Plaintiffs v Defendants

CORPORATIONS - Securities - Fundraising provisions - Misleading and deceptive statements, omissions and new circumstances - Draft prospectus - Whether appropriate to release to analysts - Corporations Act 2001 (Cth) ss 728, 729, 731, 732, 733.

CONTRACT - Conditional agreement - Applicable costs agreement - Terms of the retainer - Whether subsequent retainer may be entered into by "continuing to instruct" - Application of a provision for uplift, downlift or maintenance of 100 percent of legal fees.

DEBT - Proceeding to recover unpaid legal fees - Entitlement to interest - Calculation of interest - Legal Profession Uniform Law (Vic), s 195(1); Legal Profession Uniform General Rules 2015, r 75.

CIVIL PROCEDURE - List of real issues in dispute - Pleadings - Civil Procedure Act 2010 (Vic), s 7.

Apson Pty Ltd (as trustee for the Apson Hirsch trust)

The Founders, as executive directors, and the Non-executive Directors

Earnings before interest tax depreciation and amortisation

Freehills' defence to the United Statement of Claim

Kinlee Pty Ltd (as trustee for the Kinlee Silver trust)

Draft prospectus to be provided to independent analysts

Initial public offering scheduled for completion in December 2016

Email drafted by Ziegelaar setting out why he felt that United (or the due diligence committee and the Board) were not then in a position to proceed with the Pathfinder

United Australia, United Petroleum, United Holdings, Silver, Hirsch, Kinlee and Apson

Proceeding, commenced in August 2017, in which the United Parties claim loss and damage by reason that the Public Offering did not proceed

the United Parties' further amended statement of claim

1 The Corporations Act 2001 (Cth) contains provisions with respect to fundraising in order to protect the investment community.[1] Essentially, those provisions are there to seek to ensure that documents released to the market are complete, in the sense that they are accurate and contain no material omissions concerning the subject matter of the fundraising.

2 This case concerns the intended release of draft documents to independent analysts, as part of a complex process undertaken to list a private company on the Australian Securities Exchange in 2016. Experts were engaged to advise on the process. For a variety of reasons, documents prepared did not meet the recommended standard, and had not been checked and verified in accordance with established industry practise by the deadline set by the experts.

3 This is a paradigm case of independent directors being mindful of their responsibilities as directors in deciding not to approve the continuation of the process in 2016.

4 Avi Silver ("Silver") and Eddie Hirsch ("Hirsch") (together, "the Founders") are successful business persons who, over more than 2 decades, established an independent fuel distribution business throughout Australia, which they continue to operate.

5 Having initially established a chain of stores in South Australia in 1993, the Founders expanded throughout Australia. The business evolved from conducting independent fuel retail outlets to a vertically integrated fuel distribution business. Essentially, the business acquires fuel from both domestic and international suppliers and transports it to its own terminals. Then, by means of third party transport or its own transport, the fuel is deposited at 9 fuel depots, and then transferred to the wholesale and retail outlets.

6 In late 2014, the Founders decided to make an initial public offering by which they would offer shares in a company (then yet to be incorporated) in which they would also hold substantial shareholdings. After various attempts, the Founders pursued an initial public offering with a scheduled completion date of 16 December 2016 ("the Public Offering").

7 There are 2 proceedings that have been heard together. The first proceeding was commenced by Herbert Smith Freehills (a firm) ("Freehills") in January 2017 ("the Fees Proceeding"). By the Fees Proceeding, Freehills sued for fees it claimed were outstanding. The defendants were United Petroleum Australia Pty Ltd ("United Australia") and United Petroleum Pty Ltd ("United Petroleum") (together, "United"). United counterclaimed in the Fees Proceeding, alleging they were entitled to a disappointment discount. It was further alleged that interest claimed by Freehills on invoices remitted to United was a penalty. Certain declarations were sought with respect to the disappointment discount, the fees and interest charged by Freehills, and certain alleged conduct of Freehills.

8 At trial in August 2017, United sought leave to amend their defence and counterclaim. Without going into detail, ultimately the trial was adjourned and a new proceeding was commenced, to be heard at the same time as the Fees Proceeding.

9 In the later proceeding, the plaintiffs are United Australia, United Petroleum, United Petroleum Holdings Limited ("United Holdings"), Silver and Hirsch, Kinlee Pty Ltd (as trustee for the Kinlee Silver trust) ("Kinlee") and Apson Pty Ltd (as trustee for the Apson Hirsch trust) ("Apson") (together, "the United Parties").[2] The defendants are Freehills and Martin Hudson ("Hudson"), the former non-executive chairperson of United Holdings ("the United Proceeding").

10 The principal issues in the Fees Proceeding are quite narrow. There is no issue concerning the work performed by Freehills, or the amount charged for that work, subject to a dispute about the applicable retainer and its terms. United contends the terms of the retainer are to be found in an agreement made in 2014. Freehills alleges the operative agreement was reached in 2016. The fundamental difference between the 2 alleged agreements is whether Freehills' fees ought to be the subject of a discount in circumstances where the Public Offering did not proceed.

11 By the United Proceeding, each of the United Parties claim loss alleged to have arisen by reason that the Public Offering did not proceed.

12 With respect to Freehills, it is alleged the Public Offering process ceased, on Sunday, 23 October 2016, because Freehills failed to perform its obligations and breached its duties, including by assisting the non-executive directors to bring the process to a halt. It is further alleged that Freehills failed to advise the Founders, or certain others, of certain matters by particular points in time.

13 As against Hudson, loss is claimed by reason that Hudson decided, either on 22 or 23 October 2016, not to proceed with further consideration and finalisation of documents required to be released to analysts with respect to the Public Offering.

(1) There will be judgment in favour of Freehills in the Fees Proceeding for the outstanding amounts claimed. The counterclaim will be dismissed.

15 The Founders formed what Silver described as a partnership in 1980. They were engaged in business throughout the 1980s, and commenced the business now known as "United Petroleum" in approximately 1991.

16 Of the 2 Founders, Silver has taken more responsibility for financial matters. It was Silver who decided to commence the United Proceeding against Freehills and gave instructions accordingly. It has been Silver who has been conducting this litigation on behalf of the Founders.

17 Hirsch took a far less "hands-on" role with respect to preparation for the Public Offering. He basically relied on Silver to deal with the matters required for the Public Offering to be put in place.

18 The chief executive officer of United Holdings, Gary Brinkworth ("Brinkworth"), was not appointed to that position until 10 October 2016 (only 13 days before the last of the critical events which gave rise to this litigation). Immediately before this appointment, he was chief executive officer and managing director of Barristers Chambers Ltd, a position he had held since 2014. Brinkworth also had extensive Australian and international experience in retail and wholesale distribution, asset management, and retail and financial services, including 17 years with BP Oil.

19 Hayden Stockdale ("Stockdale") was appointed, on an interim basis, as chief financial officer of United Holdings in May 2016, approximately 2 months before its incorporation. In 2016, Stockdale had 18 years' experience as an investment banker and had been involved in approximately 40 to 50 initial public offerings. Stockdale had also been employed in senior financial roles in other large corporations. He was a partner at Goldman Sachs, where he ran the equity financing business for the natural resources sector, initially in Australia and then for Asia. Stockdale obtained undergraduate degrees with honours in law and commerce, and has a post-graduate diploma in applied finance and investment from the University of Melbourne.

20 Broadly speaking, with respect to the Public Offering, Stockdale took over from Jim Mooney ("Mooney"), who was the chief financial officer of United. Mooney had been appointed as United's representative on the due diligence committee. Although different accounts were given as to why Mooney played a lesser role in relation to the Public Offering, the underlying fact is that from around May 2016, with Stockdale's appointment, Mooney was less involved.

21 It was intended Stockdale would hold the position of chief financial officer until February 2017, when he was to be replaced by Neale O'Connell ("O'Connell"). O'Connell was employed full time elsewhere, and took no significant part in the events the subject of these proceedings.

22 David Szymczak ("Szymczak") was the chief operating officer of United. He had worked at United for over 15 years in various roles. Prior to that time he had been employed by Shell Oil Company.

23 Peter Larsen ("Larsen") was appointed senior general counsel and company secretary of United in July 2015. In September 2016, he was appointed group company secretary. As a corporate lawyer, Larsen had worked in the energy and resources sector over a number of years. Before that, Larsen worked in private practice, at the global law firm Ashurst. He holds a bachelor of laws (honours) and a bachelor of arts, both from Melbourne University. Larsen was the alternate for Mooney for meetings of the due diligence committee.

24 Nicholas Moen ("Moen") was appointed as chief operating officer, for retail and strategy, in July 2016. Moen had previously worked for BP for 18 years. He ceased his involvement with United in around December 2016, after the decision not to proceed with the Public Offering had been made.

25 Tom O'Brien ("O'Brien") was appointed as United's chief executive officer in 2013, and established United's permanent fuel trading operations in Singapore in 2016. O'Brien had extensive experience in the resources industry prior to joining United.

26 In early 2016, Hudson was appointed as prospective chairperson of the soon-to-be-formed board of United Holdings. Upon its incorporation on 19 July 2016, he formally became chairperson and a non-executive director. He was not a member of the due diligence committee, but attended its meetings from time to time.

27 At the time of this appointment, Hudson had extensive commercial and legal experience.

28 From 1971 to 1995, Hudson was a partner of Freehills.[3] During that time, he was managing partner for the Melbourne office, chair of the Melbourne board and a member of the national board.

29 In 1995, he left Freehills to join Pacific Dunlop Ltd to manage a piece of international product liability litigation with class actions in the United States, United Kingdom, Australia and Canada. In 2001, he joined Southcorp Ltd as company secretary and general counsel, ultimately becoming company secretary and general counsel of Foster's Brewing Group in 2005. In 2007, he joined the board of NM Superannuation Pty Ltd, a trustee of the publicly listed AXA Australia Group's superannuation funds. In 2009, Hudson left Foster's Brewing Group and became a member of the board of Cleanaway Waste Management Ltd. He became chairperson of that publicly listed company in 2013, and resigned in 2016. Hudson also joined the board of AMP Superannuation Ltd upon AXA Australia Group being taken over. On the day of his appointment as chairperson of United Holdings, other non-executive directors were appointed, including Tim Antonie ("Antonie") and John Slack-Smith ("Slack-Smith") (the 3 non-executive directors together, "the Non-executive Directors").

30 Antonie was a non-executive director of various other companies. His directorships included Premier Investments Ltd, Breville Group Ltd and Village Roadshow Group Ltd, all publicly listed companies. He also had many years' experience in investment banking and corporate advice, having previously been managing director at UBS Investment Banking.

31 Slack-Smith was, and remains, the chief operating officer at Harvey Norman Holdings Ltd. Slack-Smith has worked for many years at Harvey Norman, including as an executive director for the last 17 years.

32 The joint lead managers for the Public Offering were Morgan Stanley Australia Securities Ltd ("Morgan Stanley") and Credit Suisse (Australia) Ltd ("Credit Suisse") (together, "the Lead Managers").[4] Pursuant to their engagement, the Lead Managers agreed to provide the financial advice, analysis and assistance "customarily expected", together with any additional assistance agreed in writing. Essentially their role was to manage the Public Offering process.[5]

33 The managing director of equity capital markets for Morgan Stanley was Mark Burmeister ("Burmeister"). Burmeister was extensively involved in the preparation of relevant materials and critical discussions, and was a member of the due diligence committee, but was not called as a witness. Others involved from Morgan Stanley were Tristan Evans ("Evans"), vice president of the investment banking division and Stephen Bajraszewski ("Bajraszewski"), an analyst from the investment banking division.

34 The most senior person from Credit Suisse involved in the Public Offering was Adam Lennen ("Lennen"), who was the managing director of equity capital markets. Others involved from Credit Suisse were Laura Dickie ("Dickie"), vice president, Stephanie Charles ("Charles"), managing director of investment banking, and Harry Byrnes-Howe, an investment banking analyst. Charles was a member of the due diligence committee, with Lennen as her alternate.

35 The Lead Managers were not only involved in actively preparing the relevant documentation, but also employed independent analysts to consider the information proposed to be presented to the market by way of a draft prospectus ("Pathfinder").[6] These in-house analysts were not involved in the formulation of draft documents prepared by the Lead Managers.

36 KPMG was another organisation heavily involved in preparations for the Public Offering. Its role was not straightforward.

37 George Svinos ("Svinos") is now the chief financial officer of United. However, in 2016, he was a partner at KPMG, and head of retail consumer markets for Asia Pacific. Svinos was introduced to United in around 2007 or 2008, and, through KPMG, worked with United from that time. Silver gave evidence Svinos knew United's business intimately.

38 Svinos gave evidence that, in 2016, he was the client liaison partner responsible for all services provided to United, and was acting as financial adviser to the Founders in relation to the Public Offering. He was also responsible for "coordinating many of the requests for information from external advisers of United". He became more involved in the Public Offering process in September and October 2016. Towards the end of the process, Silver asked Svinos to dedicate himself full-time to the project. In that role, he "liaised closely" with Silver and kept him informed of the progress of the Public Offering. He was in contact with Silver during that period on many days, though not necessarily every day. Silver said he relied on Svinos, together with Mooney and Stockdale at different times, to keep him up to date with respect to the Public Offering and to communicate any information they learnt in relation to it. Svinos also gave instructions on behalf of United to its advisers.[7]

39 Another partner at KPMG, James Hindle ("Hindle"), performed a very different role. Hindle was retained by United to be the investigating accountant, and prepare an investigating accountant's report. Hindle had experience in such a role in earlier capital raisings for other companies. He was a member of the due diligence committee.

40 The purpose of the investigating accountant's report was to report on the relevant financial information. That report would be included in the proposed prospectus. In the lead up to preparing the report, Hindle was to be actively involved in considering information presented to the due diligence committee, to read and comment on successive drafts of the prospectus, and to generally ensure that a review of financial information was conducted in accordance with Australian auditing standards.

41 The partner at Freehills responsible for work to be performed for the Public Offering was Michael Ziegelaar ("Ziegelaar"). Ziegelaar, a partner since 1999, is the co-head of the equity capital markets group at Freehills, having advised a large number of companies with respect to publicly listing. Ziegelaar was appointed chair of the due diligence committee.

42 Ziegelaar was assisted by others at Freehills, including Alex Mackinnon ("Mackinnon"), senior associate, and Amanda Cowan ("Cowan") and Andrew Earle ("Earle"), both solicitors at that firm.

43 Mackinnon, who, together with Ziegelaar, gave evidence for Freehills, has been employed by Freehills in "equity capital markets" since 2010. He worked on all 4 transactions the subject of these proceedings. Further, Mackinnon has worked on more than 10 initial public offering transactions in addition to his work for United.

44 The managing partner at Freehills was Rodd Levy ("Levy"). Although Levy had some contact with officers at United, he had a minor role in relation to the relevant events.

45 On 8 December 2014, Freehills sent an email to Mooney, the then chief financial officer of United Petroleum, attaching a proposed engagement letter. The draft letter was addressed to Silver and Hirsch, as directors of United Australia.[8] Silver, Hirsch and Mooney were listed as the contacts for United Australia. The proposed letter indicated fees would be invoiced monthly from January 2015 to June 2015, with a fee cap at $2 million.[9] Further, if there was no successful outcome to the initial public offering then contemplated,[10] Freehills agreed to charge 75 percent of their standard hourly rates. The letter also provided that if United Australia effected a trade sale or introduced a third party shareholder either before 31 December 2015 or within 2 months of the work on the initial public offering concluding, then Freehills would charge 100 percent of their standard hourly rates up to the applicable cap.

46 The letter expressly provided that the scope of services did not include non-legal services, such as financial advice, and that the benefit of the advice provided was solely for United Australia. In that regard, Freehills' advice was not to extend "to third parties (including any of your directors, employees or shareholders)".

47 In December 2014, the engagement letter was executed by Silver on behalf of United Australia.

48 Freehills performed services pursuant to this retainer, including establishing a due diligence committee chaired by Ziegelaar. Meetings of the due diligence committee were held, and legal work was performed on an ongoing basis.

49 In February 2015, Mooney raised the fact that the work to be performed no longer included the possibility of seeking funds from the United States' markets. He sought a reduction in the proposed fee. Freehills responded by stating they were happy to discuss this the following week.

50 At the end of March 2015, Mackinnon circulated an email instructing that no more work be performed by Freehills as "United has requested this while it considers the implications of the Caltex block trade".[11]

51 In April 2015, work resumed. Freehills acceded to Mooney's request and reduced the fee cap from $2 million to $1.78 million. Mooney responded by saying the revised fee cap was broadly what he expected. He inquired as to how to bring about the change. Freehills emailed Mooney stating that they acknowledged the revised cap by the emails exchanged and that it was not necessary to reissue their engagement letter.

52 In June 2015, Freehills sent a revised fee arrangement to take into account a property investment trust intended to be established. The intention at that time was to create a registered management investment scheme to hold the retail sites. Freehills was involved in advising on structures, and the means by which a responsible entity could obtain an Australian financial services licence. This was followed up in late July 2015 with an email from Ziegelaar to Mooney giving a further estimate of fees and the scope of works involved. However, this proposal was not pursued, as it was thought it would be better to utilise the services of a property group with a subsidiary holding an existing Australian financial services licence.

53 On 31 August 2015, Freehills sent an invoice to APN Funds Management Ltd, copied to Mooney, for legal services provided up to 26 August 2015. APN Funds Management Ltd was the property group under consideration at that time.

54 Freehills progressed the establishment of the property trust until 21 September 2015, when Mackinnon sent another email entitled "Pens down on United". After referring to a sense of déjà vu, Mackinnon explained in a subsequent email that the Lead Managers wanted to sell at a higher yield, which meant the Founders would receive less money, and that the Founders would not agree to that at that time. In giving evidence, Mackinnon explained that the proposed property trust had to be comparable with other property trusts on the market if the offering were to be successful.

55 By 4 November 2015, a re-established due diligence committee met, with Ziegelaar again being a member of that committee. Larsen, United Australia's company secretary, was the only person on behalf of United Australia to attend the meeting. During that meeting, it was noted that the target timetable for listing was to be around Easter 2016.[12]

56 As the United Group had been operating privately, with the Founders effectively making all significant decisions with respect to the business, the Founders decided to appoint experienced business persons to assist. This was done with the intention that those persons would become non-executive directors of the proposed corporate vehicle (ultimately United Holdings) in which shares would be issued for the purposes of the Public Offering. Silver gave evidence that "the whole board" was in place by March 2016, but it was not made official until a later time.

57 In May 2016, a document entitled "Project Diamond[13] Discussion Materials" was circulated by Larsen to the Non-executive Directors, amongst others, which provided some background to the equities market and set a new "high level" timetable for the Public Offering. This timetable provided that the initial draft of the financial section of the proposed prospectus would be complete by mid August 2016; with this section to be complete (including financials and updated forecasts for the 2016 financial year) by early October 2016. The new timetable anticipated that the prospectus would be lodged in mid November 2016, with pricing and the book build to be completed by early December and the final price announced to the market by around 7 December 2016.[14]

58 The new timetable extended the time for the various steps to be completed, as the consultants involved had asked the Founders for more time.

59 In mid June 2016, the timetable was further revised. Larsen's covering email identified the main changes, including that the "back end execution has been pushed out approximately a month".[15] The new timetable provided the prospectus drafting to be completed by late September 2016, with the financial section to be completed by the end of August.[16] Silver accepted he knew in June 2016 that this was the timetable "the board" was working to. Antonie gave evidence that he considered it a major change from the timetable previously contemplated. He said at this time that "[KPMG's work] ... plus the banking, the environmental review, the valuations; everything was just continually moving sideways".

60 In late June 2016, Mackinnon sent an email to Mooney providing a fee explanation that had been foreshadowed. The email inquired whether it was possible for Ziegelaar to meet with Silver to discuss the explanation in the coming 2 weeks.

61 The fee explanation recorded the difference between the work to be performed under the original proposed public offering in late 2014 and the public offering then being contemplated. It explained why Freehills' fees were higher than the original cap. It also proposed a "discount/uplift arrangement", and further provided that, if United decided not to proceed with the listing process, then Freehills would charge 100 percent of its standard hourly rates.

62 Mooney gave evidence that at this time, Freehills' fees had not been resolved and discussion on the issue was continuing. He said that a meeting was held between Ziegelaar, Silver and himself in June or July 2016 at which Freehills' outstanding invoices were discussed. According to Mooney, at prior meetings, in addition to issues being raised about invoicing, "the 25% uplift or downlift factor" was discussed and Silver stated in that regard, "That's not negotiable Michael [Ziegelaar]. You need to go away and think about that". Mooney also gave evidence that, at the "final fee meeting",[17] Silver advised Ziegelaar not to deal with Mooney in respect of any fee matters.

63 Ziegelaar's recollection was different to Mooney's. He said there had been a lot of "toing and froing" about an aspect of the fee proposal. He further said that, after agreeing, at the behest of Silver, to a 10 percent discount on a particular item, Mooney asked Silver whether "he wanted the up and down arrangement", to which Silver said he did. Ziegelaar further recalled a meeting on 21 July 2016, at which Silver said he would look at the fees and get back to Freehills.

64 On 1 July 2016, United Australia sent a letter to Hudson appointing him as chairperson and non-executive director of United Holdings.[18] The letter stated that United Holdings intended to undertake an initial listing and quotation of its fully paid ordinary shares later in 2016. The letter stipulated certain matters if the Public Offering proceeded, and also stated that, if the Public Offering did not proceed for any reason, Hudson agreed to resign as a director when requested. The letter recorded Hudson's role and responsibilities as follows:

Your role as a non-executive director includes responsibility to monitor and review management processes aimed at ensuring the integrity of financial and other reporting, and satisfying yourself that [United Holdings'] financial controls and systems of risk management are robust and defensible. Your role will also include providing assistance to [United Holdings] on its intended initial listing on the Australian Securities Exchange.

The letter referred to Hudson's fellow directors, being the Founders as non-independent directors, and Antonie, Slack-Smith and Lyndsey Cattermole[19] ("Cattermole") as the independent directors. According to the letter, Antonie was to chair the audit and risk committee and Slack-Smith and Cattermole were also to be members of that committee.

65 On 15 July 2016, Mooney and Ziegelaar exchanged text messages by which Mooney cancelled a meeting to be held that day and sought to move it to the following Monday. As part of this exchange, Ziegelaar asked whether Mooney had given the new fee schedule to Silver. In response, Mooney stated that he had given it to Silver's secretary the previous day.

66 On 19 July 2016, United Holdings was incorporated. On the same day, the Founders, as executive directors, and the Non-executive Directors were appointed to the board of United Holdings ("the Board"), with Hudson as chairperson. From this time, the Board met regularly. Typically, the meetings commenced with Silver giving an oral presentation of the recent trading performance of the United business. Both Hudson and Antonie described these presentations as being given at "a high level". Slack-Smith said they were relatively brief. No written materials were provided, something which was the subject of "a continued complaint" of Antonie's.

67 The Board was never provided with monthly management accounts, a business plan or a budget. Further, no written analysis was provided at the board meetings to show how the United business was tracking against budget. At all times, the Founders, not the Board, remained in charge of all financial and operational matters affecting that part of the United business which was ultimately intended to become the business of United Holdings once the Public Offering was completed.

68 On 22 August 2016, Mackinnon sent an email to Mooney, copied to Larsen and others. The email attached an engagement letter for the Public Offering. The email stated that the fee was capped at $1.225 million and included a "25% discount and uplift arrangement and other agreed matters". The letter included Freehills' entitlement to 100 percent of its hourly rates if United decided not to proceed.[20] The email asked for the engagement letter to be signed and returned. The attached engagement letter, also dated 22 August 2016 and signed by Ziegelaar for Levy, stated that the offer could be accepted by returning a signed copy of the letter or by continuing to instruct Freehills on the matter.

69 Although the letter was not sent directly to Silver, he saw it and read it shortly after it was sent. Silver said when he read it he concentrated on "the dollar bit". He said the "plus and the minus 25 percent" was not highlighted and suggested he did not see the difference.[21] The letter expressly stated that the revised fee cap included work "relating to Dalby".[22] Silver said he had asked this to be included, and the quote for the work was $125,000. Silver said he accepted the quote.

70 On 7 September 2016, Larsen sent an email to the United Holdings directors and Brinkworth. At the time, it was proposed that Brinkworth would be the chief executive officer of United Holdings. Brinkworth was still employed elsewhere full time, but was being included in communication in anticipation of him starting in his position with United Holdings in October 2016.

71 The email attached a list of proposed dates for the due diligence committee and board meetings for September to December 2016. The proposed date for the Board to sign off on the financial section of the prospectus was 10 October 2016, and for the "Full final prospectus" on 14 October 2016. The references to the prospectus in this context were not references to a prospectus in its final form (for lodgement with the Australian Securities and Investments Commission ("ASIC")), but rather to a Pathfinder for submission to market analysts.[23]

72 On 9 September 2016, Freehills sent a tax invoice to Mooney entitled "United Petroleum IPO".[24] The covering letter expressly referred to work done with respect to "the Dalby restructure". At that time, no exception was taken to the invoice, which, in addition to the respective totals, identified the hourly rates of Ziegelaar and Mackinnon in accordance with rates quoted on 22 August 2016, and not those quoted in December 2014.[25] United made no suggestion that any difficulty existed with respect to the engagement letter forwarded on 22 August 2016 or the invoice.[26]

73 On 15 September 2016, Ziegelaar met with Silver, in the presence of Mooney.[27] At the meeting, Ziegelaar said that Silver needed to focus on the financials because United were not going to meet the timetable "if you don't get a handle on this". Mooney recalled Silver responding by telling Ziegelaar to "throw the resources at it". Stockdale was called into the meeting by Silver.[28] Ziegelaar said Stockdale indicated he did not think the financials were an issue for United.[29] Ziegelaar then left the meeting.

74 Shortly after this meeting, Silver discussed this issue, amongst others, with Svinos. As a result of this discussion, Svinos called Ziegelaar and told him to stay out of the financials.

75 On 20 September 2016, Ziegelaar and the Lead Managers met with Silver and Svinos. Ziegelaar, Lennen and Burmeister all raised concerns about the ability to meet the timetable for the Public Offering to occur in 2016.

76 Silver gave evidence that in response he stated that "we have to make it". He then gave conclusory evidence of what was agreed at the meeting, namely that "they" would engage additional persons for the project, as well as extending secondments. This evidence was not supported by any other person at the meeting.

77 Svinos acknowledged that the Lead Managers stated at this meeting that they did not think it would be possible to complete the Public Offering in 2016, because the preparation of the prospectus, including the financials, was behind schedule. Ziegelaar recalled a presentation by the Lead Managers about the then state of the process and the progress of particular work streams. Ziegelaar particularly recalled discussion about how the financials were behind.

78 Although Lennen could not state precisely when, he did recall telling the Founders around this time that he thought that the timetable was too tight for the Public Offering in 2016 and that "potential considerations to going in the first half of 2017 [might have been] more appropriate". Lennen also recalled stating that he was concerned that the management appointments had taken a long time to come into effect and that towards the end of December the "management team weren't going to be around, or [Brinkworth] was going to [have been] in the office for a very short period of time".

79 On 22 September 2016, Stockdale sent an email to Silver entitled "Comfort on IPO timing". In that email, Stockdale stated that he was personally very comfortable that things were on track for the Public Offering to happen in December as planned. He also stated that he was happy with the progress that was being made on the financials and would let Silver know if anything changed. Silver said, when he read this email, he was surprised that United were starting to catch up so quickly. In truth, United were not catching up such that the timetable was being achieved.[30]

80 On 23 September 2016, Ziegelaar provided a status update. In that email, he noted that the prospectus was not in a state to begin the formal verification process. Ziegelaar stated he would be happy to reiterate to members of management what they would need to be doing to make the verification process more manageable.

81 As to the verification process, Mackinnon gave unchallenged evidence that the process usually undertaken prior to a draft prospectus being released to the analysts (known in the industry as a "Pathfinder") was to verify sections 2, 3 and 4, respectively concerning industry overview, business overview, and the financial information relevant to the company about to be floated.[31]

82 For the purposes of verification, Freehills would ordinarily be responsible for "boxing up" the prospectus. This involves drawing a box around every sentence, giving the sentence a number, and then creating a numerical table which identifies the person responsible for verifying each statement. The table also contains boxes in which the responsible person is required to provide evidence that supports the statement, including the material facts and figures, and then a final column where the responsible person can signify a request for any amendments to the proposed prospectus.

83 Mackinnon said Freehills assumes the responsibility of verifying the legal statements. As for commercial information, the verification is to be conducted by the company and Freehills receives those verifications once they are done. Mackinnon said that, in his experience, the majority of a prospectus needs to be verified before the Pathfinder is released to the analysts. Not only was this evidence not challenged, but the United Parties accepted that a Pathfinder was a necessary part of any public offering being able to proceed in 2016 (or at a later time).[32]

84 Mackinnon said there was no point in commencing the verification process until the document was finished. Otherwise, he said those involved would be verifying things that were not the final draft prospectus and the whole process would need to be re-completed when changes were made. He also said the verification process could take 2 days if a lot of resources were utilised, but that would be aggressive and that normally it would take 4 or more days.

85 As to the state of a prospectus to be used as a Pathfinder, there is no requirement that the Pathfinder be in the final form intended to be lodged with ASIC. Indeed, there is no legal requirement for a Pathfinder to be released to analysts or at all. However, Ziegelaar gave evidence that, in his experience, a Pathfinder is "99.9 percent of the version that's lodged with ASIC". When it was put to Ziegelaar that you could lodge a prospectus with ASIC before it was given to the analysts, he said that, on such a large Public Offering as proposed by United, practically no. He said it was necessary to do a price discovery exercise to determine what the price ought to be so any listing is "not a complete flop". When it was suggested to Ziegelaar that you could conduct an initial public offering without analysts, although you might not get such a good price, Ziegelaar again rejected this. In so doing, he directed his answer to United's circumstances and pointed out, correctly, that Silver was very keen on maximising the price.[33]

86 Although United's cross-examination of a number of witnesses was directed to the absence of a legal requirement for a Pathfinder, in closing submissions lead counsel for the United Parties indicated, consistent with the pleadings, that it was no part of the United Parties' case that the alternative of pursuing the Public Offering without a Pathfinder was a viable option.[34]

87 Also on 23 September 2016, a meeting of the Board was held. The directors who attended were Hudson, as chairperson, Silver and Antonie. Also in attendance were Brinkworth, Mooney and Svinos. Larsen attended as secretary. The directors discussed key dates and the progress of the Public Offering, noting that it was critical to avoid "further slippage" and that the "current aim" was to have the completed draft of the prospectus (including financials and the management discussion and analysis section) completed for circulation to the due diligence committee and directors at meetings to be held on 3 October 2016.

88 On 24 September 2016, a draft document prepared by KPMG entitled "Project Diamond 2 steps plan" was circulated to the Non-executive Directors, Brinkworth and others. The following day, Hudson thanked Larsen and noted that many of the restructure steps were at the United Australia level, and queried who was to be on the board of that company to approve the relevant transactions. He also asked how it was that United Holdings was to be satisfied that the appropriate assets were in the entities to be "slotted in under [United Australia]", and that appropriate steps would be taken for United Australia to approve the relevant contracts. Whilst Hudson said he was sure there were simple answers, he said it was not disclosed in the paper. He asked for it all to be laid out at a meeting on 24 October 2016 on the basis that the meeting to "approve signing everything" looked like happening on 7 November 2016.

89 The following day, Larsen responded stating that he agreed that the matters raised should be laid out on 24 October 2016 and that he would talk to Freehills about it. The email continued:

The restructure work stream has been kept apart from Jim[35] and KPMG - with very little discussion of implementation or the who and how - which now needs to happen. I'll start that process internally.

Ziegelaar was copied into this response and sent an email to lawyers at Freehills asking to talk about what had been raised.

90 On 30 September 2016, a draft due diligence committee report was circulated by Hindle to a large number of persons, including each of the United Holdings directors and Ziegelaar. The covering email noted that the work was still in progress and that there were likely to be further changes to the financial model.

91 Further, Hindle stated that the report had not been reviewed in detail by management and was, accordingly, subject to change. The 159 page report essentially covered each of the matters that needed to be ultimately addressed by the due diligence committee. The contents page of the report read as follows: Introduction; Executive summary; Fuel trading group analysis; Retail analysis; Wholesale analysis; Imported Fuel; Dalby Group;[36] Other income; Overheads; Cash flow and balance sheet; Summary prospectus disclosures; Tax due diligence; and Appendices.

92 The introduction to the report noted that it was incomplete in the following areas:

(1) The amendments to the financial model being used by Credit Suisse.

(2) Finalisation of the United terminals in New South Wales and Dalby 2016 financial year historical information, which was awaiting completion of audits.

(3) Outstanding support for some of the forecast assumptions in the 2017 financial year accounts, which were denoted by square brackets in the report.

93 The report listed the drivers for the 2017 financial year forecast, being management fees on property development, improvement in Dalby profitability, new store openings and the full year impact of distributors. The EBITDA[37] forecast, "after straight line impact of leases", for the 2017 financial year was $111.6 million.

94 According to the "Pro forma EBITDA bridge FY16 to FY17F",[38] there were 13 key components from which the figure of $111.6 million was derived. This included $22.4 million primarily driven by new store openings and the full year impact of site openings in the 2016 financial year. The amount of $8.9 million was attributed to the gross margin for distributors, and $9.9 million was forecast for Dalby. The EBITDA base for the 2016 financial year was $83.5 million. The calculations were illustrated diagrammatically as follows:

95 The report also included 5 pages dedicated to the restructure to occur before the Public Offering. It recorded that the United Group would take steps to simplify its structure, with business units being divided according to the nature of their operations. It noted that phase 1 of the restructure had been implemented in June 2016. It stated that phase 2 was intended to create a single listed company, United Holdings, to hold the portfolio of the United Group entities. Various observations were made in relation to the tax consequences and risks with respect to the restructure.

