the concept of a request for bids would apply simply where there was some knowledge about a sale process. 219 Bradken's submissions are rejected. The first submission does not assist in the resolution of the proper construction of s 44ZZRD(3)(c). The authorities referred to by Bradken are of limited utility. In each case, the statutory language and the statutory context was different. Similarly, Bradken's reference to dictionary definitions of the word "request" is an exercise of limited utility: cf XYZ v The Commonwealth of Australia (2006) 227 CLR 532 at [19]; R v Campbell (2008) 73 NSWLR 272 at [49] and General Accident Fire & Life Assurance Corporation Ltd v Commissioner of Pay-roll Tax (NSW) [1982] 2 NSWLR 52 at 55. In the end, it is the whole phrase that is to be construed in the context of the CCA and in a manner consistent with the policy and purpose of the legislation: s 15AA of the Acts Interpretation Act 1901 (Cth) and Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69]. 220 What then is the proper construction of s 44ZZRD(3)(c)? As a matter of statutory construction, there must be a "request for bids". As Bradken submitted, the provision does not apply where there is an offer (or a "bid") uninitiated by, or not responsive in some way to, a call for bids, as there would be no relevant "request". But there is nothing in the language of the section that requires a request directly or individually to each of the parties to the alleged contract, arrangement or understanding. Such a construction is not supported by the statutory language. The section does not stipulate to whom any request need be made. Why? Because it refers to a singular "event of a request for bids", not requests for bids. 221 Further, and contrary to Bradken's submission, that construction of the section is consistent with the purpose of the provision which is to prohibit per se bid rigging between competitors, including potential competitors. Again, there is nothing in the language of the section (or the EM) to suggest that the bid rigging prohibition is somehow restricted to only those bidders or potential bidders who were within the scope of that process: see EM at [1.2] and [1.39]-[1.42]. Put another way, if Bradken's construction of the section was the preferable construction, it would frustrate the statutory purpose because the prohibition would be inapplicable to arrangements involving a person who had not been individually invited or requested to bid in circumstances where that person may nevertheless have made a bid (but for the arrangement sought to be impugned). Such an arrangement would still be bid rigging and no less objectionable on competition grounds. 222 As Norcast submitted, the circumstances of this case highlight the absurdity of Bradken's construction. Put bluntly, Bradken's argument rises no higher than a bid rigging arrangement involving Bradken and Castle Harlan is not caught by the bid rigging prohibition because neither Bradken nor Castle Harlan received an individual invitation or request from Norcast to enter the sale process and make a bid, even though Castle Harlan did in fact make a bid. One only has to state the proposition to reject it. If it were otherwise, the per se prohibition would not apply to open requests for bids which take the form of an advertisement in the Government Gazette or a newspaper because none of the bidders in that case receive a personal invitation to bid. 223 Here, there was a competitive sale process for NWS conducted by UBS which was "the event of a request for bids" within the meaning of s 44ZZRD(3)(c) of the CCA. 224 Even if the construction of s 44ZZRD(3)(c) propounded by Bradken was the preferable construction (contrary to the view formed), that construction of the CCA would not assist Bradken because, in relation to the sale of NWS, there was a "request for bids" directed to both Bradken and Castle Harlan. Section 44ZZRD(3)(c) requires the existence of a request for bids (which there was). It does not require an individual invitation to join in any request for bids. Walsh of Goldman Sachs (with authority from Norcast) informed Bradken of the sale process (see [31] and [79] above). Castle Harlan was then informed of the sale process by Bradken (see [95] above), invited to bid (see [100] and [113] above) and, ultimately, did bid for NWS: see [134] and [171] above.

Bradken's alleged exclusion from the sale process 225 Bradken devoted a large portion of its written submissions to the allegation that it had been excluded from the NWS sale process. The findings above are a complete answer to any contention that Bradken was excluded.

Request for bids in Australia 226 Bradken also submitted that it was clear from the nature, purpose and structure of the CCA that any relevant "request for bids" within the meaning of s 44ZZRD(3)(c) of the CCA must be "a request for bids" in Australia. That contention is rejected. 227 That construction finds no support in the language of s 44ZZRD(3)(c). The sub-section states: (3) The purpose condition is satisfied if the provision has the purpose of directly or indirectly: … (c) ensuring that in the event of a request for bids in relation to the supply or acquisition of goods or services: (i) one or more parties to the contract, arrangement or understanding bid, but one or more other parties do not; … (Emphasis added.) 228 If the legislative intent had been to impose a territorial limitation in relation to the "request for bids" condition in s 44ZZRD(3)(c), then words to that effect would have been included in the provision expressly or by reference: cf the definition of "trade or commerce" in s 4 and the definition of "market" in s 50A. 229 As noted earlier, s 44ZZRD expanded the operation of s 45. Section 45 contains a territorial limitation: s 45(3). It provides that "competition" for the purpose of s 45 means: in relation to a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, means competition in any market in which a corporation that is a party to the contract, arrangement or understanding or would be a party to the proposed contract, arrangement or understanding, or any body corporate related to such a corporation, supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the provision, supply or acquire, or be likely to supply or acquire, goods or services. (Emphasis added.) Section 4E provides that, unless the contrary intention appears, a "market means a market in Australia". The law on what constitutes a "market in Australia" is unsettled: see, eg, Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd (No 5) [2009] FCA 1464 at [35]-[36]. It is unnecessary to consider the point, however, since no similar territorial limitation is to be found in s 44ZZRD(3)(c) and no limitation should be implied. 230 What then is the territorial coverage of s 44ZZRD(3)(c)? It is governed by s 5 of the CCA. Section 5, entitled "Extended application of this Act to conduct outside Australia", relevantly provides: (1) Each of the following provisions: (a) Part IV; … (c) the Australian Consumer Law (other than Part 5-3); … extends to the engaging in conduct outside Australia by: (g) bodies corporate incorporated or carrying on business within Australia; or (h) Australian citizens; or (i) persons ordinarily resident within Australia. … (3) Where a claim under section 82, or under section 236 of the Australian Consumer Law, is made in a proceeding, a person is not entitled to rely at a hearing in respect of that proceeding on conduct to which a provision of this Act extends by virtue of subsection (1) or (2) of this section except with the consent in writing of the Minister. … (5) The Minister shall give a consent under subsection (3) or (4) in respect of a proceeding unless, in the opinion of the Minister: (a) the law of the country in which the conduct concerned was engaged in required or specifically authorised the engaging in of the conduct; and (b) it is not in the national interest that the consent be given. (Emphasis added.) 231 There are a number of matters to be noted. First, s 5(1) is a conduct nexus requirement. It provides that the CCA may extend to conduct occurring outside Australia provided there is a connection between the corporations or persons engaging in the conduct and Australia. For corporations, the requirement is that the corporation be incorporated in Australia or carry on business in Australia. In the present case and to the extent necessary, Bradken would satisfy both limbs. It is incorporated in Australia and carries on business in Australia. The nexus between Castle Harlan and Australia is considered at [242]-[256] below. Second, where damages under s 82 of the CCA or s 236 of the ACL are sought, s 5(3) provides that conduct occurring outside of Australia and otherwise within the scope of s 5(1) may not be relied upon except with the consent in writing of the relevant Minister. The Minister is required to give consent under s 5(3) unless, in the opinion of the Minister, the law of the country in which the conduct occurred required or specifically authorised the conduct and it is not in the national interest for consent to be given. Norcast sought the Minister's consent prior to the hearing of the proceeding. Norcast sought and provided to the Minister advice concerning the laws of the country in which the conduct occurred, which was to the effect that the conduct was not required or specifically authorised by those laws. It was not necessary for the Minister's consent to have been obtained prior to the commencement of the hearing. However, it was necessary for the outcome of Norcast's request for consent to be known prior to the delivery of judgment. The Minister ultimately provided consent on 14 March 2013.

Supply or acquisition of goods or services in Australia 232 Next, Bradken submitted that not only must there be an "event of a request for bids" in Australia but that event must be a request "in relation to the supply or acquisition of goods or services" in Australia and that requirement was absent. 233 Again, the section does not state that the "supply or acquisition of goods or services", must be in Australia. The territorial coverage of s 44ZZRD(3)(c) has been addressed earlier. 234 However, there was a further issue. Section 44ZZRD(3)(c) provides that the event must be a request for bids "in relation to the supply or acquisition of goods or services" (emphasis added). The parties did not directly address this issue in their written or oral closing submissions. After the conclusion of the hearing, the Court requested that the parties provide further short written submissions directed to answering the following question: "Goods" and "services" are defined in s 4 of the CCA. In the present case, what was the relevant supply or acquisition of goods or services? 235 The parties filed further written submissions. It was common ground that the request for bids was not in relation to the supply or acquisition of goods. Norcast submitted, however, that the request for bids related to the supply and/or acquisition of services, being the shares in NWS. Norcast's submission relied upon the definition of "services" in s 4 of the CCA, which includes: any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce … 236 Norcast contended that: (a) shares in NWS are "rights in relation to, and interests in … personal property" and so fall within this definition. The [CCA] does not define "personal property" and only defines "share" as "includes stock". However, the Corporations Act 2001 (Cth) defines shares as personal property and they have been held to be choses in action, which are a form of personal property; and (b) in any event, the shares in NWS are, plainly, "rights", "benefits" and/or "privileges", that are "conferred in trade or commerce". For example, it has been held that "[a] share is a right to a specified amount of the share capital of a company" (emphasis added) and shares in companies are "a right to receive certain benefits from a corporation". (Emphasis added, citations omitted.) 237 Bradken agreed and submitted that the "better view" appeared to be that the shares in NWS were services, for the purpose of s 4 of the CCA. Bradken's further written submissions principally focused on whether the request for bids was in Australia or the supply or acquisition of goods or services was in Australia, or Bradken and Castle Harlan would have been, or would have been likely to be, in competition in a market in Australia. Those submissions have been addressed. 238 Norcast's submissions on these issues are accepted. At the very least, a share is a right and is a chose in action. That is sufficient. It is therefore unnecessary to decide whether the shares in NWS were also rights in relation to and interests in, among other things, the real or personal property then owned by NWS. 239 Second, the shares in NWS were also "benefits" and/or "privileges" that are "conferred in trade or commerce". In Sydney Futures Exchange Limited v Australian Stock Exchange Limited (1995) 56 FCR 236 at 255, Lockhart J described the nature of a share as follows: A share is a right to a specified amount of the share capital of a company, carrying with it rights and liabilities when the company is a going concern and in the course of its winding up. A share is a chose in action entitling its holder to the rights and subjecting him to the liabilities provided by the memorandum and articles of association and by legislation. 240 However, in Trade Practices Commission v Australian Iron & Steel Pty Ltd (1990) 22 FCR 305 at 314, Lockhart J noted, without further explanation, that "shares are neither 'goods' nor 'services'". The parties did not refer the Court to any later or binding authority on the question. It is unusual to refer to shares, or the rights conferred upon a shareholder, as "services". However, in light of the definition of "services" in the CCA, the shares in NWS were "services" for the purpose of s 44ZZRD(3)(c). It follows that there was an event of a request for bids in relation to the supply or acquisition of goods or services within the meaning of s 44ZZRD(3)(c). 241 For that reason, the purpose condition in s 44ZZRD(3)(c) is capable of being satisfied in this case. As a result, there is a "cartel provision" for the purpose of Pt IV of the CCA.

