Overview of the PSASOC
22 Before addressing the specific challenges, I provide an overview of the PSASOC. Part A contains a note as to terminology. Part B concerns the parties to the proceeding. This Part includes a description of the group members, Hastie and the Deloitte parties. Part C deals with financial reporting and sets out allegations concerning: Hastie's financial reporting obligations; the engagement of DTT as Hastie's auditor; relevant auditing standards; the engagement of DTT to prepare an investigating accountants' report for the Pathfinder and the Prospectus; and the engagement of DCF to prepare a report on directors' forecasts for the Pathfinder and the Prospectus.
23 Part D concerns Hastie's full year results for FY2010. First, in [25], certain statements contained in Hastie's financial statements for FY2010 are set out. These are described as "Hastie's August 2010 Representations". Next, in [26], allegations are made concerning Hastie's actual position by 30 June 2010, alternatively by no later than 25 August 2010 (being the date on which the financial statements were released). This is a lengthy paragraph, setting out a number of facts and matters contrary to the position set out in the financial statements. For example, 26.1 contains the allegation that Hastie's new businesses, including the Rotary division and the Middle East businesses, "were generating earnings materially lower than had been anticipated by Hastie at the time the businesses were acquired". By way of further example, [26.2] contains the allegation that Hastie's revenue and EBIT recorded in its FY2010 financial statements: materially overstated the economic benefits that were probable to flow to Hastie; materially overstated the amounts that were recoverable in respect of Hastie's construction contracts; and had not expensed amounts earlier recognised in Hastie's revenue that had become "uncollectable or improbable". The facts and matters referred to in [26] are defined, together and severally, as the "August 2010 Information". In simple terms, as senior counsel for the Deloitte parties put it in the course of submissions before me, this label describes the alleged deficiencies in the FY2010 financial statements.
24 Paragraph [27] contains allegations that the August 2010 Information: was material to the accuracy of the representation of Hastie's financial position and financial performance conveyed by its FY2010 financial statements; was information that ought reasonably to have been detected and reported by a professional company auditor exercising due skill and care to conduct the audit of Hastie's FY2010 financial statements in accordance with DTT's statutory audit obligations; and was not disclosed in Hastie's FY2010 financial statements.
25 In [28] of the PSASOC, it is alleged that Hastie's FY2010 financial report included DTT's audit report in respect of Hastie's FY2010 financial statements. Paragraph [29] of the PSASOC sets out the representations alleged to have been made by DTT by way of the audit report:
29. By the DTT FY2010 Audit Report, DTT:
29.1 stated that in its opinion, Hastie's FY2010 Financial Report:
(a) was released in accordance with the Corporations Act;
(b) gave a true and fair view of the financial position of Hastie as at 30 June 2010 and of the financial performance of Hastie for FY2010;
(c) complied with the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations; and
(d) complied with International Financial Reporting Standards (as disclosed in Note 1 of the FY2010 Financial Report);
29.2 further stated that:
(a) DTT had conducted its audit in accordance with the Auditing Standards;
(b) DTT had obtained sufficient and appropriate audit evidence to provide a basis for its audit opinion; and
29.3 represented to the market that DTT:
(a) had exercised the skill and care to be expected of a competent professional company auditor in the conduct of its audit of Hastie's FY2010 Financial Statements,;
(b) as a result of that exercise of skill and care, had reasonable grounds for each opinion and statement referred to in paragraphs 29.1 and 29.2 above.
(together, the DTT FY2010 Audit Representations).
Particulars
The statements in paragraphs 29.1 and 29.2 were stated expressly in the DTT FY2010 Audit Report.
The representation in paragraph 29.3 was implied by the conduct of DTT in and the issuing of the DTT FY2010 Audit Report.
26 Paragraph [30] of the PSASOC contains allegations to the effect that these representations were: made in trade or commerce; made in relation to a financial product within the meaning of certain provisions and, in the premises, made in relation to financial services within the meaning of certain provisions; representations that the audit service was of a particular standard or quality; statements or information likely to induce persons to apply for, dispose or acquire Hastie's securities; and information that a reasonable person would expect to have a material effect on the price or value of Hastie securities. The allegations in that paragraph evidently seek to establish elements of the contravention provisions relied upon later in the proposed pleading. Then, at [31], the PSASOC sets out particular alleged shortcomings in the conduct of the FY2010 audit. For example, in [31.1] it is alleged that, in planning, performing and reporting the audit, DTT:
did not or not adequately obtain an understanding of Hastie's internal controls sufficient to identify and assess the risks of material misstatement, including:
(a) an evaluation of Hastie's management and management oversight over its businesses, in particular the New Businesses; and
(b) Hastie's processes for identifying business risks, estimating the significance of its risks, assessing the likelihood of the risks occurring and deciding about the actions to be taken to address those risks.