96 Silver gave evidence that he was told at the end of September 2016, by Stockdale and Ziegelaar, that the process had "caught up and we're absolutely back on track". Svinos said he never attended a meeting in late September 2016 where Ziegelaar said the process, including the financials, was "back on track". Ziegelaar said he had no recollection of ever saying such a thing. It was not put to Ziegelaar during cross-examination that he ever told Silver things were "back on track".[39]

97 I do not accept Silver's account. To state such a thing would have been to materially misrepresent the true situation.[40] There is no apparent reason why Ziegelaar would have done so. Further, Silver was a member of the Board, was aware of the timetable, and would have known himself that United were not meeting the timeline then in place. Furthermore, insofar as the alleged conversations concerned secondments,[41] in fact the secondments in place terminated around 23 September 2016, and were not extended. There was no complaint from Silver, or anyone else at United, that Freehills were acting contrary to what had only recently been agreed with Silver by terminating these secondments.

98 In conclusion, Silver plainly discussed the issue of timing with Ziegelaar and the Lead Managers, who each expressed their concern about meeting the deadlines for the Public Offering in 2016. Further, as a result of this discussion, Ziegelaar and the Lead Managers, in substance, gave assurances they would work very hard in an endeavour to meet the deadlines, and informed Silver that they could still be met. However, no guarantees or commitments were ever given to Silver that the deadlines would be met come what may. Under cross-examination, Silver accepted there was no guarantee, but on the basis "[t]here's no guarantee for anything, but I was hoping".

99 At the start of October 2016, Brinkworth was still employed full time elsewhere. On Sunday, 2 October 2016, he sent an email to Svinos, copied to Silver, Hirsch and Hudson, referring to the recently circulated draft due diligence committee report. That email acknowledged that Brinkworth had not previously been to due diligence committee meetings, or been involved in discussions or decisions that had resulted in the approach as proposed. He stated that he was keen to make sure he understood the thinking behind those decisions and the implications for the business in the short term. The email listed a total of 16 questions and observations.

100 On 3 October 2016, the Founders, as directors of United Holdings, were provided with a draft engagement letter setting out the role of the Lead Managers. That draft letter, which was reviewed and later agreed to by Silver, recorded that Morgan Stanley and Credit Suisse were to be the Lead Managers and bookrunners for the Public Offering. The tasks to be performed by the Lead Managers included:

(1) Project managing the Public Offering process, including overall coordination of other advisers.

(2) Assisting United Holdings in the selection of other advisers (where necessary).

(3) Advising on developing the "equity story" for United Holdings and strategies to address potential investor concerns.

(4) Assisting with the preparation of the Public Offering prospectus and ancillary documentation, and participating in the due diligence process.

(5) Liaising with the "Investigating Accountant" in relation to the preparation of the accountant's report.

(6) Advising on the most appropriate method of conducting the Public Offering.

With respect to subparagraph (4) above, the draft letter sought acknowledgement and agreement from United Holdings that the Lead Managers would not be making any statement in the prospectus, nor any statement upon which such a statement were based, and that whilst the Lead Managers were assisting with the drafting of the prospectus, United Holdings would be responsible for the prospectus (except to the extent that the law prevented the Lead Managers from excluding liability).

101 Also on 3 October 2016, a meeting of the due diligence committee was held. Mooney, Hindle, Ziegelaar, Lennen and Burmeister attended as members of that committee. Also in attendance were the Non-executive Directors, Brinkworth, Larsen, Stockdale, O'Connell and other representatives of Freehills, Credit Suisse and KPMG.

102 During the meeting, Morgan Stanley updated the committee on the status of the prospectus, stating that there had been several rounds of comments by management and that the drafting was closer to being finalised. The focus had been to complete and verify the material that was to go in the analysts' presentation. There were several comments made on the draft as it then stood. The minutes included:

• It was noted generally that the key people section, particularly the management biographies and [Silver's] and [Hirsch's] roles, needed additional work.
• [Svinos] said he briefly discussed with [Silver] the roles of [Silver] and [Hirsch] post listing. Both would take executive roles and [Svinos] would discuss this further with [Silver] to provide some drafting to [Morgan Stanley].
• The [due diligence committee] noted that the risk section is in good shape.
• [Antonie] stated that the strategy of the business and the business narrative still needed to be better worked through the entire document. It needs to be apparent that there is a footprint strategy and a growth story.

103 Also during the course of the meeting, Lennen suggested that it would be a good idea for the committee to be provided with a trading update for the current financial year to ensure that the actual results achieved before lodgement were tracking with the forecast for the whole 2017 financial year.

104 On 4 October 2016, Ziegelaar inquired of others at Freehills as to whether or not Silver had been invited to the upcoming due diligence committee meeting. In response, Mackinnon said he had not been invited. He also stated that Freehills may have been told not to include him and that "someone at United" would pass things on to Silver. Ziegelaar replied, stating that he would like to talk to Mackinnon about asking Svinos to invite Silver when the next invitation was sent out to Svinos.

105 According to Ziegelaar, around this time he raised the issue of Silver's non-attendance at the due diligence committee meetings. Neither Silver nor Hirsch had attended a due diligence committee meeting since the first meeting held on 18 May 2016. Ziegelaar gave evidence that, in response to his suggestion to Svinos that Silver should attend due diligence committee meetings, Svinos stated that Silver "does not do detail". Svinos denied such a discussion ever took place.

106 Whatever was said on this issue, the fact is that neither of the Founders, who were the executives with the firsthand knowledge of the business to be the subject of the Public Offering, was a member of the due diligence committee. Why this was so was not explained. Ordinarily, it would be expected that at least 1 of the Founders would have assumed such a role. Hindle suggested that the non-participation of both the Founders was unusual. Antonie said it was highly unusual.[42] The position was exacerbated, presumably, as time went on and United's representative on the committee, Mooney, played a lesser role in the preparation.

107 Also on 4 October 2016, a draft presentation for the analysts was forwarded by Evans to Larsen and Stockdale of United, together with Svinos, Brinkworth and Antonie, copied to various others, including Freehills. The draft anticipated the presentation being delivered by Silver and Brinkworth. There were no financials in the analysts' presentation.

108 On 5 October 2016, Silver, Svinos and Nick Wormald of Freehills met to discuss the possibility of a trade sale. Exploration of this option was to run in parallel to preparing for the Public Offering. Ziegelaar's contemporaneous note taken at the meeting includes the following: "Need to be able to pull IPO". When cross-examined about this meeting, Silver stated he did not understand what this phrase meant.[43] However, he acknowledged that he was in discussions at the time for a possible trade sale, and that if the offer was sufficiently high, the Founders "would have gone with it".

109 On 6 October 2016, Stockdale sent an email to Silver suggesting the reason Silver was "not more confident in an IPO" was that Silver thought there may be a trade buyer instead. Silver's 1 word email in response was "Wrong".

110 When cross-examined about his attitude to the Public Offering at this time, Silver stated he was keen to get on with it. Further, Hirsch said that he never discussed with Silver the possibility of not proceeding with the Public Offering. However, there was some uncertainty amongst others at the time. Lennen sent an email to Svinos on 7 October 2016, inquiring whether or not further work should proceed. In response, Svinos stated that the Founders were considering their position, but his instructions were that "we are still working towards" the Public Offering. He instructed Lennen to go ahead as scheduled.

111 On the same day, Larsen sent an email to Freehills and others informing them that Svinos had confirmed the meetings scheduled for the following week were going ahead. Svinos stated a direction had been given that the meetings be held at 200 Hoddle Street, Abbotsford ("United's Offices"), and that the numbers should be kept to a minimum. Freehills was also directed to proceed to issue invitations for a due diligence committee meeting the following Wednesday. That email set out a timetable as follows:

To consider the environmental [due diligence] report, property valuation report, and latest draft prospectus

Approval of financial section of prospectus (and full prospectus if ready)

Placeholder - Approval of prospectus if not approved on Weds 12 Oct

112 Larsen then forwarded the email to Svinos stating that the independent directors and due diligence committee members would want to see 2 reports prepared by Savills and Kleinfelder before Monday. He inquired of Svinos whether they would be able to be circulated that day.

113 In response to Larsen's email, Antonie emailed him, copied to Hudson and Brinkworth, stating that he assumed the analysts were not getting the forecasts on the following Monday. He stated that this put an unreasonable timeline on the Board, given his understanding that the forecasts were being refined. In response, Larsen emailed Antonie stating Antonie was correct, namely that there were no financials in the analysts' presentation. He inquired whether Antonie wanted him to raise "the timing point" with Stockdale and Svinos at that time.

114 On the afternoon of 7 October 2016, Hudson emailed a large number of persons at Freehills, the Lead Managers, KPMG, United Petroleum, the other Non-executive Directors and Brinkworth. By this email, Hudson requested that, given the tightness of the timetable, future documents be circulated in markup against the previous circulated draft so he would be able to focus on the changes rather than "wading through stuff we have already seen, discussed and accepted".

115 Neither Silver nor Hirsch were included in the addressees of Hudson's email. No exception was taken to this.

116 Later on 7 October 2016, Stockdale sent an email to the Lead Managers, KPMG and Freehills, copied to Svinos, Mooney and others at United, Brinkworth and the Non-executive Directors, informing them that a decision had been made to exclude Dalby from the listing vehicle, United Holdings. Stockdale directed that "the various preparations" reflect this in the documents and work streams.

117 Despite the email sent by Svinos earlier that day,[44] Lennen remained concerned about whether work should continue to be performed with respect to the Public Offering. At around 4.00 pm on 7 October 2016, he sent an email to Svinos stating that Silver had been very clear the night before to "stop work ... yet there seems to be a number of emails on work continuing". The email continued:

I think we need to understand what we are working towards given [Silver] said he needed to discuss next steps with [Hirsch] and the key stakeholders.

118 Svinos emailed Lennen in response, copied to Burmeister, stating that the Founders were considering their position with respect to pricing and they would come back with a decision the following week. He also stated the discussions the previous night were clearly confidential and should not be shared with any other party, and that they were continuing all work on the current timetable.

119 On Saturday, 8 October 2016, a meeting was held at United's Offices between Silver, Svinos and Ziegelaar. Ziegelaar gave evidence this was the only meeting he attended at United's Offices on a Saturday morning. I accept this evidence. It is the only Saturday morning meeting about which there is a contemporaneous note.[45]

120 Silver's bald assertions to the contrary, without any specifics of any other such meeting, were not convincing.[46] Further, Svinos was unable to give any specific evidence of a Saturday morning meeting other than this meeting.[47]

121 Ziegelaar's contemporaneous note of the meeting included:

Timing - March is a must - bigger - $145

• Distributors turnaround

• Dalby.

Silver had no recollection with respect to these topics. Svinos said it reflected the feedback from the Lead Managers and was not Silver's view. Contrary to suggestions put in cross-examination, this note does not reflect Silver or Svinos telling Ziegelaar on 8 October 2016 that March 2017 was a must for the Public Offering. Although I accept Ziegelaar's evidence that the advantages of the Public Offering proceeding in 2017 were aired by either Silver or Svinos,[48] contemporaneous documentation demonstrates that December 2016 was still the target date at that time.

122 Also on the morning of 8 October 2016, Morgan Stanley circulated the latest version of the draft prospectus, both in clean copy and marked up.[49] Also attached was a draft analysts' presentation, which had "been through the verification process this week". The covering email noted that the Dalby assets had been removed based on instructions the previous day. Finally, it was noted that the "growth section" was subject to further comments from Svinos and that Morgan Stanley were "waiting on more detail on the store roll out profile from United".

123 On 10 October 2016, the scheduled due diligence committee meeting was convened. Each of the members of the committee was in attendance, including Burmeister by phone. Also in attendance were the Non-executive Directors, Brinkworth (whose employment commenced that day), Larsen, Stockdale, and other representatives of the Lead Managers, Freehills and KPMG.

124 The minutes of the meeting record that Stockdale updated the committee on the status of the financials and that Hindle noted that KPMG was continuing to review them.

125 In addition to the agreed minutes, Ziegelaar took a contemporaneous note of that meeting. With respect to the discussion about the financial documents being prepared, Ziegelaar's note records Stockdale stating that a huge amount of work had been done with respect to changes to the forecast.[50] The note, the accuracy of which was not challenged, also included the following:

[Silver] wants a whole range of other things to incorporate not present to [due diligence committee] till he reviews them & sit down with KPMG.

Run-rate for $5m than proforma forecast.

Dalby out.

"Dalby out" was a reference to the assets and business relating to the Dalby refinery not being included in the Public Offering.[51] As may be seen from the diagram of the EBITDA bridge as at 30 September 2016,[52] the Dalby business represented $9.9 million of the 2017 financial year EBITDA forecast of $111.6 million.

126 On 12 October 2016, another due diligence committee meeting was convened. In addition to the usual attendees, there were also environmental experts in attendance. Amongst other things, the minutes of that meeting recorded:

(1) Svinos stated that a report from Savills relating to rents for related-party leases would be received that day and circulated. He also stated that the valuations for the landbank sites were yet to begin.[53]

(2) Hindle stated that he expected KPMG would be able to provide an update to its due diligence report the following night.

(3) Hindle stated that KPMG would liaise with ASIC and make the necessary updates to its submission regarding the form of the financial disclosure in the prospectus.

(4) Ziegelaar stated he was "continuing to work with United to finalise the outstanding due diligence queries and requests for information". Ziegelaar stated that due to this outstanding information, there were gaps in Freehills' legal due diligence report.

(5) The Lead Managers undertook to prepare an updated timetable and to circulate it to the due diligence committee.

127 Also on 12 October 2016, Ziegelaar sent an email to Silver providing a summary of outstanding invoices totalling $488,151. Ziegelaar asked Silver to call him as Freehills' "outstanding fees now exceed $1m with [work in progress]". Ziegelaar stated that Silver had told him the previous week he had authorised payment of Freehills' invoices, so he was checking the position. During cross-examination, Silver said he could not recall the discussion, but they were heading towards 23 October 2016 and he did not think there were "any big amounts outstanding".

128 On the afternoon of 12 October 2016, Burmeister sent an email to Antonie and Mackinnon, copied to many others, asking for an update on the year-to-date financial performance as part of the financial review. Burmeister stated that he assumed Svinos and Stockdale could coordinate the information. Burmeister referred to the fact that Lennen had raised this at 2 previous due diligence committee meetings before the meeting held that day.

129 At trial, Hudson recalled that Lennen had raised this issue. He said that both Lennen and Antonie had observed that the financial forecasts as prepared did not seem to have a sufficient base when compared with the year-to-date performance and that they were concerned to get a "real handle" on the year-to-date actual performance.

130 Later that afternoon, Mackinnon sent an email referring to the meeting held earlier that day. The email set out a timetable identifying the person or persons responsible for each outstanding item. The email stated:

As everyone knows, it is critical to meet these dates.

131 On 13 October 2016, in an email exchange between Ziegelaar and Mackinnon, it was noted that Freehills had not received a signed version of the engagement letter provided on 22 August 2016. Mackinnon noted that the letter had the "'continuing to instruct us' wording".[54]

132 In the early hours of 14 October 2016, Hindle circulated an updated draft due diligence report, noting that there were a few potential changes to the financials after Silver's review of the latest forecast and based on further discussions between KPMG and United Australia. The 117 page report, dated 13 October 2016, included a covering note stating that work was incomplete with respect to the following:

(1) Obtaining support for certain key model assumptions, including new retail site metrics, Singapore operations, BP fuel sharing arrangement, distributors, forecast capital expenditure and the proforma cash flows for the 2017 financial year.

(2) The 2017 financial year statutory forecast, both cash flow and profit and loss.

(3) Completion of items identified by square brackets throughout the report.

(4) Obtaining a representation letter from United management.

It was further noted that the preliminary conclusions expressed might be amended or refined as KPMG's work progressed.

133 The introduction to the report included further details of the status of KPMG's work. Various documents were listed as being outstanding, including related-party lease agreements, BP fuel sharing arrangements and the landbank independent valuations.

134 The EBITDA (before straight line impact of leases) for the 2017 financial year was forecast at $113 million. In reaching this figure, amounts referable to Dalby had been removed. This had the consequence of increasing the EBITDA base for financial year 2016 to $87.4 million.[55] The calculations were illustrated diagrammatically as follows:

135 In a section of the report entitled "Key matters for consideration by the [due diligence committee]", the management approach to the forecast was discussed. A comment by KPMG to the effect that they considered the approach adopted by management to be robust and subject to an appropriate level of challenge and review was contained within square brackets, thereby signifying that KPMG were not willing to make that statement at that time.

136 On 14 October 2016, the third due diligence committee meeting for that week was held.[56] In that meeting, Svinos stated that details of sites the subject of agreements for lease and development agreements, together with a copy of the agreements, would be provided that day. He also stated details of the site rollout plans would be provided. As to the timetable, the Lead Managers provided an updated proposed transaction timetable, which was considered by the committee. According to the minutes,[57] the discussion focused on issues that might impact upon the listing on the anticipated date. It was agreed that Lennen and Burmeister would discuss the timetable with the Founders.

137 The second set of minutes of the 14 October 2016 meeting also stated that the Lead Managers provided an updated proposed transactions timetable.[58] Although Silver said it was not his practice to read the due diligence committee meetings' minutes, he believed he read the minutes of this meeting (being the later set of minutes). Further, Silver gave evidence he understood, at this time, what needed to be provided by 19 October 2016 if the Public Offering was to go ahead in 2016. This included the provision of a "full prospectus, including the financial section". Either in this conversation, or around this time, Lennen also suggested to Silver that, in light of the long time it had taken for management appointments for United Holdings, consideration might be given as to whether the first half of 2017 might be more appropriate.

138 During the due diligence committee meeting that day, Stockdale stated it was a "come to Jesus moment", by which he meant it was a "do or die" moment and that everything was going down to the wire. Stockdale said his comment reflected his understanding that, if the timetable was not complied with, then United were looking at delaying the Public Offering to the following year or not proceeding at all. It was not suggested anyone at the meeting disagreed with Stockdale's assessment of the situation.

D.6 Still no satisfactory progress on financials

139 On the afternoon of 14 October 2016, Earle sent an email to Hudson, attaching the draft of the financial section of the prospectus that had been provided to Freehills on 1 October 2016. He stated that Freehills had not seen another version since then and that, to "state the obvious, the numbers in this draft shouldn't be relied on". Hudson said he read the attached document in light of Earle's observation in the covering email. Hudson also stated that this was the first time he had seen anything to do with the financials.

140 Shortly after this, Hudson received another email from Freehills, this time from Mackinnon. This email was also copied to the other Non-executive Directors, representatives of United (including Brinkworth, Stockdale and Larsen), the Lead Managers, and KPMG. Mackinnon stated that a copy of the management sign off certificate was attached, such certificate having been discussed at the due diligence committee meeting that morning. He stated the certificate was an attachment to the due diligence planning memorandum. He further stated that, at the due diligence committee meeting held the previous Wednesday, it was proposed that the certificate, either in a form tailored to the individual's area of expertise or in relation to the entire prospectus, would be signed off by Silver, Hirsch, Stockdale, Larsen, Mooney, Szymczak, O'Brien and Brinkworth. Mackinnon asked whether there was an expectation of anyone else providing a sign off. The email concluded with the following:

These certificates will be signed prior to lodgement.[59] However, we will need comfort from each signatory that they would be willing to sign it prior to the prospectus going to analysts.

141 Larsen recalled receiving this email from Mackinnon. He said that he had no reason to doubt the advice of Mackinnon with respect to the comfort required before the prospectus was released to the analysts. He said he expected that verification and due diligence would be complete by this time.

142 The draft management sign off certificate included the following paragraphs:

1. I have read the Prospectus and the due diligence planning memorandum in connection with the Prospectus (Planning Memorandum), which outlines among other things the required content of the Prospectus ...

1. I confirm each of the following:
   • As far as I am aware, each statement in the Prospectus [or for executives with limited areas of responsibility specify relevant part of the Prospectus], in the context in which it appears:

• if one of fact, is true and nothing material has been omitted from it;

• if one of opinion or forward looking, is fair and based on reasonable grounds; and

• is not misleading or deceptive (including by reason of an omission).

• As far as I am aware, the Prospectus [or for executives with limited areas of responsibility specify relevant part of the Prospectus] does not omit required information.

143 During cross-examination, both Brinkworth and Larsen were taken to this draft management sign off certificate. Neither of them was in a position to sign a management sign off certificate on 23 October 2016.[60]

144 In the evening on 14 October 2016, Charles sent an email to Mackinnon, copied to the Lead Managers, stating that the attached document was to be provided to Silver shortly. The attached document, entitled "Project Diamond; High level timetable update", had been prepared by the Lead Managers and was sent to representatives of United Australia and the Non-executive Directors. The timetable contained the following key dates:

(1) 19 October: the date by which the prospectus, including the financial section, the KPMG financial report, the analysts' presentation, the confirmation on due diligence matters and the Freehills' verification were all to be completed, as verified final drafts.

(2) 21 October: the date for the Board and due diligence committee to sign off on the financials and draft prospectus.

(3) 24 October: the date for the analysts' briefing, including of the financials and draft prospectus provided.

The timetable still had the date of 17 November 2016 as the date for lodging the prospectus with ASIC. It had also maintained the book build dates of 13 and 14 December 2016, and the listing date remained 16 December 2016.

145 Silver said that he understood that, as at 14 October 2016, this was the timetable, but that it had moving components. However, he "absolutely ... knew" that if this timetable was not met the Public Offering could not occur in 2016. Hirsch said he did not recall seeing the document at all, and was not involved in the detail.

146 Svinos gave evidence that, around the time this timetable was circulated, either Lennen or Burmeister stated that, if the Public Offering were to occur in 2016, 24 October 2016 was the latest date for the analysts' briefing. Further, Svinos accepted that was "what this document said".

147 Brinkworth recalled Lennen and Burmeister presenting the new timetable, and it being said that the timetable was already tight. He said his expectation was that United "had to hit these dates". Brinkworth gave evidence that Lennen and Burmeister said the most critical step was to make "sure that we all signed off on the financials", meaning the full year forecasts for the 2017 financial year. Lennen gave evidence that, at the time this timetable was put forward, the requirement was that, by 19 October 2016, the documents were "to be complete and final drafts" that also had been verified. Further, Antonie recalled the Lead Managers stating that they had pushed the time limits as far as they could go. Furthermore, from around this time, Slack-Smith considered the Board had an "inflexible" date of 24 October 2016 for complete information. He said he knew that, by this date, the relevant information had to be approved by the Board for release to the analysts "given the further series of actions and events that were required to occur to allow for a listing of [United Holdings] on no later than 16 December [2016]".

148 This timetable only remained in place for a very short period of time. The first deadline of 19 October 2016 did not come close to being met.

149 On Saturday, 15 October 2016, Larsen sent an email to the Non-executive Directors, Brinkworth and the personal assistant to Silver and Hirsch. It was also sent to someone who worked "in legal" at United Australia. The email was brought to Silver's attention. Hirsch said it was not brought to his attention.

150 Larsen recorded that, as discussed with Hudson, the arrangements for the Board and due diligence committee meetings for the following week had changed to allow time for the finalisation of the prospectus and financials, and to give adequate time to the Board to review them prior to meeting to approve the full prospectus. The email noted that the due diligence committee meeting scheduled for 17 October 2016 was cancelled, and that it was to be held on 19 October 2016. Larsen also stated the board meeting to approve the prospectus would be scheduled on either the weekend of 22 to 23 October, or on 24 October 2016, "as required to give Directors at least 2 clear days minimum to review materials". The requirement of at least 2 clear days had been imposed by Hudson.

151 Larsen then forwarded the email to Svinos, copied to Freehills, stating that Hudson was insistent that the directors get the full prospectus papers by midday on 20 October 2016 at the latest, and would prefer the board meeting to be 23 October 2016, rather than 22 October 2016, to maximise the reading time. He asked Svinos to float the idea of a meeting on 23 or 24 October 2016 with Silver.

152 In giving evidence, Hudson stated he imposed these time requirements because he wanted time to be able to talk amongst the Non-executive Directors and also to raise matters with management before being called upon to make a final decision. Slack-Smith gave evidence that he recalled discussing the time requirements with Hudson and the fact that an appropriate period of time was needed for each Non-executive Director to independently review the finalised material. Slack-Smith said he thought 2 days, at the very least, was required.

153 In response to these emails, no one, including Silver, considered that his request was unreasonable.[61]

154 On 16 October 2016, Ziegelaar sent an email to Mackinnon and Earle, asking them to set up 5.00 pm daily meetings for the following week. Previously, there had been daily meetings, but these had lapsed. Ziegelaar wanted to reinstate them for the final week's preparation.

155 On the afternoon of 16 October 2016, Antonie emailed Burmeister and Lennen requesting the latest timetable. That evening, Lennen sent the then current timetable stating that it was "tight, slightly compromised and a question mark remains on how competitive an investing market we will have on December 14".[62] Lennen gave evidence about the possibility of some of the investing market having left for Christmas by this time.

156 Earlier on 16 October 2016, Lennen sent an email to the "Diamond team" at Credit Suisse, copied to Burmeister, which recorded that he and Burmeister had spoken to Silver the previous morning. He stated the plan was to adopt the timetable put forward the previous Friday with 1 change, namely the board meeting was likely to take place on the Saturday. He also said that Monday should be reserved for briefing the analysts. The email concluded:

Clearly a significant risk to achieving this timetable still exists via the financials, however, we should prepare as if we are going this year at this stage.

The email contemplated a meeting of the due diligence committee on Friday, 21 October 2016, at which "all the numbers and prospectus" would be signed off ahead of the board meeting the following day.

157 On 17 October 2016, Mackinnon sent an email to Morgan Stanley and Brinkworth, copied to Larsen, referring to "the other key outstanding for the prospectus (putting aside the financials)", being the related-party arrangements. Eight separate items were raised. Mackinnon noted that there were other minor items, but that the matters he had raised were the "big ticket items".

158 Late morning on 17 October 2016, a telephone conference was held between Ziegelaar, Antonie, Hindle and Charles in which the 2017 financial year forecast was discussed. During the course of that meeting, Antonie stated that United had "banked all good bits and assumed all negatives will get better". Ziegelaar's note of the conversation records Antonie saying that a "QC could rip us apart". When this was put to Antonie, he said it was slang language, intended to reflect his concerns about releasing the prospectus with a current forecast that was already not being hit. He said he was discussing the possibility of someone then coming back and suing United Holdings, and that not being a good outcome if the directors had not made adjustments for the fact that the actuals reflected that they were trading below what had been forecast at that point in time.

159 Ziegelaar's note also recorded "doesn't read like an investigating accountant's report". Antonie said he did not recall saying this, but the fact was that KPMG's draft report did not. He said that that was because KPMG had to put all the information into the report "for us" rather than reviewing other information, as would have been typical. Antonie said in his experience the financial information was usually approved by the board before it went to the investigating accountant.

160 Throughout 17 October 2016, matters were being worked upon. Larsen observed in an email to Mackinnon that the timetable kept "moving around". He stated that Hudson was adamant that the Non-executive Directors needed at least 2 clear days to review the relevant materials, so that a Wednesday distribution and a Friday sign off on the outstanding materials "won't fly". Larsen stated he needed to "tee up" the directors, particularly the Non-executive Directors, for the due diligence committee meeting and Board sign off as soon as possible. He inquired of Mackinnon how this could be settled.

161 On the night of 17 October 2016, Ziegelaar sent an email to Antonie, stating that Hindle would try to do the "agreed-upon procedures",[63] but noted that Hindle was concerned whether he could agree the exact procedures with the Lead Managers that week. Ziegelaar expressed the view that the numbers were likely to keep materially changing up to Friday. He suggested it should be the subject of discussion at the 5.00 pm telephone conference the following day.

162 On Tuesday, 18 October 2016, Lennen sent an email to his colleagues at Credit Suisse, forecasting the events for that week. He suggested there would be a meeting with Silver that Thursday, with the due diligence committee on the Friday and a board meeting would be held on the Saturday, then stated:

[I]f we get through that, we are 50/50 this year at best.

If next year, it will be Q3 ... [Silver] doesn't want to forecast 2 years.

163 Also on 18 October 2016, Svinos sent an email to Antonie stating that Silver understood Antonie had requested a meeting with some of the members of the executive and KPMG that day. Svinos stated that, moving forward:

requests by [d]irectors for access to United executives should be made either to [Hudson] or [Silver] himself.

Can you please outline the purpose of the requested meeting, and the topics to be covered, so that [Silver] may understand who should attend the meeting.

Antonie responded that the purpose of the meeting was to understand KPMG's report, as he had "many questions" and that he was running out of time. After a number of other emails were exchanged on this topic, Hudson sent an email to Antonie stating:

If this thing gets away, this [nonsense] will stop!!

In sending this email to Antonie, Hudson said he was referring to Antonie's inability to get direct access to the financial officers of United. He expressed the uncontroversial view that, in a well-run public company, the audit committee chair would have direct access to its financial officers, particularly the chief financial officer, to discuss whatever particular concerns existed.

164 In the afternoon of 18 October 2016, Hudson sent an email to Ziegelaar, copied to Antonie, Lennen, Burmeister and Hindle. Hudson sought an update on what was to be received before the meeting the following day, and when. Hudson said he was starting to get concerned at the time the Non-executive Directors would have before sign off to get comfortable, "particularly given all the chatter about the financials and the fact that we have seen absolutely nothing in this regard whatsoever". Hudson said in evidence that the reference to "chatter" was a reference to Antonie talking about his concerns about the forecasts and the difficulty about having information about those forecasts, his concerns about related-party transactions and incomplete information concerning those transactions. Further, by this time Antonie had expressed the view that the "run-rate to date" was not sufficient to yield the outcomes that had been forecast.

165 That same day, ASIC sent an email to Hindle, copied to Freehills and Stockdale. In that email, Hindle was informed that, in the following 2 days, ASIC would be reviewing a memorandum previously provided to it by KPMG. The email also recorded that ASIC's position regarding the inclusion of unaudited financial statements in prospectuses and that the likely response would be consistent with certain guidelines. This response gave rise to internal emails at Freehills in which it was suggested that ASIC's position "could be the deal breaker". The feedback sought from ASIC was not obtained before 24 October 2016. Neither Mackinnon nor Ziegelaar were asked any questions in cross-examination about this issue.

166 Still in the afternoon of 18 October 2016, Silver sent an email to Antonie, copied to Hirsch, Hudson and Svinos, stating that all financial information required his approval prior to being released. He directed Antonie not to "ask anyone at United for information", and to address his questions to Silver on the basis that he would arrange for the answers to be prepared promptly. Silver said he wrote this email because he was receiving complaints from staff that Antonie was asking for information and causing a lot of stress. Silver said he wanted to coordinate it. It is not surprising that Hudson was not entirely pleased that Antonie, as chair of the audit committee, was not getting direct access to the financial officers of United.

167 During the course of 18 October 2016, further information was being sought to support the financials. KPMG sent an email to Stockdale stating that certain historical information was required to support assumptions being used. When Stockdale inquired whether Svinos had supporting evidence for the relevant assumptions, Svinos simply replied that the information came straight from Silver. By that email, Svinos inquired of Szymczak whether he was able to assist or identify who should be spoken to. Stockdale gave evidence that, at this time, he was concerned about the lack of information generally, and, when information did come through, the lack of documentation to support it.

168 On the night of 18 October 2016, Antonie sent an email to the Founders. In that email, Antonie listed a non-exhaustive series of key questions he wanted to discuss. With respect to the limits Silver had imposed on Antonie having access to management directly, Antonie said he understood Silver's desire to control the information to ensure accuracy, but also noted that, as chairperson of the audit committee and a director of United Holdings, it was his duty under the Corporations Act to satisfy himself as to the financial forecast. Antonie stated that was all he was trying to do "in a condensed timeframe - I take this obligation very seriously".

169 Shortly after this email was sent, Silver responded stating the questions were good ones and that he was happy to meet to provide the answers. Upon learning of this meeting the following day, Hudson asked to be included.

170 On 19 October 2016, the date that had been scheduled for the final due diligence report,[64] KPMG circulated a 168 page due diligence report which included in its heading "Draft subject to detailed review by management". It was also stated to be a draft "for discussion purposes only". The matters listed as incomplete had been amended from the 13 October 2016 draft report.[65]

171 In addition to stating that United Holdings directors were aware that KPMG had not yet completed the work required to enable it to report in accordance with the terms of reference set out in its engagement letter, the incomplete work was stated to be:

(1) Obtaining support for certain key model assumptions, notably new retail site metrics and forecast capital expenditure.

(2) Completion of items identified by square brackets throughout the report.

(3) Obtaining a representation letter from management.

172 The introduction with respect to the status of KPMG's work was also amended. It provided a summary of the "information/calculations" required, including:

(2) Finalisation of the 2017 financial year depreciation expense.

(3) Update for current trading, including retail/wholesale margins and year-to-date overhead cost variances and run-rate implications.

(4) The finalisation of capital expenditure forecasts.

(6) Clarification of the impact of the new "S Oil contract pricing".

The introduction also listed a series of assumptions in respect of which further documents were required to be provided, including related-party lease agreements and landbank independent valuations.

173 The EBITDA (before straight line impact of leases) for the 2017 financial year had been increased from $113 million to $115.1 million.[66] It was noted that the depreciation and interest expense required further modelling in the 2017 financial year. Again, the EBITDA forecast was illustrated diagrammatically as follows:

174 The section of the draft report identifying key matters for consideration had not been changed, relevantly, from the previous draft.[67] KPMG still refrained from expressing the opinion that management had adopted a robust approach that was subject to an appropriate level of challenge and review.

175 With respect to the forecasts, KPMG's draft report set out what were considered to be the main risks with the 2017 financial year forecast. Brinkworth said he read these at the time. No doubt as a reflection of the short time he had been in the position of chief executive officer, he said he had done no research in detail himself about the risks identified. He also said he had not discussed them with anyone.