Castle Harlan carrying on business in Australia 242 Norcast alleged that each Respondent was a person involved (within the meaning of s 75B of the CCA and/or s 2(1) of the ACL) in contraventions by Castle Harlan. The primary claim was that Castle Harlan contravened ss 44ZZRJ and 44ZZRK of the CCA and s 18 of the ACL. A claim for accessorial liability must fail if the primary claim is not maintainable: Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 at [154]. 243 Castle Harlan is a New York-based private equity fund. Norcast must establish, among other things, that Castle Harlan carried on business within Australia: s 5(1)(g) of the CCA. Bradken submitted that it did not. 244 The facts relevant to that issue may be divided into four categories. First, Castle Harlan's interest in CHAMP. CHAMP was incorporated on 31 December 1999. A press release issued in New York on 20 October 1999 by Castle Harlan described the formation of CHAMP in the following terms: Castle Harlan, Inc., the New York merchant bank, announced today it had agreed to acquire a 50 percent stake in the business of private equity manager Australian Mezzanine Investments Pty. Limited (AMIL) in order to make private equity buyout investments in Australia, New Zealand and elsewhere in Asia. Terms of the transaction were not disclosed. AMIL, based in Sydney, is one of Australia's oldest and most prominent private equity firms. The new management company to be formed by the two entities will be called Castle Harlan Australian Mezzanine Partners Pty. Limited (CHAMP) and will be based in Sydney. Castle Harlan said that it and CHAMP had each launched separate buyout funds that will raise $300 million in the aggregate from Castle Harlan, AMIL, their associates and investors in their existing funds. John Castle, chairman of Castle Harlan, said, "We at Castle Harlan look to this first expansion of Castle Harlan outside the United States with great enthusiasm and great optimism." [Harlan], Castle Harlan's president, added, "We identified AMIL as the pre-eminent private equity manager in Australia, and we support this partnership with all of our resources." AMIL's principals, Bill Ferris and Joe Skrzynski, commented: "We feel the hybrid vigor of Australian Mezzanine Investments and Castle Harlan will combine the best of Australian and U.S. private equity managers to create a clear leader in Australasian private equity." They said AMIL's existing investment funds would not be affected by the joint venture, but all future AMIL investment funds will be organized under the umbrella of CHAMP. Castle Harlan will continue to organize and manage private equity investment funds outside of Australasia. [Morgan], a Castle Harlan managing director, will relocate to Sydney next year to assist in the establishment of CHAMP. 245 CHAMP's website described CHAMP as "the result of a joint venture initiated in 2000 between AMIL [Australian Mezzanine Investments Pty Limited] and [Castle Harlan], a mid market Buy Out specialist in the United States". 246 The next category of facts may be described as the activities Castle Harlan undertook with, or in conjunction with, CHAMP. There was evidence of the following activities: 1. Castle Harlan's co-investment with CHAMP in Austar on 2 February 2004. An announcement stated: In a series of transactions first announced last April, Castle Harlan Partners IV, a US$1.163 billion private-equity investment fund raised by Castle Harlan, Inc., co-invested in Austar with CHAMP 1 Funds, a A$500 million private-equity investment fund raised by Castle Harlan and its Sydney-based affiliate, Castle Harlan Australian Mezzanine Partners (CHAMP). The acquisition price was approximately A$0.16 per share; the stock closed on the Australian Stock Exchange today at A$.075. Austar has exclusive pay television rights in all but the major Australian cities and sparsely settled Western Australia. … Castle Harlan also invests in Australia, New Zealand and the broader Australasian region through its Sydney-based affiliate, CHAMP, which is one of Australia's oldest and largest private equity firms. 2. Castle Harlan and CHAMP raised over a billion dollars of Australian investment funds, including funds named "CHAMP I" and "CHAMP II". In relation to CHAMP II, on 2 August 2005, Castle Harlan announced that: … it and CHAMP, its Australian affiliate, had raised new investment funds with aggregate commitments of A$950 million (US$730 million), making the CHAMP II Funds substantially larger than any other independent private equity funds managed in Australasia. 3. a press release dated 7 May 2006 recorded that "[Castle Harlan] is currently managing private equity funds, including its Australian affiliates, in excess of $3 billion"; 4. a press release dated 28 July 2008 records that: Until it went public in August 2004, Bradken had been a portfolio company of Castle Harlan's Australian affiliate CHAMP Private Equity in Sydney. … Castle Harlan, founded in 1987, invests in controlling interests in the buyout and development of middle-market companies in North America, Europe and, together with CHAMP Private Equity, in Australasia. … CHAMP Private Equity was formed in 2000 as Castle Harlan Australian Mezzanine Partners by the founders of CHAMP Private Equity's predecessor and Castle Harlan. CHAMP Private Equity and its predecessor have made more than 60 investments since 1987 in companies operating in Australia and New Zealand. CHAMP Private Equity currently maintains offices in Sydney, Australia and Singapore. Please refer to its website at www.champmbo.com. 5. a promotional brochure for Castle Harlan stated that "[t]he members of our financial and administrative team also maintain constant contact with their counterparts at CHAMP to assure a smooth and productive relationship that benefits both parties"; and 6. in the "about us" section of Castle Harlan's website, a statement that: Since our inception, Castle Harlan has participated in eight private equity funds, five domestically and three in Australia. … We have also joined forces with one of Australia's leading private investment firms to create CHAMP - Castle Harlan Australian Mezzanine Partners. Together Castle Harlan and CHAMP employ more than 35 investment professionals. 247 Specific examples of Castle Harlan and CHAMP jointly using funds they manage to make investments in, and sales of investments to, companies operating in Australia were also in evidence. The first took place in February 2004 and involved Austar, as recorded in the press release set out at [246] above. The second example involved United Malt Holdings (UMH). In a press release on Castle Harlan's website dated 12 September 2006 it was stated that: Castle Harlan, Inc., the New York-based private-equity investment firm, and CHAMP Private Equity, its affiliate based in Sydney, Australia, announced today that private-equity investment funds they manage have acquired Great Western Malting, Canada Malting Company, Barrett Burston Malting and a 60 percent interest in Bairds Malt to create United Malt Holdings ("UMH"), one of the world's largest producers of malt for use in the brewing and distilling industries. UMH has revenues in excess of US$400 million. It operates in the United States, trading as Great Western Malting; Canada, trading as Canada Malting Company; Australia, trading as Barrett Burston Malting; and the United Kingdom, where it owns a 60 percent interest in Bairds Malt. … 248 UMH was subsequently sold to an Australian company, GrainCorp Ltd. Castle Harlan announced the sale on 5 October 2009. The announcement stated that: Castle Harlan, Inc., the New York private equity investment firm, and CHAMP Private Equity, its affiliate based in Sydney, Australia, confirmed today that they have agreed to sell United Malt Holdings (UMH), one of the world's largest producers of malt for the brewing and distilling industries, to GrainCorp, Ltd., a major Australian bulk-grain handler. The transaction would be valued at US$655 million (A$757million). 249 A further announcement dated 13 November 2009 stated that: The two firms had acquired UMH in September 2006 from Conagra Foods, Inc., a U.S. company, and Tiger Brands of South Africa. The price they paid at the time was not disclosed, but they invested a total of $90.54 million in equity, approximately 55 percent from Castle Harlan Partners, and 45 percent from CHAMP. 250 The third category of facts concerns Castle Harlan's involvement in the acquisition of NWS. Several Castle Harlan employees were involved in the acquisition of NWS, including Harlan, Morgan and Philip. Harlan was the Chairman of the Executive Committee of Castle Harlan. Morgan was a Co-President of Castle Harlan. Philip was a Managing Director of Castle Harlan. Many of the activities took place in Australia. 251 The fourth category of facts concerns what might be described as the "practical" links between CHAMP and Castle Harlan. CHAMP's directors include Castle (the Chairman and Chief Executive Officer of Castle Harlan), Harlan and Morgan. Morgan relocated to Sydney in order to establish CHAMP, was its Executive Director in its early years and travelled to Australia regularly thereafter. Morgan and Harlan are members of the Executive Committee of CHAMP, which meets at least monthly in Sydney: cl 3.5(a) of the CHAMP Shareholders Agreement. The quorum and voting rights of the Executive Committee are such that Castle Harlan (through its wholly owned subsidiary, Castle Harlan Australia LLC) is able to exercise three of the six votes on the Executive Committee, even if only a single Castle Harlan representative attends an Executive Committee meeting: cll 3.5(d) and (e) of the CHAMP Shareholders Agreement. 252 As Morgan, Co-President of Castle Harlan and a Director and Executive Committee member of CHAMP, was reported as having said: [Castle Harlan's] relationship [with CHAMP] is a two way street … [w]e've learned a lot from each other and benefited from each other's relationships to the point where they're now collective relationships. 253 Greiner was cross-examined regarding a document titled "CHAMP - Financial Reporting Pack, YTD May 2011". Greiner's evidence was that he had never previously seen the document. The document stated that CHAMP had budgeted to receive $4.9 million of fees which were described as "[Castle Harlan] Advisory Fee" and had in fact received $3 million as at the date of the document. Greiner's evidence was that, in his view, those fees related to funds provided by Castle Harlan which were invested and managed by CHAMP. 254 Carrying on business in Australia is not defined in the Corporations Act 2001 (Cth) (the Corporations Act). It is amplified in s 21 of the Corporations Act and includes having a "place of business" in Australia and administering, managing or otherwise dealing with property situated in Australia as an agent, legal personal representative or trustee, whether by employees or agents or otherwise. That definition is itself not exhaustive. There remains scope for the operation and application of territorially-based concepts of carrying on business derived from the general law: Re Application of Campbell; Gebo Investments (Labuan) Ltd v Signatory Investments Pty Ltd (2005) 54 ACSR 111 at [36]. 255 At general law, carrying on a business generally involves conducting some form of commercial enterprise, systematically and regularly with a view to profit: Gebo Investments at [38]. It is unnecessary to restate the "usual elements" of a finding of carrying on business in Australia. It is, however, necessary to point out that a company may be found to carry on business in Australia even though the bulk of its activities are conducted elsewhere (Gebo Investments at [38]-[41]) and that it conducts its activities in Australia by reason of its control over or connection with an Australian company: Adams v Cape Industries Plc [1990] Ch 433 at 530 and Bray v F Hoffman-La Roche Ltd (2002) 118 FCR 1 at [60]-[63]. 256 Castle Harlan was a co joint venturer in CHAMP, an Australian company. It (with CHAMP) raised over a billion dollars of Australian investment funds by way of multiple raisings over a period of years. It (with CHAMP) acquired and then sold for profit at least two Australian companies - Austar and UMH. Monthly Executive Committee meetings of CHAMP were held in Sydney. Indeed, Morgan moved to Sydney to establish CHAMP. Castle Harlan's activities in Australia were not isolated but were repetitive and with a view to profit. Greiner's oral evidence about Castle Harlan's role in CHAMP (that it was advisory in nature) is rejected. It was inconsistent with the contemporaneous documentary record: see [244]-[249] and [251]-[253] above. Those facts establish that Castle Harlan carried on business within Australia itself and, further or alternatively, through CHAMP.

