Sheehy v Nuix Pty Ltd

Mr Sheehy 15 Mr Sheehy gave evidence of the circumstances in which he entered into the 2008 Option Agreement and the background to the incentives provided to him. This evidence included the growth of the business of Nuix, the transactions between Nuix and Macquarie in 2011 and 2016, the sale to Macquarie in December 2016 of 30,000 options that had been issued to him with a grant date of 13 June 2006 and an exercise price of $0.85 (2006 Options) and some 20% of the 2008 Options. Mr Sheehy gave further evidence regarding the circumstances of his resignation as the CEO of Nuix, his knowledge and participation in the Share Split and the commencement and settlement of the 2018 Proceedings. 16 Mr Sheehy was cross-examined. He found the task of directly answering questions challenging. He was prone to becoming argumentative and non-responsive as illustrated in the following exchange: Do you see that?---Yes, I see that. And those were the instructions that you had given to Deutsch Miller at the time about your understanding of the effect of the share split on your options and those of all other Nuix share and option holders; correct?---Yes, and no. I hate to be confusing, but Deutsch Miller - - - Let me just break it down for you, Mr - - - HIS HONOUR: Had you finished your answer?---I was trying to explain why I said yes and no. I think a yes and no answer probably does require an immediate explanation for it to be of any sense?---Deutsch Miller are a great law firm, but they didn't understand the intricacies of options and shares, so hence the reason why - one of the reasons why I changed law firms by this case. Well, that's not really an answer to the question that was asked of you?---Oh, okay, sorry. And the question then is - I apologise. MR DARKE: This paragraph, Mr Sheehy, reflects the instructions that you gave to Deutsch Miller about what you understood to be the effect of the share split on your options; correct?---Yes. 17 When pressed further by Mr Darke SC, who appeared for Nuix, as to how he gave instructions to his solicitors, Deutsch Miller, to state to Nuix that the number of the Remaining 2008 Options should be multiplied by 50 and the exercise price divided by 50, contrary to the position he was now advancing in these proceedings, he gave the following argumentative evidence: That statement of how the share split would apply to your options, accorded with your instructions to Deutsch Miller, didn't it?---That's how they wrote it up, yes. Yes. And - - - HIS HONOUR: That's not an answer to the question?---Sorry. We are not interested in what they wrote up. We know what was written up; it's in the letter. That wasn't the question that was asked by Mr Darke. Answer Mr Darke's question?---Yes, Mr Darke. MR DARKE: The words that appear in brackets: Our client's options will be multiplied by 50 and the exercise price will be divided by 50. Accorded with your instructions to Deutsch Miller; correct?---Yes. Yes and no again. I mean, there was multiple ways it was described over the - - - I'm not asking you, Mr Sheehy, about how it was described?---Okay. I'm asking you about the instructions you gave to Deutsch Miller. And the instructions you gave to Deutsch Miller were that the number of your options will be multiplied by 50, and the exercise price would be divided by 50 as a result of the share split; correct?---Yes. And that was your state of mind at the time; correct?---I was of two states of mind because both - in my mind, both got to the same place. Whether you had 50 times the number of options then you had a one to one change, or you had a one to 50 share split and they both got to the same place. Mr Sheehy - - -?---So, you could say yes. If you had been in two states of mind at the time, as you just said, you would have instructed Deutsch Miller to describe the effect of the share split on your options in 35 those two alternative ways, wouldn't you?---Sorry to be contrarian but no, I wouldn't. Because they both ended up in the same place as having 22.X million shares. They - I wouldn't have. Mr Sheehy, you gave Deutsch Miller explicit instructions about how you understood the share split to affect your options; correct?---I gave them instructions. Explicit instructions; correct?---I asked them to work out what happened. I wouldn't have said - I didn't sit down and give them a lecture on how share and option splits work. But, you know, I thought it was pretty obvious. 18 I accept that generally, Mr Sheehy was seeking to answer questions truthfully but at times his evidence was not only affected by the adversarial manner in which it was given but also by the extent to which it was inconsistent with the apparent logic of events or contemporaneous documents. This inconsistency was particularly evident in his evidence about his knowledge of the content of the capitalisation tables and option registers of Nuix, his knowledge of the Share Split and its likely impact on the Remaining 2008 Options and the reasons why he had not advanced in the 2018 Proceedings the claims he now seeks to raise in these proceedings. 19 In all the circumstances, I did not disregard but I treated with caution the evidence, both written and oral, given by Mr Sheehy in these proceedings.

Nuix's witnesses 20 The respondent relied on the following witnesses.