176 Late afternoon on 19 October 2016, Svinos sent an email to the Founders, stating that Hudson had requested the proposed board meeting be rescheduled to Sunday to give the directors enough time to review the draft prospectus.

177 Late on 19 October 2016, Stockdale emailed Hindle, representatives of the Lead Managers and others at KPMG, copied to Svinos, Mooney and others at United, entitled "Current trading bridge". In that email, Stockdale addressed 11 separate items concerning the year-to-date figures.

178 At 9.59 pm on 19 October 2016, Dickie sent an email to a large number of persons, including the Non-executive Directors, Hindle, Svinos, representatives of United (including Mooney, Larsen and Stockdale, but not the Founders), and representatives of Freehills. The email attached the current draft of the financial section of the prospectus. Dickie said there were a number of "outstanding areas" being worked through with management. Hudson said this was the first time he received anything approaching an up-to-date financial report, but, contrary to his expectations, it was not complete. Slack-Smith said he did not see the draft until the following day, and, when he reviewed it, he noticed that the financial section was incomplete.

179 Not only was the document significantly incomplete on its face, it also had shaded sections indicating drafting notes. These notes were shaded in 2 colours, to indicate either United management or KPMG was required to provide further information. Some further comments were shaded in a third colour, seemingly where the figures or statements shaded required confirmation and, in some instances, insertion.

180 As a result of the unsatisfactory state of the preparation, it was decided the meetings of the due diligence committee and the Board scheduled for 21 October 2016 would be rescheduled for Sunday, 23 October 2016. Antonie likened the situation to being caught in a pincer movement, the Non-executive Directors wanting as much time to review the documents as they could get and the deadline for things to be approved not moving. He said the time to approve the documents "got less and less and less".[68]

181 At 2.26 am on 20 October 2016, Morgan Stanley circulated an updated version of the draft prospectus "following verification work undertaken in the past week". The covering email, addressed to representatives of United (but not the Founders), Freehills, Credit Suisse and KPMG, and the Non-executive Directors, noted that verification had been completed on section 2, and had largely been completed on sections 3, 5 and 6. However, with respect to section 3.7 (dealing with growth initiatives and improvements), it was noted that the rollout numbers and descriptions were "with [Svinos] to review".

182 The 116 page draft prospectus still contained significant omissions. In particular, it did not contain anything at all with respect to financial information. That section of the draft noted that the financial information was being drafted separately by Credit Suisse.

183 Around lunchtime on 20 October 2016, Svinos sent an email to Stockdale stating that Silver would like to understand a figure in the forecast that Silver believed was too low. Svinos said Silver was of the view that the number should be increased. The email also stated that it was necessary to go through Antonie's questions[69] with Silver as soon as possible.

184 In response, Stockdale stated that Hindle would not sign off on anything more than the existing amount of the forecast. He continued:

Even the $2m for Singapore is a stretch. One possibility is the Terminal trading profit looks more like $7m than $6m right now but that difference may have been consumed elsewhere.

Svinos then gave a suggestion as to how the terminal profit should be dealt with.

185 Hindle was not included in this email chain. When he was taken to it during cross-examination, he said that Svinos did not have Hindle's or KPMG's instructions to send the email asking for the increase, and that it appeared to Hindle that Svinos was acting at the behest of Silver. Hindle viewed Svinos' role as part of the Public Offering in this regard as quite unusual.

186 Later on 20 October 2016, Silver met with the Lead Managers and then, immediately after, with Hudson and Antonie. The first meeting was mainly about fees and pricing. In that meeting, Silver agreed to the fees being requested by the Lead Managers. Further, the Founders gave instructions that they wanted to proceed with the Public Offering in 2016. They maintained they wanted to achieve a price that reflected 10 times the EBITDA forecast for 2017. This was despite receiving advice from the Lead Managers that they thought they would achieve 9 times EBITDA. Lennen noted in a follow up email to Morgan Stanley that Silver told him if the value was not right he would sell less, but he also reserved the right "to pull the deal".

187 The later meeting went for over an hour. Without descending to the detail, Silver provided an explanation in relation to each of the issues Antonie had raised. During the course of the meeting, Silver asked Hirsch to join it to explain exposure to the international trade, which he did. According to Silver, at the end of the meeting, Hudson and Antonie told him "they were satisfied with the answers [and that] they had no further questions". Under cross-examination, Silver went a bit further. He stated that both Hudson and Antonie said they were satisfied with the answers and comfortable, and that they had no further questions in relation to the forecast. By way of emphasis, Silver stated that was "exactly what they said".

188 Antonie was called by the United Parties to give evidence. He was not taken to his email listing his questions on the forecast in his evidence in chief. During the course of his cross-examination, Antonie denied he said to Silver on 20 October 2016 that he was comfortable and satisfied with the financials and had no further questions. Antonie said he could not possibly have said that, no doubt alluding to his lack of satisfaction or comfort at that time.

189 Hudson gave no evidence on this issue. Silver's version of how the meeting concluded was not put to Hudson in cross-examination.

190 In circumstances where, on 20 October 2016, Hudson and Antonie had only very recently been provided with draft and incomplete financials for the draft prospectus, which were subject to change, it is inconceivable that experienced directors like Hudson and Antonie would have said to Silver that they had no further questions and were comfortable with the forecast. Their conduct at the time demonstrated the exact opposite state of mind. I reject Silver's evidence that any such statement was made to him. Further, I note there was no challenge to Antonie's evidence emphatically rejecting he gave any such response to Silver.[70]

191 Silver did not meet again with Antonie until 23 October 2016.

192 In the morning of 20 October 2016, Morgan Stanley sent an email to, amongst others, Mackinnon and Svinos attaching a document entitled "Growth initiatives and improvements [updated]". The author stated that outside the financials, the section of the prospectus dealing with this subject matter was 1 of the most important sections. It was suggested that this section would need the sign off of Svinos "given [Svinos has] been working directly with [Silver] on this and [has] intimate knowledge of the portfolio and plan". The email also stated that the others needed to review section 3.7 of the draft prospectus to let Morgan Stanley know any comments as Morgan Stanley wanted to ensure everyone was "OK with this".

193 When taken to this email, Hindle acknowledged that it was unusual for a partner of KPMG to be so intimately involved with the business of a client in circumstances where KPMG was also acting as the investigating accountant. Hindle said this gave rise to some slight concerns, but they were not significant enough to feel the need to address it internally at KPMG or with United.

194 That afternoon, Larsen sent an email to Freehills attaching a verification table with respect to section 5 of the draft prospectus, concerning "Key Risks". Larsen noted that he had made changes to the text and cross-referenced them in the verification table. Reference was also made to the "data room sections for source documents".

195 A short time later, Hindle sent an email to Antonie and Stockdale, copied to Svinos and Hudson. That email stated that it was Hindle's expectation that the forecast model would be updated that day to include the year-to-date actuals, including for September 2016. He also referred to management revisiting the forecasts to reflect an analysis of the year-to-date variance. He stated that, on the basis that the model was updated and finalised that day, KPMG would be able to update its report by close of business the following day. The email continued:

There is a bit of work involved in flooding revised numbers through the workbooks which underpin our report and we obviously need to get comfortable with the position put forward by management in this time period as well.

At this stage, I don't have visibility of the impact of September results and the full implication for FY 17 results.

I'll leave it with [Stockdale] to advise if he thinks he will be in a position to walk through the Sept results and impact on the forecast by early [tomorrow].

Stockdale gave evidence that a range of things were moving, some related to historic numbers and some relating to the present trading period. Stockdale emphasised the need for due diligence in relation to the forecast, including having a reasonable basis upon which to make the forecast and testing all the assumptions underlying it. In this context, Stockdale said that "we" were trying to get a feel for the risk involved and what the pattern of behaviour had been up until as recently as possible.

196 Late on 20 October 2016, the timing of the due diligence committee and board meetings for that weekend remained uncertain. Accordingly, Ziegelaar sent an email to Svinos, the Non-executive Directors and others seeking confirmation that the due diligence committee meeting would start at 10.00 am on the upcoming Sunday, followed by the board meeting.

197 Hudson responded almost immediately, sending an email at 10.21 pm on 20 October 2016, stating the times were fine with him "but on the assumption that we have the complete suite of documents/reports by the time we rise on Saturday morning with no 'left-overs'". The email was forwarded to, amongst others, Stockdale, Mooney and Larsen of United, as well as Svinos. None of these recipients suggested that Hudson's stated assumption was unreasonable. Svinos drew the email to the attention of Silver, who also did not consider Hudson's position to be unreasonable. Further, in giving evidence, both Hindle and Lennen said they did not consider the request to be unreasonable.

198 Also on 20 October 2016, an email was circulated internally by Freehills, attaching a document entitled "Board charter and relationship with management". Although Silver was not included in the email, and said he was not involved in creating the attached document, he said that he read it and recalled that the Board approved it. Under the heading "Board process", it was stated that the Board would meet regularly. It was further stated that, periodically, the Non-executive Directors would meet without executive directors or management present. Silver said that he had no issue with such a course being adopted.

199 Mid afternoon on 20 October 2016, Hudson sent an email to Ziegelaar and Svinos, copied to Larsen and others. Hudson stated that, from the emails he had read, he understood that there was to be no meeting at 7.30 am on Friday, as originally planned, as Stockdale was not ready. He referred to the possibility of a meeting late the following day to give Antonie the opportunity to resolve and be comfortable about the open issues. He also foreshadowed the due diligence committee and board meetings would be commencing around midday on Sunday. The email concluded:

Could I strongly suggest [Ziegelaar] and [Svinos] pick up the phone to each other - get these times finally agreed, invitations out and then look to document production as agreed so we have what we need by "wake up time" on Saturday morning (if not earlier).

In giving his evidence in chief, Hudson stated by this time he was getting a little irritated. The source of this irritation was the lack of precision about when they were to meet and what they were going to receive.

200 Around 4.00 pm on 20 October 2016, Svinos sent an email to Lennen, copied to the Non-executive Directors, Hindle, and representatives of the Lead Managers and United, noting that the 7.30 am meeting the following morning was being replaced with an afternoon meeting, as he expected the financial model would not be finalised until the morning. Hindle said Svinos was not getting instructions from him and that it appeared he was getting instructions from United.

201 Around this time, Lennen was having doubts about whether things would proceed as planned. In an internal email responding to a request to confirm the proposed analysts' presentation on 24 October 2016, he recorded that there was a board meeting to be held on the Sunday "to sign off on the release of the prospectus and financials to the analysts", but noted that until then "it could go either way". Lennen acknowledged at trial that the state of preparation was such that he believed at this time there was a significant risk things would not go ahead on the Sunday.

202 Around 5.00 pm on 20 October 2016, Hudson sent an email to a large number of persons, including Svinos, stating that he had noticed for the first time that the current draft of the prospectus included a section relating to dividends. Hudson observed that, to his knowledge, there had been no discussion on the topic. He stated that he could probably get his head around a range if sufficiently broad and supported by management, but that he felt pretty uncomfortable with anything forecasting an actual first dividend. He made this observation in the context where "everything else [was] moving around" and in the absence of the "usual paper supporting a dividend payment".

203 At this time, Hudson was having discussions with Antonie about Antonie's concerns about the forecasts and related-party transactions. Further, the information being provided to Hudson was, in significant respects, in a state of flux. In short, Hudson's reference to things "moving around" reflected the actual position.

204 Hudson also sent an email to Antonie on the topic of the forecast dividend. It was agreed by them that they would discuss the issue when they next met "with the group" to discuss the financials. To this end, Hudson stated that it might be teed up with an email in response to the draft of section 4 that had been received overnight.[71] Also, Hudson discussed aspects of the latest draft materials with Brinkworth, making suggestions as to how certain matters might be improved.

205 At around this time, Svinos gave a direction to Freehills to set up a meeting for the following afternoon to review the financials. Further, he directed Freehills to arrange a meeting to be held at Freehills' offices at midday on Sunday, beginning with the meeting of the due diligence committee and then a board meeting. By this time,[72] Silver had given a direction to Lennen that Svinos would "be effectively the interface" between Silver and the advisers.

206 In the evening of 20 October 2016, Mackinnon emailed Morgan Stanley some suggestions for section 3.7 of the draft prospectus, concerning retail growth initiatives and improvements. This section was still in draft. The number of retail sites to be opened was referred to in square brackets, thereby indicating it remained subject to confirmation and might be the subject of change.

207 At this time, section 5 of the draft was also being amended. In an email to Larsen, Cowan forwarded the draft section asking for his updates "to avoid version control issues". Larsen responded later that night in the following terms:

Agree re consistency and tidy-ups but the best we can do in the timeframe and given the volume and paucity of [readily] available info from management here.

(Emphasis added.)

It is clear from this email that not all management at United had readily available information to respond to the outstanding matters.

208 On the same night, an email exchange between Lennen and Burmeister demonstrated an apprehension concerning the information available on the financials. After both agreeing that the "clock [was] ticking", it was recorded they were focussing on the EBITDA, though it was also acknowledged the cash flow still needed to be done.

209 Late on 20 October 2016, Antonie inquired of Ziegelaar whether or not a draft of the KPMG opinions had been seen. Antonie stated that the opinions needed to be finalised before the Board signed off on the financial information section of the draft prospectus. Hudson was included in the email, and immediately stated that he agreed with Antonie.

210 Approximately an hour later, Antonie sent a further email stating that he was reading the financial information section and had "many comments/changes/questions". He inquired as to whom he should deliver them in the morning, noting he would not be finished marking them up for a few hours. He made the further observation that there was a tremendous amount of work required to get the section completed. The remainder of the email chain indicates that arrangements were made to collect Antonie's comments the following morning.

211 The 61 page section covering financial information, drafted as at 19 October 2016, and as marked up by Antonie, contained extensive comments and suggested changes throughout. It is unnecessary to record the detail. Antonie's covering note to Charles encapsulated the position:

There are sections I have not fully commented on yet as still much movement - mainly FY 2017 assumptions and MDA.

"MDA" was a reference to the management discussion and analysis section of the prospectus. Antonie gave unchallenged evidence that the draft was "incredibly rough" and that he was aware that management really had not focussed on the draft at that point in time.

212 On the morning of 21 October 2016, Hindle sent to Hudson, Antonie and Ziegelaar a draft independent accountant's report, which Hindle stated was in standard form and would not likely be the subject of any material changes. The attached draft specifically addressed the circumstances of the Public Offering. However, the letter itself did not contain the details of the financial information intended to be the subject of the prospectus.[73]

213 Immediately after, Hindle sent a further email to Stockdale, copied to Svinos. Hindle asked Stockdale whether he could advise when it was expected KPMG would be provided with a summary of the current trading variance analysis for the first quarter of the 2017 financial year, together with any revisions to the forecast EBIDTA. The email continued:

The last model we received showed EBITDA of $112m, this reflected Q1 actual results and revised [cents per litre] margin off [long term margin] actual to Sept.

Given the Q1 variances and the analysis/comments on the variances to Aug-16, I have an expectation that some of the variances are "run rate" related and should be reflected in a downwards revision of the FY17 EBITDA from the $112m currently modelled. Clearly not all are run rate and we will wait to see your analysis and conclusions, but I do think it would be an aggressive position to assume those variances don't reoccur at all in the rest of the year.

We also noted that the distributor internal margin was increased by $1m in the latest model. This removes some of the upside we previously had and leaves little to no further room for any further risk in the forecast.

(Emphasis added.)

214 Hindle gave evidence he had a preliminary concern about the need to revise the EBITDA forecast downwards. Hindle further stated that they had found an error in the model which identified that there was some upside. Finally, Hindle said that his last comment was directed towards maintaining a balance between upside and risk in the forecast, and that the balance had been slightly twisted, albeit it was only a million dollars in the scheme of things. He believed at this time there was no room for any further risk in the forecast, but still felt the forecast was reasonable.

215 Notwithstanding Hindle's expectation concerning the "standard" independent report,[74] Antonie took exception to some of its contents. Antonie emailed Hudson recording that the draft letter incorrectly stated that the financials had been prepared by the directors. He recorded his belief that it was the directors' responsibility to ensure that appropriate procedures were in place to ensure that the financial statements gave a true and fair view, but that it was management's responsibility to prepare the financial statements and that was why the directors got sign offs from management. Antonie also noticed that the assumptions had been prepared by management based on their knowledge and had certainly not been prepared by the directors. Antonie concluded the email by stating that he was unhappy with the wording as it did not reflect what had occurred. Hudson agreed with Antonie's concerns.

216 Antonie's response gave rise to further emails from Hindle, effectively stating that KPMG would check the terminology with the prospectus, and also would consult with the Lead Managers, to ensure there was consistency between the prospectus and the final letter.

217 At around 9.30 am, Larsen sent an email to Freehills with the subject "Verification". The email contained the "list of verifiers" for the prospectus, inquiring as to which version of the document the verifiers were to sign off on.[75] Larsen also noted that, "practically and logistically", most persons listed would disappear at the end of the day (it being a Friday). He acknowledged that this was an issue for United, not Freehills, but that he considered it a key issue to getting where they wanted to get to by Sunday. The 18 persons listed included Silver, Hirsch, Hudson, O'Brien, Szymczak, Moen, Mooney, Stockdale, Larsen and other officers of United.

218 Earle emailed Larsen in response, stating that signed verification certificates were not required that day. He said that, on Sunday, Freehills would ask for verbal confirmation from United that verification was substantially complete,[76] noting that it could not be fully complete as details in the prospectus were still to be determined (for example, "offer metrics"). It was further noted that there would be a supplemental verification process, probably the following week, "once the document stops moving". He concluded by stating that Larsen should be comfortable that the changes coming out of his verification had been included in the prospectus.

219 Also on the morning of 21 October 2016, inquiries were being made at Morgan Stanley as to when the analysts' presentation planned for the following Monday would occur. As part of this email chain, it was recorded that Brinkworth and Stockdale were to attend the presentation, Stockdale being the person to give the presentation. Ultimately, enquiry was made of Credit Suisse. In response, Lennen suggested that 2.00 pm the following Monday was the scheduled time.

220 Late that morning, Mackinnon emailed others at Freehills stating that the latest from Svinos was that "Landbank doesn't go in at listing but is paid for by [U]nited separately after the [Public Offering]". According to Silver, "there was always a discussion" as to whether or not the land in question would be sold to United Holdings as part of the Public Offering process, or whether United Holdings would purchase that land after the Public Offering. In contrast, Svinos gave evidence that the landbank sites were always going to be included before listing, and did not recall any discussion about them not going in. It is likely that Svinos' recollection was faulty. Not only was it inconsistent with Silver's position on the landbank sites, but, more significantly, when Mackinnnon was cross-examined, there was no challenge to his contemporaneous message of what had apparently just occurred.[77]

221 Also late morning, Freehills emailed Larsen a draft agenda and minutes for the proposed due diligence committee meeting on the upcoming Sunday, together with draft minutes for the board meeting scheduled to follow immediately after. The covering email stated that Freehills would circulate the due diligence committee materials later that day, which consisted of 10 separate items listed in the email. Further, the email stated that the Lead Managers would circulate the prospectus and financials, and KPMG would circulate its due diligence report. The email referred to an earlier discussion with Larsen pursuant to which it was agreed that Larsen would circulate the draft board minutes. Finally, the email asked Larsen to let Freehills know if any changes were required to the minutes.

222 When giving evidence, Larsen recalled a discussion with Earle. He could not recall a discussion with Mackinnon regarding his concerns, but he acknowledged he did have concerns at that time about whether or not management would be in a position to provide the sign offs by the Sunday. Larsen thought there were 2 risks at the time: the first being United Holdings' liability if the prospectus was released to the analysts in an incomplete form; and the second being the previous advice from the Lead Managers that if the draft prospectus was released and then amended, and the amendments were not relatively limited but substantial, that would not be particularly favourable to United Holdings. Similarly, Ziegelaar gave evidence that amending the Pathfinder once it had been received by the analysts would impact their confidence in the Public Offering.

223 Mackinnon reviewed the draft minutes before they were sent. He gave evidence that it was the practice at a final due diligence committee meeting to ensure that all due diligence committee members, the advisers, management, team members and verifiers of the prospectus were all "essentially happy" for the Pathfinder to go to the analysts. He gave further evidence that the minutes sent were strictly a draft and that all necessary changes were to be made once the meeting occurred. That said, he gave further evidence that no real changes were anticipated with respect to the confirmation section of the draft minutes as they were what was required, more or less in the form of the draft, before the Pathfinder could go to the analysts.

224 Neither the draft due diligence committee minutes nor the draft board minutes were sent to any of the Non-executive Directors.[78]

225 The draft due diligence committee minutes referred to the purpose of the meeting. The draft recorded that the due diligence process that had been adopted, including verification, was designed to seek to ensure that the Pathfinder was accurate and not misleading or deceptive, including by omission. Next, the draft provided for various updates to be given, including an update from Stockdale on United's recent trading performance. Then the draft provided that management sign-off certificates were to be given by Silver, Hirsch, Brinkworth, Stockdale, Mooney, Szymczak, O'Brien and Larsen. The professional advisers to sign off included Freehills and KPMG. The form of the proposed confirmation was as follows:

• The members of the management listed above present at the meeting;
• [Freehills];
• The Investigating Accountant; and
• The [due diligence committee] members signing the [due diligence committee] final report,

confirmed that it believes, subject to finalisation of any outstanding issues in the manner acceptable to the [due diligence committee] and to any assumptions or qualifications that are relevant to the provision of any such report, sign-offs or opinion, that the Pathfinder is, except as disclosed, in proposed final form and the relevant reports, sign-offs and opinions are in final form and could be signed and delivered by it at that time in respect of the Pathfinder (rather than the Prospectus) and assuming the Pathfinder were the Prospectus be lodged with ASIC on the date of distribution of the Pathfinder.

(Emphasis added.)

The draft minutes also noted that confirmation would be sought from any members of management not present at the meeting immediately after the meeting.

226 The draft board minutes anticipated that the Pathfinder would be distributed to each director prior to the meeting. Also as part of the background, the draft minutes recorded:

• Although practically there is a limited ability to amend the Pathfinder once it has been distributed to the analysts, this does not prevent any amendments necessary to ensure that the Prospectus complies with the Corporations Act; and
• At the meeting of the due diligence committee established in connection with the [Public Offering] ... which was held prior to this meeting:

• each Reporting Person (as defined in the Due Diligence Planning Memorandum) present was asked, in respect of their reports, sign-offs and opinions; and

• each member of the [due diligence committee] was asked, in respect of the [due diligence committee] final report,

to provide confirmations in relation to their reports, sign-offs and opinions as if the Prospectus were being lodged with ASIC.

• The [due diligence committee] had sent out verification instructions to people responsible for verification of the Pathfinder, identifying statements in the Pathfinder to be verified by the relevant person.

• The verification of the Pathfinder ... has been substantially completed in accordance with the Due Diligence Planning Memorandum under which the due diligence process for the [Public Offering] has been undertaken; and
• Each of the following persons have read the Pathfinder and confirmed that they were not aware of any reason that the Pathfinder should not be issued and that having regard to prevailing circumstances they would be able to deliver their management sign off in the form approved by the [due diligence committee] in connection with the Pathfinder:

[The names of Silver, Hirsch, Brinkworth, Stockdale, Mooney, Szymczak, O'Brien and Larsen were then listed.]

Each director confirmed that as far as they are aware, having regard to the confirmations given to the Board by the [due diligence committee] at the meeting that was held prior to the Board meeting:

• Each director had considered the Pathfinder and is satisfied that:

• the scope of the enquiries made and the investigations carried out by the [due diligence committee] were reasonable; and

• the review carried out by the [due diligence committee] was adequately implemented and supervised;

• The information contained in the Pathfinder is not misleading or deceptive and contains all of the information that investors and their professional advisers would reasonably require (and reasonably expect to find in the Pathfinder) to make an informed assessment of:

• the rights and liabilities attaching to Shares; and

• the assets and liabilities, financial position and performance, profits and losses and prospects of the Company;

• The Board Statements[79] and all expressions in the Pathfinder of opinion, intention, objectives, belief, expectation or proposed action on behalf of the directors or the Company in relation to the business prospects or strategy of the Company or any other matter are held by the director and there is a reasonable basis for them;

227 Various further emails were exchanged during 21 October 2016, some concerned with changes to the forecast profit and loss statement and cash flow. Suffice to say that the exchanges of financial information culminated in an email being sent by KPMG at 4.28 pm attaching an "Additional information pack" for discussion at 4.30 pm that day. The email was sent to Freehills and the Lead Managers. The addressees of this email did not include any of the directors. However, the attached document was available to Hudson and Antonie at a meeting held at Freehills' offices, which commenced somewhere between 4.30 pm and 5.00 pm.[80]

228 The KPMG document contained an updated EBITDA bridge, recorded diagrammatically as follows:[81]

229 Just before 5.00 pm, Larsen sent an email to Freehills asking for the final due diligence planning memorandum, only to receive a response from Freehills that it was not final. It was stated that the Lead Managers' lawyers were still commenting on the memorandum and, in the circumstances, Freehills asked Larsen not to circulate the draft planning memorandum or its attachments.

230 The draft planning memorandum consisted of 27 pages, together with 9 attachments. Broadly speaking, it set out the requirements with respect to the proposed prospectus and the due diligence process, including the role of the due diligence committee. There was no issue at trial about the appropriateness of its contents. For present purposes, it is only necessary to refer to the following, with respect to the due diligence committee:

The [due diligence committee] will operate by unanimous decision. Any minority or dissenting view must be brought to the attention of the Board. If the minority or dissenting view relates to a material matter, it must be brought to the attention of the Board immediately.

(Emphasis added.)

231 Also shortly before 5.00 pm, Larsen spoke with Earle expressing his concern about the form of sign off set out in the draft minutes setting expectations too high for Sunday, as he believed this provided for a greater degree of finality and certainty than that that existed or would exist on the Sunday. Larsen gave evidence that he was particularly concerned about the anticipated confirmation that the Pathfinder was in a form substantially ready to be provided to ASIC as well as the analysts. Earle explained to Larsen they were only draft minutes. Larsen was not satisfied and wanted to speak to someone more senior. Earle passed this information on to Ziegelaar and Mackinnnon.

232 Mackinnnon then telephoned Larsen to explain the purpose of the minutes. Mackinnon gave evidence that, whilst there was no legal requirement for the confirmations by reason of any provision of the Corporations Act or any guidance given by ASIC, the confirmations were drafted because of market expectation. Mackinnon stated that industry practice was reflected in the due diligence planning memorandum, which practice had developed in the industry as a result of legal and other advisers establishing a process that would enable a court to consider that a sufficient due diligence process had been done for the purposes of a company being able to avail itself of the due diligence defence.[82] Mackinnon said he gave this explanation to Larsen, and Larsen made no suggestion that he considered the confirmations were not required.

233 The meeting at Freehills to discuss KPMG's "Additional information pack"[83] was attended by Hindle and, probably, another employee on behalf of KPMG, together with Svinos. Although there was some uncertainty as to precisely who attended in person (or by telephone), others in attendance included Ziegelaar, Stockdale, Brinkworth, Charles, Lennen and Burmeister. As for the Non-executive Directors, Antonie attended in person. Hudson was on the telephone. Slack-Smith gave evidence he had no recollection of participating in this meeting.

234 The contemporaneous notes of Ziegelaar during the course of the meeting included the following:

[Hindle] saying can't see positive impact in October.

[Hindle] says at 5.45 pm if you don't make it up then you can drive a bus through the forecast.

United = 2 weeks volatility is not enough to change a forecast.

[Hindle] has a different view. [Hindle's] challenge is saying first two weeks of [September] down also so can't say when it will reverse.

[Hirsch] & [Silver] = $115 m

KPMG = $112 m

6.06 pm - agreed that forecast fully baked & there is no forecast buffer.

7.00 pm - week from Monday is what is required - [Hindle]

235 As to the 4 notes above attributed to Hindle, he could not recall making any statements to the effect of Ziegelaar's notes.

236 Ziegelaar had a better memory than Hindle as to what was stated at this meeting.[84] With respect to the note concerning the absence of a positive impact in October, Ziegelaar recalled Hindle saying that July and August 2016 results were down and that September was cycling down. Hindle further said he could not see anything reversing in October and that this was a problem for the forecast. He also said he had recollection of Hindle stating that if United did not make it up, then you could drive a bus through the forecast. Next, Ziegelaar said he recalled someone from United, he was not sure who, stating that 2 weeks volatility was not enough to change the forecast. He further recalled Hindle responding that his challenge was that, if the first 2 weeks of trading in September 2016 were down, you could not say that trend was going to reverse. In this regard, Ziegelaar also recalled Stockdale saying they should stick with the current forecast and neutral growth.

237 Hindle also said he was comfortable with a 2017 financial year EBITDA forecast of $112 million. He was well aware the Founders were expecting a higher number. Svinos said they wanted the forecast to be $115 million.

238 The note concerning the forecast being "fully baked" was not attributed to any person. Hindle said, to his knowledge, they were not his words and, although he could not specifically recall, it was possible they were said. Hindle also said it was possible someone said there was no buffer built into the forecast. Lennen and Svinos had no recollection of any such phrases being used. Ziegelaar recalled both matters being stated, but he could not recall who said them. Stockdale had a specific recollection of the term "fully baked" being used "leading up to 22 and 23 October" by himself, Hindle and Antonie.[85] Given the contemporaneous note, the absence of any witness denying it was said, and the positive evidence of Ziegelaar and Stockdale, it is likely opinions to this effect were expressed during the meeting.

239 As to the note recording Hindle stating he required a further week from the following Monday, Ziegelaar said that is what Hindle stated he required to complete his work on the draft document. Further, both Antonie and Stockdale gave evidence that they recalled Hindle saying he required another 7 days or about a week. Lennen had a slightly different recollection, recalling Hindle stating there was a lot of work to be done, which would take more than a day or 2. When the matter was put to Svinos, he could not recall Hindle stating words to the effect suggested by Ziegelaar, but he could not deny they were said.

240 Finally, when giving his evidence that he could not recall saying such words, Hindle declined the opportunity, twice, to deny he said he needed this long. Ultimately, Hindle answered by giving evidence that, "with the benefit of hindsight ... given where we were at post that meeting, I don't think it would have taken 7 days to finish our work" (emphasis added). Also, Hindle acknowledged on the Friday night KPMG still would have had to verify the final draft of the financials (which he said would have taken no more than 24 hours), but he had no knowledge of the progress management had made with the verification process, and no clarity as to how long it would take them. He also understood there were many outstanding issues in KPMG's draft report that were contingent on receiving material from management. Hindle stated that not everything was under his control in this regard.

241 Given the contemporaneous note of Ziegelaar, the accounts given by Ziegelaar, Antonie and Stockdale, and the substantial amount of work that still needed to be done as at the evening of 21 October 2016, I am satisfied that Hindle said that KPMG would need in the order of a further week to complete KPMG's work. Further, I am satisfied that Ziegelaar's contemporaneous notes broadly reflect what was said at the meeting by Hindle on this topic.[86]

242 Hindle also could not recall stating (or hearing) that if the actual results to date "don't make it up then you can drive a bus through the forecast". He gave evidence that he believed he did not say it. However, based on Ziegelaar's contemporaneous note, including the precise time at which it was said, together with the recollection of Ziegelaar that it was said, and the absence of any evidence from any witness denying it, I am satisfied that words to this effect were said.

243 Antonie gave evidence he attended the meeting for about 2 hours. He gave evidence that he found the meeting unsatisfactory because its purpose had been to finalise the numbers. Antonie gave unchallenged evidence that KPMG had been asked to prepare an "unders and overs" schedule which looked at the forecast. He said they went through the schedule and Lennen stated at the end of that exercise that it did not give him any confidence at all. Lennen stated that there was nothing that gave a buffer and it all looked like downside. Antonie said he also recalled Svinos saying he had just spoken to Hirsch and that everything was fine. Svinos reported to the meeting that the retail gross margin was budgeted to make $15 million for the month, compared to $13.5 million, to which Hindle responded that the budget was actually $15.6 million. Accordingly, based on what Svinos reported, United were also tracking behind in relation to October 2016.

244 Antonie said he also raised the issue of land capital expenditure. He suggested that the cash flow was not "hanging together" because of the absence of such capital expenditure, to which Svinos replied, "Don't worry, leave it with me, I'll go and work on it". In response to Svinos, Hindle stated that Svinos was not to be working on it, because United needed to do that work. Antonie suggested he witnessed a clear tension between Hindle and Svinos at this meeting.

245 Antonie gave evidence that project management fees were also discussed. He said he had previously discussed these fees for related-party transactions and stated he wanted 100 percent of the fees recognised at the completion of construction. Antonie stated that when he received the draft KPMG report on 19 October 2016, he noticed that the accounting policy in this regard had been changed. He said when such changes occurred, they would normally go through the audit committee of the Board, of which he was the chair.[87] He said he was concerned because the first time he heard of the change in the policy was when he read the KPMG report.

246 When Antonie raised this issue at the meeting, Svinos responded that he had "taken the risk out of the forecast" and had "moved it to 100 percent recognition at the date of signing of the construction contract". Antonie found the use of such language concerning the removal of risk to be unsatisfactory.

247 Antonie said there was also discussion about the "missing of the earnings for the retail business". He said inquiries were also made as to whether they would get up-to-date trading performance for the wholesale business and the distribution business. When this was raised, Lennen suggested that the forecast should be lower than $115 million, to which Svinos responded "[Silver]'s stated the number is 115". He also recalled Hindle stating not long after that that he knew the number he needed to get to.

248 Antonie gave evidence that, as an independent director relying on an investigating accountant, this was not what he wanted to hear. However, Antonie did not respond to Hindle's comment at the time, given Silver had said to him on the previous day that he did not care whether the EBITDA forecast went up or down a couple of million dollars, provided he got his value. Antonie said he recognised that, if he was not comfortable with the forecasts in their final form, he would have a chat to Silver in relation to that because Silver had already indicated he may move in that regard.