Were Bradken and Castle Harlan in competition or likely to be in competition with each other in relation to the acquisition of NWS (ie, was the competition condition satisfied)? 257 Norcast accepted that it was required to establish under s 44ZZRD(4) of the CCA that, but for the Bid Rigging Arrangement, Bradken and Castle Harlan would have been, or would have been likely to be, in competition with each other in relation to the acquisition of the relevant services, the shares in NWS. 258 Bradken submitted that the competition condition was not satisfied for two reasons. First, neither Bradken nor Castle Harlan were included in the NWS sale process and, therefore, as a matter of fact, they were not in competition with each other in relation to the acquisition of shares in NWS. Second, even if Bradken and Castle Harlan would have been likely to be in competition with each other in relation to the acquisition of the shares in NWS, the competition condition referred to in s 44ZZRD(4) requires, as a matter of statutory construction, that competition must be in respect of a market in Australia. Both contentions are rejected. 259 The likelihood of parties being in competition with each other is a question of fact: J McPhee & Son (Australia) Pty Ltd v Australian Competition and Consumer Commission (2000) 172 ALR 532 and Australian Competition and Consumer Commission v Pauls Ltd (2003) ATPR 41-911. As noted earlier, "likely" includes "a possibility that is not remote": s 44ZZRB. 260 Castle Harlan bid for NWS. It wanted to acquire NWS for resale at a profit. Bradken wanted to acquire NWS - it was the logical purchaser. Absent the arrangement between them, it is at least possible that Castle Harlan and Bradken would have competed with each other in bidding for NWS. 261 The second limb of this argument, that, even if Bradken and Castle Harlan would have been likely to be in competition with each other in relation to the acquisition of the shares in NWS, the competition condition referred to in s 44ZZRD(4) requires, as a matter of statutory construction, that competition must be in respect of a market in Australia is also rejected. No limitation is to be found in s 44ZZRD(4) and no limitation should be implied. If the legislature had intended to impose such a territorial limitation, then words to that effect would have been included. That conclusion is also arguably supported by authority: see ASX Operations Pty Ltd v Pont Data Australia Pty Limited (No 2) (1991) 27 FCR 492 at 497-8, where, like s 44ZZRD(4), s 4D required parties to a proscribed contract, arrangement or understanding to be competitive with each other but did not expressly require the competition to be in a market in Australia. A territorial limitation of the kind contended for by Bradken is unnecessary and inappropriate.

Did Bradken and Castle Harlan make a contract or arrangement, or arrive at an understanding in relation to bidding for NWS (the Bid Rigging Arrangement)? 262 The Bidding Provision was a cartel provision. It is then necessary to deal with Norcast's contention that Bradken and Castle Harlan made a contract or arrangement, or arrived at an understanding, in relation to bidding for NWS (the Bid Rigging Arrangement), which contained the Bidding Provision. Bradken submitted that, at no time prior to 17 June 2011, had the parties committed to an on-sale of NWS by Castle Harlan to Bradken. 263 The relevant applicable legal principles may be summarised as follows: 1. an arrangement or understanding is apt to describe something less than a binding contract or agreement: Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd (2000) 169 ALR 344 at [75]; see also Newton v Federal Commissioner of Taxation (1958) 98 CLR 1 (Privy Council) cited with approval in Top Performance Motors Pty Ltd v Ira Berk (Queensland) Pty Ltd (1975) 5 ALR 465 at 469; 2. the elements of an arrangement or understanding are: 2.1 evidence of a consensus or meeting of the minds of the parties, under which one party or both of them must assume an obligation or give an assurance or undertaking that it will act in a certain way which may not be enforceable at law: Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2008] FCA 678 at [10] and the authorities cited; 2.2 a hope or mere expectation that as a matter of fact a party will act in a certain way is not itself sufficient to establish an arrangement or understanding, even if it has been engendered by that party: ACCC v CFMEU at [10] and the authorities cited including Apco Service Stations Pty Ltd v Australian Competition and Consumer Commission (2005) 159 FCR 452 at [45] and Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 at [79]; 2.3 the necessary consensus or meeting of minds need not involve, though it commonly will in fact embody, a reciprocity of obligations: ACCC v CFMEU at [10] and the authorities cited; 2.4 in relation to whether or not mutual obligation is a necessary ingredient of an arrangement or understanding, it has been suggested that it is difficult to envisage circumstances that would be an understanding within s 45 of the TPA involving the commitment by one party without some reciprocal obligation by the other party: Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 at 230-1 and 238. That statement applies equally to ss 44ZZRJ and 44ZZRK of the CCA; 2.5 an arrangement may be informal as well as unenforceable with the parties free to withdraw from it or to act inconsistently with it, notwithstanding their adoption of it: Federal Commissioner of Taxation v Lutovi Investments Pty Ltd (1978) 140 CLR 434 at 444; 3. whether there is a difference between an arrangement and an understanding has not been resolved: Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1 at 22-6 but cf Australian Competition and Consumer Commission v Australian Medical Association Western Australia Branch Inc (2003) 199 ALR 423 at 460. However, the concept of an understanding is broad and flexible: cf L Grollo & Co Pty Ltd v Nu-Statt Decorating Pty Ltd (1978) 34 FLR 81 at 89 and Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (2004) 141 FCR 183 at [54]; 4. whether or not an arrangement or understanding has been reached will depend on the view formed of all of the circumstances. A meeting of minds may be proved by independent facts and from inferences drawn from primary facts including, without limitation, evidence of joint action by the parties in relation to relevant matters, evidence of parallel conduct and evidence of collusion between the parties. As Isaacs J said in R v Associated Northern Collieries (1911) 14 CLR 387 at 400: Community of purpose may be proved by independent facts, but it need not be. If the other defendant is shown to be committing other acts, tending to the same end, then though primarily each set of acts is attributable to the person whose acts they are, and to him alone, there may be such a concurrence of time, character, direction and result as naturally to lead to the inference that these separate acts were the outcome of pre-concert, or some mutual contemporaneous engagement, or that they were themselves the manifestations of mutual consent to carry out a common purpose, thus forming as well as evidencing a combination to effect the one object towards which the separate acts are found to converge. See also News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 573-4. 264 However, where proof of an arrangement or understanding rests on inferences to be drawn from primary facts, it is not sufficient for the circumstances to give rise to conflicting inferences of equal degrees of probability: Luxton v Vines (1952) 85 CLR 352 at 359-60. 265 In the present case, the evidence establishes that Castle Harlan and Bradken entered into the Bid Rigging Arrangement no later than 8 March 2011. The Bid Rigging Arrangement was informal and unenforceable. Either party could withdraw from it or even act inconsistently with it. Hodges himself contemplated doing so in mid-June of 2011: see [188] above. But that does not detract from the finding that the Bid Rigging Arrangement: 1. was entered into by Castle Harlan and Bradken; and 2. was given effect to by Castle Harlan and Bradken. 266 The finding that Castle Harlan and Bradken entered into the Bid Rigging Arrangement no later than 8 March 2011 is founded on direct and express communications between the parties to the arrangement, namely Castle Harlan and Bradken: see [84], [86], [90], [95], [96], [100], [103], [104], [106] and [107] above. 267 Even if, contrary to the view formed, those direct and express communications were insufficient to found a finding that Castle Harlan and Bradken entered into the Bid Rigging Arrangement no later than 8 March 2011, that finding is open having regard to the inferences to be drawn from the circumstances that existed: cf News Limited v Australian Rugby Football League Limited at 573-4 citing R v Associated Northern Collieries at 400. 268 The circumstances included: 1. Bradken's interest in acquiring NWS: see [37], [38], [39], [42], [44], [45], [49], [51], [52], [60], [71], [79], [95], [103]-[106] and [111] above; 2. that Bradken knew that Pala had launched a sale process for NWS: [79], [81], [82] and [83]; 3. Bradken's response to becoming aware that Pala had launched a sale process for NWS was first to contact Castle Harlan to tell it about the NWS sales process and that Bradken was interested in acquiring NWS and then to contact Merrill Lynch: see [84]-[94] above; 4. upon being told about the NWS sales process and that Bradken was interested in acquiring NWS (see (3) above), Castle Harlan immediately took steps to enter the sales process and having done so, immediately provided information it obtained from that process to Bradken: see [97], [100], [104], [110], [112], [113], [118]-[121], [126]-[128], [146] and [148] above; 5. despite itself not entering the sales process, Bradken undertook and obtained detailed analyses of NWS to ascertain what NWS might be worth, including from Merrill Lynch, which it provided to Castle Harlan: see [87], [88], [93], [94], [99], [101]-[103], [105], [108], [123], [126]-[128], [133], [144]-[147], [150], [162] and [179] above; 6. Hodges maintained control over the number and identity of those who knew about Bradken's interest and indirect participation in the sale process: see [94], [114], [126], [127], [132] and [160] above; 7. Bradken made enquiries about the cost Bradken might have to pay to Castle Harlan if Castle Harlan should succeed in acquiring NWS and Bradken then acquired NWS from Castle Harlan: see [105] and [107] above; 8. Castle Harlan negotiated an amendment to the NDA with UBS to remove the need for Castle Harlan to disclose the identity of its "advisers". The only adviser (at that time) was Bradken: see [112]-[114] above; 9. Bradken took steps to keep its involvement in the NWS sales process a secret: see [112], [113], [114], [118]-[122], [126], [127], [156], [171] and [174] above; 10. Castle Harlan was concerned about its reputational risk from its involvement in the "arrangement" and the "paper trail" and sought indemnities to protect itself: see [107], [119], [122], [129], [130], [181], [182], [183], [192], [193] and [194] above; 11. immediately prior to making the initial bid, Bradken assisted Castle Harlan to analyse the value of NWS: see [128], [131] and [133] above; 12. Bradken knew the initial bid was going in. It is to be inferred that Bradken knew the contents of the bid and it was for that reason that Bradken wanted to know the result: see [135], [136] and [137] above; 13. Bradken maintained direct contact with Castle Harlan at all relevant times and that included contact which referred, directly or indirectly, to the Bid Rigging Arrangement: see [84], [86], [90], [95], [96], [103], [104], [106]-[108], [110], [113], [115], [128]-[131], [133], [135]-[138], [143], [146], [149], [150], [155], [161]-[163], [167], [168], [174]-[178] and [181]-[197] above; 14. Bradken's adviser, Merrill Lynch, was aware of the Bid Rigging Arrangement: see [142] above; 15. Bradken continued to assist Castle Harlan in submitting the Final Offer to Pala: see [143], [144], [146], [149], [150], [155], [161], [162], [163] and [168eg] above; 16. prior to the submission of Castle Harlan's Final Offer, Bradken sought funding advice from Merrill Lynch (see [145] above), who presented to the Board of Bradken (see [147] above), and the Board subsequently authorised a capital raising: see [165] above; 17. Castle Harlan made false statements to NWS and its representatives about its involvement with Bradken in the NWS sales process: see [154] and [157]-[159] above; 18. on 2 June 2011, the day after Castle Harlan and Norcast entered into exclusive negotiations, Bradken Operations and Castle Harlan entered into a confidentiality agreement: see [174] above; 19. in a paper prepared for the 17 June 2011 Board meeting, Hodges and Ward misrepresented the nature of Bradken's involvement in the acquisition of NWS, either because they knew that its involvement would arouse the Board members' concerns or because they planned to discuss the true nature of the arrangement during the meeting without leaving a "paper trail": see [195] above; 20. Bradken was concerned that its arrangement with Castle Harlan would need to be disclosed to the ASX before Castle Harlan completed its acquisition of NWS and therefore structured the on-sale of NWS to avoid that obligation: see [176] and [177] above; 21. on 17 June 2011: 21.1 Bradken Operations entered into the deposit agreement with Castle Harlan: see [199] above; and 21.2 Norcast and BC entered into the SPA whereby BC agreed to pay US$190 million for all the shares in NWS: see [200] above; 22. on 22 June 2011, Bradken executed a side agreement which committed it to the terms of the SGPA between Bradken Operations and Castle Harlan that would be executed on closing between Norcast and Castle Harlan: see [201] above; 23. on 5 July 2011, Bradken drafted false answers to questions about the timing of its involvement in the sale of NWS: see [202] above; and 24. on 6 July 2011: 24.1 Bradken Operations executed the SGPA with BC, whereby Bradken Operations subscribed for 89.7% of the shares in BC and acquired the right to call for the remaining shares in BC; 24.2 Pala closed the sale of NWS to BC at US$190 million; 24.3 Bradken Operations exercised its right and acquired the remaining shares in BC; and 24.4 the total amount paid to Castle Harlan entities by Bradken was US$212.4 million, see [205] above. 269 Bradken's submissions, which addressed the state of an agreement regarding the eventual on-sale of NWS by Castle Harlan to Bradken, were beside the point. The existence of the Bid Rigging Arrangement did not depend upon the parties having reached a concluded agreement regarding the on-sale of NWS to Bradken. Further, each of the matters listed in [268] above is evidence not only of the existence of the Bid Rigging Arrangement, but to the extent that those matters occurred after 8 March 2011, is evidence of Bradken and Castle Harlan giving effect to the Bid Rigging Arrangement.