27 By way of further example, in [31.2] it is alleged that in planning, performing and reporting the audit, DTT:
did not or not adequately identify the significance of the risks associated with the August 2010 Information, including the impact of the economic climate on the Rotary division and the Middle East businesses, which required specific attention;
28 The list of alleged shortcomings of the audit continues through to [31.13]. It is fair to say that the allegations are pitched at a high level of generality and, in combination, amount to an attack on the whole conduct of the audit. Paragraph [32] contains allegations to the effect that, in the premises of the earlier paragraphs, DTT: had not conducted the audit in accordance with the Auditing Standards; had not obtained sufficient and appropriate audit evidence to provide a basis for its audit opinion in respect of Hastie's FY2010 financial statements; had not exercised the skill and care to be expected of a competent professional company auditor in the conduct of the audit; and did not have reasonable grounds for the audit opinion or the representations in [29.3]. These matters are defined as the "DTT FY2010 Audit Breaches".
29 Paragraph [33] contains an allegation to the effect that, in the premises, DTT disseminated information that was "false in a material particular or materially misleading". Paragraph [34] contains an allegation that DTT ought reasonably to have known: the August 2010 Information; the DTT FY2010 Audit Breaches; and the matters referred to in [33]. These paragraphs evidently seek to establish elements of the contravention provisions relied upon.
30 The part of the PSASOC dealing with the FY2010 audit culminates in paragraphs [35]-[37], which set out the specific contraventions of the Corporations Act, the ASIC Act and the ACLV alleged against DTT in relation to that audit. In summary, it is alleged that DTT contravened the following provisions (which, in very general terms, concern false or misleading statements, and misleading or deceptive conduct):
(a) s 1041E of the Corporations Act;
(b) s 12DB of the ASIC Act or s 29 of the ACLV; and
(c) s 12DA of the ASIC Act, s 1041H of the Corporations Act or s 18 of the ACLV.
31 As noted earlier, it is not alleged that Sadie Ville or other Claimants purchased shares in Hastie in the period immediately following 25 August 2010, when the FY2010 financial statements (including the audit report) were released. Rather, the claim is based on share purchases that took place some time later, in the period between 14 June 2011 and 21 February 2012. By 17 June 2011, there had been further disclosures as to Hastie's financial position, notably in the 1H2011 results (on 11 April 2011), the review report in relation to those results, and in the Prospectus. I note, for example, that in DTT's review report for the 1H2011 results, there was an 'emphasis of matter' dealing with a material uncertainty regarding the continuation of Hastie as a going concern. This statement was reproduced quite prominently on page 2 of the investigating accountants' report in the Prospectus. In these circumstances, there is a question as to significance of the alleged FY2010 audit representations in the Relevant Period.
32 Part E of the PSASOC deals with Hastie's financial results for 1H2011, in respect of which DTT prepared a review report. The structure of this Part of the proposed pleading is similar to that of Part D. First, the results and representations by Hastie are set out. Next, allegations are made concerning Hastie's actual position by 31 December 2010, alternatively by 11 April 2011 (when the 1H2011 results were released). These facts and matters are defined, together and severally, as the "April 2011 Information". Again, in simple terms, this label describes the alleged deficiencies in the 1H2011 results. Paragraph [45] contains alleged representations by DTT, which are defined at the end of the paragraph as the "DTT 1H2011 Review Representations". This paragraph includes, in [45.2], the allegation that, by the review report, DTT:
further stated that:
(a) DTT drew attention to the net loss of $94.1m incurred by Hastie in 1H2011 and experienced a net decrease in cash of more than $5m during 1H2011 and to the matters at paragraph 40.6 above; and
(b) DTT concluded that the matters in sub-paragraph (a) indicated the existence of a material uncertainty which may cast significant doubt about Hastie's ability to continue as a going concern - but this uncertainty was not sufficient for DTT to qualify its conclusion in respect of Hastie's 1H2011 Financial Report;
33 Paragraph [47] sets out the alleged shortcomings in relation to DTT's review of Hastie's 1H2011 results. Following a similar pattern to Part D, Part E culminates with alleged contraventions of specific provisions of the legislation in relation to DTT's review of the 1H2011 results. In summary, it is alleged that DTT contravened the following provisions:
(a) s 1041E of the Corporations Act;
(b) s 12DB of the ASIC Act or s 29 of the ACLV; and
(c) s 12DA of the ASIC Act, s 1041H of the Corporations Act or s 18 of the ACLV.