249 Just after 8.00 pm on 21 October 2016, Mackinnon sent an email to Stockdale, Mooney and Larsen, copied to Antonie, Hudson and a number of solicitors at Freehills, stating that he understood that the financials would not be verified the following day as they would not be final. Prior to this time, it had been envisaged that the verification of the financial section of the proposed prospectus would occur at the same time the review was being conducted by the directors. Shortly after this, Svinos sent an email in which he asked for the meeting on Sunday to be rescheduled to 3.30 pm. "to allow the directors more time to read the report".

250 Around 9.00 pm, Freehills sent draft documents for the Sunday meetings, including to all of United Holdings directors. The attached documents included minutes from 3 previous meetings and an agenda for the upcoming due diligence committee meeting. However, no draft minutes were provided for the meeting of either the due diligence committee or the Board.

251 Meanwhile, the Lead Managers continued to work on the draft prospectus.

252 At 1.10 am on 22 October 2016, Morgan Stanley emailed an updated version of the prospectus, marked up from the version that had been provided the previous Wednesday evening. Contrary to what had been foreshadowed,[88] the draft did not include the financial section, which, save for the cover page, was left entirely blank. The covering email stated that the growth section of the prospectus had been "redrafted ... following on from the session with [Svinos] today". Under cross-examination, Svinos agreed that section 3.7 concerning growth initiatives and improvements was 1 of the most important sections of the prospectus.

253 The covering email also stated there were key outstanding matters relating to the related-party information in section 9. In section 9.5, entitled "Offer Management Agreement", 7 headings were listed, but the detail was entirely absent. In section 9.7, entitled "Lease and other property arrangements", there was a reference to project management agreements which were concerned with a 15 percent management fee to be earned by United Holdings. Again, no details were given.

There are several outstanding items that will need to be completed following finalization of the [management discussion and analysis] in Section 4 (which is being circulated separately in the interests of time).

Self-evidently from what is set out above, as at 1.10 am on 22 October 2016, the draft prospectus was nowhere near being a final draft.

255 At 4.28 am, Credit Suisse emailed the updated draft of the financial section of the draft prospectus. In Dickie's covering email, she reported that the section remained a work-in-progress, noting they had "put [Antonie]'s comments through and progressed some other updates". Dickie also recorded that some of the tables had been updated, but that the remaining tables would be progressed "tomorrow" (presumably a reference to the same day). The email continued:

We've done a tick and tie of most cross references but haven't been able to tick and tie back all the numbers yet given time constraints. ...

[Svinos] - if you are taking [Silver] through this version, then can you please get him to focus predominantly on the commentary/description of drivers for the historical numbers rather than on ticking numbers. Please note that the forecast EBITDA of $114.6m is reflected in the model but not yet reflected in all the tables.

Three further issues were raised by Dickie for Freehills, KPMG and Morgan Stanley respectively, each of which required reviewing of the draft on the basis that she was concerned that there were things that did not "make sense in the context", that proper sources were being used and that there were "major discrepancies remaining".

256 Although Dickie's email was sent to management at United, it was not forwarded to any of the directors. Lennen explained that it was not normal practice to provide multiple versions of documents to board members and that the Lead Managers would try to give the directors as close to final documents as was possible. Lennen acknowledged that Credit Suisse were working towards producing a complete document "with no leftovers".[89]

257 During the course of the Saturday, from around 10.00 am to 4.00 pm, Svinos worked through the 61 page draft financial section with Silver.[90] Changes were made during that process. These included an additional $20 million of capital expenditure on greenfield sites (meaning new acquisitions) and brownfield sites (meaning existing developments).[91]

258 After completing this process, at 4.23 pm Svinos sent an email to Dickie, other representatives of the Lead Managers, KPMG, Freehills, Stockdale and Mooney stating he had been through the draft financials with Silver and was happy with "some minor changes noted". Although this process had taken place, it is clear Silver and Svinos had not sourced all the required information.[92]

259 Dickie responded inquiring with respect to the addition capital expenditure. She asked Svinos to confirm "from a modelling perspective" that the $20 million growth in capital expenditure needed to be phased over a period after the Public Offering.

260 Also in response to Svinos' email, Hindle stated by email that KPMG needed "some assumptions as well ... number of sites, cost for site, timing". Hindle said he was frustrated with Svinos making last minute material changes. Hindle said he needed more clarity around the rationale and the assumptions behind what Svinos had added. The requested assumptions were never provided by Svinos. In giving evidence, Svinos suggested this detail was not necessary for the meeting to be held the following day. A further response was sent by Charles, stating she wanted to know whether Svinos or Stockdale would be coming back to "us" on other questions that remained outstanding in the document.

261 When Stockdale read Silver's comments on the financial section, he was extremely deflated. He was expecting something far more comprehensive, given the following day was "do or die".[93] In his view, the explanations were inadequate. Of course, Stockdale himself did not have first-hand knowledge of some of the matters that remained outstanding. He was reliant on Silver, as Silver was the person responsible for many of the significant assumptions underlying the forecast.

262 The Non-executive Directors were not included in any of these communications. Further, although Brinkworth had been provided with the draft financial section, he did not have any discussions with any of United Holdings directors about their contents, other than with Silver. Equally, there was no suggestion Stockdale spoke to any of the Non-executive Directors about this draft.[94]

263 One of the "minor changes" made by Silver and Svinos concerned the proposed dividend policy. The addition to the document read as follows:

[Silver] considers a dividend policy as follows:

NAPT (sic) 68

Depn 20

Cash 88m

Dividend should be approximately 47m with the balance retained for expansion.

This is approximately 70% of NPAT.

There was no further detail on how these figures had been arrived at. None of the detail was discussed with the Non-executive Directors.

264 Unsurprisingly, the Non-executive Directors were becoming increasingly concerned about the unsatisfactory state of the documentation. Having previously been advised that the deadline for approval of the Pathfinder was the following day, the delay was becoming critical.

265 On the Saturday morning, Antonie emailed Hudson stating he would like to meet prior to the meeting the following day to discuss his position going forward. Antonie said he had thought hard overnight and had reached a decision.[95] Upon receipt of the email, Hudson rang Antonie. Antonie informed Hudson he was not going to act dishonestly, or be misleading, by signing his approval on the terms contemplated in the draft minutes, and therefore he would have no option but to offer his resignation. However, he said he wanted to meet with Hudson "to give it the most chance to see if we could get there".

266 As to Antonie's state of mind, he said that he was very stressed. He said the lead up to 23 October 2016 was, from his perspective, "actually terrifying". He said he wanted to let the chairperson know his position, but considered he had no option but to offer his resignation or be sacked if he was not willing to sign the minute in relation to approval of the Pathfinder.

267 In response to Antonie, Hudson said he was in the exact same situation. Hudson's deadline of the Saturday morning with "no leftovers" had been missed,[96] and no one had telephoned to explain why that had not happened. Antonie gave evidence this was contrary to normal practice and his experience on other boards.

268 Antonie said during the course of the conversation it was agreed that they had to work out the status of the documentation and the due diligence committee's position. It was agreed that they would have discussions with Ziegelaar, Lennen and Burmeister to discuss these matters.[97]

269 Antonie and Hudson then contacted Ziegelaar. Hudson told Ziegelaar he was annoyed that the Board had not received the documents they were expecting to receive that morning.

270 Hudson then contacted Lennen and said he was very annoyed that he had not received the full suite of documents. Lennen said they were still working on the financial section and it would be provided as soon as possible. However, when Hudson asked when that would be, Lennen would not give an indication.

271 Pausing here, at trial the United Parties sought to make much of Hudson's level of annoyance, which arose out of the deficient documentation. Hudson gave evidence that, on the Saturday morning, he was angry because the Board only had until the following day to become comfortable with the final draft of the prospectus, which was still unavailable. Under cross-examination, it was put to Hudson that there "is no luxury of being angry as a chairman".

272 In written closing submissions, the United Parties sought to elevate Hudson's state of mind to some sort of agenda to stop the Public Offering occurring to 2016. It was submitted Hudson was irritated and "refused" to speak to the Founders. In oral closing, the word "refused" was withdrawn in favour of the word "failed". In any event, to the extent the United Parties contended Hudson's annoyance gave rise to a concerted effort to stop the Public Offering occurring in 2016, that contention is rejected. Given the reasonable requests of Hudson[98] had, yet again, gone unsatisfied, it would have been surprising if Hudson had not felt some level of annoyance.[99]

273 Returning to the Saturday morning, Hudson, with Antonie, then spoke again to Ziegelaar. During this conversation, Ziegelaar expressed his concerns about not being in a position to sign off on the prospectus the following day. During this conversation, Antonie repeated his concerns about the documentation, and in particular what was driving the revised forecasts. Ziegelaar indicated that his concerns about the ability to have everything ready the following day were shared by the Lead Managers.

274 Ziegelaar gave evidence that, in 1 of his conversations with Antonie on the Saturday morning, he asked Antonie what he thought about Hindle saying he needed so much longer to finalise the accounts. Antonie said it concerned him. He said Hudson was part of the same discussion, but he could not recall what Hudson said.

275 The upshot of the various discussions was that the Lead Managers would continue to work on the drafting. Hudson and Antonie decided to await the outcome of that work before making any final decision.

276 While these discussions were taking place, Antonie continued to attempt to obtain relevant financial information. At 9.00 am, he sent an email to Hindle and Stockdale, copied to Hudson and Ziegelaar, asking to be told when Hindle and Stockdale would have a final position on the numbers. Antonie stated he wanted sufficient time to understand and reflect on the numbers and asked further questions in relation to the outstanding issues. Specifically to Stockdale, Antonie stated that all volumes and margins across the 3 businesses up to the previous night were needed. No doubt this was so Antonie could make an informed assessment of how the business was performing compared to the proposed forecast.

277 Around mid morning, Antonie also contacted Larsen to discuss his concern about the proposed sign off on the Pathfinder. By this stage, Antonie had reviewed the draft minutes.[100] He expressed his concern about the absence of the financial section and the form of the sign off.

278 Also around mid morning, Hindle responded to Antonie's email concerning the final position on the numbers. Hindle stated that he and Stockdale had agreed on an EBITDA of $114.6 million. Hindle then proceeded to list the changes to the numbers presented the previous night, listing 4 separate items. In this regard, Hindle gave evidence that he had carried out some investigation with Stockdale as part of this process.

279 During his evidence in chief, Antonie was asked whether he trusted Stockdale to be a competent chief financial officer. Antonie responded by stating that, when he had seen him in another organisation he did, but he believed Stockdale was working under extraordinarily tight circumstances with accounting systems that made it more difficult for him.

280 Based on the discussion the previous evening, Ziegelaar was concerned that Svinos was insistent on proceeding with the Pathfinder regardless of the state of the documentation. After his discussions with Hudson and Antonie, and representatives of the Lead Managers, Ziegelaar decided to draft an email setting out why they were not then in a position to proceed with the Pathfinder. The email ("the Script Email"), which was sent to Hudson and Antonie at 1.24 pm on the Saturday, read as follows:

Here is a script for the [Silver/Hirsch] meeting for your comments. Please call me to discuss. We should agree who delivers it. One (sic) you comment on it, I will send it to the [Lead Managers] before our 5.00 pm call today.

1. We have worked very hard since we last spoke to you about the timetable but still have serious concerns about giving the prospectus to analysts, and presenting to them, on Monday.

2. We think we are about a week behind where we should be.

3. This is due to a number of reasons - the main ones are:

• the financials have kept moving - we have not had time to get comfortable enough to give them to the analysts - we are concerned they will change after we do so when we have more time to analyse them in the next few days - the [Non-executive Directors] and the banks are not comfortable to sign off on them as you normally would before they go to analysts

• we are not sufficiently prepared for the analyst presentation and the questions they may ask - the [Management Discussion and Analysis] is not settled, it did not have full company input until yesterday and we have not rehearsed - the [Management Discussion and Analysis] normally takes at least a week to settle and we have not had the time to do that - nor have we rehearsed

• we have not had the time to ensure that the financials are consistent with the rest of prospectus

• the store roll out numbers are not clear.

1. If we give the prospectus to analysts in its current state, we are concerned that it will look incomplete or inconsistent to them, we may not be able to answer their questions and it may have to be changed after we give it to them - later changes, especially to the financials, reflect badly on the IPO.

5. These risks could result in:

• a material decrease to the analyst valuation or

• the analysts having a negative view of United, which affects your ability to IPO next year.

1. The analysts have to be independent and can't have conflicts of interest. Because of licensing and regulatory reasons, the [Lead Managers] can't influence the views of analysts. For example, the [Lead Managers] are not able to correspond with analysts in relation to these matters. So we can't manage them or give them a draft prospectus which could later change.

7. Unfortunately, this means that we can't IPO this year.

1. What we think you should do is list in April next year and change the year end to December to deal with the forecast issue.

281 When cross-examined about the Script Email, Ziegelaar denied that he had agreed with Hudson and Antonie to have a meeting with Silver and Hirsch. Ziegelaar said the script was for a meeting which may or may not happen, but there had been no meeting scheduled or thought about. Ziegelaar said he sent the Script Email to Hudson and Antonie because he wanted to see if his concerns were valid. He said at the time he believed Silver and Hirsch knew of his concerns because he had been told to treat Svinos as if Svinos were Silver, and Svinos knew that KPMG needed more time based on the discussion the previous evening.[101]

282 Hudson gave unchallenged evidence confirming the script had not been sought by him. Hudson said he understood that Ziegelaar had sent the Script Email on the basis that, if a decision not to proceed was ultimately taken, somebody would need to talk to the Founders.

283 Hudson responded to the Script Email almost immediately, saying that he would come back with more detail shortly. Hudson's email continued:

[I]mmediate thought is that aside from movement in the financial, it will only be Sunday am when we get, for the first time, the "final" financials - no time to properly consider & then question management.

Also in the email, Hudson inquired whether the formal approval to release material to the analysts was to come from the Founders or the Board.

284 Antonie also responded to the Script Email, suggesting it was a good starting point. He made further points as to why there was "insufficient time to be comfortable". In explaining why he did not feel comfortable that Saturday morning, Antonie said that it was not just his concern with the figure of $114.6 million EBITDA for the 2017 financial year. He said he needed to be comfortable with the whole financial section, the disclosures that were made to support the forecast, and everything else that went around it. Antonie said he thought they should make the point that there were no real contingencies provided for in the forecast and, accordingly, there had not been sufficient time to get comfortable with it.

285 Hudson then responded to Antonie's suggestions, saying he agreed with his thoughts. Hudson said the "tone needs to focus on the fact the numbers only settled on Friday/Saturday, and have [only] finally been put into [section] 4 for review on [Sunday] morning". The email stated that while they might be able to get comfortable with what has been disclosed, there had simply been no time to do so, nor for the directors to interrogate management "as would normally occur". Hudson suggested that putting out the Pathfinder without doing this process was "risky and 'amateurish'".

286 That afternoon, Ziegelaar spoke with Hudson. He advised Hudson that each director had to formally consent to the lodgement of the prospectus with ASIC,[102] and that, in Ziegelaar's practical experience, directors would confirm the Pathfinder if they were prepared to legally consent to the lodgement of the prospectus. Ziegelaar said that was the way the "IPO processes typically ran".

287 Notwithstanding the state of the materials, Hudson was still preparing for the proposed meetings the following day. Mid afternoon, he contacted Larsen to speak about the order of proceedings and who would be presenting at the due diligence committee and board meetings. In an email to Stockdale shortly after the discussion, Larsen stated that Hudson had agreed that if Stockdale presented on the forecast and financials in the due diligence committee meeting with KPMG and Credit Suisse, there would be no need to repeat that information to the board meeting which followed, albeit there might be follow-up questions. Larsen's email also recorded that both Hudson and Antonie wanted detailed presentations "on the numbers etc" at the meetings.

288 Mid afternoon, Charles sent an email to Lennen and Burmeister commenting on Silver and Svinos' changes.[103] It appears she was unimpressed:

Just an example of the last minute changes we are getting - $20m of capex added with the swish of [Svinos]'s pen.

289 Later that day, Lennen added to Charles' comment with the following:

And no basis for the number or relationship to a strategy or business plan.

Lennen said the normal course, if someone was going to spend $20 million, was that there would be some supporting evidence or some business rationale or some stated use. He said it was certainly, in his mind, quite a material amount of money being changed "very late in proceedings".

290 Just before 5.00 pm, Morgan Stanley sent an email to Ziegelaar, copied to Credit Suisse. The email attached the timetable, previously agreed to on 14 October 2016,[104] on the basis that Ziegelaar could use it for his discussion with Hudson. The email recorded it had been discussed with Silver by Lennen and Burmeister about a week ago. The email also recorded that 16 December was the "absolute backstop" for the Public Offering, and that the "deadlines" had already been pushed back from 19 and 21 October 2016 to 23 October 2016. Under cross-examination, Silver agreed that he knew that 16 December 2016 was the last possible day and that "if we didn't make that the whole thing would basically collapse, and [would] have to be restarted the following year if we [chose] to do so".

291 At 4.55 pm, KPMG circulated the first part of their comments on the financial section to the Lead Managers, Freehills, Stockdale and Svinos, but not to United Holdings directors. The covering email said further comments would be sent shortly. Hindle gave evidence that he had a team of 5 people, including himself, working on the financials that Saturday. This was the same team of people that had been reviewing and analysing the models for a couple of months. Hindle said he believed KPMG could not have reviewed the materials any quicker on that day.

292 During the course of the day, Ziegelaar, Hudson and Antonie decided to meet at 5.00 pm to assess the situation. It was decided that it was preferable to meet without any representative from United so that an independent assessment could be made. The meeting, by telephone, was attended by Ziegelaar, Hudson, Antonie, Slack-Smith, Lennen, Charles and Burmeister.[105] Ziegelaar took notes of the meeting. Ziegelaar gave evidence that the meeting was about whether "we" were prepared to send the Pathfinder to the analysts, which effectively concerned whether "we" were prepared to go ahead with the Public Offering. No doubt, these matters were being considered because it was anticipated that they were all expected to sign off on either the due diligence process or the contents of the Pathfinder, or both.

293 At the start of the meeting, Hudson spoke of his general unease about taking things forward and said there needed to be a co-ordinated approach. He inquired whether everyone agreed with that. Slack-Smith made the observation that it sounded like Hudson was running out of time. The note of Ziegelaar records the following then occurred:

Burmeister KPMG/[Freehills] - can we say we comfortable - No.

• But don't believe numbers will have enough fat?

Other than recalling it was Burmeister that spoke on this issue, Ziegelaar had no recollection beyond the note.

294 The note then records Lennen identifying a number of difficulties then being faced:

No management presentation

No KPMG[106]

No contingency built into numbers

No real review of [management discussion and analysis]

No real rehearsal

Days away from being given to analysts.

295 Ziegelaar said Lennen identified the work that remained to be done, which meant that the document being worked on was not "at a Pathfinder stage". In addition to identifying documents that were not ready, and observing that no contingency had been built into the forecast numbers, Lennen stated that there had been no real rehearsal for the analysts' presentation. It was on that basis that he expressed the view that the giving of the Pathfinder to the analyst was days away from occurring.[107]

296 Antonie gave evidence that Stockdale was getting very concerned about what he was going to present to the analysts as he had been unable "to rehearse something that doesn't exist". Further, Antonie held the view that it was very important to have a proper rehearsal before any presentation to the analysts. Based on his experience, he held the view that Stockdale would need to be in a position to address the types of questions the analysts would ask. The purpose of the rehearsal was not only to make sure they were good answers, but also to ensure that the answers did not go outside what was in the draft prospectus. Antonie gave evidence to the effect that the rehearsal process would generally take a number of days.[108]

297 Returning to the meeting, another part of Ziegelaar's notes recorded someone stating that Brinkworth and Stockdale would not be prepared for the presentation to the analysts and that "weakness on management bench will go into report". Ziegelaar said while he knew this was said, he could not recall who said it. There was also a discussion as to why March or April 2017 would be better timing for the Public Offering than December 2016. During the course of the meeting, Charles stated that KPMG had only just that day turned their minds to the cash flows as they had been focussed on the profit and loss.

298 Hudson stated that it had been flagged to Silver some 2 weeks ago that the situation they were then in might happen and suggested that Silver would "be alright". Burmeister rejected this suggestion.

299 Towards the end of the meeting, Lennen made a comment that the timetable was already too late. The meeting concluded with either Lennen or Burmeister saying they would go to Svinos to discuss the issues, as Silver would not like it. Antonie said this was agreed by those present, subject to waiting to see "what came in overnight" and that, if it was not satisfactory, then the discussion with Svinos would need to go ahead.

300 Just after 5.00 pm, Larsen emailed the agenda and papers for the board meeting "following the [due diligence committee]" to the directors, Brinkworth and Svinos. The email did not include any draft minutes.

301 At around 5.30 pm, Svinos responded to Charles' query earlier that afternoon as to whether or not Svinos or Stockdale were coming back to Credit Suisse that afternoon.[109] Svinos simply replied "[Stockdale] will cover the financials".

302 At 6.00 pm, Mackinnon sent an email attaching a property update provided by United. A couple of minutes later, Ziegelaar responded to Mackinnon, copied to others at Freehills working on the matter:

Don't do any work on it tonight. Barring a miracle it's dead.

The first reference to "it" in the email was a reference to a list forming part of the property update. It was not a direction to stop work altogether. Ziegelaar said the email was sent in the context of people who had been working around the clock and that it was a Saturday night. He said the work in question could have been done very easily on the Sunday or the Monday as none of it was dependent on the Pathfinder. Those at Freehills working on the Public Offering continued their work. The second reference to "it" was a reference to the Public Offering.

303 Ziegelaar was attacked under cross-examination for not informing the Founders of his view on the Saturday evening as expressed in this email. When asked why he did not do so, Ziegelaar gave a number of reasons, stating that: at the time, KPMG wanted 10 more days; Hindle, Brinkworth and Stockdale were sitting in on daily 5.00 pm meetings and they knew what was going on, so the Founders must have known what was going on; and telling the Founders anything was not going to change the world. In a later answer, Ziegelaar said that the "entire management team" of United were in those daily meetings. Whilst this might have been an exaggeration, it was fair to say that senior management, together with Svinos, were being kept up to date in the daily 5.00 pm meetings leading up to the weekend in question.

304 As an aside, Silver gave evidence this email was brought to his attention during the discovery process. He said he was told by his solicitors that Ziegelaar had directed Mackinnon to stop working. He said when he heard that it was "like a kick in the gut". Silver assumed, contrary to the fact, that Freehills did not continue to work on the matter after this email was sent.

305 At 6.27 pm, Lennen sent a text message to Charles, in the following terms:

We tried at 5. Thanks for joining and the hard work. [Hudson] has backed down from this morning. The [B]oard is brave (when [Silver] is not around).

Lennen said he could not recall sending this text message, but it was part of an update that was given about the material amount of work still to be done, the really high risk of the deal not proceeding and their not being in a position to brief analysts on the following Monday.

306 At around 6.30 pm, Svinos responded to Hindle's earlier demand,[110] asking that a note be made in the prospectus to deal with another issue that Hindle had raised concerning brownfield sites. In short, Svinos provided none of the information sought.

307 During the course of the evening, Antonie spoke to Stockdale by telephone. Antonie told Stockdale that the financials were not where they needed to be. He said he had discussed this with the Lead Managers. Antonie said he was uncomfortable with the financials and the state they were in, to which Stockdale responded that he was also uncomfortable. Antonie then expressed the view to Stockdale "off the record" that he did not think it would be going ahead the following day and asked Stockdale to keep it "off the record", which Stockdale agreed to do. Stockdale's evidence was, from this point in time, he effectively knew the matter would not proceed the following day. However, that was not yet a view that had been formed by the Non-executive Directors.

308 Shortly before 8.00 pm, KPMG emailed the second part of their "mark-ups" of the financial section of the draft prospectus to the Lead Managers, Freehills, United management (including Stockdale) and Svinos. The email was not sent to any directors of United Holdings.

309 Shortly before 10.00 pm, Charles sent an email to Lennen recording that Stockdale had reviewed the cash flows. She suggested that, apart from some moving numbers in the capital expenditure and working capital, they were getting close. She stated that no one had focussed on the flow of funds, but that that was not critical for the analysts. Lennen agreed with this observation.

310 After 10.00 pm, the Lead Managers were still working on the financial information. An email was sent by Bajraszewski, which referred to a spreadsheet and a comparison that had been made of 370 sites and drew attention to a number of inconsistencies. Four "main things" were specified. Bajraszewski agreed with Mackinnon that it was necessary to get United to reconcile the issues and that they "definitely need[ed] this information into a single source otherwise there will be ongoing issues".

311 At 11.31 pm, Morgan Stanley emailed Ziegelaar and various persons at United, including Brinkworth, Stockdale and Larsen. The email stated that the analysts' presentation had been updated so it aligned with the prospectus and Brinkworth's comments that day. Those comments had not been provided to United Holding's directors. The email stated that there were a few outstanding items that would need to be addressed before Monday afternoon.

312 At 5 minutes to midnight, Ziegelaar emailed Mackinnon responding to Mackinnon's earlier query on what was happening the following day. Ziegelaar said he would know more in the morning, but suspected Mackinnon would have to come in. Ziegelaar also expressed the expectation that the process would be called off at a smaller meeting around 3.00 pm or 3.30 pm. Plainly, Ziegelaar was aware of the Non-executive Directors' proposal to meet before 3.30 pm the following day.[111]

313 Also at 5 minutes to midnight, Hindle emailed "KPMG's updated report for tomorrow's [due diligence committee] meeting". This time, the addressees included each of United Holdings directors, as well as the Lead Managers and Freehills, amongst others. Similar to the report provided on 14 October 2016,[112] the 181 page report contained a covering note stating that KPMG's work was incomplete, including by reason that it still contained square brackets "throughout the report" identifying incomplete items.

314 Although the report identified further documentation required, Hindle gave evidence that the documents related more to the provision of the investigating accountant's report for the lodgement of the prospectus rather than to the Pathfinder, and would not have impacted on the actual numbers.

315 Further, although the comment concerning the robustness and appropriate level of challenge and review by United's management was still within square brackets,[113] Hindle gave evidence that he was content with the forecast EBITDA number by that time.

316 The final diagrammatical illustration of the EBITDA bridge was as follows:

317 The updated report also contained a comparison between the actuals up to September 2016 and the forecast position. Hindle gave evidence that this had been the subject of discussions prior to the circulation of this report.

318 At 31 minutes past midnight, Bajraszewski emailed an updated version of the analysts' presentation to a large number of persons at United (not including the Founders), the Lead Managers, Freehills, Svinos, Hindle and the Non-executive Directors. The covering email stated that it had been updated to ensure it matched the latest changes to the prospectus, noting that it was still subject to "slight changes". With respect to the changes that still needed to be made, at least concerning the necessary financial information, the covering email did not accurately reflect the position. The financial section was entirely blank, save for the words: "To be inserted". Significantly, arguably the most critical aspect of the document was devoid of content.

319 At 1.36 am on 23 October 2016, Charles emailed an updated "current draft" of the financial section of the prospectus. The email was sent to a large number of addressees, including the United Holdings directors. Silver initially gave evidence that he thought the document was "pretty accurate and pretty complete". This was despite the fact that the document still contained more than 50 drafting notes (which were highlighted in green). Shortly after his initial comment, Silver conceded the document was "nowhere near complete". On the face of it, it appeared some of the drafting notes may have been significant.[114] Of course, given how late the financial section was circulated, the Non-executive Directors had had no opportunity to properly consider the drafting notes and confer with management to assess their significance.

320 At trial, many of these drafting notes were not the subject of direct evidence. On a specific basis, there was little attempt by United to explain which were material and which were not. Either by way of evidence in chief or during cross-examination, United chose to make only a few of the notes the subject of direct evidence, as follows:[115]

(1) Lennen could not say whether the drafting note concerning distributor overhead costs[116] was substantial or not without seeing the quantum of the number.

(2) With respect to the same note,[117] Svinos could not say what the "Distributor overhead costs" figure was. When he was pressed, he could not say whether it was greater than $1 million or greater than $2 million. Svinos conceded all individual items greater than $1 million would be material. Despite this evidence, in his evidence in chief, Svinos had said the matter had not been discussed on the Sunday morning because it was not material.

(3) Hudson accepted that the note recording that debt at the time of Public Offering was to be discussed with management[118] had no impact on the forecast, as had been reported by Hindle. When it was put to him, Hudson also accepted that the note could have been discussed at the scheduled afternoon meeting at Freehills, but he did not know what the impact was then going to be in terms of the documentation. However, Svinos gave evidence that this issue was to be discussed as soon as the cash flows were completed. There was simply no prospect that the cash flows were going to be completed on 23 October 2016.

(4) Svinos gave evidence there was no discussion about the note concerning all debt costs being expensed.[119] Further, Hudson accepted that he was aware on the Sunday that Hindle thought he could complete the cash flow and balance sheet within 24 to 36 hours. However, Hudson also stated that nobody discussed with him the possibility of "loosening" the timetable for the Pathfinder to be released to the analysts beyond 24 October 2016.

(5) Svinos gave evidence he discussed with Hindle on the morning of 23 October 2016 the note concerning management being required to confirm the capital expenditure forecast, including the split between maintenance and growth.[120] That discussion concerned the adequacy of the forecast and what needed to be included in the cash flows and balance sheets when they were completed.

(6) Svinos said he also discussed with Hindle the note concerning the $20 million of ongoing maintenance capital expenditure.[121] Svinos told Hindle that he was comfortable with the $20 million capital expenditure. He said there were some issues in terms of getting clarity in what was included in a private company compared to that that would be "defined in a public company", and that the number was more than sufficient to cover what was required. Svinos said it was a conservative estimate.

(7) Svinos also discussed with Hindle the note concerning the sensitivity analysis to be reviewed by KPMG and management.[122] Svinos gave evidence that he wanted to make sure that Hindle was comfortable and that "adequate allowance had been made for these to occur, because in the absence of hitting your targets we would be severely impacted by the market".

(8) With respect to the definition of "overheads" needing to be confirmed,[123] Svinos said it was important to understand that a private business had an inclination to expense as much as it could. He gave evidence that a public company was far more concerned about its numbers being consistent, whereas a private company had little interest in consistency and was out to maximise their outgoings and expenses. Accordingly, Svinos said they had to be comfortable with the definition of "overheads" being overly conservative "as compared to the forecast". When this issue was raised by Svinos with Hindle on the Sunday, Hindle stated he wanted the overhead definition in the forecast to be the same as the overhead definition being used by United in their actual results. Svinos stated to Hindle that United were inclined to expense more into overhead than would have been allowed for in the forecast, thereby resulting in a very conservative view of overheads. According to Svinos, Hindle said he was happy with that explanation.

(9) With respect to the note concerning the dividend policy requiring confirmation,[124] Svinos said he had discussed that issue with Silver the previous day and confirmed the dividend policy that United would adopt moving forward. He said none of the Non-executive Directors discussed the dividend policy with him on the Sunday.

321 In Hindle's re-examination, he was asked a general question about the drafting notes. When asked whether he considered the notes affected the prospect of the Pathfinder being approved on 23 October 2016, Hindle said the comments and queries that needed to be resolved "in tandem with the remaining areas of work that we needed to do on the cash flows" meant that he was "well aware" that the due diligence committee could not give a recommendation to release the Pathfinder on 23 October 2016.

322 Freehills' senior counsel cross-examined Hindle on some of the drafting notes, which adduced the following:

(1) With respect to the note concerning management confirming capital expenditure numbers,[125] Hindle understood the work was to be undertaken by Stockdale and "the rest of the United team as required, together with Credit Suisse and KPMG".

(2) Hindle said the same persons were to be involved in management confirming final cash flow capital expenditure forecasts,[126] tax payment phasing[127] and confirmation of any distribution in the 2014 financial year.[128]

(3) As to the note concerning confirmation and an analysis of capital expenditure on a per site basis,[129] Hindle said that work was to be done by Stockdale "working with United", and that this was primarily a management input requirement.

(4) With respect to the note concerning assumptions relating to ethanol sourcing terms and the related-party issues,[130] Hindle said that work was to be performed by Credit Suisse, with United.

(5) In relation to the note concerning consolidation of the 3 distributors acquired in Queensland,[131] Hindle said he thought that issue related to a volume assumption and should have been in a different part of the financial section.

(6) As to the note concerning all debt costs being expensed,[132] Hindle said that that would have involved people beneath Stockdale at United, being "whoever was close to the debt refinance".

(7) With respect to the next note concerning working capital forecasts,[133] Hindle said that he was aware the working capital forecast for the following financial year had not been approved by the Board because it had not been finalised.

(8) As to the issue of the dividend policy,[134] Hindle was uncertain whether or not that remained a live issue. He said it was something that he was not directly involved in and that, to his understanding, Credit Suisse had been working on that with the Founders. Hindle said his memory was that there was to be no proposed dividend for the 2017 financial year and that it was more around a long term dividend policy, but that he could be wrong. Clearly, Hindle had not been involved in any discussions concerning the recent introduction of a dividend policy for the 2017 financial year.[135]

323 For completeness, the United Parties' closing submissions stated the drafting notes "presented no qualitative obstacle to finalising" the financial section. No evidence of any witness was referred to in support of this assertion. In fact, the submission went against an overwhelming body of evidence to the contrary and cannot be accepted.[136]

324 As is apparent from what is set out above, the Non-executive Directors were provided with the financial section of the draft prospectus proposed to be considered at the board meeting for the very first time at 1.36 am on the day they were being asked to approve it for the purposes of the Pathfinder going to the analysts.[137] Even assuming everything within the document was in order, given the size and complexity of the draft financial section, together with everything else, an enormous amount was being asked of the Non-executive Directors on that Sunday.

325 Antonie said he had to speed read the document, and turned his attention to the green highlighting as much as he could. He said he could not say whether he reviewed every highlighted matter because he was focussing on some other bigger issues and other documents that had been received and were to be reviewed in a very short period of time. Antonie said he was quite frantic because he had been faced with "an impossible task". Further, he said from what he had reviewed that he knew there were actual material errors or issues that had not been addressed. Furthermore, Antonie gave evidence that, although he emailed some queries that day, he had insufficient time to review the documents to ascertain what his questions were.