Did the Bid Rigging Arrangement contain a provision which had the purpose of directly or indirectly ensuring that in the event of a request for bids in relation to supply or acquisition of goods or services, one party would bid but the other would not (ie, was the purpose condition satisfied)? 270 The requirement in s 44ZZRD(3)(c) that a cartel provision must relate to a request for bids "in relation to the supply or acquisition of goods or services" was considered earlier: see [234]-[241] above. However, the purpose condition also draws attention to the purpose of the alleged cartel provision (in this case, the Bidding Provision). 271 Bradken submitted that there were two matters which precluded a finding that the purpose condition in s 44ZZRD(3)(c) was satisfied. First, Bradken submitted that the purpose condition required that the Court must find that the operative, subjective purpose of the parties to the Bid Rigging Arrangement was to ensure that, in the event of a request for bids, one party bid but the other did not. Second, Bradken further submitted that the requirement of "ensuring that … one or more parties to the contract, arrangement or understanding bid, but one or more other parties do not" (emphasis added) could not be satisfied unless there was a degree of reciprocity to the Bid Rigging Arrangement. 272 In relation to the first submission, Bradken submitted that none of the relevant individuals at Bradken or Castle Harlan had the subjective, operative purpose of entering into an arrangement that had the objective of ensuring that Bradken would not bid, but instead Castle Harlan would bid, for NWS. In Bradken's submission, Hodges and Greiner believed that Bradken had been excluded. The approach to Castle Harlan was therefore made simply to preserve the possibility of an acquisition of NWS at some point in the future. 273 I accept that the purpose condition, which requires that "the provision [have] the purpose of directly or indirectly … ensuring that in the event of a request for bids in relation to the supply or acquisition of goods or services … one or more parties to the contract, arrangement or understanding bid, but one or more other parties do not", directs the Court to consider the subjective, operative purpose of the parties to the relevant arrangement: EM at [1.33]-[1.34]; News Limited v South Sydney District Rugby League Football Club Limited (2003) 215 CLR 563 at [18], [43], [63] and [212] and Australian Competition and Consumer Commission v TF Woolam & Son Pty Ltd (2011) 196 FCR 212 at [61]ff. The subjective, operative purpose may be inferred, however, from the nature of the arrangement, the circumstances in which it was made and its likely effect: News Limited v South Sydney District Rugby League Football Club Limited at [44] and News Limited v Australian Rugby Football League Limited at 576. 274 Here, the parties to the Bid Rigging Arrangement were Bradken and Castle Harlan. The relevant subjective, operative purposes to be considered were those of Hodges, Greiner, Harlan and Morgan, which could be imputed to their respective corporate principals. 275 I reject Bradken's contention that Hodges and Greiner did not have a purpose of ensuring that Bradken would not bid, but instead Castle Harlan would bid, for NWS. As Gleeson CJ held in News Limited v South Sydney District Rugby League Football Club Limited at [18], "[t]he purpose of conduct is the end sought to be accomplished by the conduct". The belief that Bradken had been excluded from the NWS sales process is not inconsistent with that purpose. In fact, it is entirely consistent with that belief, and a logical extension of it, that Hodges and Greiner would seek to achieve a situation whereby another party (namely Castle Harlan) would lodge a bid on Bradken's behalf. A natural corollary of such a belief is that Bradken would not lodge a bid itself. As considered at [104] above, Hodges said on 5 March 2011 that he was "definitely hoping [Castle Harlan] can bid for the business". Indeed, it must be recalled that Bradken's submission proceeded on the stated premise that Castle Harlan would bid for NWS. That is not surprising because the evidence demonstrated that was their precise stated purpose. Once it is understood that Bradken and Castle Harlan intended that Castle Harlan would bid, it is inconceivable that Hodges would have made that statement on 5 March 2011 while still hoping that Bradken would also bid. It is equally inconceivable that Castle Harlan would have agreed to enter the NWS sale process, at Bradken's suggestion and with Bradken's assistance, in circumstances where Bradken still reserved the right to itself bid for NWS. Finally, Bradken's contention that the Court should accept Hodges' oral evidence that he was open to making a bid if Bradken had been included in the process is rejected. It was self serving, speculative and inconsistent with the contemporaneous documentary evidence: see, by way of example, [84], [86] and [89] above. 276 Further, Greiner's subjective, operative purpose was equally to ensure that Castle Harlan made a bid: see [86], [89], [90], [100], [104]-[107], [168], [186] and [187] above. Again, as a corollary to that purpose and consistent with his stated belief that Bradken had been excluded, I accept that Greiner's purpose was also to ensure that Bradken did not bid. 277 Harlan and Morgan were not called to give evidence. It is open to the Court to infer, based on the nature of the arrangement, the circumstances in which it was made and its likely effect, that their subjective, operative purposes, to be imputed to Castle Harlan, were that Castle Harlan would bid for NWS. As mentioned above, it is simply inconceivable that they would hold that purpose consistent with anything other than a desire to ensure that Bradken did not bid. 278 In relation to the second submission, I have already considered the contention that an arrangement (for the purpose of s 44ZZRD(3)) requires a degree of reciprocity: see [263] and [265] above. Bradken's submission is rejected. As set out above, the purpose of the Bidding Provision was to "[ensure] that in the event of a request for bids … one or more parties to the contract, arrangement or understanding bid, but one or more other parties [did] not".