34 Part F of the PSASOC concerns the June 2011 capital raising. This includes, at [56], the allegation that on or about 14 June 2011, Hastie announced a $160 million equity raising (defined as the "Equity Raising"). It is alleged at [57] that, on or about 14 June 2011, Hastie securities were placed in a trading halt. At [58], it is alleged that on or about 14 June 2011, DTT provided to Hastie a draft investing accountants' report and DCF provided to Hastie a draft report on directors' forecasts. It is alleged at [59] that DTT and DCF intended these draft reports to be included in the Pathfinder. At [60], it is alleged that on or about 14 June 2011, Hastie lodged the Pathfinder with the ASX and distributed it to prospective investors, and that the Pathfinder included the draft reports prepared by DTT and DCF. Next, the PSASOC deals with the Prospectus. It is alleged at [61] that, on or about 17 June 2011, DTT and DCF provided to Hastie final versions of their respective reports. At [62], it is alleged that DTT and DCF intended the reports to be included in the Prospectus. At [63], it is alleged that, on or about 17 June 2011, Hastie lodged the Prospectus with the ASX and distributed it to prospective investors. It is alleged at [64] that, on or about 17 June 2011, Hastie announced that it had completed: the institutional placement, raising approximately $42.8 million; and the institutional component of the retail placement, raising approximately $40.8 million. It is alleged that Hastie's securities resumed trading on the ASX on 17 June 2011 and that, on or about 12 July 2011, Hastie announced that it had completed the retail placement, raising approximately $18 million (at [65]-[66]).
35 It is convenient to note at this point that Sadie Ville did not purchase shares in Hastie in the period between release of the Pathfinder (on 14 June 2011) and publication of the Prospectus (on 17 June 2011): see Annexure A to the PSASOC. Further, Sadie Ville did not purchase any shares in the days immediately following publication of the Prospectus. To the contrary, as indicated in Annexure A to the PSASOC, Sadie Ville's first transaction after 17 June 2011 was to sell 58,000 shares on 28 June 2011. Subsequently, on 19 July 2011, it purchased 228,000 Hastie shares. It may also be noted, based on the share prices set out in Annexure A, that the Hastie share price appears to have fallen dramatically by the commencement of the Relevant Period. While the share price was $1.53 (and $1.55) as at 26 October 2010, it was only $0.13 as at 28 June 2011, being the first date within the Relevant Period appearing in Annexure A.
36 Part G of the PSASOC is headed "Prospectus Representations" but in fact contains allegations concerning both the Pathfinder and the Prospectus. In circumstances where the Pathfinder is expressed to be a draft, Sadie Ville did not purchase any Hastie shares in the period between the Pathfinder and the Prospectus, and the Prospectus was published three days after the Pathfinder, there is a question as to the significance of the Pathfinder allegations in Sadie Ville's case. In [67], it is alleged that Hastie made certain representations by the Pathfinder and the Prospectus. In [68], it is alleged that by the draft investigating accountants' report in the Pathfinder and the investigating accountants' report in the Prospectus, DTT made certain representations:
68. By the DTT Pathfinder Report and the DTT Prospectus Report, DTT:
68.1 stated that:
(a) it had conducted the DTT Prospectus Retainer in accordance with ASRE 2405;
(b) in DTT's opinion, nothing had come to its attention which caused it to believe that the:
1. Historical Information was not presented fairly in accordance with the basis for preparation as disclosed in section 5.2 of the Pathfinder and Prospectus; or
2. the Pro Forma Information was not presented fairly;
(c) in relation to Hastie's FY2010 Financial Report:
1. DTT had conducted an audit of Hastie's FY2010 Financial Report;
2. in the conduct of the audit DTT had complied with Australian Auditing Standards;
3. the audit was unqualified;
(d) in relation to Hastie's 1H2011 Financial Report:
1. DTT had conducted a review of Hastie's 1H2011 Financial Report;
2. the review had complied with the applicable Auditing Standards;
3. during the review nothing came to DTT's attention to indicate that the 1H2011 Financial Report was not free from material misstatement;
68.2 by the conduct in paragraph 68.1(c) above, repeated and affirmed the DTT FY2010 Audit Representations;
68.3 by the conduct in paragraph 68.1(d) above, repeated and affirmed the DTT 1H2011 Review Representations;
68.4 represented to the Market that in relation to its review the subject of the DTT Pathfinder Report and DTT Prospectus Report:
(a) DTT had complied with ASRE 2405;
(b) DTT had exercised the skill and care to be expected of a competent accountant in the conduct of a review of the Financial Information; and
(c) as a result of that exercise of skill and care, had reasonable grounds for each opinion, statement and affirmation referred to in paragraphs 68.1, 68.2 and 68.3 above;
(together, the DTT Prospectus Representations).