Mr Standen 21 Mr David Standen is an Executive Director of Macquarie. In the period between June 2011 and November 2020 he was a non-executive director of Nuix. 22 Mr Standen gave evidence of his involvement with the co-founder of Nuix, Dr Tony Castagna, who had previously been a consultant to Macquarie, and the circumstances of Macquarie's initial investment in Nuix, the Share Split and the October 2016 transaction whereby Macquarie acquired 20% of all shares and options held by participating Nuix employees, for approximately $20 million (Macquarie 2016 Transaction). In particular, Mr Standen gave evidence of his understanding as to whether, absent a waiver from Nuix, the options that Macquarie acquired from Mr Sheehy were exercisable and the relationship between the transaction and Mr Sheehy's resignation from Nuix. He also gave evidence of his knowledge and involvement in the settlement of the 2018 Proceedings including the basis on which Nuix agreed to the terms of the Consent Judgment. 23 Mr Standen was cross-examined. 24 The principal focus of the cross-examination of Mr Standen by Mr Jackman SC (as his Honour then was), who appeared for Mr Sheehy, was a challenge to his evidence that although Macquarie had agreed to pay approximately $7 million for the 2008 Options from Mr Sheehy, Mr Standen believed at the time they were purchased that they could not be exercised because they had expired. The cross-examination included the following somewhat colourful exchange: Now, on your evidence, Mr Standen, Mr Sheehy's options issued under the letter of 5 17 September 2008, in order to be exercised, required something to have happened by the end of 2010; correct?---Yes. And it was now 2016; correct?---Yes. Right. And, to your understanding, then, the options had expired or lapsed?---Yes. Right. And, in effect, they were dead. Yes?---I don't know if that's - whatever word you want to use. I mean, what can I say here. But among Macquarie's many skills is the not the ability to bring the dead back to life, is it?---Look, again, I don't know what word you want to use, but, yes. 25 Mr Standen otherwise gave evidence that the apparent contradiction was that the "real substance and intention" of Macquarie's acquisition of 86,727 of the 2008 Options and the 2006 Options from Mr Sheehy was a "golden handshake" on an ex gratia basis so that he "would leave on good terms and support the business going forward in a productive way." He explained that this was the commercial purpose of the transaction and that Macquarie had only agreed to proceed on the basis that Nuix would waive the preconditions to the exercise of the options, which included for the Remaining 2008 Options that there had been a sale of the business of Nuix. 26 I accept Mr Standen's evidence, albeit that his subjective belief as to the status of the Remaining 2008 Options was at best of marginal relevance to the matters that I had to determine. It was consistent with the contemporaneous Nuix board minutes formally waiving any preconditions to the exercise of the options to be acquired by Macquarie from Mr Sheehy and the entries in Nuix's capitalisation tables and option registers recording that the options had been exercised or surrendered. It was also consistent with the apparent logic of events, as Mr Sheehy resigned on the day he entered into the option sale agreement with Macquarie and Macquarie immediately exercised the options and acquired a majority interest in Nuix. 27 In the circumstances, the credit challenge to Mr Standen's evidence did not cause me to doubt the accuracy or truthfulness of Mr Sheehy's oral and written evidence.

Mr Phillips 28 Mr Daniel Phillips is an executive director of Macquarie. He was appointed as a non-executive director of Nuix in 2011. 29 Mr Phillips gave evidence of Macquarie's initial investment in Nuix in 2011, his understanding of the status of the 2008 Options, his involvement in the Macquarie 2016 Transaction, his knowledge of the "increasing friction" between Mr Sheehy and the Board of Nuix and the circumstances in which Macquarie agreed to purchase 2008 Options from Mr Sheehy. Mr Phillips also gave evidence of the reasons why Nuix agreed to a resolution of the 2018 Proceedings on the basis of the Consent Judgment and the time that would have been necessary for Mr Sheehy to have been issued with shares in Nuix and for the shares to then be sold, if Nuix had accepted the validity of his purported exercise of the Remaining 2008 Options on 27 January 2021. 30 Mr Phillips was cross-examined. 31 Much of the cross-examination of Mr Phillips was directed at his evidence concerning the Macquarie 2016 Transaction. It was clearly evident from the cross-examination of Mr Phillips that his knowledge of the status of the 2008 Options at the time of the Macquarie 2016 Transaction was very limited and that Mr Standen had principal carriage of the transaction for Macquarie. 32 The concessions made by Mr Phillips in the course of his cross-examination as to the extent of his knowledge of relevant events were readily provided. I am satisfied these concessions did not reflect on the reliability of other relevant evidence that he gave of matters in which he had direct knowledge. In particular, the reasons why Macquarie acquired 2008 Options from Mr Sheehy as part of the Macquarie 2016 Transaction and the basis on which Nuix agreed to the Consent Judgment.