Does s 44ZZRU of the CCA apply with the result that the cartel conduct prohibitions in ss 44ZZRJ and 44ZZRK are not engaged? 279 The CCA has created exceptions that carve out conduct from the operation of the cartel provisions where that conduct is governed by another prohibition in the CCA. One of the anti-overlap exceptions concerns the acquisition of shares or assets. The overlap provision is ss 44ZZRU. It relevantly provides: (1) Sections 44ZZRF, 44ZZRG, 44ZZRJ and 44ZZRK do not apply in relation to a contract, arrangement or understanding containing a cartel provision, in so far as the cartel provision provides directly or indirectly for the acquisition of: (a) any shares in the capital of a body corporate; or (b) any assets of a person. … (Emphasis added.) The prohibitions under s 45(2) against exclusionary provisions and the substantially lessening of competition provisions are subject to a similar exception: s 45(7) and EM at [4.40]-[4.41]. 280 The acquisition of shares or assets exceptions (ss 44ZZRU and 45(7)) are intended to ensure that mergers and acquisitions are subject to s 50 of the CCA and not the cartel provisions (Div 1 of Pt IV) or other anti-competitive agreements provisions (s 45): SA Brewing Holdings Ltd v Baxt (1989) 23 FCR 357 at 372. As a result, s 44ZZRU provides that the prohibitions in ss 44ZZRJ and 44ZZRK do not apply in relation to a contract, arrangement or understanding containing a cartel provision in so far as the cartel provision provides directly or indirectly for the acquisition of shares in the capital of a company. Section 44ZZRU "define[s] a boundary between the fields of operation" of ss 44ZZRJ and 44ZZRK and s 50: SA Brewing at 372. 281 A number of matters should be noted. First, s 44ZZRU expressly provides for the primacy of the prohibition against a contract, arrangement or understanding containing a cartel provision. The carve out from the prohibition in s 44ZZRU is then set out. It is limited in two respects. It is limited to a contract, arrangement or understanding containing a cartel provision in so far as the cartel provision provides directly or indirectly for the acquisition of shares in the capital of a company. In other words, the prohibition continues to apply to balance of the contract, arrangement or understanding containing a cartel provision except to the extent that the cartel provision provides directly or indirectly for the acquisition of shares in the capital of a company. The language of the section is "provides" not "relates to". It is specific in its terms. 282 Next, the carve out is limited by the fact that the application of ss 44ZZRJ and 44ZZRK to the relevant contract, arrangement or understanding is preserved by the words "in so far as". So long as the relevant contract, arrangement or understanding can stand with the excluded provision being severed, the balance can and will contravene those prohibitions: SA Brewing at 372. That construction is consistent with the structure of the CCA that it is s 50 which primarily regulates anti-competitive acquisitions. Put another way, matters that involve a substantial lessening of competition - completed acquisitions of shares - should remain subject to s 50. Other matters - such as the rigging of bids - remain and should remain subject to Div 1 of Pt IV. 283 In applying the s 44ZZRU exception to alleged cartel conduct, a three step analysis may be appropriate: 1. identify the cartel provision in the contract, arrangement or understanding; 2. identify the provision that provides directly or indirectly for the acquisition of the NWS shares; and 3. determine whether the cartel provision in (1) is severable from the provision in (2). See Beaton-Wells, C and Fisse, B, Australian Cartel Regulation (Cambridge University Press, 2011) at 301 and SA Brewing at 372. 284 In the present case, the cartel provision (called the Bidding Provision) was, and formed part of, the Bid Rigging Arrangement. It was a provision that Castle Harlan would bid for the NWS shares and Bradken would not bid. The provisions that provided directly for the acquisition of the NWS shares by Castle Harlan and Bradken were contained in the SPA and in the SGPA, respectively. Put another way, at the time of the making of the Bid Rigging Arrangement, no provision in that arrangement or understanding between Castle Harlan and Bradken could have provided directly or indirectly for the acquisition of shares. Neither of them owned the NWS shares at that time. The question which arises is whether the Bidding Provision provided "indirectly" for the acquisition of the NWS shares. The answer is no. The Bidding Provision related to the two stages of the NWS sales process (see [72] above), not to the eventual acquisition of the shares. Once stage 2 was complete, and Castle Harlan had lodged a final bid and Bradken had not, the work of the Bidding Provision was complete. For the same reason, s 50 did not and could not apply to the Bidding Provision in the Bid Rigging Arrangement - the provision did not directly or indirectly effect any acquisition. In the present case, the third step in the analysis does not arise.

Is Norcast able to rely upon the conduct of Bradken and Castle Harlan engaged in outside of Australia and, further, can Norcast establish that Castle Harlan was carrying on business within Australia (see s 5 of the CCA)? 285 The reach of s 5 of the CCA has been addressed earlier: see [230]-[231] above. Further, and for the purpose of its claim under s 82 of the CCA, the Minister provided consent for Norcast to rely upon conduct engaged in outside of Australia: see [231] above. For those reasons, Norcast is able to rely upon the conduct of Bradken and Castle Harlan engaged in outside of Australia. Moreover, Norcast established that Castle Harlan was carrying on business in Australia: see [242]-[256] above.

Was Bradken a person involved in Castle Harlan's contraventions within the meaning of s 75B of the CCA? Were Greiner and/or Hodges involved in either or both of Bradken and/or Castle Harlan's contraventions? 286 Norcast alleged that Bradken was involved (within the meaning of s 75B of the CCA) in Castle Harlan's contraventions of ss 44ZZRJ and/or 44ZZRK and that Greiner and Hodges were involved (within the meaning of s 75B of the CCA) in one or both of Bradken's and Castle Harlan's contraventions of ss 44ZZRJ and 44ZZRK. 287 As mentioned above, there can be no finding of accessorial liability where the primary contravention is not established. Here, the primary contravention has been established. It is then necessary to consider Norcast's contentions about Bradken's, Greiner's and Hodges' involvements in the Bid Rigging Arrangement. 288 Section 75B is procedural. It provides: (1) A reference in this Part to a person involved in a contravention of a provision of Part IV or IVB, or of section 95AZN, shall be read as a reference to a person who: … (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or … 289 Section 75B extends the operation of other provisions including ss 82 (damages) and 87 (other orders). A person will only be regarded as involved in a contravention within the meaning of s 75B if the person intentionally participated in the contravention. A person includes a body corporate: s 2C of the Acts Interpretation Act 1901 (Cth). Intentional participation requires actual, not constructive, knowledge of the essential matters that make up the contravention: Compaq Computer Australia Pty Ltd v Merry (1998) 157 ALR 1 at 4-5; Yorke v Lucas (1985) 158 CLR 661 and Quinlivan v Australian Competition and Consumer Commission (2004) 160 FCR 1 at [9]. There are two important qualifications. It is unnecessary to prove that the respondent knew that his or her actual participation was a breach of the CCA and, secondly, where there is a combination of suspicious circumstances and a failure to make enquiry, it may be possible to infer knowledge: Compaq Computer Australia Pty Ltd v Merry at 5. Norcast's amended pleading of knowledge included some particulars of constructive knowledge. Constructive knowledge is not sufficient and those claims are rejected. Of course, the pleading of actual knowledge is unaffected. 290 The Respondents submitted that none of them were involved in the relevant contraventions. They relied upon two grounds. First, that the principal Bid Rigging Arrangement claim failed. It is not in dispute that a claim for accessorial liability must fail if the primary claim is not maintainable: Rural Press Ltd v Australian Competition and Consumer Commission (2002) 118 FCR 236 at [154]. Here, the claim succeeds: see [208]-[278] above. 291 If the principal Bid Rigging Arrangement claim was maintainable (and it is), Bradken did not submit that there was any other ground or grounds tending against a finding that it knowingly or intentionally participated in Castle Harlan's contraventions of ss 44ZZRJ and 44ZZRK. That is not surprising. If (as I have found) there was a principal contravention constituted by Bradken's and Castle Harlan's conduct in making and giving effect to the Bid Rigging Arrangement, Bradken was necessarily involved (within the meaning of s 75B of the CCA) in Castle Harlan's contraventions (and vice versa). Bradken's conduct, referred to above, establishes it had knowledge of the essential elements of Castle Harlan's contraventions. 292 It is then necessary to deal with Greiner and Hodges. The second ground relied upon by them was that neither of them knowingly or intentionally participated in any contravention by Castle Harlan or Bradken "in the sense of them having actual knowledge of the essential elements that make up the alleged contravention and a level of involvement". These contentions are rejected. 293 Each knew of the essential facts and had more to do with the subject matter of the complaint constituting the contravention than simply having some knowledge of the matter: cf Yorke v Lucas at 670. 294 In the case of Greiner, his role and knowledge included that: 1. Greiner was Bradken's Chairman and a non-executive director and Deputy Chairman of CHAMP (see [29] above) and, as Chairman of Bradken, Greiner knew NWS was a strategic acquisition opportunity for Bradken: see [42] above; 2. in February 2011, Hodges told Greiner NWS was for sale. He then agreed with Hodges that Bradken would not bid but would tell Castle Harlan so that Castle Harlan would be interested in the sale: see [86] above; 3. he made the initial contact with Morgan at Castle Harlan about NWS: see [90] above; 4. he obtained the NWS teaser from Morgan and told Morgan he looked forward to discussing further when Morgan received the IM: see [100] above; 5. he had knowledge of critical steps including in early March 2011, when he and Hodges were asked by Morgan whether the "talk further on [NWS]" should wait for the IM to arrive: see [104] above. Hodges responded two minutes later to Morgan and Greiner - "[y]es definitely hoping [Castle Harlan] can bid for the business". Thirty five minutes later, Greiner replied to Morgan asking him to call him over the weekend as it "might cut thru a bit": see [104] above; 6. by 7 March 2011, Greiner had received a financial analysis concerning NWS which Hodges explained to Greiner and then asked "[c]an we discuss how we might work with [Castle Harlan] on this as I think this is best, likely only chance": see [105] above. The idea that Bradken had to "work with" Castle Harlan was discussed between Hodges and Greiner at about this time and, in particular, they discussed the minimum cost that Bradken might have to pay to Castle Harlan should Castle Harlan succeed in acquiring NWS and Bradken then acquired NWS from Castle Harlan; 7. to facilitate the arrangement, on 8 March 2011, Greiner met with Harlan in Sydney. Greiner could not recall the precise terms of the conversation but did recall that Harlan said that he would speak with Morgan and said words to the effect that he would "be keeping an eye on [NWS], and hope[d] … some mutually satisfactory deal [could] be done": see [106] above. Next, Greiner met with Ferris, the Chairman of CHAMP, to seek to ascertain how much the arrangement was going to cost Bradken: see [107] above. Then, Greiner immediately reported to Hodges on his discussion with Harlan: see [107] above. Greiner told Hodges that Harlan had said that Castle Harlan "would be happy to do a transaction of any sort with Bradken and had complete faith in [Greiner] and [Hodges]". There were two issues - reputational risk to Castle Harlan associated with the arrangement that Hodges and Greiner had discussed with Castle Harlan and the cost of Castle Harlan's involvement. Greiner told Hodges that the primary discussion was to be between Hodges and Morgan: see [107] above; 8. on 20 March 2011, Greiner was told by Hodges that there were "information issues for Bradken": see [121] above. These were solved: see [127] above; 9. Greiner attended the Bradken Board meeting on 21 April 2011 when the NWS acquisition was considered. An analysis undertaken by Merrill Lynch was presented to the Board. It was detailed. The analysis was predicated upon a NWS "enterprise value" of between $200 to $230 million and "fees and expenses" of $20 million. Greiner's evidence was that he could not recall where Merrill Lynch had obtained the figures from. The presentation begins with a statement that: "Neutron assumptions and synergies based on Bradken management forecasts": see [147] above; 10. on 14 May 2011, Greiner's (and Hodges') roles and involvement were clear. Greiner told Hodges that Morgan was concerned if Greiner and Hodges "both go under a bus": see [160] above; 11. on 27 May 2011, the day the final bids for NWS were due, Greiner sought confirmation from Harlan that "the [Castle Harlan]/Bradken arrangements are satisfactory": see [168] above; and 12. Greiner was the person who resolved the "pens down" position adopted by Castle Harlan and ensured that the deal proceeded: see [185]-[186] above. Put simply, Greiner was involved and had knowledge of the essential elements from the start to the finish. 295 In the case of Hodges, his role and knowledge was more extensive. He was one of the architects (along with Greiner) of the arrangement (see [84]-[86] above) and then the principal who controlled and directed the arrangement. His control extended to every aspect of the arrangement - personnel (see [94], [114], [126], [127], [132] and [160] above), the steps taken and not taken (see [79], [84]-[87], [89], [93]-[96], [98]-[105], [108], [110]-[115], [118], [120], [121], [124]-[127], [132], [138], [139], [142], [145], [149], [150], [162], [165], [167], [176], [179], [180], [185], [188], [192]-[195], [196]-[199], [202] and [205] above) and the secrecy not only of the arrangement itself but also of the distribution of information Bradken obtained from Castle Harlan (see [100], [114], [118]-[122], [126] and [127] above). 296 The fact that proceedings were not commenced against Castle Harlan does not preclude the Court making appropriate findings and orders against Greiner and Hodges: Australian Competition and Consumer Commission v Black on White Pty Limited (2001) 110 FCR 1 and Matheson Engineers Pty Ltd v El Raghy (1992) 37 FCR 6. 297 Accordingly, I find that each of Greiner and Hodges were involved (within the meaning of s 75B of the CCA) in both Castle Harlan's and Bradken's contraventions of ss 44ZZRJ and 44ZZRK.