Particulars
DTT's representations were partly written and partly implied.
To the extent that the representations were written, they were contained in DTT's Pathfinder Report and DTT's Prospectus Report.
To the extent that the representations were implied, they were implied by DTT's conduct in relation to ostensibly complying with the terms of DTT's Prospectus Retainer and DTT issuing its report without qualification.
37 Paragraph [70] contains alleged representations by DCF in connection with the draft report on directors' forecasts in the Pathfinder and the report on directors' forecasts in the Prospectus. These are defined as the "DCF Prospectus Representations".
38 Part H is headed "Prospectus Contraventions", but through the operation of the earlier definitions picks up representations pertaining to the Pathfinder as well as the Prospectus. Paragraph [72] contains allegations concerning Hastie's actual position as at 14 June 2011 and in the period after that date. It alleges that, by reason of certain inadequacies in Hastie's financial reporting in the lead up to this period, there was uncertainty as to Hastie's true financial position. These matters are defined, together and severally, as the "June 2011 Information". Paragraph [74] alleges that, in the premises, representations made by Hastie in the Pathfinder and Prospectus were misleading or deceptive, and Hastie contravened s 728 of the Corporations Act (which, in general terms, proscribes the offering of securities under a disclosure document if it contains a misleading or deceptive statement).
39 Paragraph [76] sets out alleged shortcomings in DTT's performance of its retainer in connection with the Pathfinder and the Prospectus. These are defined, together and severally, as the "DTT Prospectus Review Breaches". In [77], it is alleged that, in the premises of matters there set out, the DTT Prospectus Representations were misleading or deceptive within the meaning of s 728(1) of the Corporations Act. At [78], it is alleged that, pursuant to s 729(1) of the Corporations Act, the Claimants may recover from DTT the amount of the loss or damage suffered by the Claimants by the inclusion of the DTT Prospectus Representations in the Pathfinder or the Prospectus (defined as the "DTT s.728 Contraventions"). There is a question as to the appropriateness of the label "DTT s.728 Contraventions" as it does not appear to be alleged that DTT itself contravened s 728 (which, as noted above, proscribes the offering of securities under a disclosure document if there is a misleading or deceptive statement in the document). Rather, it appears that Sadie Ville relies on s 729(1) as providing a right to compensation from DTT in circumstances where it was a person named in the disclosure document with its consent as having made a statement: that is included in the disclosure document; or on which a statement made in the disclosure document is based.
40 Paragraph [80] contains an allegation to the effect that the DTT Prospectus Representations were false in a material particular or materially misleading. Paragraph [81] alleges that those representations were information likely to: induce persons to apply for or acquire Hastie securities; or have the effect of increasing, reducing, maintaining or stabilising the price for trading in Hastie securities on the ASX, within the meaning of s 1041E of the Corporations Act. Paragraph [82] alleges that DTT ought reasonably to have known: the June 2011 Information; the DTT Prospectus Review Breaches; and the matters set out in [77]. Specific alleged contraventions in connection with DTT's reports in the Pathfinder and the Prospectus are then set out in [83], [83A] and [84]. It is alleged that DTT contravened the following provisions:
(a) s 1041E of the Corporations Act ([83]);
(b) in connection with the Pathfinder - s 12DA of the ASIC Act, s 1041H of the Corporations Act or s 18 of the ACLV ([83A]); and
(c) s 12DB of the ASIC Act or s 29 of the ACLV ([84]).