326 As to the position of Slack-Smith, he lives in Sydney. On that Sunday morning he boarded an 8.00 am flight to Melbourne, having left Avalon in Sydney around 6.00 am. He gave evidence he saw the emails when he awoke, but did not have a chance to look at them until at least the time he was on the plane.

327 Slack-Smith accepted that the time in which he was asked to review the materials was extremely limited. He was concerned about his ability to act properly within his role as a Non-executive Director, particularly in light of the incomplete information. He said he understood that complete information needed to be presented to the analysts, without any omissions, only 24 hours later, and that he was concerned at the amount of work that was still to be done.

328 Slack-Smith also gave evidence of his experience in operating within a current listed entity,[138] and was specifically aware of what went into the preparation of company accounts for the Australian Securities Exchange. He also gave evidence that not only had he not had the proper opportunity to consider the information, but he had no proper opportunity to discuss with management what had been presented by KPMG and others.

329 Hudson said that, on the Sunday morning, he was disappointed to find that there still appeared to be outstanding matters with the financials between management and the advisers in relation to the financial section. He said he was uncomfortable with this section and the fact that over 50 items remained open. He observed that there was no financial section whatsoever in the management presentation. He also noted that the KPMG report by Hindle was not final.

330 Returning to the events on the Sunday morning, at 6.52 am, Antonie sent an email to Larsen, Hudson and Ziegelaar concerning the 2 agendas for the meetings later that day. He observed that the due diligence committee meeting agenda provided for an update on trading, but had no requirement for management to make a presentation on the financials. He further noted that the board agenda was simply to approve the Pathfinder. Antonie observed that, to that stage, the due diligence committee had only had a question and answer session on the KPMG draft report, which had subsequently been amended materially. He concluded as follows:

It is fundamental that the [due diligence committee] or the [B]oard receive a presentation from management on the final financial numbers and in particular the forecast.

With everything moving very quickly has [Stockdale] been advised he needs to be present on this matter.

331 When taken to this email in his evidence in chief, Antonie was asked why he did not send it to any of Svinos or the Founders. The question was framed in terms of querying whether it was an oversight. Antonie said he did not think there was any reason to send it to them, as he was sending it to Larsen, who was the company secretary. He also said he sent it to Ziegelaar and Hudson, who were the chairpersons of the due diligence committee and United Holdings respectively. Further, he said he considered it to be a process-orientated email. Antonie observed, as was the fact, that emails throughout the transaction were not sent to every single person and "that's just not the way it works". Any implicit criticism of Antonie in this line of questioning was unfounded.

332 In an immediate response to Antonie's email, Hudson stated that it was his understanding that Stockdale would make the presentation and that it clearly had to happen. A little later in the morning, Larsen responded stating that Stockdale was aware of the need for a presentation, and that Larsen had run him through the key parts of the agenda.[139] Larsen referred to Hudson and Antonie's respective requirements for a detailed presentation in the financials. The email suggested Stockdale was prepared for that. Larsen also said the agenda for the board meeting could be broken down into approval of each component part of the Pathfinder "if that's where we are at". Hudson again responded immediately, stating that they may not get there, but being prepared as Larsen had suggested would be helpful.

333 Shortly after 7.00 am, Hudson and Antonie exchanged emails concerning requests Antonie had made for information that had gone unanswered. The previous evening Antonie had sought an explanation with respect to hedging and the sensitivity analysis. Further, that morning he had sought to raise a number of issues with respect to the information that had been provided.

334 Additionally, in relation to the further matters raised by Antonie that morning, Hudson responded:

Thanks - not sure of our chances of getting clarity on this today!

Just ridiculous that we be expected to read, digest and approve for distribution material with as many open issues as are still in what we got overnight!

335 Shortly after this email exchange, Antonie emailed a further query with respect to the financial information. It is apparent from the series of emails that morning that Antonie was doing his best to get across the material only recently provided and attempt to ensure its accuracy to the extent that he could in the time available.

336 Shortly before 8.00 am, Mackinnon emailed Ziegelaar and Earle asking why "everyone else [was] running so hard".[140] Mackinnon said he sent this email because he was unsure what was happening. He said that, after he sent the email, he continued to work on the retail site rollout plan, because at that stage it was an issue that needed to be resolved. This was because the considerable data provided by KPMG and United to Freehills and Morgan Stanley, was inconsistent.

337 At trial, there was a significant body of evidence demonstrating that Freehills continued to work on outstanding matters up until the Sunday afternoon. It was not until the Monday morning that an internal email was sent instructing Freehills' lawyers to cease all work on the Public Offering.

338 Antonie continued to work on the draft financial section. At 10.14 am, he raised further queries. He forwarded these separately to Burmeister and Lennen. That email included:

These are important issues that we are either not on top of or am I barking up the wrong tree - regardless I would want answers before we present the product to the analysts as we need to get it right as to the reason you should see through the straight line accounting issue.

339 A short time later, Lennen responded, agreeing that the detail needed to be examined. After making a number of observations concerning some of the topics raised by Antonie, Lennen continued:

I am going through the materials now ... but with a 55 page financial section, 181 page KPMG report, 37 page analyst presentation and 117 page prospectus ... I am not sure how we are expected to be comfortable in 12-24 hours.

(Emphasis added.)

In giving evidence, Lennen explained that, at the time he sent this email, a detailed report had been provided by KPMG which had not been presented to the due diligence committee and needed some review and reflection. He said the report contained elements that were relatively new, or new to the committee. He said there was also a very detailed financial section, together with a management discussion and analysis section, that had not been reviewed by management in any detail. In addition, Lennen said there was an analyst investor presentation that still required the inclusion of a lot of financial information to be extracted from the draft prospectus, and there needed to be some level of review from Freehills to feel comfortable that this information consisted of verifiable statements. Lennen said that, in his experience, that amount of information, particularly given the other items to be agreed, was a lot of work to do ahead of briefing the analysts at 2.00 pm the following day.

340 In addition, Lennen gave evidence that he did not think it was reasonable for him to be expected to review all of the material that had been provided and to be comfortable with it by the time of the scheduled due diligence committee meeting and board meeting that afternoon.

341 Under cross-examination, Lennen agreed that, based on his experience, the purpose of a due diligence committee in these circumstances was to ensure that United Holdings, together with its directors and advisers, got the benefit of the due diligence defence under the Corporations Act.[141] Further, based on Lennen's experience, he understood that a company or person would only get the benefit of a due diligence defence if the prospectus that had been signed off had also been verified. Lennen also said there was no prospect of that occurring on that Sunday.

342 About an hour after Lennen sent his email,[142] he spoke with Antonie. Although Antonie did not have a recollection of all that was said, he recalled Lennen referring to his discussions with Svinos. Lennen told Antonie, in substance, that Svinos was not listening. Antonie also recalled them discussing that the financials had not improved.

343 Lennen also had a conversation with Svinos around this time. He told Svinos that it was Lennen's view that the documents were not in a state to be approved that afternoon, and that there were still material open-ended questions and work to be done. He said that, having been through the materials, it did not appear they were in a position to brief the analysts the following day. Svinos responded, saying the Founders wanted to continue regardless. Lennen could not recall his precise response, but said they agreed to disagree. Lennen gave evidence that, from his perspective, given the information that he had gone through at that time, the weight of work that was required and the outstanding items that were required to be dealt with, they were not going to be in a positon to brief the analysts the following day.

344 Svinos gave an account of a discussion with Lennen in which he suggested that he told Lennen he had spoken to all the stakeholders, including KPMG, Stockdale and Ziegelaar, inquiring as to whether or not the cash flow and profit and loss could be completed within 24 to 36 hours. He said he then asked Lennen whether Lennen's team was willing to work "24/7 straight" after the due diligence committee meeting until the process was complete and the Pathfinder issued. He asked whether it was doable. Svinos gave further evidence that Lennen responded saying Credit Suisse was "happy to work 24/7 to get this process complete and, yes, we can delay the analysts by 24 to 36 hours if required".

345 I do not accept this evidence for a number of reasons. First, Lennen himself gave no such evidence. Secondly, when Lennen was asked whether 1 day's delay would have made a difference in this regard, he declined to express an opinion.[143] Thirdly, Svinos' account is in direct conflict with an account Lennen gave to Antonie shortly after the relevant events occurred.[144] Fourthly, under cross-examination, Svinos changed his evidence, stating that Lennen had told him the time for the analysts' briefing could be "extended out a day, 2 or 3".[145]

346 At 11.42 am, Svinos sent an email to Stockdale stating that the Lead Managers were threatening to "pull" if United did not get rid of the square brackets.[146] Svinos inquired whether Stockdale had got anywhere on this issue.

347 Around this time, Stockdale spoke with Svinos. Svinos inquired about the status of the financial section. Stockdale stated that what he had received from Svinos the previous day, with Silver's comments, was not complete. He stated that there was still a lot of work that needed to be done on the prospectus.

348 In response, Svinos "plead[ed]" with Stockdale to do whatever work was possible in order to get the draft prospectus ready, so that the Public Offering would not be pulled. In reply, Stockdale said he had been waiting on required information for weeks, if not months, and that he was relying on Svinos to source this information from Silver. Stockdale said he did not know what else he could do if the required information was not provided. He said he had no recollection of telling Svinos that it could be done that afternoon, and did not believe that he said it.

349 Remarkably, Svinos said he did not tell Silver about the position of the Lead Managers on the Sunday morning. Svinos gave evidence that he told Silver that there was some delay and that it might be necessary to delay the analysts' briefing. However, he did not tell Silver that it was his understanding that the Pathfinder was not going to be approved for release that afternoon. Svinos said he did not do this because he did not know it to be the fact and it was up to the due diligence committee and the Board to decide.

350 This evidence was surprising in light of other evidence given by Svinos. He said by the time he met the Founders at the KPMG offices,[147] he had absolutely no doubt the Pathfinder was not going to get signed off that afternoon. In explaining his position, Svinos said that was why he had arranged for the various advisers and Stockdale to continue working for the next 24 to 36 hours. In any event, for reasons best known to himself, it appears Svinos did not give the Founders a comprehensive report as to where things stood.[148]

351 In an internal email, at 11.46 am, Ziegelaar inquired as to whether or not sections 2 and 3 of the draft prospectus were 80 percent verified.[149] He also inquired about section 1.[150] The affirmative response with respect to sections 2 and 3 was coupled with uncertainty with respect to section 1. Cowan stated that the relevant verification table had not been received by Freehills, and that it might have been progressed a lot or not at all. She simply did not know.[151]

352 At trial, which parts of section 2 and section 3 that had been verified was unclear. United did not seek to lead any evidence to establish which parts of the prospectus had been verified. Of course, none of this concerned the financial section of the draft (which was never verified).

353 Brinkworth spoke with a number of people on the Sunday. He spoke to Hudson, who informed him there was still a bit to come together. He also spoke to Antonie who, according to Brinkworth, said that they should work their way through it.

354 Brinkworth also had a conversation with Stockdale on the Sunday morning, though his evidence of that conversation was vague. When it was put to him that Stockdale had said that morning he was concerned about whether the material could be finalised for the analysts' presentation, Brinkworth said, non-responsively, that he had spoken to Stockdale and asked him whether he was comfortable he could get everything done, to which Stockdale gave an affirmative answer.[152] He then said he recalled another conversation in which it was said that they would get together that day to work through the information. He suggested that Stockdale never told him it could not be done.

355 However, Brinkworth acknowledged that, on the Sunday, he did not know whether or not all outstanding issues could be resolved that afternoon. He said he was not forming a judgment himself and was not personally involved in resolving all the outstanding issues. In fairness, it would not have been a realistic expectation for someone so new to the business to be in a position to do so.[153]

356 Stockdale gave a far more specific account of this conversation, which he said occurred at 11.33 am and lasted for 31 minutes.[154] He said Brinkworth telephoned him to discuss the preparations for that day. Brinkworth expressed his concern about the Public Offering not proceeding. In response, Stockdale said he was disheartened from realising how much work was required to complete the financial section of the prospectus.[155]

357 In light of this unchallenged evidence of Stockdale, I do not accept any suggestion that, on 23 October 2016, Stockdale said that he was comfortable that he could get everything done. It is patently obvious on the evidence, and was apparent to Stockdale at the time, that this was not possible. Further, when asked during cross-examination whether he would have been prepared to sign off on the Pathfinder on 23 October 2016, Stockdale responded that he would have been "deeply, deeply uncomfortable". When asked to explain why, Stockdale said that, in all his experience, he knew the amount of work required for an initial public offering, and he did not feel there was sufficient time to do it. He also said that he felt that United did not have the requisite underlying justification for the forecast.

358 During the course of the morning, Hindle spoke to Svinos. He told Svinos he believed it would take 24 to 48 hours to "close out" the cash flow work. Svinos denied Hindle telling him this, though acknowledged Hindle told him that Hindle would not be able to sign off on the release of the Pathfinder that afternoon because of outstanding work on the cash flow forecast. However, Svinos said that Hindle had indicated he could sign off on the EBITDA figure. Whichever version of the conversation is correct, it was not controversial that Hindle indicated he would not sign off on the Pathfinder later that day.

359 At 1.36 pm, Svinos telephoned Ziegelaar. Ziegelaar took a contemporaneous note. Svinos told Ziegelaar that Silver was comfortable with the financials and the management discussion and analysis section of the prospectus. Svinos said that KPMG would be ready for the sign off of the independent accountant's report the following Thursday, but that KPMG would be comfortable for the Pathfinder to go to the analysts on the Monday with "only little gaps". Ziegelaar noted:

If anything changes or stuffs up the process à like legal don't expect anything to change.

The next part of the note records Ziegelaar's response, which was that it was a rushed document and therefore was likely to change. Svinos also made the suggestion that the bracketed items could be dealt with the following day if everyone got into a room and sorted things out together. The note also recorded Svinos saying that Hirsch was to ring Antonie to discuss the "hedge of Shell International".[156] There were other notes of this conversation which were not the subject of any direct evidence.

360 The same note had in the top right hand corner:

Ziegelaar said that note was a reference to Burmeister and Lennen having spoken to Svinos earlier that morning. The blank in the note was left to be filled in, but Ziegelaar ran out of time because there was "too much happening". Ziegelaar was told by either Burmeister or Lennen that they had spoken to Svinos at 11.15 am that morning and that they disagreed with Svinos' view about the ability to finalise the documents. Ziegelaar was told it was the Lead Managers' position that the documents were not in a satisfactory state to go to the analysts and could not be finalised in the way Svinos suggested.[157]

361 Svinos was still determined to press on regardless. He indicated this to Lennen in a telephone conversation, the substance of which was then conveyed by Lennen to Charles in a text message:

No meeting with [Silver], [Svinos] said no reason to as we are all good to go.

362 After landing in Melbourne,[158] Slack-Smith arranged to meet with Hudson and Antonie at the Grand Hyatt Hotel in central Melbourne at around 1.30 pm. During this meeting, Hudson invited Antonie and Slack-Smith to state their respective positions. Antonie stated in substance that, given the state of the documentation and the concerns he had, he was not prepared to approve the release of the Pathfinder to the analysts at the meetings scheduled that day. Slack-Smith stated that they were out of time, and it would be far more appropriate for the listing date to be moved to early 2017. Slack-Smith gave evidence that it was simply unacceptable for him to be in a position of having to consider "not an insignificant amount of information in a very short timeframe that was still not yet complete within the boundaries of the responsibilities that [he] had as a director".

363 In response, Hudson agreed that the Non-executive Directors were in no position to sign off on the Pathfinder that day. He suggested that he contact the Founders to arrange to speak to them before the scheduled due diligence committee meeting. Both Antonie and Slack-Smith agreed that was an appropriate course.

364 Antonie explained that he thought the Founders should be contacted before the formal meetings that day because he expected the Founders would have been highly embarrassed to sit through a process where people did not sign off on the documents. Antonie said by this stage he knew the documents would not be signed off because: first, it was questionable whether management would sign off in relation to some issues; secondly, he was confident the due diligence committee would not sign off in light of the discussion the previous evening;[159] and, thirdly, he knew the Board would not sign off given the position of the Non-executive Directors.

365 Within 5 or 10 minutes of the Non-executive Directors concluding their meeting, Hudson telephoned Silver, and told him he wanted to speak before the scheduled meetings. Silver said that he was leaving, and that he would call Hudson back when he got closer to the city. Silver never did. Also, before Hudson called Silver, Ziegelaar was informed of the Non-executive Directors' position. He was told by Hudson that Hudson would inform the Founders of their decision.

366 The details above refer to some, but not all, of the conversations that took place on the Sunday morning. In summary, save for the Founders and, perhaps,[160] Svinos, everyone[161] with any meaningful involvement in the process was of the view that the documents were in no state to be approved for release to the analysts.

367 Early afternoon on 23 October 2016, Silver met with Svinos, Hirsch and Stockdale at KPMG's Melbourne office.

368 Stockdale had a specific recollection of Silver stating that he thought the Lead Managers were "going to pull the IPO". He recalled this being stated in the basement car park, just outside the doors to the elevators. Despite the fact that leave was sought, and granted, under s 38 of the Evidence Act 2008 (Vic) to cross-examine Stockdale, this evidence was not the subject of challenge. Stockdale was a reliable witness. I accept his evidence. It appears any effect arising from what Stockdale conveyed to Silver may have had on Silver's expectations was likely to have been nullified, or at least mollified, by both Silver and Svinos' attitude to seek to press on.

369 While at the offices of KPMG, Hirsch said he felt his integrity had been called into question over the previous 24 hours because Antonie had queries about "some unhedged oil that had been contracted". Hirsch said he felt that Antonie doubted the veracity and the honesty of what Hirsch had said.

370 Svinos gave evidence that he told the Founders at KPMG's offices he had had discussions with the Lead Managers that morning, and that they had expressed some concerns with the lateness in the preparation of all of the financial information. Svinos said he also informed them that he had spoken to KPMG, Freehills and Stockdale "about working 24/7 until the process is complete" and that there could be a delay of 24 to 36 hours.

371 Under cross-examination, Silver rejected the suggestion that there was any discussion about the Public Offering being unlikely to proceed as the financials in the prospectus had not been finalised. He stated that such a suggestion could not be further from the truth. Silver also denied being told that the Lead Managers were threatening to pull out because of the state of the financials.

372 After 3.00 pm, the Founders and others at KPMG left to meet at Freehills.

373 I pause here to note the evidence given by the Founders of their state of mind at this time. Silver said he expected it to be a milestone day in his life. Hirsch used exactly the same language when giving his evidence. Further, Hirsch gave evidence that when he went to Freehills that day, he believed he would be signing off and approving the prospectus that day and had "come to do a signing". If nothing else, this clearly demonstrates Hirsch was not across the materials. Only a cursory review of the outstanding matters would have, at the very least, raised some serious doubt as to whether that could occur.

374 There must also be a serious question as to how carefully Silver had reviewed the materials. Under cross-examination, he was taken to an email chain, which included the email from Svinos to Stockdale stating the Lead Managers were threatening to "pull" the Public Offering if "the square brackets" were not removed.[162] Having seen this email in the witness box, Silver volunteered that he did not know what was meant by the reference to the square brackets. If Silver was familiar with the documents that had been circulated before the scheduled meetings on 23 October 2016, he would have fully understood the significance of the square brackets.[163]

375 Upon their arrival at Freehills, Hudson approached the Founders and asked if he could speak to them privately. They moved to a small room, where only the 3 of them were present. Hudson gave evidence that he told the Founders that the Non-executive Directors had reached a decision that they would not approve the Pathfinder for release to the analysts the following day. Hirsch initially gave evidence he recalled Hudson stating that the Non-executive Directors were not prepared to sign off that day. Shortly after, he stated Hudson said he would not sign off for "this year". However, further evidence of Hirsch made it apparent Hirsch had moved to the later larger meeting when he claimed Hudson said this.[164] Silver gave evidence that Hudson said they had run out of time and were not prepared to sign off that year.

376 It was common ground that Hudson made reference to the possibility of the Public Offering proceeding in 2017. Hudson gave evidence he said to the Founders that this would allow time for the outstanding issues to be resolved. Silver said Hudson also suggested changing the end of the financial year to 31 December.

377 Silver said he "tried to tell" Hudson they had to the following Wednesday, but Hudson "wouldn't have a bar of it". It seems highly unlikely anything to that effect was said by Silver. Silver gave no evidence of anyone telling him that they had to the following Wednesday. Further, both Silver and Hirsch gave evidence that they believed the process of approving the Pathfinder for release to the analysts could occur that afternoon.[165] Indeed, Silver gave evidence that he thought the draft prospectus was very close to perfection.

378 After the Founders and Hudson had completed their private discussion, they returned to a large conference room. A short meeting then took place. Those in attendance included the Non-executive Directors, representatives of Freehills, the Lead Managers and KPMG, and some of United's management.[166] No one took notes, and the meeting was enveloped with tension.

379 Before turning to the evidence of what was said at this meeting, it must be noted that the evidence of Silver, Hirsch, Svinos and Brinkworth on this topic is necessarily tainted by reason that those witnesses engaged in subsequent discussions with each other about what was said at this meeting. Indeed, Brinkworth gave evidence of discussions with both Silver and Hirsch, as recently as 3 weeks before he gave his evidence, about what was said, including each of the Founders giving their own recollections in this regard. The fact that Silver was involved in this unsatisfactory conduct is particularly surprising when, it must be assumed,[167] he was properly advised, at least by early February 2018, about the importance of not discussing evidence with other witnesses before trial.[168]

380 Silver's evidence on this issue was also unsatisfactory in another respect. When asked by his counsel what he said to Antonie in the meeting in the large conference room, his answer was:

I said to him that, you know, the month of work that was put into the syndication, and I keep going to the syndication because that was a huge time consumer, the banking syndication, the end of the financial year changed, I needed to take it all on board. I was basically horrified.

It was unclear whether this answer was entirely unresponsive, or whether Silver was suggesting he mentioned the banking syndication to Antonie in this meeting. Under cross-examination, Silver acknowledged that no reference to the banking syndication had been made.

381 A table of the evidence given by various witnesses at trial about what was said at this larger meeting was prepared by the parties, which runs for nearly 19 pages. I will not labour the matter by going through each account, but confine myself to the material matters.

382 Upon returning to the main conference room, Silver was the first to speak. He said that he had been told the Non-executive Directors were not prepared to approve the prospectus. According to Hindle, Silver said the meeting was not going to happen and "the IPO was off". Ziegelaar also recalled Silver saying these words.

383 Silver then asked Ziegelaar why he had not let him know that the Public Offering could not go ahead. Ziegelaar responded by stating that he had told Silver that this might happen.[169] Silver rejected that suggestion. Silver also sought explanations from others.

384 Antonie recalled responding first. He said it was unfortunate that they had got to this point. He stated that it was a room full of people who were motivated to get the deal done, but that they had run out of time. Antonie further stated that, "unfortunately, in the time pressure, at the end" it was United's accounting systems and processes that let United down. Silver recalled Antonie saying that United Holdings would be worth more money in 2017.

385 During the course of the exchanges, Hindle spoke. Silver's account was that Hindle addressed everyone and said that it could be done if "you guys want to do it" and if everyone wanted to cooperate. Returning to the witness box to continue his evidence-in-chief the following day, Silver added to this, deposing that Hindle also said that he thought "the document" would not change and could go to the analysts. No other witness, including Hindle, gave evidence to this effect.[170] I do not accept it. If nothing else, it is fanciful to suggest that the Pathfinder was in a state where it could have sensibly been provided to the analysts without change.

386 Hirsch gave evidence that Hindle said that he had "enough information to complete this". It seems highly unlikely that any such statement was made in circumstances where requests for material information were still outstanding. Again, no other witness, including Hindle, supported this account.

387 Svinos said Hindle expressly stated he was comfortable with the earnings and that he was prepared to sign off for the forecast to go to the analysts. Hindle gave no evidence to support this. On the contrary, he gave specific evidence of conversations he had that day about the work that still needed to be done, from KPMG's perspective, and how they might work together "to bridge those gaps".

388 Hindle said that when he was asked by Silver why the process had got to the position it had and "we were so time constrained at the back end", he responded that in his view there were milestones that had been missed earlier in the process "time-constrained the forecast financial preparation". Hindle expressed the view to the meeting that it was not so much over the last couple of weeks, but more the months of August and September 2016 when this had occurred.[171]

389 A number of witnesses gave evidence that Svinos said that they all might take more time[172] to complete the process, but that he was shut down. Some witnesses said it was Hudson who spoke over the top of him, others said it was Hirsch. Ziegelaar thought it was Silver. Clearly, tensions were running high. Whoever it was who responded to Svinos' suggestion, no one supported his position.

390 After various exchanges had taken place, in substance Silver told everyone to stop work while he and Hirsch considered what to do next.

391 The Founders sought no advice before leaving the meeting. Further, Ziegelaar did not attempt to give any advice. In particular, no advice was given to the effect that the due diligence committee meeting and the board meeting should, or could, proceed. Ziegelaar said he did not ever consider giving advice at that point because Silver had said the Public Offering was off, because the Founders did not want to engage in discussion and because they walked out.

392 Further, by this time Ziegelaar had formed the view that there "was nothing to talk about", that there was nothing anyone could learn at a meeting that would enable the process to go forward beyond that afternoon, and that they simply were not ready to proceed.

393 Furthermore, in rejecting the proposition that he had a duty to give advice that the due diligence committee meeting could proceed, Ziegelaar said that would have been bad advice because the documents were incomplete and not suitable for going ahead with the Public Offering at that time. When asked in cross-examination to further explain why it would have been bad advice, Ziegelaar said he had been told by the Lead Managers that the Public Offering could not be done before Christmas and that he also "knew this for a fact".

394 After the Founders left the meeting, a number of those in attendance decided to go to the Grand Hyatt for a drink. During these discussions, Stockdale, and probably Larsen,[173] told Antonie that they believed the right decision had been made and that the Public Offering could not have proceeded. In particular, Stockdale said he had been very concerned and ill-prepared to be able to do the analysts' presentation the next day.[174] Stockdale also spoke about the upsides of doing the Public Offering the following year.

395 Svinos arrived at the Hyatt a little later than the others. He spoke with Lennen and Burmeister and suggested to them that he thought the Public Offering could still proceed in 2016 with a little more time. Both of them said in response that it would not be possible.[175] Ziegelaar overheard the conversation and said that Lennen and Burmeister simply stated that Svinos' suggestion would not work.

396 Late on 23 October 2016, Antonie sent an email to Stockdale contemplating the possibility of the Public Offering proceeding in March 2017. He listed 10 suggestions. The fourth matter was to ensure the proper segregation of the work between United Holdings and KPMG, so that independence would be maintained. Antonie suggested that Svinos was required to be "out of preparation of [the] forecast". Antonie said he had raised the issue of the independence of the investigating accountant with Silver in the past.[176] However, Antonie said he did not realise until the last week or so how involved Svinos had become, recalling that on 21 October 2016 Svinos had volunteered to go away and prepare the numbers, only to be corrected by Hindle to the effect that it was the company that was to prepare the numbers, not him.[177]

397 Also later on 23 October 2016, Lennen sent an email to his team stating that the Founders had decided that they had run out of time to complete the Public Offering in 2016, and were going to reflect on alternatives going forward. When asked by 1 of his colleagues whether the Founders had decided to take that course or were told, Lennen responded that they were told and were not happy. He said the Founders wanted to know why they "have missed" and that it could be expected that there would be "a spray or two still".

398 Around 8.00 pm, Ziegelaar prepared a list of lessons to be learnt from the failure to complete the Pathfinder process by 23 October 2016. Ziegelaar sent the list to Mackinnon and Earle and asked for their comments. It was proposed this list would be provided to Silver, but this never occurred.[178] The list, as amended by Mackinnon, read as follows:

1. You need to attend meetings and be across the process. Others can't do this for you. Advisors should have direct access to you.
2. Spend time understanding the detailed timetable and what each of the steps involve (sic). Make sure all aspects are met and check in with your team as to progress and holdups.

2. (sic) Don't shoot the messenger - you won't get the truth. Don't fight your Advisors about requests during the process. They are on your side and know what they are doing

1. We need to take you through the IPO process. For example, everything has to be agreed one week before the prospectus goes to the Board before the analyst presentation. Understand the IPO discount
2. You need to have fat in the forecast - you can't put every dollar of upside into it - the tightness of the forecast meant the Board struggled to get comfortable with it.
3. Keep [O'Connell], [Stockdale] and Ajith [Abeynaike][179] working on the financials until lodgement. Work out now who else you need to hire.
4. Decide who [you] want on your board - do you want vigorous debate or people who agree to what you want? I WOULDN'T ADD THIS. I DONT THINK THE BOARD WAS THE ISSUE AND I THINK IT WILL JUST MAKE THINGS WORSE TRYING TO CHANGE THE BOARD[180]

7. Identify what kept moving this time and agree them earlier next time:

- forecast

- store rollout

- growth strategy

- Dalby

1. Be involved in prospectus drafting yourself - it's the document describing your business and what you will be judged by
2. Do what you can now that might divert resources later on - eg finalising the leases.
3. Start things early - don't put them off because you think they won't take much time - eg Savills [report].
4. Don't complicate things to create minimal incremental value - eg property sales to third parties whilst deal ongoing.

399 On the morning of 24 October 2016, Silver told Larsen to stand the Board down. He also said he would not try for another Public Offering.

400 On 24 October 2016, Lennen sent an email to others at Credit Suisse referring to "United going on hold for this year". Lennen thanked them for their help in circumstances where they had an "extremely tough and underprepared client". Under cross-examination, Lennen explained that he made this statement because it always seemed to take a long time for requested information to be prepared by United. Lennen said there "wasn't necessarily the people within the organisation or the information readily available".

401 Late morning on 24 October 2016, Antonie sent an email to Larsen and Stockdale referring to a conversation he had just had with Hudson. He said that the Non-executive Directors had been requested to resign and asked for the appropriate form. The email concluded:

It is a credit to you both how you performed under extreme pressure - the absolute right decision was made yesterday in the interest of the company and all involved - let's keep in contact.

402 Around midday on 24 October 2016, Svinos sent an email to Freehills asking them to defer a meeting anticipated to be held at 2.15 pm that day and to halt all work. Svinos said he was currently getting instructions from United on the way forward.

403 On the afternoon of 24 October 2016, Hudson sent an email to the Founders in which he thanked them for their courtesies throughout the process "particularly in our conversation yesterday which cannot have been easy for either of you". Hudson suggested that it had been a privilege to be associated with them, and that they had an excellent business. He signed off with warmest regards. Silver said he was not surprised to receive this letter. He said that he and Hudson had a warm relationship.

404 Yet some further reflections occurred that afternoon. Hindle sent an email to Svinos, providing his main points and perspective with respect to what had occurred. Hindle noted that the timetable kept getting deferred, when it was originally envisaged that, for a November 2016 lodgement, the financial model and forecast would be largely "locked down" by 30 June, with just an update in August 2016. Hindle continued:

[Public offerings] of large companies like [United Petroleum] need to work to this timetable and this allowed (sic) for known challenges in systems/processes of [United Petroleum].

Hindle said he made this comment in a context where United did not have a formal budgeting process and the Public Offering forecast was the first time a forecast for United had been prepared in that level of detail. Hindle said that he knew from experience with United (referring to previous attempts by United to prepare for a public offering which "didn't proceed really to the forecasting stage"), that it would not be a quick or easy process. In short, Hindle was aware of "[United's] financial information and accounting reports and systems", and well placed to assess their processes, before commencing the work of the Public Offering.

405 Hindle's next comment referred to the timetable being pushed back as management worked on refinance, restructure, audit and other near term requirements with more imminent deadlines. Hindle expressed uncertainty as to what internal communication was given to Silver through the period. He suggested that KPMG should have raised with Silver directly the concerns they held, "but it was always seen as a case of 'next week'".

• In reality no work was done on the forecasts until mid August and even then [Credit Suisse] team were challenged to get the right input from management for 2 or 3 weeks.
• Became clear end August that the timetable was under clear pressure. Still possible, but there was no room for error or iteration. KPMG team expanded to work alongside management on property and historical consolidation analysis.

Hindle gave evidence that the process to compile the forecast was not started in earnest until mid August 2016, and it was a slow start at that point as well. Further, the reference to the Credit Suisse team being challenged was in part a reference to the difficulty in obtaining information from United that was required for the financial modelling and forecasting process. In this regard, Hindle pointed out that the financial information forming the basis of the forecast had to come from United.

407 The second part of the email was entitled "Process since start of September/last 3 weeks". Seven separate points were raised by Hindle under this heading. The first of them read as follows:

Main challenges were moving information on property, new stores, landbank etc. Challenge in getting a full and accurate picture.

Hindle said it was a challenge to get full and accurate information about the metrics that were connected to the new stores, and their precise locations. This gave rise to difficulties ascertaining the profitability that was going to flow from the new stores, which was 1 of the significant drivers in the forecast EBITDA profit. Hindle said there were changes to the constituency of the portfolio of new retail sites over the first 2 weeks of October, and to a less material extent after that. As set out above,[181] as late as 1.10 am on 22 October 2016, the growth section of the draft prospectus was being substantially redrafted.

Iteration of financial model - we would have received over 50 versions of the model as numbers kept moving - reality is our review work is at the end of line and hence our report keeps moving/being updated when the model changes.

Hindle said the input assumptions to the forecast kept moving, albeit that that was not unusual in any forecast preparation. However, he said each change delayed KPMG's process of reviewing and finalising its report.

Needed to have numbers locked down end of [September] - in the last 3 weeks most assumptions changed for [Silver's] review (should have happened 3 weeks earlier but model not progressed sufficiently), Dalby in/out, property movements.

Hindle said that, in the first 2 weeks of October 2016, Silver undertook a fairly rigorous review of the forecast. Although consequential changes to assumptions did not give rise to time consuming or onerous work for KPMG, it did mean that other things that needed to be addressed were not addressed.