What was Norcast's loss and damage? 298 Norcast claimed damages from the Respondents. Norcast submitted that the damages were to be quantified as the difference between the amount that Norcast received for its sale of the shares in NWS (US$190 million) and the amount that Bradken, as the likely highest bidder, but for the contraventions, would have agreed to pay to acquire those shares directly from Norcast. Norcast quantified that difference as at least equal to the US$22.4 million premium Bradken agreed to pay and did in fact pay to Castle Harlan. 299 Norcast further submitted that the price may well have been considerably higher, having regard to the fact that Bradken had valued NWS at more than A$300 million, on the basis of $40 million in additional earnings from synergies which Bradken expected to be able to capture post-acquisition and that, according to Morgan, the US$190 million base price agreed with Norcast was "at least $10m below the top of [Hodges'] range". 300 The Respondents filed extensive submissions to the effect that Norcast suffered no loss or damage. 301 Section 82 has at least five discrete elements: Marks v GIO Australia Holdings Limited (1998) 196 CLR 494 at [95]. One element is that only a person who has suffered loss or damage may rely on the section: I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Limited (2002) 210 CLR 109 at [42]-[45]. Another element is the causal requirement that the injury be sustained by the contravention: Marks at [95]. If the Court finds that damage has occurred, it must do its best to quantify the loss even if a degree of speculation and guess work is involved: Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167 at 183. Of course, loss or damage includes economic or financial loss as well consequential loss which is a direct result of the conduct in question: Wardley Australia Limited v Western Australia (1992) 175 CLR 514 and Frith v Gold Coast Mineral Springs Pty Ltd (1983) 65 FLR 213 at 232. 302 What then is the position here? The Respondents submitted that Norcast suffered no loss or damage because it was happy with the bid it received from Castle Harlan, Norcast would not have otherwise achieved a higher price and Bradken would not have agreed to pay more than US$190 million. I reject those contentions. 303 Damages are assessed at the difference between the US$212.4 million including costs and expenses which Bradken did in fact pay to acquire NWS and the US$190 million Norcast received from Castle Harlan. In assessing the loss or damage, there is necessarily a degree of estimation. However, that assessment proceeds on the basis of some established facts. First, the sale process was competitive. Despite Bradken's assertions to the contrary, an assessment of loss or damage should not take into account the possibility that Bradken would have been able to "discover" the other bids before making its own bid in a competitive bid process. Second, the bidding process was confidential. As a result, the contention that underpinned much of this section of Bradken's submissions, that it would have known that US$190 million was the price against which it had to bid, falls away. Third, as the factual analysis demonstrates, there were significant strategic considerations (including synergies) for Bradken in seeking to acquire the business: see [37], [38], [42], [88], [99] and [101]-[104] above. Even Greiner acknowledged that because there were synergies between Bradken's and NWS' businesses, Bradken was able to be "a little more aggressive" in terms of the multiple of NWS' EBITDA which it was prepared to offer. 304 Moreover: 1. as early as March 2011, Hodges told his staff that he would have to pay nearly $200 million to purchase NWS: see [101] above. That was not an uninformed statement. Hodges knew in November 2010 that Pala had been approached with a "knock out offer" for NWS in the mid $170 millions which led to Pala to consider "exiting by a selective process": see [62] above; 2. the US$190 million price paid by Castle Harlan "was at least $10m below the top of [Hodges'] range": see [189] above; 3. a price of US$212.4 million was within the UBS proposed range of US$180 million to US$220 million; 4. in its presentation to the Bradken Board, prepared on instructions from Bradken management, Merrill Lynch included a range of US$200 million to US$230 million as the range of potential prices for the NWS acquisition: see [147] above; 5. a price of US$212.4 million was value accretive to Bradken; 6. in Greiner's view, the price of US$212.4 million was "a good deal" for Bradken; and 7. during cross-examination, Hodges would not swear that he would not have paid US$212.4 million to Norcast directly. 305 Accordingly, I find that Norcast suffered loss or damage and assess that loss or damage at US$22.4 million (being the difference between the US$212.4 million including costs and expenses which Bradken did in fact pay to acquire NWS and the US$190 million Norcast received from Castle Harlan).

E. MISLEADING OR DECEPTIVE CONDUCT CLAIMS 306 Norcast relied upon three instances of alleged misleading or deceptive conduct. First, Norcast relied upon Bradken's silence about the Bidding Provision, the back to back sale arrangement with Castle Harlan and the fact that it and Castle Harlan were cooperating for the purpose of acquiring NWS, between late February 2011 and 6 July 2011. Second, Norcast submitted that Castle Harlan's silence as to those matters also constituted misleading or deceptive conduct in contravention of s 18 of the ACL. 307 Finally, Norcast submitted that Castle Harlan made the following express representations which were misleading or deceptive: 1. on 12 or 13 May 2011 that it did not have plans to sell NWS to Bradken and that it would not do so; and 2. on 27 May 2011 that: 2.1 the final bid was made on behalf of Castle Harlan and its associated entities; 2.2 Castle Harlan intended that the entity to acquire the shares in NWS would be a corporation controlled in the sole investment discretion of Castle Harlan's associated entities; 2.3 the entity to acquire the shares in NWS would be a corporation controlled in the sole investment discretion of Castle Harlan's associated entities; 2.4 Castle Harlan and its associated entities did not expect to require, or intend to obtain, any funding for the acquisition of the shares in NWS from non-associated entities of Castle Harlan; and 2.5 Castle Harlan and its associated entities would not require, and would not obtain, any funding for the acquisition of the shares in NWS from non-associated entities of Castle Harlan, (collectively, the Representations). 308 In relation to the claims made against Castle Harlan, Norcast alleged that Bradken, Greiner and Hodges were persons involved within the meaning of s 2(1) of the ACL. Norcast further alleged that each of Greiner and Hodges were persons involved with Bradken's misleading or deceptive conduct within the meaning of s 2(1) of the ACL.

Did Bradken engage in misleading or deceptive conduct by its silence? 309 Silence may amount to misleading or deceptive conduct. The categories of conduct are not closed. As Black CJ said in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 32: Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive. See also Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357 at [16]-[18]. 310 A duty to disclose is not essential in order to establish that silence constitutes misleading or deceptive conduct: Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 at 88. However, unless there is a duty to disclose relevant facts, or the circumstances are such that there is a reasonable expectation that a relevant fact would be disclosed if it exists, it is difficult for silence to constitute misleading or deceptive conduct. 311 In Winterton Constructions Pty Ltd v Hambros Australia Limited (1992) 39 FCR 97 at 114, Hill J put it in the following terms: Obviously, it is difficult to see how a mere silence could, of itself, constitute conduct which is misleading or deceptive or likely to mislead or deceive. However, if the circumstances are such that a person is entitled to believe that a relevant matter affecting him or her adversely would, if it existed, be communicated, then the failure to so communicate it may constitute conduct which is misleading or deceptive because the person who ultimately may act to his or her detriment is entitled to infer from the silence that no danger of detriment existed. 312 In the context of a bargaining process, full disclosure in commercial negotiations is not necessarily required: cf Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458 at 475. Instead, the purpose of s 18 is to ensure that the bargaining process is not viewed as a licence to deceive: CCP Australian Airships Ltd v Primus Telecommunications Pty Ltd (2005) ATPR 42-042 at [33] citing Poseidon Ltd v Adelaide Petroleum NL (1991) 105 ALR 25 at 26. 313 In this context, ss 4(2)(a) and (c) of the CCA are sometimes relevant. They provide that: (a) a reference to engaging in conduct shall be read as a reference to doing or refusing to do any act, including the making of, or the giving effect to a provision of, a contract or arrangement, the arriving at, or the giving effect to a provision of, an understanding or the requiring of the giving of, or the giving of, a covenant; … (c) a reference to refusing to do an act includes a reference to: (i) refraining (otherwise than inadvertently) from doing that act; or (ii) making it known that that act will not be done; and … Inadvertence does not invoke these provisions; the relevant refusing or refraining must be engaged in deliberately: Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477. 314 Bradken submitted that neither it nor Castle Harlan engaged in misleading or deceptive conduct by silence because neither was obliged to disclose Bradken's identity as a potential purchaser of NWS. As noted earlier, that is not the test. Further, that was not the alleged misrepresentation pleaded by Norcast: see [306] above. 315 The question is whether, by its silence, Bradken failed to disclose the three matters referred to at [306] above so as to "deceive" Norcast. The answer is yes. 316 Bradken knew of the NWS sale process but did not seek to enter it: see [79] above. With that knowledge, Bradken took steps to ensure that Norcast did not learn of the "connection" between Castle Harlan and Bradken in relation to Castle Harlan's acquisition of NWS: see [118]-[122], [126] and [127] above. The steps were deliberate and designed to deceive Norcast. Bradken and Castle Harlan reached an arrangement or understanding, the Bid Rigging Arrangement, which included the Bidding Provision. Bradken and Castle Harlan cooperated and partnered for the purposes of acquiring NWS. The acquisition of NWS was Hodges' "plan" or "ultimate goal" and why he arranged or at least "encouraged" Castle Harlan to bid. The cooperation and partnering included (but was not limited to): 1. entering into the Bid Rigging Arrangement: see [265]-[269] above; 2. reviewing and analysing confidential due diligence materials at Castle Harlan's offices in circumstances where Bradken knew that its use of those materials was ostensibly restricted to assisting Castle Harlan to acquire NWS: see [118]-[122], [126], [127] and [129] above; 3. selecting the identity of the foundry consultant to accompany Castle Harlan on the site visits and then ensuring that the consultant was not made aware of the connection between Castle Harlan and Bradken: see [126] and [127] above; 4. taking steps to reduce the "paper trail" which documented the extent of the cooperation and partnering: see [119] and [149] above; and 5. seeking to avoid entering into an agreement with, or making a payment to, Castle Harlan which would require disclosure to the market, until after Castle Harlan had acquired NWS: see [177], [186], [202] and [203] above. 317 Those deliberate and deceptive steps were taken by Bradken to prevent disclosure of its direct involvement in Castle Harlan's acquisition of NWS. In doing so, by its silence, Bradken represented that it was not involved in Castle Harlan's acquisition of NWS. That conduct was misleading and deceptive. Contrary to Bradken's contention, the claim for misleading or deceptive conduct was not predicated on Norcast establishing the existence of the Bid Rigging Arrangement. Even in the absence of the Bid Rigging Arrangement, in all the circumstances, Bradken and Castle Harlan's silence constituted misleading or deceptive conduct in contravention of the ACL. 318 Bradken further submitted that Bradken's silence was not misleading or deceptive in circumstances where Norcast knew that it was not uncommon for a private equity business to resell a company it had acquired. Norcast's general awareness of the likelihood that Castle Harlan might, at some time in the future, sell NWS cannot and does not cure Bradken's misleading or deceptive conduct by silence.