The contraventions alleged in [83] and [83A] are defined, together and severally, as the "DTT Prospectus Misleading Conduct". As presently drafted, the definition does not pick up the contraventions alleged in [84].
41 Paragraph [85] sets out alleged shortcomings in DCF's performance of its retainer in connection with the Pathfinder and Prospectus. These are defined, together and severally, as the "DCF Prospectus Review Breaches". Paragraph [86] contains the allegation that, in the premises of matters there set out, the DCF Prospectus Representations were misleading or deceptive within the meaning of s 728(1) of the Corporations Act. Then, at [87], it is alleged that, pursuant to s 729(1) of the Corporations Act, the Claimants may recover from DCF the amount of the loss or damage suffered by the Claimants that was caused by the inclusion of the DCF Prospectus Representations in the Pathfinder or the Prospectus (defined as the "DCF s.728 Contraventions"). I refer to and repeat the observations I made in [39] above regarding the comparable allegations concerning DTT.
42 It is then alleged, in [89], that the DCF Prospectus Representations were false in a material particular or materially misleading. After making further allegations, comparable to those referred to above in connection with DTT, specific allegations are made in [92], [92A] and [93] against DCF in connection with its reports in the Pathfinder and the Prospectus. It is alleged that DCF contravened the following provisions:
(a) s 1041E of the Corporations Act ([92]);
(b) in connection with the Pathfinder - s 12DA of the ASIC Act, s 1041H of the Corporations Act or s 18 of the ACLV ([92A]); and
(c) s 12DB of the ASIC Act or s 29 of the ACLV ([93]).
The contraventions alleged in [92] and [92A] are defined, together and severally, as the "DCF Prospectus Misleading Conduct".
43 The next section of the PSASOC, comprising [94]-[97], is headed "Prospectus Contraventions - Causation". Paragraph [94] (omitting the particulars, and without reproducing the mark-up against the amended statement of claim) is in the following terms:
94. The:
94.1 DTT FY2010 Audit Representations;
94.2 DTT 1H2011 Review Representations;
94.3 DTT s.728 Contraventions;
94.4 [deleted]
94.5 DTT Prospectus Misleading Conduct;
94.6 DCF s.728 Contraventions; further or alternatively
94.7 [deleted]
94.8 DCF Prospectus Misleading Conduct;
(together and severally, Deloitte's Contraventions) were a cause of:
(a) Lazard agreeing to act or continue as cornerstone investor;
(b) Hastie's Lenders continuing the Standstill Agreement;
(c) Hastie and its Lenders calculating the amount required to be raised in the Equity Raising;
(d) the Equity Raising being instituted in the terms it was instituted, or at all;
(e) Hastie Securities being offered under the Equity Raising upon the terms at which they were offered (Offer Prices);
(f) the Equity Raising being successfully completed, so as to enable Hastie to meet the requirements of its Lenders (including the Lender Requirement);
(g) Hastie being able to continue to trade;
(h) Hastie Securities being restored to trading on the ASX on or about 17 June 2011 or at all.
44 It is convenient to make some observations about [94] of the PSASOC at this stage. First, although the six matters identified in [94.1] to [94.8] are defined as the "Deloitte's Contraventions", the first two matters are not alleged contraventions but rather alleged representations. Secondly, as noted above, the labels "DTT s.728 Contraventions" and "DCF s.728 Contraventions" appear to be inapposite as it is not alleged that DTT or DCF contravened s 728. Thirdly, the six matters identified in [94.1] to [94.8] are defined "together and severally" as the "Deloitte's Contraventions", indicating that each of them is relied on individually as being a cause of each of the matters set out in (a) to (h). Fourthly, there appears to be a logical impossibility in some of the alleged contraventions causing some of the alleged consequences, as the consequences took place earlier in time. For example, the alleged contraventions in relation to the Pathfinder and the Prospectus are said to have been made on or about 14 June 2011 and 17 June 2011 respectively. Yet they are alleged to have been a cause of "Lazard agreeing to act … as cornerstone investor", which took place on or about 20 May 2011 (see PSASOC, [54]), and Hastie and its lenders "calculating the amount required to be raised in the Equity Raising", which presumably took place before 14 June 2011.