Current trading gaps and addressing director questions absorbed management time in last week, work on other areas didn't progress.

Hindle said that the Lead Managers had been asking for details of the gaps between the current trading and the forecast for a number of weeks from the end of September onwards, though this was not unexpected. No doubt this was a reference to the fact that as each day passed further comparisons needed to be made. Hindle said it would be expected that this work would be covered before any prospectus was released.

411 Hindle then identified a consequence of the numbers moving, namely:

Impossible to draft a coherent financial section to prospectus while numbers moving around.

Although KPMG was not responsible for drafting the financial section of the prospectus, it provided some review comments. Further, Hindle acknowledged that although the EBITDA forecast number did not change dramatically in October 2016, there was significant movement within the constituent components of the EBITDA bridge.[182] In that regard, Hindle accepted that because the numbers in various versions of the financial models that were provided to KPMG kept changing, KPMG was not able to finalise its due diligence report prior to the board meeting scheduled to be held on 23 October 2016.

412 The penultimate observation made by Hindle was:

Cashflows put on back burner as focus was on EBITDA - this is only [outstanding] area of our report and reasonably quick fix.

In his evidence in chief, Hindle said the "reasonably quick fix" was referring to 24 to 48 hours. Further, when taken to this point in re-examination, Hindle said the clarification he would make was that clearly KPMG's report had more square brackets that covered points other than cash flows, but the context of that point was in relation to the headline numbers for the Pathfinder.

No lack of effort - team collectively worked all hours to get there and I don't believe we could have done any more, but timetable in [September/October] had no flex to deal with changes/iterations/imperfect information.

(Emphasis added.)

414 Later on 24 October 2016, Svinos responded to Hindle's email saying that he agreed with everything Hindle had stated. In giving his evidence, Svinos said his response was a truthful statement at a high level. Svinos' email continued:

When dealing with [Silver] it's important to get to the pointy end as you have a small window of opportunity before he takes over.

Changes to model.

Trading performance reconciliation.

Independent directors concern escalated in the last week over the current trading performance.

Your points with respect to the last 4 weeks are most relevant.

If you have time you may get to your other points.

(Emphasis added.)

415 With respect to the first point made, Svinos said he was giving advice to Hindle about how to conduct his meeting with Silver. Notably, nowhere in Hindle's email, or Svinos' response, was there any suggestion that the process did not continue with the release of the Pathfinder to the analysts because of any failure to take an extra 24 to 36 hours to attempt to finalise the documentation.

416 Before continuing with the chronology, a further point must be made with respect to the forecast. The Non-executive Directors were not in a position on 23 October 2016 to be satisfied with the forecast for 2017 based on the actual performance of the business in 2016. The leap in the EBITDA from $87.4 million in 2016[183] to a forecast of $114.6 million in 2017[184] involved an "aggressive construction program" (to use Silver's words) with new store openings. Self-evidently, diligent directors would need to properly understand and consider the underlying assumptions carefully before being in a position to approve such a forecast,[185] along with all the other recent information that was coming to their attention.[186]

417 In the evening on 24 October 2016, Lennen sent an email to Charles referring to the fact that the Non-executive Directors had been asked to resign that day. Lennen then drew the obvious conclusion:

418 Late on 24 October 2016, Stockdale prepared a chronology of the events of the 2 preceding days. He said he did this as a result of Silver's decision to desist with the Public Offering for good and because Silver had been on a "rampage about being blind-sided". He said the reference to "being blind-sided" was to the words used by Silver that day.

419 The chronology Stockdale prepared set out all the emails and telephone calls in which he was involved.[187]

420 On 25 October 2016, Antonie met with Silver. Hirsch was also present for at least some of the meeting. Antonie said the meeting started with Silver screaming and yelling at him. Silver accused Antonie of asking a whole lot of questions for the purpose of delaying the Public Offering. Silver said that Hindle had told him that he had never been asked so many questions before, to which Antonie responded that he had made enquiries of Hindle because he was the only source of information that he had. When asked by Silver why it was that Antonie did not want to move forward on 23 October 2016, Antonie responded "numbers and process". He gave evidence that the reference to "numbers" was a reference to the "whole financials". Silver then asserted that Antonie had convinced the other directors to not believe in the numbers, which Antonie rejected. Antonie said he then "got further abused". Further, Antonie had a recollection of Silver saying that Antonie was being paid only $150,000 a year, so "why would you delay the float?".

421 Antonie said the meeting ended by Hirsch stating he was keen to understand the benefits of the Public Offering going forward. Antonie then spent some time with Hirsch going through the benefits and upsides in a Public Offering proceeding in 2017.

422 In the witness box, Antonie expressed the view that the Public Offering not going ahead was a bad outcome for everybody. He gave evidence that everyone had worked for months to achieve the desired outcome, which was to float United Holdings. He observed, as was the fact, that the Lead Managers were not to be paid by United unless the Public Offering proceeded. Antonie said that he was of the view that there was incentive for everyone for the Public Offering to go ahead in 2016, and there was no rationale for him to want to delay the Public Offering if it had been in a proper position to proceed.

423 Ziegelaar met with Silver on 27 October 2016. During that meeting, Ziegelaar asked Silver in substance whether Svinos had told him what was going on, and did not get a response to his query.

424 During the course of this meeting, Ziegelaar asked Silver to sign the engagement letter forwarded on 22 August 2016.[188] Silver refused to do so, and said, incorrectly,[189] that he had never sighted the letter.

425 On 31 October 2016, Silver telephoned Ziegelaar and informed him that he wanted Freehills' bills taxed. Silver also queried the application of the 25 percent discount. Silver stated that, leading up to 23 October 2016, he understood Freehills were trying to get the work done and that they were not trying to delay the process. Ziegelaar's contemporaneous note records it being said:

Silver denied saying this and said it was Ziegelaar who said Freehills was 98 percent complete. He continued:

If you said 90 percent, that would be more - 98 percent, it wasn't me. It was [Ziegelaar].

It is clear from this answer that Silver was not giving evidence by way of recollection, entertaining the possibility that he may have said 90 percent. The contemporaneous note is more probative of the truth of what was said. Ziegelaar was not cross-examined on this note. I find the note reflects what Silver said during this call.

426 Also during the course of this conversation, Silver said he wanted Ziegelaar to come out and meet with him and Svinos, because he wanted to understand whether somebody had ambushed "his" Public Offering.

427 On 2 November 2016, Antonie sent an email to Ziegelaar, Mackinnon and Hudson providing a summary of what had occurred. This document was tendered by the United Parties as part of their opening to suggest that there was no decision by Antonie on 23 October 2016 not to proceed with the Public Offering.

428 In his evidence in chief, Antonie stated he drafted an email on 27 October 2016, reflected on it overnight and then sent the first part of the email to Hudson on 28 October 2016. Then he forwarded the email, with some additions, to Ziegelaar, Mackinnon and Hudson on 2 November 2016. The email is lengthy, and it is unnecessary to record much of what it set out. However, a few matters should be highlighted:

(1) Antonie said he got to the bottom of the hedge issue by discussing it with Stockdale, Brinkworth and Svinos at a 2.00 pm meeting on 23 October 2016.[190] The email continued:

This is still an outstanding issue in the KPMG report and they first raised it - that is where I became aware of the issue.

(2) Antonie explained the reason why he had to ask questions of KPMG was that the KPMG report was the only insight into the financial numbers and discussion, as they had received no financial forecast from United or any detailed trading data in the United Holdings board meetings. He noted that Silver had mentioned only "top line performance in general".

(3) Antonie referred to a discussion with Silver in a meeting, on the afternoon of 23 October 2016, in which he said that it was the systems and processes that let Silver down and that, if there had been proper systems in place, they would not have lost the time that they did.

(4) According to Antonie, it was the Lead Managers who made the call on 23 October 2016 that United Holdings could not proceed in 2016, as the timeline had passed. He observed that the Lead Managers had control of the timetable, not the Non-executive Directors. Antonie said that they had watched the timetable continually move all year and, in particular, in the last 2 weeks.

(5) Antonie stated that he asked a few questions over the weekend that were outstanding, as they "kept running for the line on a timetable" that had continued to be extended. He said he assumed extensions could occur again or that the Non-executive Directors would have been asked to confirm that they had no real objection to the documents to be given to the analysts with more time after that to give a final review. However, in this regard he said that "this would have been a difficult position to be put in" and he was trying to get his best possible understanding of the financials.

(6) While a further extension would have put everyone in "a very compromised position", it was clearly something Svinos was contemplating so Antonie needed to be prepared as best he could.

(7) If Antonie had more time, say 48 hours, it was likely he would have had more questions on the content and in relation to reconciling the documents, noting that Lennen had commented on the morning of 23 October 2016 that there were "numbers that did not reconcile but we did not have time to discuss".

(8) It appeared to Antonie that Silver started focussing on the forecast in early to mid October 2016, "which resulted in material upwards changes".

(9) The Non-executive Directors only became aware of the variance between the actuals and the forecast for July and August 2016, and "top line" in September 2016, in mid October and "the lack of quality of financial records meant this could all not be understood and processed in the time available".

(10) As the analysts' presentation of financial information section had not been started as at 23 October 2016, Antonie was not sure what was going to be presented to the analysts the following day.

(11) Most of the people involved were of the view that the process was up to 7 days behind a normal process where documents were given to analysts, not the 24 hours Svinos had suggested, and that is why Antonie believed the Lead Managers called a halt to the process on 23 October 2016.

(12) Antonie expressed the view that "We all did everything we could do to make the transaction happen this year but we sadly ran out of time". As to this remark, Antonie gave evidence that was not only a reference to the Pathfinder for the analysts, but also a reference to the research analysts' report and to the completion of "all the other documents that were required to support those documents".

429 On 4 November 2016, Silver's personal assistant sent an email to Ziegelaar, copied to Silver and Svinos, entitled "IPO Costs". It referred to a discussion that morning and sought to confirm that Ziegelaar was not willing to meet with Silver and his "nominated advisor" Svinos. The email said that Silver was concerned by the refusal, but suggested a way forward "with a view to resolving this matter quickly". The email asked for a reconciliation of all Freehills' bills, noting the following parameters:

The agreed scope of works from the commencement of the engagement and any changes made during

The agreed fee cap of $1.2m

The application of the +/- 25% agreement

What invoices form part of the IPO scope of works and what is excluded.

430 On 9 November 2016, Antonie had a discussion with Lennen. In that conversation, it was discussed whether or not Svinos had raised with Lennen on 23 October 2016 the possibility of agreeing to a further extension of 1 day. On the possibility of a further 24 hours, Lennen said he told Svinos that it was a moot point because they were still a number of days off. Further, Lennen said that if he thought they were only 1 day off he would have raised it at the meeting at 3.30 pm on 23 October 2016. Furthermore, he stated that Svinos did not know what he was doing, he did not understand the depth of detail the analysts would have gone into and did not realise the analysts would have "ripped them apart".[191]

431 Finally, in his conversation with Antonie, Lennen said he stated to Svinos only in the previous week (in November 2016) that if he thought the transaction could have gone forward, he would have raised it at the 3.30 meeting.

432 Antonie took a contemporaneous file note of the discussion with Lennen because he was worried about the threats that Silver had made to him 2 weeks earlier.[192]

433 On 29 January 2018, Freehills filed a witness outline of Stockdale's anticipated evidence. On 30 January 2018, Silver telephoned Stockdale and "proceeded to yell a number of things" at Stockdale. According to the email sent that day by Stockdale to Freehills, in substance Silver said as follows:

• [Stockdale's] affidavit [presumably a reference to the outline] was a lie.

• It's a lie that [Silver]/[Hirsch]/[Svinos] knew at KPMG, prior to the meeting at Freehills, that the IPO was going to be pulled.

• [Stockdale] knew at the time that the IPO was going to be pulled, and should have informed [Silver], it being [Stockdale's] duty to do so as [Silver's] employee.

• That [Stockdale] knew this on the Saturday and that [Stockdale] wasn't working that day or was avoiding calls that day, and that they tried calling [Stockdale] several times and [Silver] has evidence of this.

• There were three other people in the KPMG meeting who will all testify that [Stockdale's] affidavit is a lie.

• It's false for [Stockdale] to say [Silver] didn't read the financials.

• [Stockdale] "f***ed up big time".

• [Stockdale] was responsible for the IPO failing.

• [Silver] is going to sue [Stockdale] personally.

• [Silver's] spent 40 years fighting with big oil companies and has succeeded in taking 10% of the market, and that's (sic) [Silver's] not afraid of a fight.

• [Silver] will sue [Stockdale] for everything [Stockdale has].

• Money is not an issue, it's the principle, that [Stockdale] lied, even if it costs $10m in order to take everything [Stockdale has].

• [Stockdale has] got nothing to gain from this but everything to lose.

• [Stockdale] can't hide behind [Antonie] anymore, [Antonie] can't protect [Stockdale].

(Emphasis added.)

Having set out his account of what Silver said to him, Stockdale's email continued:

It goes without saying that this has got me extremely rattled, and while I'm happy to recount events as I saw them, I really don't want to find myself the target of a law suit. I'm also alarmed that [Silver] can make a call to me with these threats. I'd like to discuss.

434 Shortly after Stockdale sent his email, Freehills contacted him. Freehills then made an interlocutory application, seeking certain relief based on Silver's alleged conduct. After certain undertakings were given by Silver,[193] the interlocutory application did not proceed. As the possibility of a contempt proceeding has been aired, evidence concerning this discussion will be addressed only to the extent strictly necessary to deal with the issues in the proceedings presently before the court.

435 In his evidence in chief, Silver acknowledged calling Stockdale after he read Stockdale's statement. He said Stockdale rang him back about 15 minutes later. Silver said he asked Stockdale why Stockdale had said that Silver knew the Public Offering was not going ahead when they were at the KPMG offices prior to meeting at Freehills on 23 October 2016. Silver then said he said to Stockdale "just tell me if you knew", to which he said Stockdale responded that he thought Silver knew. Silver said that he then got very upset. After protesting that he was not an actor and was not acting surprised at Freehills on 23 October 2016, he then asked Stockdale how he knew the Public Offering was not going ahead. He said that Stockdale refused to tell him.

436 Silver said that, after he referred to Stockdale's contractual obligations, including not to withhold information from Silver, Stockdale responded that he wanted to have a coffee with Silver. Silver said he could not do so without getting advice from his lawyer. He said he spoke to his solicitor and was advised not to meet with Stockdale under any circumstances.

437 Under cross-examination, Silver said that, upon reading Stockdale's outline, it became clear Stockdale knew the Public Offering was not going to proceed on 23 October 2016. Silver said he was yelling at Stockdale because Stockdale did not want to tell him how he knew of this.

438 When it was put to Silver that he told Stockdale that he had "f-ed up big time", Silver said he did not know whether he had used those words, but, "yes" he told Stockdale he had "done the wrong thing 100 percent". Silver denied telling Stockdale that Stockdale was responsible for the failing of the Public Offering, but he acknowledged that he threatened to sue Stockdale if he did not comply with what Silver said were his legal obligations.

439 I accept Stockdale's evidence that he felt threatened by Silver's behaviour during this telephone call.[194] However, I reject the United Parties' submission that the position Stockdale found himself in resulted in him being an unsatisfactory witness. In my observation, notwithstanding the obvious pressure he was under,[195] Stockdale was a conscientious witness.

440 In complex commercial litigation, it is essential that parties know the case they have to meet. Whether it be by pleadings or some other means, parties are entitled to clarity and certainty, particularly when allegations are serious and substantial amounts are claimed. That is not to say that a party may not seek to change its case before, during, or even at the end of, trial in an appropriate case.[196] Whether any change ought be permitted by the court is largely a question of procedural fairness,[197] to be assessed at the time any change is sought to be made.

441 Before the hearing commenced, the court directed the parties to prepare a list of issues for determination, based on the pleadings. The parties were invited to identify the "real issues" for determination, in an attempt to try and narrow the many issues that had been raised. A list of issues was agreed between the parties, and with the court, before the trial commenced.

442 The parties were reminded repeatedly throughout the trial that the case would be determined on the pleadings and that any application to amend them should be made promptly.[198]

443 On the very last day of trial, the United Parties attempted to alter the directed, and agreed, approach. In response to the court yet again informing the parties the case would be determined on the pleadings, and that any party could seek leave to amend if they so desired, senior counsel suggested that perhaps the United Parties had taken too much guidance from what Dawson J said in Banque Commerciale SA En Liquidation v Akhil Holdings Ltd.[199] In his dissenting judgment, his Honour stated:[200]

But modern pleadings have never imposed so rigid a framework that if evidence which raises fresh issues is admitted without objection at trial, the case is to be decided upon a basis which does not embrace the real controversy between the parties. Special procedures apart, cases are determined on the evidence, not the pleadings.[201]

444 However, reliance on this passage in isolation is apt to overly simplify the issue. That case involved "little more than a technical defect".[202] Further, Dawson J emphasised the underlying purpose of pleadings is to define the issue between the parties so they may know the case they have to meet.[203] Whether it is appropriate to determine issues outside the pleaded case depends on the particular circumstances at hand.

445 Significantly in this case, leaving aside the repeated directions from the court, both Freehills and Hudson's counsel stated on numerous occasions during the trial, including in their openings which were delivered before any evidence was called, that they would hold the United Parties to their pleadings. This is a long-established practice in commercial litigation,[204] which, generally speaking, is entirely consistent with the Civil Procedure Act 2010 (Vic). Whilst it is ultimately a matter for the court based on the circumstances of the particular case before it, ordinarily, requiring an opposing party to clearly identify the real issues in dispute facilitates the just, efficient, timely and cost-effective resolution of the dispute.[205]

446 Also on the last day of trial, the United Parties sought to persuade the court that, contrary to their opponents' submissions, certain matters raised in the United Parties' closing submissions were the subject of the pleadings.[206] The court indicated it would rule on each matter.

447 The first matter concerned whether or not the United Parties had pleaded an allegation that Freehills failed to advise the Founders that there was no legal requirement for the Pathfinder. After being taken to various paragraphs of the United Parties' further amended statement of claim ("the United Statement of Claim"), I ruled that this allegation was not the subject of the pleadings.

448 The United Parties then made an application to amend.[207] This was opposed. As it turned out, there was no need for the court to rule on the application. It was ultimately withdrawn by the United Parties. To explain, towards the end of the last day of the hearing, the court invited the United Parties to make any further application for leave to amend. In response, senior counsel stated no application would be made and the application made earlier that day was withdrawn.

449 For completeness, there is 1 further matter to be addressed. During the course of submissions on this issue, the United Parties' senior counsel said that given the difficulties between the parties agreeing on a list of issues,[208] he thought they had the responsibility "to give up" on the list of issues in light of the provisions of the Civil Procedure Act.[209] This was the first the court had heard of any such approach or attitude.

450 To reiterate, nothing contained in the Civil Procedure Act is inconsistent with the approach the court has taken. If the United Parties were of the view that there were "real issues" which were not the subject of the pleadings, in the circumstances of this case it was incumbent upon them to make an application for leave to amend so that any attempt to change their case could be precisely identified as to its nature and scope, and the prejudice, if any, to Freehills and Hudson could be properly assessed and weighed in the exercise of the court's discretion when considering the question of leave to amend.

451 Accordingly, as indicated throughout, the issues will be determined based on those identified on the pleadings.

F.1 Was it the 2014 or 2016 engagement agreement that applied to Freehills' engagement?

452 On this issue, there is little dispute between the United Parties and Freehills as to the relevant underlying facts. United retained Freehills in December 2014 pursuant to a written agreement.[210] The United Parties relied upon the fact that the terms of the 2014 retainer did not state that the retainer would be terminated in the event that United restructured the business that would be the subject of the listed company, and that no provision was made for an increased cap if the listing occurred before 30 June 2015.[211] The United Parties contended the condition of listing before 30 June 2015 only applied to a single term of the retainer, namely that Freehills' fees would be capped at $2 million.

453 As to what occurred in 2016, there can be no serious dispute that Freehills' letter of 22 August 2016, sent by email,[212] was received by Mooney and Larsen, and that Mooney provided a copy to Silver.[213] Further, it was common ground that a "[United Petroleum] Fee explanation", explaining an increase in Freehills' fees, the intention to charge a discount/uplift arrangement and the alternative 100 percent fee charge if United decided not to proceed with the Public Offering,[214] was seen and considered by Mooney and Silver, and discussed with Ziegelaar.[215]

454 It was also common ground that, after receipt of the 22 August 2016 letter, United continued to instruct Freehills with respect to the Public Offering and never took any exception to the terms of that letter before Silver was asked to sign it after the work had been completed.[216]

455 In essence, the United Parties submitted that the 22 August 2016 letter did not apply because: it was not signed by the Founders or anyone on their behalf; United never indicated its agreement to the new terms; Ziegelaar and Silver discussed Freehills' outstanding fees after 22 August 2016 and Ziegelaar never sought Silver's consent to the proposed "variation"; and the conduct of continuing to instruct Freehills after 22 August 2016 was "entirely consistent" with the existing retainer that had been created in 2014.

456 The fact that the 22 August 2016 letter was not signed by the Founders, or anyone on their behalf, is not determinative of whether a new agreement was entered into. A written offer may be accepted by the conduct of the offeree.[217] The issue is whether the conduct of the offeree, including its silence, would be regarded by a reasonable bystander as signalling to the offeror that the offer had been accepted.[218] Specifically, a client may accept a solicitor's written engagement terms by continuing to instruct.[219] However, whether in fact a client does so depends on the circumstances of the case.[220]

457 The submission that United never indicated agreement with the new terms is contrary to the evidence. Silver gave evidence that the offer of Freehills to perform the work relating to the refinery in Dalby was accepted.[221] There was no suggestion by United that there was some separate agreement in relation to Dalby outside the 22 August 2016 letter.[222] Further, Freehills invoiced United in early September 2016, the terms of which clearly indicated that invoice was being remitted pursuant to the new agreement.[223] United continued to instruct Freehills after receipt of this invoice, thereby signifying their agreement with the new fee structure.[224] Accordingly, the conduct of continuing to instruct Freehills after 22 August 2016 was not, as the United Parties contended, entirely consistent with the retainer created in 2014.

458 By reason of the matters set out in the preceding paragraphs on this issue, it is of no consequence that Ziegelaar and Silver did not expressly discuss the contents of the 22 August 2016 letter. As Freehills' offer had been accepted by United's conduct, it was not necessary for this to be confirmed orally in order for a legally binding agreement to have been on foot.

459 In light of this finding that Freehills' retainer from late August 2016 was in accordance with the 22 August 2016 letter, it is strictly unnecessary to consider the alternate case of Freehills that United is estopped from denying the 22 August 2016 letter governed the arrangement between the parties. Briefly, however, if an agreement had not been established, Freehills would have succeeded in establishing an equitable estoppel by reason of the following:[225]

(1) Freehills assumed a particular legal relationship after 22 August 2016, namely a relationship governed by the terms of the letter sent on that date.

(2) United received the 22 August 2016 letter knowing Freehills would expect the letter to govern the terms of the relationship unless it was informed otherwise, and continued to instruct Freehills to complete work as set out in that letter.

(3) Freehills acted in accordance with the terms of the 22 August 2016 letter from that time onwards and expected to be paid for its services in accordance with its specified terms.

(4) United knew Freehills was acting in accordance with the terms of the 22 August 2016 letter by reason of the work performed, including in relation to Dalby, and by the written terms of invoices remitted from early September 2016.

(5) Freehills would suffer detriment if it was not paid for its services in accordance with the 22 August 2016 letter.

(6) United failed to act to avoid the detriment by failing at all relevant times, after 22 August 2016, to decline Freehills' services or to raise any objection to the terms of the 22 August 2016 letter.

F.2 Given the terms of the engagement agreement, is United entitled to a 25 percent discount on Freehills' fees?

460 No. As the Public Offering did not proceed at the direction of Silver,[226] Freehills was entitled to 100 percent of its standard hourly rates.[227]

F.3 If the court concludes that the 22 August 2016 letter contains the relevant terms of the discount arrangement, and that United were not entitled to a 25 percent discount, then did Freehills breach its fiduciary duties by relying upon the 22 August 2016 letter to the detriment of United and failing to advise United of the consequences of the 22 August 2016 discount arrangement to United on or before 23 October 2016?

461 No allegation of Freehills breaching its fiduciary duties in this regard could be properly maintained. Both Silver and Mooney accepted that the discount and uplift arrangements were explained to them.[228] The issue was not pressed by United in closing submissions.

F.4 Did Levy and Ziegelaar, by their silence in respect of the discount arrangement, engage in misleading or deceptive conduct?

462 The allegation of misleading or deceptive conduct by United was premised on an allegation that "at all material times" Freehills, Levy and Ziegelaar knew or ought to have known on or about 23 October 2016 that if, in consequence of the refusal on that day of the Non-executive Directors "to sign the prospectus required to be lodged with ASIC" (emphasis added), the Public Offering did not happen by 31 December 2016, Freehills would not give United the benefit of the disappointment discount and would insist upon being paid all fees rendered for work performed. Further, it was alleged that at no time on or after 23 October 2016, did Freehills, Levy or Ziegelaar advise United of the consequences known to each of them.

463 There was simply no evidence that any of the Non-executive Directors refused to sign the prospectus to be lodged with ASIC. The occasion to sign off on the prospectus never arose at any time (whether in 2016 or 2017) because of the Founders' decision not to pursue the Public Offering at all.[229]

464 It is unnecessary to explore the numerous other ways in which the United Parties' defence in the Fees Proceeding could not be made out. The United Parties did not pursue any of them in closing submissions.

F.5 If the discount on Freehills' fees is not applicable, has United suffered loss or damage?

465 United plainly knew of the discount and uplift arrangement and Freehills' entitlement to 100 percent of outstanding fees if United decided not to proceed. Further, the United Parties led no evidence referable to the loss claimed pursuant to this allegation. It was not pressed in closing.

F.6 Is Freehills entitled to interest on the various invoices the subject of its claim?

466 This issue arises because, on 25 January 2017 when Freehills filed its statement of claim in the Fees Proceeding, it claimed amounts with respect to outstanding invoices "as a sum due and owing", together with interest "pursuant to statute" and not otherwise.

467 On 19 May 2017, judgment was ordered, pursuant to r 35.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic),[230] with respect to these invoices and United were ordered to pay Freehills the sum of $462,984.47. However, included in the orders made that day was an order for Freehills to file an amended statement of claim by 22 June 2017. Further, before any orders were made, the issue of how interest was claimed was raised with the court. In seeking an order for judgment, Freehills sought to include interest on a contractual basis even though such a basis had not been pleaded. Freehills' senior counsel told the court he was unsure whether the point was being taken by United. It was. However, after observing there was then no claim for interest on foot, the United Parties' senior counsel also stated "I'm not saying they can't bring that, that's a matter for them".

468 In these circumstances, where the order for judgment was made on the express acceptance that leave to amend the statement of claim could be ordered to enable Freehills to bring a claim for interest, and leave was granted as part of the same set of orders, there could be no basis for treating the order with respect to the invoices made on 19 May 2017 as final on all issues relating to the invoices. Further, when giving his ruling as to the amount of the judgment to be ordered, Judd J expressly noted that the sum the subject of the admission (giving rise to the order under r 35.04) did not include "the amount of interest claimed by [Freehills]". His Honour did not so include on the basis that interest was not pleaded or admitted.[231]

469 Accordingly, it cannot be said that the debt in respect of these invoices had "passed into judgment" insofar as it concerned interest.[232]

470 It was a term of each of the engagement letters, replicated in each of the invoices in question, that if Freehills was not paid within the time specified for payment,[233] interest would be charged until the date of payment at a rate specified by the Reserve Bank of Australia as the cash rate target on the date of the invoice, increased by 2 percentage points.[234] Further, pursuant to s 195(1) of the Legal Profession Uniform Law (Vic),[235] a law practice is entitled to charge interest for unpaid legal costs on the same basis as was claimed in each of the invoices.[236] Not surprisingly, the United Parties made no submission to support United's allegation that charging interest at this rate was a penalty.

471 Thus, Freehills is entitled to claim interest in accordance with the terms of the 2016 retainer and, with respect to 1 invoice dated 27 June 2016, the 2014 retainer, as demanded in its invoices (namely 30 days after the date of each invoice). The parties will be directed to calculate the outstanding interest in light of these reasons.[237]

F.7 Did the conversations as alleged in paragraphs 17A, 17B, 19 and 21 of the United Statement of Claim occur?

472 Paragraph 17A of the United Statement of Claim alleged:

At several of the Ziegelaar/Silver meetings (precisely which ones Silver cannot say) Ziegelaar said words to Silver to the effect that Ziegelaar understood the [Public Offering] had to be completed by Christmas 2016 and was causing [Freehills] to provide all relevant and necessary legal services and advice to facilitate the [Public Offering] being completed by Christmas 2016.

(Emphasis added.)

473 Self-evidently, this allegation was made on the express instructions of Silver. Not only did Silver not give any evidence which, in substance, reflected this allegation, but, presumably as a consequence, the allegation was never put to Ziegelaar.[238]

474 In seeking to maintain this allegation, United's closing submissions lumped the references to paragraphs 17A, 17B, 19 and 21 of the United Statement of Claim together. Essentially, they submitted that Silver made it clear he wanted the Public Offering to be completed in 2016 and that he was willing to pay for it. Nowhere in United's submissions was it suggested Ziegelaar ever said anything remotely reflecting this allegation. It has not been made out.

475 Paragraph 17B of the United Statement of Claim alleged:

At several of the Ziegelaar/Silver meetings (precisely which ones Silver cannot say), Silver said words to Ziegelaar to the effect that the [Public Offering] must be completed by Christmas 2016.

(Emphasis added.)

476 This allegation must also be rejected. Apart from Silver's uncorroborated evidence to the effect that he said, on a single occasion, to Ziegelaar that they had to make it,[239] there was no probative evidence of Silver making a statement to the effect alleged at "several" meetings. Indeed, this allegation was not even put to Ziegelaar in cross-examination. The case put to Ziegelaar was advanced no higher than that the Founders instructed Ziegelaar that they "wished to" proceed in 2016. Further, Ziegelaar volunteered that he had no recollection of the Founders saying words to the effect that the listing must occur by the end of 2016.

477 For completeness, there was nothing in any written retainer (leaving aside the issue of which is the correct retainer) which stipulated that the Public Offering had to occur by Christmas 2016.

478 Paragraph 19 of the United Statement of Claim alleged:

In or about the middle of September 2016, Ziegelaar and Silver met in the presence of Mooney, Svinos and Stockdale wherein:

(a) Ziegelaar informed Silver that the [Public Offering] was behind the timetable could (sic) not be completed by Christmas 2016;

(b) Silver instructed Ziegelaar that the [Public Offering] had to be completed by Christmas 2016;

(c) Silver instructed Ziegelaar to make it happen, including by advising Silver what additional resources were required to facilitate the [Public Offering] completing before Christmas 2016;

(d) Silver instructed Ziegelaar to engage those resources Ziegelaar considered necessary to achieve the [Public Offering] being completed by Christmas 2016, on the basis that the fees for the work undertaken by those additional resources not be included in the fee cap which [Freehills] and [United Australia] had agreed pursuant to the Project Diamond retainer; and

(e) Ziegelaar advised Silver that he would add additional [Freehills] resources including placing [Freehills] employees on secondment with [United Holdings] and instruct them as to tasks which they needed to undertake to bring the [Public Offering] back into alignment with a pre-Christmas 2016 completion.

479 Although not specifically identified, paragraph 19 appears to be directed to a meeting held on 15 September 2016.[240] The evidence discloses that on both 15 and 20 September 2016, Ziegelaar raised the issue of being behind the timetable.[241] However, as already found,[242] Silver gave no instructions that the Public Offering "had to be completed" in 2016.

480 Further, although the issue of resources appears to have been raised on 15 September 2016,[243] it was not coupled with an instruction to advise on the required resources; that Ziegelaar (or Freehills) was to engage additional resources; or that he was to take responsibility for the completion of the Public Offering by Christmas 2016. On the contrary, almost immediately after the meeting he received direct instructions from Svinos to "stay out of the financials".[244]

481 Similar observations may be made with respect to the meeting held on 20 September 2016. Whatever was said, it had to be understood in the context where Ziegelaar had been expressly instructed not to get involved in the financials. Further, for reasons already stated,[245] Silver's evidence to the effect that he said "we have to make it" and that Freehills was to, amongst other things, extend the secondments to achieve this, was not probative.[246]

482 Finally, on no version of any of the meetings in September 2016 was it suggested by any witness that Ziegelaar said to Silver that he would engage additional Freehills resources, and those persons would be instructed as to the tasks which they needed to undertake to bring the Public Offering into alignment with a pre-Christmas 2016 completion.

483 Paragraph 21 of the United Statement of Claim alleged:

About the end of September [2016], Ziegelaar and Silver met in the presence of Mooney, Svinos and Stockdale and Ziegelaar advised Silver he was happy to tell Silver that the [Public Offering] had caught up and was back on track to complete by Christmas 2016.

484 This allegation has not been made out. The suggestion that Ziegelaar expressly stated that the process had "caught up" is contrary to the weight of the evidence.[247]

F.8 Did Ziegelaar on behalf of Freehills represent to each of the United Parties that Freehills would provide and was providing all necessary legal services and advice to facilitate the Public Offering completing by Christmas 2016?

485 Ziegelaar did no such thing. There was no evidence to support this allegation.

F.9 Did Freehills, pursuant to its retainer, have legal obligations to each of the United Parties to perform the work alleged in paragraph 24 of the United Statement of Claim?