Did Castle Harlan engage in misleading or deceptive conduct? 319 Two forms of misleading or deceptive conduct were alleged against Castle Harlan - silence and positive representations. 320 First, Castle Harlan, by its silence, failed to disclose facts and matters so as to "deceive" Norcast. Castle Harlan itself took steps to ensure that Norcast did not learn of the "connection" between Castle Harlan and Bradken: see [112], [118], [119], [154], [157] and [159] above. Again, those steps were deliberate and designed to deceive Norcast. Those deliberate and deceptive steps were taken by Castle Harlan to prevent disclosure of the Bidding Provision and of Bradken's direct involvement in Castle Harlan's acquisition of NWS. In doing so, Castle Harlan represented that there was no arrangement or understanding between it and Bradken and that Bradken was not involved in its acquisition of NWS. That conduct was misleading and deceptive. 321 Second, the positive representations (the Representations) can be divided into two categories: those made by Morgan during the site visits to Singapore and Malaysia on 12 or 13 May 2011 and those made in the Final Bid Letter. In each case, Bradken submitted that the Representations were not made and, if they were, they were misleading or deceptive. 322 The evidence established that Castle Harlan made the Representations: see [157]-[159] above (in relation to the site visits in Singapore and Malaysia) and [171] (in relation to the contents of the Final Bid Letter). I reject Bradken's submission that Morgan's responses on 12 or 13 May 2011 did not convey that Castle Harlan did not have plans to sell NWS to Bradken and that it would not do so. The representations were conveyed over the course of a discussion. In answer to a question from Wilson as to whether Castle Harlan had plans or intentions to sell NWS, Morgan responded that Castle Harlan did not. That answer was false. In the context of Morgan's false answer to that question, Wilson further asked whether Castle Harlan was planning to sell NWS to Bradken. Bradken's submission was that Morgan did not answer the question, but instead went on to explain the AmeriCast transaction. Bradken submitted that "[n]o such representation was made in so many words". I reject that submission, for two reasons. First, in the context of Morgan's false answer to the first question, his response to the second was quite disingenuous and, one can only conclude, deliberately designed to deflect attention away from Castle Harlan's true intentions and plans, by providing an innocent explanation for what Morgan perceived to be the source of NWS' concerns, the AmeriCast transaction. Second, as mentioned above, Wilson's contemporaneous report of the discussion noted that "[Morgan] was pretty straightforward in saying no": see [157] above. Wilson's witness statement did not include such a remark. It was not put to Wilson that there was an inconsistency or that his report was false. I accept that Morgan's response was in fact more emphatic than Wilson's witness statement would otherwise suggest. 323 Turning to the Representations in the Final Bid Letter, I reject Bradken's submissions. I accept Norcast's submissions that the Final Bid Letter contained representations that: 1. the final bid was made on behalf of Castle Harlan and its associated entities: see the words "[Castle Harlan], on behalf of Castle Harlan Partners V, LP. ("CHPV"), is pleased to present this proposal in response to your letter, dated April 26, 2011, relating to the acquisition of [NWS] and its subsidiaries" at [171] above; 2. Castle Harlan intended that the entity to acquire the shares in NWS would be a corporation controlled in the sole investment discretion of Castle Harlan's associated entities: see the words "[t]he acquiring entity would be a corporation controlled in the sole investment discretion of CHPV" at [171] above; 3. the entity to acquire the shares in NWS would be a corporation controlled in the sole investment discretion of Castle Harlan's associated entities: as for (2) above; 4. Castle Harlan and its associated entities did not expect to require, or intend to obtain, any funding for the acquisition of the shares in NWS from non-associated entities of Castle Harlan: see the words "[w]e would not require any financing conditions to consummate this transaction" (see [171] above) which was a response to UBS' requirement that Castle Harlan provide: … clear statements with respect to the following: … a description of all the sources of funding for the purchase of the Company and an indication of the timing and status of funding commitments. If applicable, your Final Offer should include fully committed financing letters, capable of being executed, and a list of contacts, with telephone numbers, for your source(s) of financing, with whom any financing arrangements can be discussed in detail. (see [148] above); and 5. Castle Harlan and its associated entities would not require, and would not obtain, any funding for the acquisition of the shares in NWS from non-associated entities of Castle Harlan: as for (4) above. 324 Further, each of the Representations was misleading or deceptive: 1. in relation to Morgan's responses during the site visits on 12 or 13 May 2011, those representations were misleading or deceptive having regard to the extent of Bradken's and Castle Harlan's cooperation and partnering prior to that date: see [95]-[98], [100], [103], [104], [106]-[108], [110], [112], [113], [115], [118]-[122], [126]-[130], [133], [135], [136], [138], [139], [143], [144], [146], [148], [149], [150], [155] and [156] above. To the extent they were representations as to future matters, they will be taken to be misleading or deceptive unless Castle Harlan had reasonable grounds for their making: s 4 of the ACL. Bradken submitted that Castle Harlan had reasonable grounds to make the representations. I reject that submission. In the context of the matters referred to above, there could be no reasonable basis for Castle Harlan to represent that Castle Harlan would not sell NWS to Bradken; 2. in relation to [323(1)] above, that representation was misleading or deceptive. The final bid was made on Castle Harlan's and Bradken's behalf, and to describe it as being made solely on Castle Harlan's behalf was disingenuous in light of the dealings between it and Bradken prior to that date: see [95]-[98], [100], [103], [104], [106]-[108], [110], [112], [113], [115], [118]-[122], [126]-[130], [133], [135], [136], [138], [139], [143], [144], [146], [148], [149], [150], [155], [156], [160], [161], [162], [163], [167], [168] and [170] above; 3. in relation to [323(2)] above, that representation was misleading or deceptive. Bradken was in the process of raising approximately A$150 million to be used to fund the acquisition of NWS (see [165] above). Castle Harlan knew that and knew that Bradken would provide sufficient funds to "effectively de-risk the deal" and would "co-operate on the question of where the money flows": see [168] and [170] above; 4. in relation to [323(3)] above, the representation was a representation as to future matters and, in light of the matters referred to at (3) above, it was made without a reasonable basis; 5. in relation to [323(4)] above, that representation was misleading or deceptive. Castle Harlan knew that it would require, and intended to obtain, funding for the acquisition of the shares in NWS from Bradken: see [168] and [170] above; and 6. in relation to [323(5)] above, the representation was a representation as to future matters and, in light of the matters referred to at (5) above, it was made without a reasonable basis. 325 In all of the circumstances, the Representations were misleading or deceptive. Further, on 17 June 2011, Castle Harlan provided a letter which restated that it was to be "CHP V … (together with certain or its affiliates)" which would make an equity contribution of US$190 million on the closing date: see [200] above. Norcast submitted that the 17 June 2011 letter repeated and affirmed the Representations as continuing at that later date. Given the earlier finding that the Representations were misleading or deceptive when made, and remained so on 17 June 2011, it is unnecessary to consider the additional effect, if any, of the 17 June 2011 letter, save that it may be relevant to the consideration of reliance: see [327] below.