45 The PSASOC continues, at [95]-[97], as follows (again, omitting particulars, and without reproducing the mark-up):
95. But for:
95.1 the Deloitte's Contraventions;
95.2 [deleted]
95.3 [deleted]
it was probable that:
(a) Lazard would not have agreed to act or continue as cornerstone investor;
(b) Hastie's Lenders would not have agreed to continue the Standstill Agreement;
(c) the Equity Raising in the terms it was instituted would not have been sufficient to enable Hastie to meet its Lenders' requirements;
(d) the Equity Raising:
1. would not have been instituted at all; alternatively
2. would not have been successfully completed upon the terms it was completed or upon any terms likely to satisfy Hastie's Lenders' requirements;
(e) Hastie or its Lenders would have caused Hastie to enter receivership or external administration;
(f) Hastie Securities would have been:
1. priced for the purposes of the Equity Raising; further or alternatively
2. valued by potential investors in Hastie Securities;
at nil or negligible value, alternatively a value materially less than the Offer Prices;
(g) Hastie Securities would not have been restored to trading on the ASX on or about 17 June 2011 or at all; and
(h) the Claimants would not have acquired Hastie Securities pursuant to:
1. the Pathfinder; further or alternatively
2. the Prospectus;
or at all.
96. Some or all of the Claimants acquired interests in Hastie Securities:
96.1 under or pursuant to:
(a) the Pathfinder; further or alternatively
(b) the Prospectus; and
96.2 where, in the premises in paragraph 95, but for the contraventions referred to therein:
(a) the Equity Raising would not have been undertaken;
(b) the Securities would not have been available for acquisition; alternatively
(c) the Securities would not have been available for acquisition at the Offer Prices.
96A. Further or alternatively, some or all of the Claimants acquired interests in Hastie Securities under the Prospectus as a result of:
96A.1 holding and acting upon the assumption, being an assumption generally made in the Market for Hastie Securities and on which they were entitled to act, that absent very prominent warnings in the Pathfinder or the Prospectus (as the case may be) that the financial information therein had not been prepared in accordance with applicable accounting standards and not been tested for the purpose of the Limited Assurance Opinion and the Negative Assurance Opinion in accordance with the application standards, the financial information did so comply and had been so tested; further or alternatively
96A.2 in reliance upon the DTT Prospectus Representations and/or the DCF Prospectus Representations.
97. By reason of the matters set out in:
97.1 paragraphs 95 or 96; alternatively
97.2 paragraph 96A.1, alternatively 96A.2,
the Applicant and some or all of the Group Members suffered loss or damage.
46 Part I of the PSASOC is headed "Post-Prospectus Conduct". Paragraph [99] contains an allegation that at all material times from 17 June 2011 until not earlier than 29 August 2011 (which is when the FY2011 financial statements were released), the DTT FY2010 Audit Representations, the DTT 1H2011 Review Representations, the DTT Prospectus Representations, further or alternatively the DCF Prospectus Representations were continuing. Each of these matters is defined, together and severally, as the "June Secondary Market Representations". Next, at [100], it is alleged that, on 29 August 2011, Hastie made certain representations in connection with its FY2011 financial statements. At [101], it is alleged that Hastie's FY2011 financial report included DTT's audit report, defined as the "DTT FY2011 Audit Report". A number of representations are alleged, at [102], to have been made by that report. These are defined as the "DTT FY2011 Audit Representations". Paragraph [104] contains allegations about Hastie's actual position by 30 June 2011, alternatively by no later than 29 August 2011, and deficiencies in Hastie's financial reporting up to this point in time. Following the format of the earlier sections, these matters are defined, together and severally, as the "August 2011 Information". It is then alleged, at [106], that there were a number of shortcomings in DTT's audit of the financial statements. At [107], various matters are alleged, which are then defined, together and severally, as the "DTT FY2011 Audit Breaches". Specific contraventions are pleaded in connection with DTT's audit of the FY2011 financial statements at [110]-[112], namely that DTT contravened the following provisions:
(a) s 1041E of the Corporations Act;
(b) s 12DB of the ASIC Act or s 29 of the ACLV;
(c) s 12DA of the ASIC Act, s 1041H of the Corporations Act or s 18 of the ACLV.