486 Paragraph 24 of the United Statement of Claim provided as follows:

1. At all times in the period June to October 2016 in performing the Project Diamond retainer, pursuant to which [Freehills] acted as legal adviser to [United Holdings] in relation to the [Public Offering] [Freehills] had obligations, to each of Silver, Hirsch, Kinlee, Apson, [United Australia], [United Petroleum] and [Public Offering], to, among other things, perform the following work:

(a) advise the legal documentation required for the [Public Offering], including, an [Australian Securities Exchange] compliant constitution, dividend reinvestment plans, employee contracts, escrow agreements, the prospectus, and other documentation, including proposed resolutions and minutes of meetings of the [due diligence committee] and the [Board];

(b) manage a due diligence process for Project Diamond for the purposes of achieving the [Public Offering] including preparation of and adherence to a Due Diligence Planning Memorandum which would best facilitate the completion of the [Public Offering] before Christmas 2016;

(c) have Ziegelaar chair the due diligence committee and convene such meetings of same as were necessary to best facilitate the [Public Offering] completing before Christmas 2016;

(d) advise [United Holdings] and its directors as to how to in the best interests of [United Holdings] and in particular as to the proper corporate governance procedures to be adopted to best facilitate the [Public Offering] completing before Christmas 2016, including the conduct of the directors which would comply with ss 180 to 184 of the Corporations Act;

(e) advise in a timely and clear manner all relevant and necessary tasks to be completed by each of Silver, Hirsch, [United Australia], [United Petroleum], Kinlee, Apson and [United Holdings] and their various advisers to facilitate the [Public Offering] completing by Christmas 2016;

(f) inform Silver and Hirsch, as executive directors of [United Holdings], and Brinkworth as [chief executive officer] of [United Holdings], immediately of any information, risk or conflict which might prevent the [Public Offering] completing by Christmas 2016;

(g) advise [United Holdings] in a timely manner, by informing Silver, Hirsch and Brinkworth of all steps to be taken by [United Holdings] to best facilitate completion of the [Public Offering] before Christmas 2016 and in particular as to how to best deal with any information, risk or conflict which might otherwise prevent the [Public Offering] being completing by Christmas 2016;

(h) conduct all [due diligence committee] meetings necessary to facilitate the prospectus being ready in time to facilitate the [Public Offering] being completed by Christmas 2016;

(i) advise [United Holdings] and each of its directors as to the proper conduct of meetings of the [Board] required to facilitate the [Public Offering] completing before Christmas 2016, including the matters to be taken into account by the directors in performing their duty to assess whether the draft prospectus (Pathfinder) could be released to analysts on or about 24 October 2016.

487 The first issue to determine in answering this question is for whom Freehills acted. It was admitted on the pleadings that Freehills acted for United Australia, United Petroleum and United Holdings. However, Freehills disputed that Silver, Hirsch, Kinlee or Apson were its clients, or that they were owed any duties.

488 The written terms of Freehills' retainer included the following:[248]

Our advice applies only to the specific factual and legal matters it deals with. Our advice is given solely for your benefit, as you are the client named in the engagement letter, and it is you to whom we owe our duty of care. This duty of care does not extend to third parties (including any of your directors, employees or shareholders). You may disclose our advice to persons who in the ordinary course of your business have access to your papers and records, on the basis that we will not owe them any duty or be liable to them in any respect and they will not disclose the advice to anyone else.

(Emphasis added).

489 To the extent that the United Parties contended duties were owed to Silver, Hirsch, Kinlee and Apson, those allegations are in direct conflict with the written agreement (whichever was applicable).

490 In closing, the United Parties did not advance any substantive submission that these additional parties were owed the duties alleged. Quite the contrary, the United Parties' closing submissions included the contention that Freehills' duty to advise United Australia, United Petroleum and United Holdings "did not encompass a duty to provide to the companies' directors ... advice as to the actions that their duties as directors required them to perform".[249] The United Parties also contended that solicitors were not free to provide advice to third parties as to how those parties ought to fulfil their duties.

491 It follows that this aspect of the United Parties' case, with respect to the duties alleged as owing to Kinlee, Apson, Silver and Hirsch, must be dismissed.[250]

492 All but 2 of the duties alleged in paragraph 24 of the United Statement of Claim involve an allegation that Freehills was required to "best facilitate" or "facilitate" the Public Offering completing before Christmas 2016. In seeking to make good these allegations, the United Parties relied upon the terms of the 8 December 2014 letter,[251] by which Freehills stated the scope of the work was:[252]

• Advising on the legal documentation required for the IPO, including, an [Australian Securities Exchange] compliant constitution, dividend reinvestment plans, employee contracts, escrow agreements, the prospectus, and other documentation.
• Providing advice to United Petroleum and assisting in negotiations with respect to proposed agreements with other advisors.
• Managing a due diligence process, including representation on the [due diligence committee].
• Completing all legal aspects of the Due Diligence program.
• Coordinating verification of the prospectus.
• Facilitating and participating in necessary discussions with ASIC and [Australian Securities Exchange] on IPO matters.
• Input and advice on all external communications, including marketing documentation and presentations.
• Assisting the company in the review and participation in all activities deemed necessary to ensure the company is able to meet all of the expectations and requirements of operating in the public listed space.
• Advising in relation to US144A and Regulation S offers - to be performed by [Freehills US office].[253]

The United Parties also relied upon Ziegelaar being appointed the chair of the due diligence committee, and the fact that, as a solicitor, Ziegelaar owed his clients a duty to exercise reasonable care in the performance of the retainer.[254]

493 Based on these matters, it was then contended that the retainer required Ziegelaar to act at all times in accordance with the obligations of a solicitor retained "to provide all relevant and necessary legal services and advice to facilitate the [Public Offering] being completed by Christmas 2016". Precisely how it was said that the written retainer in late 2014, with respect to a Public Offering estimated to be completed in 2015 gave rise to a duty specific to "Christmas 2016" was not explained.

494 Further, the United Parties' submissions failed to address the role of others in preparation for the Public Offering. It was the obligation of the Lead Managers to project-manage the process, "including overall coordination of other advisers working on the [Public] Offering".[255] As part of this role, it was the Lead Managers, not Freehills, who were responsible for preparing and distributing the timetables.[256]

495 Furthermore, the alleged duties must be seen in the context of the fact that much of the work to be performed, including by United, was not within the control of Freehills. This position was reinforced in September 2016 in no uncertain terms.[257]

496 Moreover, although not expressly stated in closing submissions,[258] it appears from the United Statement of Claim that the duties alleged are said to have arisen, in part, from the discussions between Ziegelaar and Silver in September 2016.[259] To the extent that those matters are relied upon to establish the alleged duties, they have not been made out.[260]

497 For these reasons, each of the duties alleged which incorporates Freehills having an obligation to best facilitate or facilitate the Public Offering by Christmas 2016 has not been established.

498 With respect to the term alleged in paragraph 24(a) of the United Statement of Claim, with respect to United Australia, United Petroleum and United Holdings, it is not controversial. This alleged duty reflects the wording of both the 2014 written retainer and the 2016 written retainer.[261]

499 As to the term pleaded in paragraph 24(f), it was far from clear why it was alleged that a duty arose to inform Silver and Hirsch in particular, as executive directors of United Holdings, and Brinkworth as chief executive officer of United Holdings, of information, risks or conflicts which might have arisen. There was no written term to that effect. Further, both Silver and Hirsch[262] chose not to be involved in the day to day matters required to be completed in preparation for the Public Offering. They left that to others at United.

500 With respect to Brinkworth, between most of June and October 2016,[263] he was employed full-time elsewhere. His actual role was, in fact, far less than that of Larsen or Stockdale. There was no direction that Brinkworth ought to be the new point of contact in the period of approximately 2 weeks he was employed as chief executive officer.[264] Further, in deciding whether Freehills should have assumed Brinkworth was someone to whom they were required to report, the role of Svinos cannot be ignored.[265] He was the person who had been directed to be the interface between the Founders and others.

501 In circumstances where the Corporations Act provides that a person may deal with directors and officers of a company on the assumption that the director or officer had authority to perform her or his duties,[266] and that the state of mind of a director will ordinarily be attributed to the company where there is a duty on that director to communicate the information in question to the company,[267] there does not appear to be any sound basis upon which the law would impose the duty alleged. In short, assuming without deciding that there was an obligation to "immediately" inform United Holdings as alleged, there is no reason to impose a duty beyond Freehills informing the chairperson,[268] being Hudson, or any of the officers of United the Founders had put in place to deal directly with Freehills with respect to the Public Offering.

502 In conclusion, only the duty alleged in paragraph 24(a) of the United Statement of Claim has been established. Reaching this conclusion is not to find that Freehills did not have a duty to perform its obligations in a timely manner, based on the circumstances that prevailed at any relevant time. However, the duties pleaded in paragraphs 24(b) to (i) go far beyond such a duty.

F.10 Did Freehills, in particular Ziegelaar, at all material times in the period June to October 2016, have a duty to perform the matters alleged so as to facilitate the completion of the Public Offering before Christmas 2016?

503 Freehills, including Ziegelaar, had no duty to perform the matters alleged. Each obligation was said to be required "so as to facilitate completion of the [Public Offering] before Christmas 2016". As stated above,[269] no such overarching duty or obligation existed. As the matters the United Parties alleged were based on duties that have not been established, each matter will be dealt with briefly.

504 The first alleged obligation was to inform Hudson and Antonie, on or about 21 and 22 October 2016, that Ziegelaar could not act for them or advise them in their personal capacity.[270] The basis upon which it is said that a retainer between Freehills and United Australia, United Petroleum and United Holdings gave rise to an obligation to inform Hudson and Antonie as alleged was not developed. In any event, neither Hudson nor Antonie sought (or received) any personal advice from Ziegelaar on either 21 or 22 October 2016, or at any other time. In short, any occasion for Freehills to tell Hudson or Antonie that the firm could not act for them personally never arose.[271]

505 The next obligation alleged was a requirement to circulate the Script Email to the Founders as executive directors of United Holdings, Brinkworth as chief executive officer of United Holdings and Slack-Smith as a non-executive director of United Holdings.[272] The United Parties' closing submissions stated that it was a breach of duty for Ziegelaar not to include Silver in the group of directors to whom he circulated the Script Email. It was also suggested that the Script Email constituted the provision of advice to the Non-executive Directors ([255]).

506 By providing the Script Email, Ziegelaar did not consider he was providing any advice to Hudson or Antonie. The Script Email had not been requested,[273] and amounted to no more than Ziegelaar collecting his thoughts and inviting feedback from Hudson and Antonie as to whether his concerns were valid.[274] Further, at the time it was sent, it was prepared for an eventuality which may never have arisen.[275] In my view, it formed no part of Freehills' or Ziegelaar's duties to circulate his preliminary views on where matters stood to the Founders, Brinkworth and Slack-Smith. This is particularly so given the lengthy meeting that was held on the evening of 21 October 2016, where all material issues were ventilated in the presence of Brinkworth and Stockdale, together with Svinos, Hindle and the Lead Managers.[276] Indeed, to send the Script Email to Silver, or others, in the form it was in would have been positively misleading. On its face, it expressed the view that the Public Offering could not go ahead in 2016. At 1.24 pm on 22 October 2016, no one had specifically told Ziegelaar that the Public Offering could definitely not go ahead in 2016. Further, none of the United Holdings directors had made a decision to that effect.

507 The observation made in the previous paragraph is also relevant to the next allegation. The United Parties alleged that Freehills had an obligation to advise the Founders, Brinkworth and Slack-Smith (in the same capacities) "by no later than the morning of 22 October 2016" that Hudson and Antonie had serious concerns about giving the prospectus to analysts and presenting to them on 24 October 2016.[277]

508 The suggestion that exploring, at length, the outstanding and prevailing issues with Svinos and Brinkworth (and, for completeness, Stockdale) on the Friday evening[278] was not sufficient to convey the position the following morning is somewhat perplexing. Both Brinkworth, as chief executive officer, and Svinos, as Silver's "interface",[279] who was meeting with Silver at length on 22 October 2016, heard first hand the concerns about the state of the documents. Those concerns were not confined to those of Hudson and Antonie, but included concerns of others such as Hindle and Lennen.

509 In these circumstances, when the documents were delivered on the morning of 22 October 2016 in an incomplete form in material respects, no one could have sensibly thought that the Non-executive Directors could have anything other than serious concerns about everything proceeding as planned on that weekend. There was no duty on Freehills or Ziegelaar to state such a conspicuously obvious matter to the Founders, Brinkworth or Slack-Smith. This was not an occasion where a solicitor became aware of information of potential significance that it would reasonably be expected for the solicitor to draw to the clients' attention and point out its ramifications.[280] Self-evidently, if the documents were materially incomplete, the planned process could not proceed. This had already been made very clear to Silver.[281]

510 It was next alleged that the Founders, Brinkworth and Slack-Smith (in the same capacities) "by no later than the morning of 22 October" should have been advised that Hudson and Antonie thought the process for the Public Offering was about a week behind where it should be.[282] What is stated above with respect to Brinkworth, Stockdale and Svinos attending the meeting on the evening of 21 October 2016 is repeated.[283] In short, Brinkworth, together with Stockdale and Svinos, was present at this meeting at which Hindle stated words to the effect that the process was a week behind where it should be.[284]

511 In the circumstances, there was no obligation on Freehills or Ziegelaar to tell Brinkworth this again, or to inform the Founders or Slack-Smith, as United Holdings already had this knowledge.

512 The next obligation pleaded was to advise the Founders, Brinkworth and Slack-Smith (in the same capacities) "by no later than the morning of 22 October" that Hudson and Antonie were not comfortable to sign off on the financials and that they considered there had not been sufficient time to get comfortable enough to give the Pathfinder to the analysts.[285] There are a number of reasons why this allegation is flawed.

513 First, on the morning of 22 October 2016, neither Hudson nor Antonie had formed the view that they would not sign off on the financials the following day. Although Hudson had stipulated certain time limits for the necessary information to be provided, he had not shut out the possibility of reviewing the materials in a lesser time if and when the information was provided. This also reflected Antonie's position.

514 Secondly, on the morning of 22 October 2016, the financials to be considered for approval did not exist, but were still a work in progress. These were not provided until the following morning.[286] Although this fact illustrates that the time constraints were becoming more acute as the financials continued to not materialise, the Non-executive Directors had decided to wait to see if the document, once produced, might still be able to be approved.[287]

515 Thirdly, to the extent that this allegation relies on the contents of the Script Email, that document was not prepared as a complete statement of the affairs as they then stood. It was drafted in anticipation of the necessary documents not being in place in time for them to be properly considered and approved so they could be given to the analysts.[288]

516 In these circumstances, to give advice in terms of the duty alleged would have been to mislead the Founders, Brinkworth and Slack-Smith as to the true position.

517 The next allegation concerns Freehills not giving advice that Hudson and Antonie considered that United Holdings could not complete the Public Offering in 2016.[289] The answer to the previous allegation also demonstrates why there was no obligation on Freehills or Ziegelaar to provide advice of this nature on the morning of 22 October 2016.[290]

518 The next obligation relates to advising Hudson that he had a duty to immediately convene a board meeting on 22 October 2016.[291] However, this allegation is based upon Hudson having formed the view that the Public Offering could not be completed in 2016. On the morning of 22 October 2016, Hudson had formed no such view. Accordingly, the allegation is without foundation.

519 The next obligation alleged was a duty to advise each of the directors of United Holdings that the view formed by Hudson and Antonie by 22 October 2016 that the Public Offering could not proceed in 2016 was not informed by the due diligence committee meeting to be scheduled the following day.[292] Leaving aside the substance of the advice allegedly required to be given, why there was an obligation to advise each director individually was not developed in closing submissions. With respect to this allegation, relevantly, the retainer was with United Holdings.[293] Generally speaking, any duty to advise United Holdings would not extend to having to advise each director individually.[294] In this case, the express terms of the retainer (both in 2014 and 2016) provided that no such obligation existed.[295]

520 In any event, this allegation is without foundation in circumstances where neither Hudson nor Antonie had formed the view, on 22 October 2016, that the Public Offering could not proceed in 2016.

521 It was next alleged that Freehills and Ziegelaar had an obligation to advise each director of United Holdings that the board meeting scheduled for 23 October 2016, to take place after the due diligence committee meeting had been completed, was for the purpose of approving or refusing a resolution that the distribution of the Pathfinder to the analysts by the Lead Managers be approved, subject to any comments the directors may have on the draft Pathfinder.[296]

522 On 21 October 2016, Freehills emailed the draft agenda and minutes for both the due diligence committee meeting and the board meeting, both scheduled to be held on 23 October 2016, to United's company secretary, Larsen. The draft minutes set out in detail what was proposed to occur at both meetings,[297] including that the due diligence committee meeting was scheduled to precede the board meeting and the purpose of that earlier meeting.[298] The draft minutes specifically provided for the distribution of the Pathfinder to the analysts. In short, there was no failure to give the relevant advice.

523 For completeness, it was not put to any director that he did not understand that it was proposed on 23 October 2016 that the due diligence committee would consider issues relating to the distribution of the Pathfinder to the analysts, including providing the necessary sign offs, before any board meeting was held.

524 Next, it was alleged Freehills and Ziegelaar had an obligation to:

advise each director that prior to the distribution resolution being considered the [chairperson] of [United Holdings] would note, if the [due diligence committee] had in fact received them, that although practically there is a limited ability to amend the Pathfinder once it has been distributed to the analysts, this does not prevent any amendments necessary to ensure that the Prospectus complies with the Corporations Act; and at the meeting of the due diligence committee established in connection with the [Public Offering] which was held prior to this board meeting: (i) each Reporting Person (as defined in the due diligence planning memorandum) present was asked, in respect of their reports, signoffs and opinions; and (ii) each member of the [due diligence committee] was asked, in respect of the [due diligence committee] final report, to provide confirmations in relation to their reports, signoffs and opinions as if the Prospectus were being lodged with ASIC.

(Emphasis added.)

525 There is no basis for imposing such a duty. The observations made above with respect to a duty to advise each director are repeated.[299] Further, no director gave evidence that he understood the Pathfinder could not be amended after it had been released to the analysts.

526 In any event, the substance of the alleged obligation reflects precisely what was contained in the draft minutes provided to Larsen on 21 October 2016.[300] Such advice was plainly given to United Holdings.

527 The final obligation alleged was an obligation to advise each of the directors of United Holdings that they would not be acting in the best interests of United Holdings by making a decision not to proceed with the Public Offering and, in particular, to refuse to consider the distribution of the Pathfinder to analysts until after the due diligence committee had met on 23 October 2016 and had made a recommendation to the Board as to whether the Pathfinder could be approved.[301]

528 Leaving aside the threshold issue concerning an obligation to give advice to each director,[302] on the facts there was no real occasion to be advising any director on 22 October 2016, or at any time before around 1.30 pm and 2.00 pm on 23 October 2016, not to make a decision not to proceed with the Public Offering. Dealing with each director, the Founders had given no indication of contemplating such a decision; quite the contrary. Further, on the evening of 21 October 2016 (and for that matter the evening of 22 October 2016), both Hudson and Antonie expressly stated they would await the provision of further documents before making any decision about the manner in which to proceed.[303] As to Slack-Smith, he had not had any communication with Ziegelaar, or anyone else from Freehills, which indicated that he might have been making a decision on 22 October 2016, or the morning of 23 October 2016, not to proceed with the Public Offering in 2016. To Ziegelaar's knowledge,[304] the position of the Non-executive Directors, and each of them, did not change until around 2.00 pm on 23 October 2016.

529 There was no specific allegation pleaded that Ziegelaar was under a duty to contact or advise the Founders after learning of the Non-executive Directors position around 2.00 pm on 23 October 2016 and before they were told of that positon by Hudson at around 3.30 pm. Despite this, this particular issue is addressed below.[305] For numerous reasons, the issue does not advance the United Parties' case.[306]

530 For completeness, there was no allegation that Freehills failed to advise the legal documentation that was required to be prepared with respect to an Australian Securities Exchange compliant constitution, dividend reinvestment plans, employee contracts, escrow agreements, the prospectus, and other documentation such as proposed resolutions and minutes of meetings of the due diligence committee and the Board.[307]

F.11 Did Freehills owe fiduciary obligations to each of the United Parties as alleged?

531 The United Parties' closing submissions simply repeated their contentions with respect to issue F.9 above. Although there can be no controversy concerning a solicitor's duty to act honestly, with loyalty, trust and confidence and to appropriately address any conflicts of interest which may arise,[308] the existence of such a duty to her or his clients[309] does not advance the United Parties' case.[310]

F.12 Did Ziegelaar breach the fiduciary duties alleged to be owed by Freehills?

532 No.[311] As the United Parties made no submissions beyond those referable to the earlier issues concerning breach of duty,[312] it is unnecessary to say anything further on this topic.

F.13 Were the financials for the draft prospectus behind schedule by reason of the matters alleged by Freehills?

533 In its defence to the United Statement of Claim ("Freehills' Defence"), Freehills denied that, prior to 1.24pm on 22 October 2016, being the time that the Script Email was sent by Ziegelaar,[313] Hudson had informed Ziegelaar that he had determined that the Public Offering could not proceed in 2016 (as alleged by the United Parties). There was no evidence that, prior to 1.24 pm on 22 October 2016, Hudson had in fact determined that the Public Offering could not proceed in 2016,[314] much less that he told Ziegelaar that.

534 In addition to this denial, Freehills alleged that, leading up to 22 and 23 October 2016, the financials were behind schedule by reason of:

(1) Silver's failure to devote the time required to reviewing the financials in accordance with the timetable, which had to be followed in order to meet the Christmas 2016 target, despite requests for him to do so.

(2) Silver's repeated demands that the profit forecast be altered in a manner requested by Silver.

(3) A lack of processes at United to produce financial information required to produce the profit forecast, and a lack of internal resources at United required to produce those profit forecasts.

535 It is incontrovertible that Silver and United failed to produce the financials in accordance with the agreed timetable, and that that was the principal, if not sole, reason why the process was behind schedule in this regard.[315] It is also incontrovertible that, in October 2016, Silver was told of, and appreciated, the need to meet the deadlines if the Public Offering was to proceed in 2016.[316]

536 There was also no controversy that, as at the afternoon of 22 October 2016, Silver was still making changes to the profit forecast. Late on 21 October 2016, Hindle indicated he was comfortable with $112 million EBITDA, but was informed by Svinos that the Founders were expecting a forecast of $115 million EBITDA.[317] Again, contrary to the agreed timetable, on 22 October 2016, Silver spent many hours with Svinos making changes to the financials, including material changes.[318] These were not available to the advisers until well into the afternoon of 22 October 2016.

537 With respect to the processes at United, Antonie described United's systems as archaic, with most things being done manually. Further, United did not use accrual accounting on a monthly basis. This resulted in there being a lot of work necessary "to get the systems up and running".[319] Further, Stockdale commented on the limited resources at United and said that, during the Public Offering process, the Founders were focused on "many, many other matters as well as the [Public Offering]".[320] Stockdale also had concerns about the lack of information generally, and the lack of documentation to support it.[321]

538 Antonie and Stockdale's views on the inadequacies of United's accounting systems were corroborated by Hindle's observations on United's systems and processes.[322] Further, Hindle said it was impossible to draft a coherent financial section while the numbers continued to move around.[323]

539 In summary, each of Freehills' alleged reasons for the financials being behind schedule has been established.

F.14 By 1.24 pm on 22 October 2016, was it unlikely that the financials would be completed and verified in sufficient time to enable United Holdings directors and advisers to have sufficient opportunity to approve the release of the final draft prospectus by 24 October 2016, as Freehills alleged?

540 The answer is yes. As at 22 October 2016, United had not performed in accordance with the agreed timetable and information essential to the completion and verification of the financials had still not been provided.[324] The United Parties did not seriously attempt to contend otherwise.[325]

F.15 Were the financials not completed by 3.00 pm on 23 October 2016, as Freehills alleged?

541 The financials were not completed by 3.00 pm on 23 October 2016.[326] Moreover, the financials were not even near completion so as to be capable of approval, much less verification, that day.

F.16 Alternatively to F.15, were the financials not completed and verified in sufficient time prior to 3.00 pm on 23 October 2016 to enable United Holdings directors and advisers to have sufficient opportunity to approve the release of the final draft prospectus by 24 October 2016, as Freehills alleged?

542 Again, no real issue arises. The financials were not completed or capable of being properly verified as at 3.00 pm on 23 October 2016. The opportunity to approve the release of the final draft prospectus by 24 October 2016 had been foreclosed by United's failure to provide the necessary information in a timely manner (or, as it turned out, at all).[327]

F.17 Was a decision made by Hudson or anybody else that the Public Offering could not proceed before Christmas 2016? When was that decision made?

543 When Hudson and the other Non-executive Directors each decided at around 2.00 pm on 23 October 2016 that they would not approve the Pathfinder on that day,[328] that effectively was a decision that the Public Offering could not proceed before Christmas 2016.[329] In making this finding, I do not accept the United Parties' submission that Hudson caused Antonie and Slack-Smith to adopt Hudson's view. The decision that it was inappropriate to approve the Pathfinder on 23 October 2016 was a decision each of the Non-executive Directors made both individually and collectively.[330]

F.18 Were the Founders informed by Hudson at about 3.00 pm or 3.30 pm on 23 October 2016 that the directors would not agree to the Public Offering proceeding until March or April 2017?

544 Whatever the exact words were that Hudson said to the Founders around 3.30 pm on 23 October 2016,[331] the effect of what was conveyed was that the Non-executive Directors would not approve the Pathfinder that day for release to the analysts the following day, which was understood by them would have the effect of the Public Offering not being able to proceed until March or April 2017. This understanding was based on the fact that they had been repeatedly advised that 24 October 2016 was the last date for the analysts' presentation, if the Public Offering was to proceed in 2016.[332]

F.19 Did Freehills or Ziegelaar breach duties owed by reason of the matters alleged in the United Statement of Claim?

545 To the extent that this question concerns paragraphs 24 and 38 of the United Statement of Claim, those matters have been addressed.[333]

546 Paragraph 25 of the United Statement of Claim alleged Freehills owed fiduciary duties.[334]

547 The United Statement of Claim alleged that, by providing the Script Email to Hudson and Antonie, Ziegelaar was acting in conflict with his duties to the United Parties and, further alternatively, was acting in the interests of Hudson and Antonie.[335] As to whether there was a duty to advise of the Script Email, this issue has already been addressed.[336]

548 With respect to the specific allegation of conflict, it was entirely consistent with Freehills' duties for Ziegelaar to ascertain, as best he reasonably could, information relevant to whether or not the Public Offering could proceed as planned, and to inquire of directors directly involved in the process whether or not his tentative views were correct. Further, the Script Email was not sent to advise Hudson and Antonie how they could persuade Silver not to proceed in 2016. Rather, prudently, Ziegelaar was preparing for the real possibility that United would not provide the outstanding matters in sufficient time or in a satisfactory state for the Pathfinder to be approved the following day. In so doing, Ziegelaar was acting in the interests of United Holdings, not the personal interests Hudson or Antonie.

549 Furthermore, Ziegelaar gave evidence that part of the reason for preparing the Script Email was to think about how to present to the Founders the reasons the Public Offering could not go ahead if that is what eventuated. Such a purpose was fully aligned with acting in the interests of United Australia, United Petroleum and United Holdings.

550 Next, it was alleged Ziegelaar breached his duties of loyalty, trust and confidence, and placed himself in a position of conflict by reason that he instructed those at Freehills working on the Public Offering to cease work.[337] This allegation is based on a misunderstanding of the email sent by Ziegelaar at 6.00 pm on 22 October 2016.[338] In short, Ziegelaar never gave an instruction that work on the Public Offering should cease generally at any time before Silver gave that very instruction on the afternoon of 23 October 2016. Not only was there no evidence of Ziegelaar giving the alleged instructions, but Freehills continued to work on the matter after 6.00 pm on 22 October 2016.[339]

551 Next, the United Parties alleged breaches of the duties as set out with respect to issue F.10 above.[340] As none of these duties or breaches have been made out, it is unnecessary to re-visit these matters.[341]

552 Next, the United Parties alleged Ziegelaar breached his duties in that he "failed and/or refused" to proceed to conduct the due diligence committee meeting scheduled to occur at 3.30 pm on 23 October 2016.[342] There is no scope to allege that Ziegelaar refused to conduct the due diligence committee meeting. At no time on 23 October 2016 was he asked to convene, let alone conduct, the meeting. In short, no occasion arose which put Ziegelaar in a position where he might have to refuse to conduct the meeting.

553 With respect to the allegation of failure, it is confined to failing "to proceed to conduct" the meeting. There was a primary, if not singular, reason why Ziegelaar did not conduct the due diligence committee meeting as scheduled. That was because Silver chose to announce that the Public Offering was off,[343] that the Founders wanted to consider their position, and that everyone should stop work.[344]

554 Further, at trial, Silver did not give evidence that he wanted to proceed with the due diligence committee meeting, or for that matter the board meeting, and that by reason of a failure on Ziegelaar's part that intention or possibility was precluded. Furthermore, given Silver had instructed everyone to stop work and decided that the Founders were going to leave, which they did, any attempt to conduct the due diligence committee meeting would have been contrary to Silver's instructions. Moreover, it is difficult to perceive any utility in conducting the due diligence committee meeting in circumstances where the Founders had so clearly stated their position, and the Non-executive Directors had also indicated a short time before that none of them was willing to approve the Pathfinder that day.[345] Coupled with this, it was proposed at the due diligence committee meeting that there were to be sign offs with respect to the Pathfinder. Ziegelaar himself knew that Freehills, justifiably,[346] would give no such sign off. The evidence also indicated that Lennen, Burmeister, Larsen, Hindle, and almost certainly Brinkworth and Stockdale, would not have signed off on the Pathfinder.[347] In circumstances where neither Burmeister nor Charles were called, it is assumed any evidence they might have given would not have assisted the United Parties' case.[348] Finally, on the evidence before the court, it is difficult to perceive how any person acting reasonably and diligently, would have seriously contemplated, on 23 October 2016, approving the release of the Pathfinder to the analysts.

555 Next, it was alleged Ziegelaar breached his duties by failing or refusing to immediately advise each of the United Holdings directors "that they would not be acting in the best interests of [United Holdings] by making a decision to not proceed with the [Public Offering] and in particular to refuse to consider the distribution of the Pathfinder to analysts until after the [due diligence committee] had completed its meeting and made a recommendation to the [B]oard as to whether the Pathfinder could be approved".

556 The reasons above[349] as to why Ziegelaar did not breach his duties by not conducting the due diligence committee meeting largely meet this allegation as well. In addition, in circumstances where, on 23 October 2016, the Pathfinder was in no state for distribution to the analysts,[350] no duty could arise to advise the United Holdings directors, or for that matter United Holdings, to conduct a meeting to consider the distribution of a document that day that was clearly not ready for distribution.

557 Further, had Ziegelaar advised that the due diligence committee meeting should take place, and had, which seems highly unlikely, the Founders acted in accordance with any such advice, at the very least because of the position of the Non-executive Directors, it is clear that any such meeting would not have resulted in each of the sign offs being given.[351]

558 Next, it is alleged Ziegelaar breached his duties by failing or refusing to advise United Holdings and each of its directors that they should immediately seek the advice of the Lead Managers, who were present in the room, as to whether the Public Offering could be completed by Christmas 2016 if the release of the Pathfinder to analysts was delayed beyond 24 October 2016, and, if so, what was the "very final date".

559 By 23 October 2016, the Lead Managers had already advised United, including the Founders, the Non-executive Directors and Freehills, that the last date for releasing the Pathfinder to the analysts was 24 October 2016. There was no credible evidence before the court to suggest that position had changed. On the contrary, on the morning of 23 October 2016, the Lead Managers confirmed their position to Ziegelaar.[352]

560 The events shortly after 23 October 2016 also indicate that the Lead Managers had not altered their view.[353] Furthermore, when given the opportunity in the witness box to suggest that the Pathfinder could be released to the analysts later than 24 October 2016, Lennen declined to do so.[354]

561 These facts demonstrate that there was no real prospect that seeking advice from the Lead Managers would have made any material difference. In addition to these difficulties, this allegation was never put to Ziegelaar in cross-examination.[355] In these circumstances, where there was no evidence from anyone representing the Lead Managers that delay beyond 24 October 2016 was feasible or even a realistic possibility, there was an obligation on the United Parties to put this allegation to Ziegelaar if it was to be maintained.[356]

562 The reasons set out in this section of the judgment illustrate why neither Freehills nor Ziegelaar breached any of the alleged duties, whether they were owed or not. However, even if Freehills or Ziegelaar owed some of the alleged duties, and they were breached (contrary to the findings above), it is highly unlikely that anything material would have flowed from such alleged breaches.

563 An underlying and fundamental difficulty with the United Parties' case was that, even if (contrary to the advice of the Lead Managers) the time for the presentation to the analysts could have been extended by a day or 2, they failed to demonstrate that in the 24, 36, 48, or even 72 hours following the scheduled meetings on 23 October 2016, the management of United and its advisers were capable of putting together the necessary documentation to prepare a Pathfinder that would have been satisfactory to, and likely to be approved by, the Non-executive Directors for release to the analysts, and also approved by others who were required to sign off as part of the due diligence process.

564 Although such an eventuality could not be described as impossible, in light of the repeated failure of United to meet any of the critical dates (even as revised) of the timetable, the court is not satisfied that there was even a real possibility as at 23 October 2016 that the Pathfinder and related documents would have been in a satisfactory state in the next 1 to 3 days.[357] More particularly, the court is not satisfied that management and others would have completed their drafts, that each of the Non-executive Directors would have had proper time to review them,[358] that they then would have had sufficient time to test the information and assumptions with United's management and possibly others, and that the verification process would have been properly completed as part of a properly performed due diligence process,[359] and that all of the Non-executive Directors would have ultimately given their approval.[360]

565 In short, it is highly likely that any advice Freehills may have given on 22 or 23 October 2016 would not have made any difference to the outcome of the process.

F.20 Would reasonable solicitors in the position of Freehills and Ziegelaar be reasonably expected, within the meaning of ss 48 and 58 of the Wrongs Act 1958 (Vic), to perform the matters identified in the United Statement of Claim?