Did Norcast rely upon Bradken and/or Castle Harlan's representations? 326 In order to recover damages, Norcast must establish that it suffered loss or damage "because of" Bradken's or Castle Harlan's conduct in breach of s 18 of the ACL: s 236 of the ACL. The use of the words "because of", as with the use of the word "by" in s 82 of the TPA, should be understood to import the traditional notion of causation as a question of fact to be determined by reference to common sense and experience into which policy considerations and value judgments necessarily enter: Wardley Australia Limited v Western Australia (1992) 175 CLR 514; E & MH March v Stramare Pty Limited (1991) 171 CLR 506. It is not always necessary to establish reliance in order to prove causation: Janssen-Cilag Pty Limited v Pfizer Pty Limited (1992) 37 FCR 526 at 529-30 cited in Marks v GIO at 528 and SPAR Licensing Pty Ltd v MIS Qld Pty Ltd (No 2) [2012] FCA 1116 at [211]. 327 Here, Norcast's Amended Fast Track Statement pleaded that: 26. Relying on the faith and truth of the representations referred to in paragraphs 24A [the 12 or 13 May 2011 representations] and 25 [the Representations] … and induced thereby, Norcast accepted the 27 May bid and agreed to enter the exclusive negotiation period with Castle Harlan and its associated entities. … 28. Relying on the faith and truth of the representations, repeated and affirmed as continuing, and induced thereby, Norcast executed the SPA and proceeded on 6 July 2011 to complete the sale of the shares in NWS to BC pursuant to the SPA for a price of US $190 million. … 47. But for the making of the representations and the non-disclosures: (a) Norcast would not have accepted a price of US $190 million for the shares in NWS; (b) the material terms of the SPA would have been agreed differently; and (c) Norcast would have sold the shares in NWS directly to Bradken or its associated entities for a higher price. A careful reader will notice that Norcast did not plead reliance upon the representations said to have arisen by Bradken's and Castle Harlan's silence, although paragraph 47 suggests that, had it known of the matters not disclosed, it would have done things differently. 328 Norcast submitted that it did, in fact, rely upon Bradken's silence, Castle Harlan's silence and the Representations. It submitted that its reliance was established on evidence from Barton, Wilson and Bulckaert that: 1. Bradken was perceived as the most obvious and likely highest bidder for NWS; 2. on 5 May 2011, Bulckaert asked Morgan whether Castle Harlan was representing Bradken and Bulckaert believed what Morgan said; 3. on 12 or 13 May 2011, Wilson specifically asked Morgan whether Castle Harlan was planning to sell NWS to Bradken, Barton read and relied upon Wilson's report of his discussion with Morgan, both Barton and Wilson believed what Morgan said; 4. Barton and Wilson first heard of Bradken's involvement in Castle Harlan's acquisition of NWS when they read Bradken's ASX release on 6 July 2011; and 5. had Barton been aware of Bradken's involvement, he would have sought to negotiate a substantially higher price for NWS with Bradken. 329 Bradken submitted that Norcast had failed to explain what it would have done differently had the truth of Bradken's involvement become known. Bradken posed a series of hypothetical questions designed to undermine the conclusion that Norcast would have done anything differently. Presumably, Bradken's submission was that, if Norcast had known of Bradken's involvement, it still would have accepted Castle Harlan's 27 May 2011 bid, entered into an exclusive negotiation period with Castle Harlan, executed the SPA and proceeding to complete the transaction on 6 July 2011. Bradken further submitted that Norcast could not establish reliance in circumstances where neither Castro nor either of the Lims (the 25% owners of NWS) gave evidence. 330 I reject Bradken's submissions. The evidence at [328] above is sufficient to establish that Norcast relied upon Bradken's silence, Castle Harlan's silence and the Representations. Had Norcast known of the true position, it would have sought to negotiate a sale of NWS with Bradken. The addition of Bradken into the NWS sale process would have resulted in an increased sale price. It is not necessary, for the purpose of s 236 of the ACL, to consider all of the permutations of the hypothetical scenario in which Bradken's involvement was known to Norcast. As Lockhart J said in Kabwand Pty Ltd v National Australia Bank Ltd (1989) ATPR 40-950 at 50,378 (in relation to s 52 of the TPA): For present purposes it is sufficient to say that a person claiming damages must show either that he has been induced to do something or to refrain from doing something which gives rise to damage or has been influenced to do or refrain from doing something giving rise to damage by the conduct contravening s 52. Barton's, Wilson's and Bulckaert's evidence is sufficient to conclude that Norcast was induced to take the steps referred to above "because of" the Representations. 331 Further, as Kiefel J concluded in Hanave Pty Ltd v LFOT Pty Ltd (formerly Jagar Projects Pty Ltd) (1999) 43 IPR 545 at 555-6 (with whom Wilcox J agreed): The question of causation can sometimes be resolved not by direct evidence as to what part a misrepresentation played in the process of entry into contract, but by a court determining what effect must be taken to have resulted. Indeed this course may sometimes be preferable to one which rested solely on evidence later given on the point. Were it necessary to do so, I would conclude that the effect of Bradken's silence, Castle Harlan's silence and the Representations was that Norcast took the steps referred to above. That is the effect which must be taken to have resulted. 332 Even if reliance was not established, however, I would find that Norcast had suffered loss or damage "because of" Bradken's silence, Castle Harlan's silence and the Representations. Here, where the silence was engaged in deliberately and, in Castle Harlan's case, in conjunction with express misrepresentations, there is a sufficient nexus between the representations and Norcast's loss and damage.

Was Bradken a person involved in Castle Harlan's contraventions within the meaning of s 2(1) of the ACL? Were Greiner and/or Hodges involved in either or both of Bradken and/or Castle Harlan's contraventions? 333 Section 2(1) of the ACL defines "involved" as: 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. 334 Section 2(1) of the ACL reproduces s 75B(1) of the CCA: see [288] above. The principles applicable to s 2(1) of the ACL (definition of 'involved') are the same as those applicable to s 75B of the CCA, considered at [288]-[289] above. There can be no finding of accessorial liability where the primary contravention is not established. Here, the primary contravention has been established. It is then necessary to consider Norcast's contentions about Bradken's, Greiner's and Hodges' involvements in the contraventions of the ACL. 335 Bradken prompted Castle Harlan to enter the NWS sale process. Bradken and Castle Harlan entered into the Bid Rigging Arrangement. The conduct referred to at [316] above evidences Bradken's intention, shared with Castle Harlan, that Bradken's involvement in the NWS sale process should be kept secret from NWS. In that sense, I accept that Bradken aided, abetted, counselled or procured the contravention constituted by Castle Harlan's silence. Further, Bradken had more to do with the subject matter of the Representations than merely having some knowledge of the matter. Bradken knew that Castle Harlan planned to attend the management presentation and site visits: see [126]-[127] above. Bradken took steps to ensure that its involvement remained secret during the management presentation and site visits: see [126]-[127] above. It is open to infer that Bradken and Castle Harlan shared a desire that Bradken's involvement should not be disclosed at the management presentation and site visits and that the secrecy should extend, in Ward's words, "everywhere": see [127] above. In that sense, I accept that Bradken was knowingly concerned in the contraventions constituted by the Representations. 336 Both Greiner and Hodges were involved in Bradken's misleading or deceptive conduct. The conduct summarised at [316] above was engaged in by Greiner and Hodges. As to Hodges' conduct: see [295] above. As to Greiner's conduct: see [294] above. I accept that Hodges and Greiner aided, abetted, counselled or procured the contravention constituted by Bradken's silence, or at least were knowingly concerned in it. 337 Finally, both Greiner and Hodges were also involved in Castle Harlan's silence and the Representations. Each of the acts of Bradken referred to in [335] above was an act of Hodges or Greiner, or both. As to Hodges' conduct: see [295] above. As to Greiner's conduct: see [294] above. Hodges gave evidence that it was not communicated to him that Morgan would deny Bradken's involvement and that it was not in Hodges' contemplation that Morgan would do so. I reject Hodges' evidence. It is self-serving and contrary to the contemporaneous facts. Secrecy was an essential part of the Bid Rigging Arrangement; it was a requirement which Hodges expressly communicated to Ward. It is open to infer that Ward communicated Hodges' desire to Castle Harlan and that Castle Harlan, acting on Hodges' instructions through Ward, took steps to conceal Bradken's involvement, including in response to direct questions from Wilson and Bulckaert. Further, it is not necessary for Hodges or Greiner to have been aware of the terms of the Final Bid Letter. The terms of the letter were crafted to conceal Bradken's involvement to give Castle Harlan's final bid the appearance of a bid made only on Castle Harlan's behalf. That was consistent with the instructions which Hodges gave to Ward, which I accept that he gave to Castle Harlan. It was also consistent with Greiner's conduct. I accept that Hodges and Greiner aided, abetted, counselled or procured the contraventions constituted by Castle Harlan's silence and the Representations, or at least were knowingly concerned in them.

Were either or both of Bradken's and/or Castle Harlan's representations conduct "in trade or commerce" either within Australia or between Australia and places outside Australia? 338 The CCA applies to conduct engaged in outside Australia by certain persons. One category is bodies corporate carrying on business in Australia: s 5(1) of the CCA. Bradken is incorporated and carries on business in Australia. Castle Harlan carries on business in Australia: see [242]-[256] above. For the purpose of Norcast's claim for damages under s 236 of the ACL, the Minister provided the relevant consent to enable Norcast to rely upon conduct which was engaged in outside of Australia: see [231] above. 339 Bradken further submitted that the misleading or deceptive conduct claims fail because of the territorial limitation imposed by the phrase "trade or commerce" in s 18 of the ACL. 340 The phrase "trade or commerce" is defined in s 2(1) of the ACL as: (a) trade or commerce within Australia; or (b) trade or commerce between Australia and places outside Australia; and includes any business or professional activity (whether or not carried on for profit). 341 Bradken's submissions are rejected. It is not to the point that the representations themselves were not "within Australia" or "between Australia and places outside Australia". Section 18 of the ACL prohibits misleading or deceptive conduct "in trade or commerce" (emphasis added). It is not the representations themselves which must constitute the "trade or commerce", but they must occur in the context of some "trade or commerce". Here, the relevant "trade or commerce" was the sale of NWS by Norcast to Castle Harlan and the potential on-sale of NWS by Castle Harlan, outside Australia, to Bradken, within Australia. 342 Bradken's silence and Castle Harlan's silence and making of the Representations were conduct by them in trade or commerce "between Australia and places outside Australia".

Does s 32(1)(d) of the Fair Trading Act 1987 (NSW), which extends the operation of that Act to "persons otherwise connected with this jurisdiction", assist Norcast? 343 Given the views formed (see [338]-[342] above), this issue does not arise.

What was Norcast's loss and damage? 344 Norcast suffered loss or damage and the Court assesses that loss or damage at US$22.4 million (being the difference between the US$212.4 million including costs and expenses which Bradken did in fact pay to acquire NWS and the US$190 million Norcast received from Castle Harlan): see [298]-[305] above. Of course, Norcast is not entitled to recover the same loss or damage twice.

If Bradken, Greiner and/or Hodges are liable as persons involved in Castle Harlan's contraventions, should there be an apportionment of liability between them and Castle Harlan and, if so, in what proportions? 345 The Respondents submitted that the proportionate liability provisions of the CCA (Pt VIA) apply to the accessorial liability claims in relation to the misleading or deceptive conduct of Castle Harlan. In particular, the Respondents submitted that: 1. each of the accessorial liability claims against the Respondents is an "apportionable claim" within the meaning of s 87CB(1) of the CCA; 2. Castle Harlan is a "concurrent wrongdoer" within the meaning of s 87CB(3) of the CCA in relation to each of those claims; and 3. as a consequence, the liability of each of the Respondents in relation to each of those claims is limited to an amount reflecting only that proportion of the damage or loss claimed that the Court considers just having regard to the extent of that respondent's responsibility for the damage or loss pursuant to s 87CD of the CCA. 346 In support of the allegation that, in those circumstances, Castle Harlan is a concurrent wrongdoer, the Respondents relied upon the same matters as those relied upon by Norcast in its claim and submitted that any liability should lie principally upon Castle Harlan as the 'active wrongdoer', with the consequence that any liability of the Respondents should be significantly reduced. 347 Those contentions are rejected. First, Bradken started the process: see [79] and [82]-[91] above. The principals of Bradken (Hodges and Greiner) were the authors of it: see [84], [86], [89] and [90] above. It was the Respondents whose actions caused the damage or loss that is the subject of the apportionable claim: s 87CB. Having regard to the extent of the Respondents' responsibility for the damage or loss, it is just that there be no reduction in their liability: cf s 87CD(1)(a).

F. CONCLUSION 348 Given the complexity of the issues, the parties bring in orders to give effect to these reasons for judgment by 4:00pm on 26 March 2013. If the parties are unable to reach agreement, each should file and serve a copy of the proposed orders supported by a two page written submission. I certify that the preceding three hundred and forty-eight (348) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.