47 It is then pleaded at [113] that, in the alternative to the matters set out in Part H:
at all material times from not later than 17 June 2011 (Trading Period) the price at which Hastie Securities traded on the ASX (traded price) was, or was likely to be, affected by information disclosed to the Market concerning Hastie's financial performance or position.
48 Paragraph [114] (omitting particulars and without mark-up) is in the following terms:
114. The:
114.1 [deleted]
114.2 [deleted]
114.3 June Secondary Market Representations; further or alternatively
114.4 the DTT FY2011 Audit Representations;
were, together and in any combination, a cause of:
(a) Hastie Securities being permitted by its Board, its Lenders, the Australian Securities and Investments Commission (ASIC) or the ASX to continue to trade on the ASX;
(b) Hastie being permitted by its Board or Lenders to continue to trade other than under receivership or in external administration; further or alternatively
(c) the traded prices for Hastie Securities during the period from the making of the said Representations being materially higher (inflated) than the prices would have been if the truth of the said Representations had been disclosed to the market.
49 Paragraph [115] contains an allegation that some of the Claimants, defined (as noted above) as "Market Claimants", acquired Hastie securities via trading on the ASX in the Trading Period (which appears, by virtue of the corrections letter dated 31 August 2017, to refer to the period from 17 June 2011) and, in the premises, in a market inflated by the said Representations. Paragraph [116] contains an allegation that the Market Claimants acquired their interests in Hastie securities as a result of holding and acting upon an assumption to the effect that the price at which they acquired the interest represented the market price in a market in which Hastie's auditors "had not made any statements or representations that were likely to influence persons who commonly invest in securities in deciding whether to acquire or dispose of Hastie Securities, but that were misleading or deceptive". Paragraph [117] contains the allegation that Sadie Ville retained, and some or all of the group members retained or acquired, Hastie securities during the Trading Period in reliance upon one or more of the said Representations. (I take this to be a reference to the June Secondary Market Representations and the DTT FY2011 Audit Representations, referred to in [114] of the PSASOC.) In the particulars under [117] it is said that Mr John Golden of Sadie Ville read and relied upon the Prospectus and ASX statements released by Hastie. In particular, it is said that he read and relied upon the DTT and DCF reports in the Prospectus. It is then said that, in reliance on these matters, Sadie Ville acquired Hastie securities "as part of the Equity Raising and subsequently" as particularised in Annexure A to the PSASOC.
50 Part J of the PSASOC concerns corrective disclosures and the collapse of Hastie. It is alleged that various disclosures were made on 3 November 2011 ([118]), 19 December 2011 ([119]) and 22 February 2012 ([120]). As the Relevant Period extends from 14 June 2011 to 21 February 2012, the claim encompasses share purchases that took place after the 3 November 2011 and 19 December 2011 disclosures.
51 Part K of the PSASOC is headed "Loss and Damage". It comprises paragraph [125], which is in the following terms (as corrected in the letter dated 31 August 2017 from Sadie Ville's solicitors, and without mark-up):
125. By reason of the matters set out in:
125.1 paragraph 99;
125.3 paragraphs 108-112;
and the matters set out in paragraph 115, 116 and 117 (as the case may be), the Claimants suffered loss and damage.
Particulars
As to Claimants other than the Market Claimants, the Applicant refers to and repeats the particulars set out under paragraphs 96 and 97 above.
The Market Claimants suffered loss of the whole of the trading price paid by them to acquire their interest(s) in Hastie Securities.
Further particulars of the Applicant's loss will be provided prior to trial. Particulars of loss for individual Group Members will be provided following the trial of common questions.
52 Part L of the PSASOC sets out the common questions said to arise. Apart from the question of liability under s 729(1) of the Corporations Act, the only common questions relating to causation and loss and damage are:
126.10 Whether any and if so which contraventions alleged against the respondents or either of them was a cause of any and if so what consequences alleged in:
(a) paragraph 94 of the Statement of Claim;
(b) paragraph 95 of the Statement of Claim.
126.11 If any contravention was a cause of a consequence referred to in 126.10, what is the measure of the loss and damage recoverable by a person in respect of any such contravention?
Thus, the common questions do not appear to pick up the causation allegations in [114] of the PSASOC.