566 The United Parties contended that Freehills and Ziegelaar, acting reasonably, should have done a number of things from 21 to 23 October 2016. These allegations were repetitious of allegations previously addressed.[361] For the reasons stated, reasonable solicitors would not be expected to perform the matters pleaded in the United Statement of Claim.

F.21 Would the consequences identified in the United Statement of Claim have occurred if Ziegelaar had performed the duties and acted as a reasonable solicitor in the circumstances set out?

567 On the premise that, in accordance with his alleged duties, and "otherwise [acting] as a reasonable solicitor", Ziegelaar would not have written the Script Email, he would have circulated the Script Email,[362] he would not have acted for Hudson and Antonie "and would otherwise have given the advice he was required to give, as set out above" (emphasis added), the consequences identified in the United Statement of Claim were as follows:

If Ziegelaar had performed his duties and acted as a reasonable solicitor in the circumstances set out ... above:

(a) the [due diligence committee] meeting would have occurred;

(b) the business of the [due diligence committee] meeting would have been conducted as proposed in the draft [due diligence committee] meeting minutes[363] and each of:

(i) Brinkworth, Mooney, Stockdale and Larsen, as the members of management present at the meeting;

(ii) [Freehills];

(iii) Hindle, the Investigating Accountant; and

(iv) the [due diligence committee] members signing the [due diligence committee] final report,

would have "confirmed that it believes, subject to finalisation of any outstanding issues in a manner acceptable to the [due diligence committee] and to any assumptions or qualifications that are relevant to the provision of any such report, sign-offs or opinion, that the Pathfinder is, except as disclosed, in proposed final form and the relevant reports, sign-offs and opinions are in final form could be signed and delivered by it at that time in respect of the Pathfinder (rather than the Prospectus) and assuming the Pathfinder were the Prospectus be lodged with ASIC on the date of distribution of the Pathfinder".

(c) the draft [due diligence committee] minutes [as set out in footnote 363] above would have been confirmed;

(d) the confirmation of the [due diligence committee] above would have been provided to the [Board];

(e) Ziegelaar would have then advised the [Board] that it should conduct the meeting scheduled to occur immediately following the meeting of the [due diligence committee];

(f) Ziegelaar would have advised the [Board] that acting in the best interests of [United Holdings] they must approve the resolution ... to distribute the Pathfinder prospectus to the analysts by the Lead Managers.

(Emphasis added.)

568 Before dealing with the individual components of this allegation, it must be noted that the consequences pleaded are sequential. Specifically, the United Parties pleaded that the due diligence committee meeting would have been convened, and conducted as proposed in accordance with the draft minutes.[364] Further, once the due diligence committee meeting had been held, and all the proposed sign offs and confirmations had been given to the Board, Ziegelaar was then to advise the Board to conduct its meeting and then give particular advice during the course of that board meeting to adopt only 1 course, namely approval. It follows, on the pleaded case, the United Parties must establish each of these incremental steps.

569 The first step, namely that the due diligence committee would have occurred, contains at least 2 assumptions in addition to those pleaded.

570 First, it assumes that, if Ziegelaar had acted as it was alleged he should have, and had advised Hudson to call a board meeting on 22 October 2016,[365] and that such a board meeting was in fact convened, it would not have been resolved at that meeting that the due diligence committee meeting would not be held the following day. Given the state of the materials, and that, if Silver were attending such a board meeting during the day on 22 October 2016 he would not have been working on the financials with Svinos, there would have been a real prospect that such a resolution would have been passed.

571 Secondly, it assumes that, if Ziegelaar had advised on the afternoon of 23 October 2016 that the due diligence committee meeting should proceed, the Founders would have accepted that advice in circumstances where Hudson had informed them that the Non-executive Directors would not approve the Pathfinder that day. Given Silver's reaction to the position of the Non-executive Directors, it is far from clear that the Founders would have accepted any such advice.[366]

572 In any event, assuming Ziegelaar gave the relevant advice and the Founders acceded to the due diligence committee meeting proceeding, there would have been no prospect whatsoever that the business of that meeting "would have been conducted as proposed in the draft [due diligence] meeting minutes".[367]

573 In closing submissions the United Parties emphasised that the draft due diligence committee meeting minutes expressly contemplated that any confirmation would be "subject to finalisation of any outstanding issues in a manner acceptable to the due diligence committee and to any assumptions or qualifications". In circumstances where the draft documentation was extensively and significantly incomplete, the Non-executive Directors had had no real ability to conduct a proper review,[368] and the draft Pathfinder was in no state to be released to the analysts, the possibility of qualifying any confirmation by identifying outstanding issues does not advance the United Parties' case. Any such qualification would have needed to have been so extensive (if it were to accurately reflect the circumstances) as to have made any conditional approval of little or no utility.

574 It follows that there was simply no prospect at all of the sign offs and confirmations being provided at any due diligence committee meeting held on 23 October 2016. It also follows that the draft minutes would not have been confirmed, and that no meaningful confirmation would have been provided to the Board.

575 Accordingly, the subsequent contingent steps, as pleaded, would never have occurred. Further, on no sensible basis could Ziegelaar have reasonably advised the Board on 23 October 2016 that, acting in the best interests of United Holdings, the Board "must approve" any resolution to distribute the Pathfinder to the analysts. Indeed, this proposition was not even put to Ziegelaar during cross-examination.[369]

576 The United Parties' closing submissions did not seek to meaningfully engage with the above matters. With respect to this issue, the United Parties contended that if Ziegelaar had advised that the Corporations Act did not require a Pathfinder, or the sign off of the due diligence committee, "the [Lead Managers'] employees, the analysts, would have receive[d] a presentation either on 24 October 2016 or shortly thereafter, say on 25 or 26 October [2016]". Such a submission was, effectively, a concession that the case as pleaded in this regard could not be made out.

577 Before leaving this topic, a further observation must be made. Even if, despite all of the matters referred to above, the Non-executive Directors received "legal" advice that the Board must approve the Pathfinder for distribution to the analysts, it does not follow that that is what the Non-executive Directors ought to have done. In such circumstances, each director would have still been required to exercise an independent judgment in relation to whether or not the Pathfinder ought to have been released to the analysts.[370]

F.22 Did Freehills and Ziegelaar know, or ought they reasonably to have known, the matters identified in the United Statement of Claim?

578 The United Parties alleged that, at all material times, Ziegelaar knew, or ought reasonably to have known, that:

(1) The United Parties "and associated entities"[371] would bear the costs of the Public Offering if it did not proceed, as United Holdings would not receive the funds from the Public Offering which it was going to use to pay or reimburse the costs of the Public Offering.

(2) The costs of the Public Offering were going to be met by United Holdings from the proceeds of the Public Offering.[372]

It was further alleged that, in those circumstances, Ziegelaar at all times knew, and it was reasonably foreseeable that, if the Public Offering did not complete by Christmas 2016, United Holdings would not receive the proceeds of the Public Offering and United Holdings, United Australia, United Petroleum, Kinlee and Apson would suffer loss and damage, namely, they would not have available to them the proceeds to meet the costs of the Public Offering.

579 Further, in these circumstances, it was alleged that Ziegelaar knew, or ought to have known, that his failure to perform his duties in the period 21 to 23 October 2016:

(1) Would prevent United Holdings from completing the Public Offering by Christmas 2016, and such risk was therefore foreseeable within the meaning of s 48(1)(a) of the Wrongs Act.

(2) In consequence of the Public Offering not completing by Christmas 2016, United Holdings would not have available to it the proceeds of the Public Offering, which proceeds United Holdings was to use to pay for the costs and to purchase the shares in United Australia and thus "achieve 100% ownership of the United Fuel Business, from which [United Holdings] expected to earn an EBITDA in the 2017 financial year of $114 [million] and to continue thereafter to achieve an annual EBITDA of at least that amount".

580 Finally, in "all the circumstances set out above", it was alleged that Freehills knew, or ought to have known, that if it did not perform its duty as alleged or otherwise perform to the standard expected of a firm providing "the services of its team with expertise in equity capital markets and the ability to assist clients to achieve successful initial public offerings including the services of a reasonable and experienced solicitor in Ziegelaar's position qua the [United Parties] in June to October 2016, the [Public Offering] could not complete by Christmas 2016".

581 There was no evidence that Ziegelaar, or anyone from Freehills, "knew" the matters alleged. They were not put to Ziegelaar or Mackinnon.[373]

582 It was undoubtedly obvious to anyone involved, including Freehills, that if the Public Offering did not proceed at all, costs incurred in pursuit of the Public Offering were likely to be wasted (at least in part).[374] However, there was no evidence to support a contention that Freehills or Ziegelaar ought reasonably to have known that if, by reason of events outside Freehills or Ziegelaar's control or otherwise, the Public Offering could not proceed in 2016, it would not have proceeded in 2017. Indeed, the Founders and United Holdings received advice from the Lead Managers, its chairperson, Hudson, Antonie and Svinos that if the Public Offering proceeded in 2017, it was likely to be more beneficial to United.[375]

583 Had the Founders not decided to bring the Public Offering process to a halt on 23 or 24 October 2016, the costs of the Public Offering could have been recovered in the following year, assuming, of course, United took the necessary steps to ensure the Public Offering proceeded.

584 In these circumstances, there is no proper basis to find that Freehills or Ziegelaar ought to have known the Public Offering would not proceed in the foreseeable future at all and that the costs of the Public Offering would necessarily be borne by any of the United Parties.

F.23 Did the United Parties suffer the loss and damage alleged in the United Statement of Claim in consequence of Freehills' failure to perform the duties alleged?

585 This issue does not arise as no failure on Freehills' part has been found. Accordingly, only some brief observations will be made.

586 Loss was claimed on a number of bases. First, it was said that Kinlee and Apson did not each receive (directly or through associated entities) 50 percent of the cash amount to be paid by United Holdings to purchase the "United Fuel Business (of approximately $150m to $250m) nor up to 35% of the shares to be issued by [United Holdings] in consequence of the [Public Offering] (which shares would have had a market value on listing of approximately $250m to $350m) which loss has been reduced by Kinlee's [and Apson's] continued ownership of 50% [each] of the United Fuel Business".

587 Secondly, it was alleged Kinlee and Apson each incurred up to 50 percent of the costs of the Public Offering "directly or through associated entities" and did not have any of those costs reimbursed by United Holdings from the proceeds of the Public Offering.

588 Thirdly, it was alleged United suffered loss and damage because each of United Australia and United Petroleum did not have any of the costs incurred or paid by either of them reimbursed from the proceeds of the Public Offering.

589 Fourthly, it was alleged that United Holdings suffered loss and damage because it did not receive the proceeds of the Public Offering, was unable to use those proceeds to pay the costs of the Public Offering and was prevented from acquiring the United Fuel Business and lost the value of that business.[376]

590 With respect to all heads of loss claimed, the United Parties have failed to establish that Freehills caused, or contributed to, the Public Offering not proceeding in 2016.[377] It follows that the necessary causal link between any loss claimed and Freehills' conduct has not been established.

591 Further, the evidence establishes that the principal reason the Public Offering could not proceed in 2016 was the failure of United to comply with the timetable and have the relevant materials available in sufficient time (or, as it turned out, at all) for it to be properly considered by United management, Freehills, KPMG, the Lead Managers, the Non-executive Directors, and others involved in the due diligence process before any Pathfinder was released to the analysts.[378]

592 Furthermore, and in any event, for the United Parties to claim loss on the basis that the Public Offering would have proceeded, or even that there was a real prospect that it would have proceeded, in 2016, the United Parties needed to advance a case as to what would have eventuated in the days and weeks after 23 October 2016. Not only was no such case pleaded, but no probative evidence was led, which demonstrated any real prospect of a commercially viable Public Offering proceeding in 2016. On the contrary, the evidence before the court suggests that any attempt to release rushed and incomplete information to the analysts would have been unsatisfactory, to say the least.[379] This must be particularly so in circumstances where the Founders were demanding such a high return.[380] It would have been unrealistic to have any expectation of a return at the upper limits of what the market might bear with such unsatisfactory materials. Indeed, there was no evidence that, even if the Board had resolved to release the Pathfinder in an incomplete and, relevantly, unverified state, Lead Managers would have allowed the Pathfinder to go to the analysts.[381]

593 Moreover, the case against Freehills suffers from a further fundamental difficulty. Each of the Non-executive Directors (amongst others)[382] gave evidence that he would not have signed off on the relevant documentation on 23 October 2016. In addition, none of them gave evidence that he would have been likely to have signed off on such documentation in the days that followed. In these circumstances, there was no real prospect of the Public Offering proceeding in 2016 regardless of any advice that Freehills might have given. The evidence is such that I do not accept that the holding of the due diligence committee meeting or the board meeting on 23 October 2016 had any real prospect of changing the position of the Non-executive Directors.[383] The holding of such meetings could not have overcome the substantial and extensive inadequacies in the relevant documents and the substantial failure to adhere to the process and timetable that had been recommended and agreed upon.

594 As to the evidence led by the United Parties in support of the loss claimed, it is only necessary to make some brief observations.

595 First, in seeking to put forward evidence of the loss claimed, the United Parties' expert[384] was asked for his opinion on the market value of 100 percent of the shares of United Holdings, his estimate of the likely performance of United Holdings, and his estimate of the likely market value of 100 percent of the shares in United Holdings as a listed entity, from Christmas 2016, on the Australian Securities Exchange as at 30 June 2017 and 30 June 2018. The expert was also asked, on the basis the Public Offering did not proceed in 2016, what he estimated was the likely market value of 100 percent of the United Fuel Business in an initial public offering or trade sale, based on the actual performance of the United Fuel Business as at the full financial year to 30 June 2017.

596 In response to the questions put, the expert declined to engage in the exercise as requested. He stated that the questions posed required a degree of speculation that prevented him from undertaking the assessment as asked. He then set out an alternative approach in his report.

597 On this alternative approach, the expert made certain "fundamental" assumptions, which included that:

(1) But for the conduct of Freehills and Hudson, United Holdings would have listed on the Australian Securities Exchange by way of the Public Offering in December 2016.

(2) If listed in 2016, the market capitalisation of United Holdings would have been based on a 9 or 10 times multiple of the EBITDA forecast for the 2017 financial year.

The United Parties have failed to establish either of these fundamental assumptions.[385]

598 In these circumstances, I do not propose to go through the further criticisms made with respect to the United Parties' expert evidence. In passing, I note that Kinlee and Apson have remained the ultimate shareholders of the companies owning the United Fuel Business in circumstances where the EBITDA for the 2017 financial year that was achieved was higher than that forecast in October 2016. On the claim as pleaded, this is directly relevant to reducing the amount of the loss claimed.[386] Further, to the extent that Kinlee and Apson sought to claim loss as shareholders of United Australia, United Petroleum or United Holdings by reason of alleged breaches of duties owed to those companies, such "losses" are reflective and not recoverable by the shareholders.[387]

599 Finally, the United Parties claimed certain miscellaneous costs as loss which bore no relevant connection to the Public Offering.[388]

F.24 Did Freehills, and in particular Ziegelaar, act in wrongful breach of the terms of the engagement agreement as alleged in the United Statement of Claim?

F.25 Did the United Parties suffer loss and damage as a result of any breach as alleged?

F.26 Did the United Parties fail to mitigate their loss as alleged?

602 This issue does not arise. However, it should be noted that there was no compelling evidence to suggest why the Founders could not have proceeded with an initial public offering in 2017. The evidence of Silver amounted to little more than expressing a personal preference[391] not to do so in light of the fallout from the (further)[392] failed attempt in 2016. In contrast, United received advice from numerous sources that it was in their interest to proceed in 2017, rather than 2016.[393]

F.27 Must any loss or damage be reduced by the United Parties' concurrent wrongdoing or contributory negligence?

603 This is also not applicable. Suffice to say that the evidence demonstrates the principal cause of the Public Offering not proceeding in 2016 was United's failure to prepare the materials required if the process was to proceed to a Pathfinder being released to the analysts in the manner which had been planned by the Lead Managers.

F.28 Does the liability cap as alleged by Freehills apply?

604 Each letter by which Freehills was retained by United contained a clause effectively limiting Freehills' liability to $50 million. As Freehills has not been found liable for any amount, it is unnecessary to consider this issue.

F.29 Are the United Parties, or any of them, entitled to set off against any order made against them in the Fees Proceeding, their claim for damages against Freehills in the negligence proceeding?

605 Again, by reason that the United Parties have been unsuccessful in their damages claim, there is no need to consider this issue.

G.1 Statutory provisions and relevant principles

606 The claims against Hudson were based on alleged breaches of his duties under ss 180, 181, 182 and 183 of the Corporations Act. Those sections provide as follows:

180 Care and diligence - civil obligation only

Care and diligence - directors and other officers

(1) A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they:

(a) were a director or officer of a corporation in the corporation's circumstances; and

(b) occupied the office held by, and had the same responsibilities within the corporation as, the director or officer.

Business judgment rule

(2) A director or other officer of a corporation who makes a business judgment is taken to meet the requirements of subsection (1), and their equivalent duties at common law and in equity, in respect of the judgment if they:

(a) make the judgment in good faith for a proper purpose; and

(b) do not have a material personal interest in the subject matter of the judgment; and

(c) inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and

(d) rationally believe that the judgment is in the best interests of the corporation.

The director's or officer's belief that the judgment is in the best interests of the corporation is a rational one unless the belief is one that no reasonable person in their position would hold.

Note: This subsection only operates in relation to duties under this section and their equivalent duties at common law or in equity (including the duty of care that arises under the common law principles governing liability for negligence) - it does not operate in relation to duties under any other provision of this Act or under any other laws.

(3) In this section:

business judgment means any decision to take or not take action in respect of a matter relevant to the business operations of the corporation.

181 Good faith - civil obligations

Good faith - directors and other officers

(1) A director or other officer of a corporation must exercise their powers and discharge their duties:

(a) in good faith in the best interests of the corporation; and

(b) for a proper purpose.

(2) A person who is involved in a contravention of subsection (1) contravenes this subsection.

182 Use of position - civil obligations

Use of position - directors, other officers and employees

(1) A director, secretary, other officer or employee of a corporation must not improperly use their position to:

(a) gain an advantage for themselves or someone else; or

(b) cause detriment to the corporation.

(2) A person who is involved in a contravention of subsection (1) contravenes this subsection.

183 Use of information - civil obligations

Use of information - directors, other officers and employees

(1) A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:

(a) gain an advantage for themselves or someone else; or

(b) cause detriment to the corporation.

(2) A person who is involved in a contravention of subsection (1) contravenes this subsection.

607 The relevant legal principles may be stated with little controversy.

G.1.1 Section 180 - care and due diligence

608 Section 180(1) relevantly provides that a director must exercise her or his powers and discharge the duties with the degree of care and diligence that a reasonable person would exercise if the reasonable person (a) were a director of a corporation in the corporation's circumstances, and (b) occupied the office held by, and had the same responsibilities within the corporation as, the director.

609 By placing the "reasonable person" in "the office" and with the "same responsibilities" as the relevant director, s 180 creates an objective test.[394] The applicable standard is what an ordinary person, with the knowledge and experience of the relevant director, would have done.[395]

610 The duty mandates, at its core, that a director's involvement in the company's management requires ordinary competence or reasonable ability.[396] Equivalently, the duty of diligence requires directors to take reasonable steps to place themselves in a position to guide and monitor the company's management.[397]

611 In considering the approval of financial statements and addressing the facts at hand, more is required of a director than a mere "going through the paces". As Middleton J stated in ASIC v Healey:[398]

What each director is expected to do is to take a diligent and intelligent interest in the information available to him or her, to understand that information, and apply an inquiring mind to the responsibilities placed upon him or her. Such a responsibility arises in this proceeding in adopting and approving the financial statements. Because of their nature and importance, the directors must understand and focus upon the content of financial statements, and if necessary, make further inquiries if matters revealed in these financial statements call for such inquiries.

(Emphasis added.)

612 Whether a director has exercised a reasonable degree of care and diligence in a given scenario can only be answered by balancing the foreseeable risk of harm against the potential benefits that could reasonably have been expected to accrue to the company from the conduct in question.[399]

613 The degree of departure from the acceptable standard required to constitute a breach of the director's statutory duty of care and diligence is the same as that which would support a claim of negligence at common law.[400]

614 The statutory duty of care recognizes a distinction, which must be kept firmly in mind, between negligence and mere mistakes, with liability arising for the former and not for the latter.[401] In relation to decisions made in expectation of events that might happen in the future, courts are conscious that forecasting is a difficult and uncertain process, with much room for mistakes and errors of judgment, and for differences of opinion.[402]

615 In ASIC v Rich, Austin J stated that:[403]

The statute requires the court to apply a standard defined in terms of the degree of care and diligence that a reasonable person would exercise, taking into account the corporation's circumstances, the offices occupied by the defendants and their responsibilities within the corporation. That requires the defendants' conduct to be assessed with close regard to the circumstances existing at the relevant time, without the benefit of hindsight, and with the distinction between negligence and mistakes or errors of judgment firmly in mind_. If the impugned conduct is found to be a mere error of judgment, then the statutory standard under s 180(1) is not contravened and it is unnecessary to advert to the special business judgment rule in s 180(2)_. In the view that I have taken of it ... s 180(2) provides a defence in a case where the impugned conduct goes beyond a mere error of judgment, and would contravene the statutory standard but for the defence.

(Emphasis added.)

616 Further, on the relationship between the duty contained in s 180(1) and the business judgment rule contained in s 180(2), Austin J stated:[404]

[T]he statutory duty of care and diligence is essentially the same as the duty of care and diligence of a director or officer at general law. Since business judgment considerations are an integral part of the general law duty, it follows ... that those considerations are to be taken into account in applying the statutory standard of care and diligence. But it does not follow that the statutory defence in s 180(2) is therefore redundant. The business judgment considerations that figure in the articulation and application of the statutory standard of care and diligence are open-ended, whereas s 180(2) is a specific statutory rule having defined components and a defined outcome. It is at least theoretically possible that s 180(2) might protect defendants from liability for acts or omissions that would otherwise constitute a contravention of s 180(1) notwithstanding business judgment considerations at that level. Additionally, on a practical level s 180(2) articulates criteria that can be a reference point for directors and officers and their advisers, and can offer a direct solution to the issue of breach of duty in a straightforward case.

(Emphasis added.)

617 The reference in s 180(1)(a) to the "corporation's circumstances" requires the court to consider the type of company involved, the size and nature of its business or businesses, the provisions of its constitution, the composition of its board and the distribution of the work between the board and other officers.[405]

618 Where relevant, it is necessary to have regard to the company's status as a listed or unlisted entity.[406] Where the context involves the sale of shares, it is necessary to consider the circumstances of the transactions as a whole, with an eye to reality.[407]

619 The "responsibilities" referred to in s 180(1)(b) include the factual arrangements operating within the company and affecting the director in question and arrangements flowing from the experience and skills that the director brought to her or his office, and also any arrangements within the board or between the director and executive management affecting the work that the director would be expected to carry out.[408] As such, it is not the case that "responsibilities" refer only to specific tasks delegated to the relevant director.[409]

620 Under s 180(2), a director who makes a business judgment is taken to meet the requirements of the care and diligence duty if she or he (1) makes the judgment in good faith for a proper purpose, (2) does not have a material personal interest in the subject matter of the judgment, (3) informs her or himself about the subject matter of the judgment to the extent she or he reasonably believes to be appropriate, and (4) rationally believes that the judgment is in the best interest of the corporation.[410] Section 180(2) further provides that the director's belief is rational unless the belief is such that no reasonable person in her or his position would hold it.

621 There must be a contravention of s 180(1) for consideration of the business judgment rule to have any application.[411] Conduct that falls short of breaching s 180(1) will not require consideration of the business judgment rule, because it will not meet the threshold enlivening the rule.[412]

622 For the business judgment rule to apply, the facts must show that the director has made an identifiable business judgment.[413] Business judgment is defined to mean any decision to take or not take action in respect of a matter relevant to the business operations of the corporation.[414] Business judgments include matters that are preparatory to the making of a business decision, including planning, budgeting and forecasting activities.[415]

623 In relation to the requirement that a business judgment be made in good faith for a proper purpose, this requirement can be met where a decision is made to refrain from doing something.[416]

624 In relation to the director informing her or himself to the extent she or he reasonably believes to be appropriate, the reasonableness of the belief should be assessed by reference to:[417]

(1) The importance of the business judgment to be made.

(2) The time available for obtaining information.

(3) The costs related to obtaining information.

(4) The director or officer's confidence in those exploring the matter.

(5) The state of the company's business at that time and the nature of competing demands on the board's attention.

(6) Whether or not material information is reasonably available to the director.

625 The requirement that the director inform her or himself of the subject matter of the judgment to the extent she or he reasonably believes to be appropriate does not encompass an objective requirement that the director demonstrate that she or he was reasonably informed. It may be that the director was not aware of available information, but nonetheless took active steps to become informed about the subject matter of the decision and reasonably believed her or himself to be informed.[418]

626 In relation to the requirement of a rational belief that the business judgment is in the best interests of the corporation, the director's belief will be rational if it was based on reason or reasoning (whether or not the reasoning was convincing and therefore "reasonable" in an objective sense), but it would not be a rational belief if there was no arguable reasoning process to support it.[419]

G.1.2 Section 181(1)(a) - good faith and best interests

627 The board, and not the shareholders, determine what is in the best interests of the company. As stated in ANZ Executors & Trustee Company Ltd v Quintex Australia Ltd (receivers and managers appointed):[420]

[A] shareholder's freedom to exercise [her or his] vote as [she or he] pleases does not mean that in law [she or he] can accomplish everything that takes [her or his] fancy. The right to vote is, it is true, a species of property that can be exercised at will, and it may confer control over the affairs and property of the company; but it does not follow that the holder may always do whatever [she or he] pleases with the corporate assets. For they are the property of the company and not of the shareholder, who has no legal or equitable interest in them.

(Emphasis added.)

628 As Byrne J observed in Glover v Willert,[421] the board manages the company. The directors are not obliged to act on the direction of all shareholders in general meeting.

629 In relation to determining the best interests of a company, the High Court has held that "[d]irectors in whom are vested the right and the duty of deciding where the company's interests lie and how they are to be served may be concerned with a wide range of practical considerations, and their judgment, if exercised in good faith and not for irrelevant purposes, is not open to review in the courts".[422]

630 There is conflicting authority concerning the meaning of "in good faith" in s 181(1)(a).

631 There is a view that the requirement that there be an "absence of good faith" involves "much more than negligence".[423] On this view, s 181(1)(a) "is contravened only where a director engaged deliberately in conduct, knowing that it was not in the interests of the company".[424] This approach involves a subjective standard.

632 An alternative view is that the test is objective. On this view, breach of s 181(1) requires consciousness that what was being done was not in the best intrests of the company, but "consciousness in this sense means knowledge of the facts that make the conduct not in the best interests of the company; it is not necessary to establish knowledge that the conduct constituted a breach of the law or was improper".[425]

633 These divergent views were considered in ASIC v Macdonald (No 11).[426] The objective test was rejected in favour of requiring subjective dishonesty.[427]

634 In this jurisdiction, the issue was considered in Mernda Developments Pty Ltd (in liq) v Alamanda Property Investments No 2 Pty Ltd (in liq).[428] In an uncontested appeal,[429] the Court of Appeal stated that, although there had been some debate in the past, it was generally accepted that the objective test ought to be applied.[430]

635 Following this decision of the Court of Appeal, the objective test was applied to the issue of whether directors were acting in good faith in at least 3 decisions of the trial division.[431]

636 However, in the more recent decision of ASIC v Flugge,[432] Robson J, after carefully considering the authorities, and acknowledging he was bound by the Court of Appeal's decision,[433] applied both an objective and a subjective test to s 181(1)(a) "as held apposite by Owen J in Bell Group v Westpac and approved by the Court of Appeal in Mernda v Alamanda".[434] It may be his Honour intended to refer to both paragraphs (a) and (b) of s 181(1) when making this observation.[435]

637 Relevantly, Owen J held that the test of "whether directors are acting bona fide in the interests of the company as a whole is largely (though by no means entirely) subjective".[436] His Honour continued:[437]

The court can look objectively at the surrounding circumstances and at the impugned transaction or exercise a power. But it does so not for the purpose of deciding whether or not there was commercial justification for the decision. Rather, the objective inquiry is done to assist the court in deciding whether to accept or discount the assertions that the directors make about their subjective intentions and beliefs.

638 On appeal, Robson J's decision was upheld.[438] Further, the Court of Appeal stated that Robson J dealt comprehensively and accurately with the legal principles governing s 181.[439] However, like Mernda Developments Pty Ltd (in liq) v Alamanda Property Investments No 2 Pty Ltd (in liq),[440] the Court of Appeal did not have the benefit of competing submissions on this issue.[441]

639 In circumstances where this court also had no competing submissions on the proper construction of s 181(1)(a) or (b),[442] and on either approach to the proper construction of the provision no liability has been found,[443] it is unnecessary to distil the state of the authorities on this section beyond what has already been stated.

G.1.3 Section 181(1)(b) - proper purpose

640 Directors must exercise their powers for the purpose for which they were conferred, and not for any collateral or improper purpose.[444] Assessment of the particular conduct, therefore, involves 2 steps. First, the court must consider the nature of the power in question_. Secondly_, the court must examine the substantial purpose for which the power was exercised. Only then can it determine whether the purpose for which the power was exercised was a proper purpose or not.[445]

641 The objective commercial justification of a director's conduct is not determinative of purpose. It is only relevant to assessing the credibility of assertions made by the director as to her or his motivation.[446] Honest or altruistic behaviour by a director will not prevent a finding of improper conduct on their part if that conduct was carried out for an improper or collateral purpose.[447]

642 There may be more than 1 purpose underlying the exercise of the director's powers, including how such exercise will impact upon their own interests. Accordingly, it is necessary to identify the substantial object which could be said to form the real ground for the director's action.[448] The issue is not whether a decision was good or bad; it is whether the director acted in breach of the duty.[449]

643 The court must determine whether, but for the improper or collateral purpose, the directors would have performed the act impugned.[450]

G.1.4 Section 182 - not to gain an advantage or to cause a detriment

644 Section 182 requires a director not to have a proscribed purpose: to gain an advantage or to cause a detriment.[451] It is not necessary that an advantage has in fact been gained by the director or other person or that detriment has in fact been caused to the corporation.[452] Further, in ascertaining whether a director had 1 or other of the proscribed purposes in mind when she or he made use of her or his position, it is relevant to consider the particular duties and responsibilities of the director and her or his appreciation of the circumstances at the relevant time.[453]

645 The test is whether the conduct would breach the standards of conduct that would be expected of a person in the director's position by a reasonable person with knowledge of the duties, powers and authority of her or his position as director, and of the circumstances of the case, including the commercial context.[454] A director's appreciation of the relevant circumstances might be relevant to analysis of the propriety of the use the director made of her or his position in acting as she or he did.[455]

646 In this court, it has been held that impropriety requires "behaviour [that] breached the norm of conduct thought necessary for the proper conduct of commercial life so that people will have confidence that the running of the marketplace is in safe hands".[456]

G.1.5 Section 183 - no improper use of information

647 The elements for contravention of s 183 "in chronological order" are as follows:[457]

(1) The person was, at the relevant time, a director, officer or employee of the corporation.

(3) She or he acquired that information by virtue of the position as a director, officer or employee of the corporation.

(4) She or he made improper use of that information in order to gain directly or indirectly an advantage.

(5) Such advantage was either for her or himself or for some other person.

(6) Alternatively to (4) and (5), that she or he made that improper use to cause detriment to the company.

648 Section 183 involves the misuse of information, rather than a director's position, and requires the same proscribed purpose and the same impropriety as s 182.[458]

649 Although breach of confidence may fall within the reach of s 183,[459] the issue is not whether the information is confidential, but how it was acquired. The question is whether the information was acquired by virtue of being a director, officer or employee.[460]

G.1.6 Sections 728 to 733 - fundraising

650 Sections 728 to 733 of the Corporations Act create prohibitions, remedies and defences concerning misleading statements and omissions in public disclosure documents, including prospectuses.[461]

651 Section 728 prohibits a person from offering securities under a disclosure document if there is a misleading statement or an omission of relevant material in the disclosure document, or if a new circumstance has arisen since the disclosure document was lodged that would have been required to be included in the disclosure document had the circumstance arisen before lodgement. A statement about a future matter is taken to be misleading if the person making it does so without reasonable grounds.[462]

652 Section 729 provides a regime for determining who is liable to compensate a person wronged by a contravention of s 728.

653 The combined effect of ss 728 and 729 is that, subject to certain defences, both the company and its directors are responsible for loss stemming from any misleading statement or relevant omission in a prospectus, or any new circumstance that is not (but should be) disclosed in the prospectus.

654 Section 731(1) excuses a person from liability under s 728(3) and s 729 if that person proves that she or he: "(a) made all inquiries (if any) that were reasonable in the circumstances; and (b) after doing so, believed on reasonable grounds that the statement was not misleading or deceptive." Section 731(2) provides a similar defence in relation to omissions. This is known as the "due diligence" defence.

655 Section 732 creates a second defence. Section 732(1) provides that a person is not liable under s 729 or under s 728(1), and does not commit an offence against s 728(3), if the person proves that she or he did not know that a misleading or deceptive statement was misleading or deceptive. Section 732(2) provides for a similar defence in relation to lack of knowledge of omissions.

656 Section 733(1) provides a further defence. A person is not liable under ss 728(3) or 729 if "the person proves they placed reasonable reliance on information given to them by: (a) if the person is a body - someone other than a director, employee or agent of the body; or (b) if the person is an individual - someone other than an employee or agent of the individual". Section 733(2) provides that a person is not an agent of the body or individual merely because the person performs professional or advisory functions for the body or individual.

G.1.7 Sections 1317S and 1318 - relief

657 Section 1317S provides that a court may relieve a person from liability under a civil penalty provision[463] where it appears to the court that the person acted honestly and "having regard to all the circumstances of the case ... the person ought fairly to be excused for the contravention".