Mr Smith 33 Mr Damian Smith was the interim CEO of Nuix between June 2005 and June 2006 and a non-executive director of Nuix between 2005 and 2011. He resigned as a director of Nuix on 31 May 2011. 34 Mr Smith gave evidence about his involvement in the appointment of Mr Sheehy as the CEO of Nuix in 2006, Mr Sheehy's 2006 employment contract, the background to and negotiation of the remuneration arrangements with Mr Sheehy that culminated in the 2008 Option Agreement and the initial investment by Macquarie in Nuix in 2011. 35 Mr Smith was cross-examined. 36 The principal focus of the cross-examination of Mr Smith was his statement in paragraph 6 of his affidavit that he had a conversation with Mr Sheehy at the time of the negotiation of the 2008 Option Agreement in which he stated words to the effect: The board wants to incentivise you to help find a sale of the entire business. 37 Prior to being taken to this paragraph in his cross-examination by Mr Jackman, Mr Smith gave the following evidence: You understood my questions to relate to the fact that words such as "whole" or "entire" or similar adjectives were not used by either you or Mr Sheehy in any correspondence in negotiating the option agreement?---In these documents; that's correct. Yes. And you don't remember any other document which used words such as "whole" or "entire" in describing the sale of the business of Nuix?---I don't recall any other documents that haven't been shown to me regardless. And you don't recall any conversation between you and Mr Sheehy in negotiating the option agreement in which words such as "whole" or "entire" were used in relation to the sale of the business; correct?---I cannot specifically recall that phrase. Specifically, no. 38 Prior to this exchange with his cross-examiner, Mr Smith presented as an attentive, careful and responsive witness. It was therefore of some concern that immediately after being taken to paragraph 6 of his affidavit, he gave the following evidence: You don't actually recall the word "entire" being used, do you?---Sorry, I misunderstood your previous question. You know, I recall - I don't recall a document that used those words. I don't recall any other documents that aren't in these various folders. No?---I do recall that conversation, and, again, that's certainly my recollection throughout, that that was my intention. Mr Smith, you understood my question a moment ago to relate to conversations between you and Mr Sheehy, not documents?---Sorry, I misunderstood. Is English your first language, Mr Smith?---It is. I'm sorry. I just misunderstood the question. 39 Given this evidence, I am not persuaded that Mr Smith has any specific recollection of using the word "entire business" in discussions with Mr Sheehy about the incentives he was being provided to sell the business of Nuix. There was no ambiguity in Mr Jackman's questions. The use of the language of a sale of the "entire business", given there was no suggestion that Nuix operated more than one business, appears strained and objectively unlikely to have been used. I accept that Mr Smith was discussing what he understood to be a sale of the whole of the business of Nuix but I do not accept that he used the specific words "whole of" or "entire" to describe the scope of the business to be sold. There was no contemporaneous document or testimonial evidence to the effect that any consideration was ever given at the time of the negotiation of the 2008 Option Agreement to any sale of anything other than the business as a whole, let alone the provision of any incentive to Mr Sheehy to sell less than the whole of the business. Hence, there would not appear to have been any reason to emphasise "whole of" or "entire" in discussions about the sale of the business of Nuix. 40 I otherwise accepted as truthful and reliable the evidence given by Mr Smith. It was of relatively limited compass and it was consistent with, and did not seek to travel materially beyond, the contemporaneous documents and the apparent logic of events.

Ms Rochay 41 Ms Cassandra Rochay (née Bell, as she was at the time of affirming her affidavit) is the Head of Risk at Nuix. She gave evidence regarding the maintenance of the Options Register, maintained in the form of an excel spreadsheet entitled "Capitalisation Table". She gave evidence that the Options Register was initially maintained by Mr Sheehy, who then delegated responsibility of that task to herself and another Nuix employee, Mr Stephen Doyle. 42 Ms Rochay also gave evidence in her affidavit regarding the Macquarie 2016 Transaction and her understanding of how this transaction affected Mr Sheehy's options, her involvement in the Share Split, the provision of a version of the Options Register to Mr Sheehy in the course of the 2018 Proceedings, the resolution of the 2018 Proceedings culminating in the Consent Judgment and the Nuix "Employee Options Plans". 43 Ms Rochay was cross-examined. 44 She directly answered the questions that were put to her in a considered and careful manner. Her answers in cross-examination and her affidavit evidence were consistent with both contemporaneous documents and the apparent logic of events. I had no reason to doubt the accuracy or truthfulness of her answers.

Mr Egan 45 Mr Michael Egan is the company secretary of Nuix. He was appointed to that role on 9 October 2020. 46 Mr Egan gave evidence of the receipt by Nuix of the notice of the purported exercise by Mr Sheehy of the Remaining 2008 Options on 27 January 2021. He also gave evidence of the steps that Nuix would have had to take to issue Nuix shares to Mr Sheehy and arrange for them to be listed on the ASX, including the time it would likely take to complete each of those steps, if Nuix had accepted the exercise notice was valid. 47 Mr Egan was not required for cross-examination.

Expert witnesses 48 Both Mr Sheehy and Nuix advanced expert evidence directed at the likely sale prices that Mr Sheehy could have expected to receive in various scenarios had Nuix accepted his purported exercise of the Remaining 2008 Options on 27 January 2021 and Mr Sheehy had then sold on the ASX the Nuix shares that he would have been issued. 49 Mr Sheehy relied on a report from Ms Julie Planinic, a forensic accountant and a director of Lonergan Edwards, dated 13 December 2021. 50 Nuix relied on a report from Mr Michael Potter, a forensic accountant and a director of Axiom Forensics, dated 14 April 2022. 51 The experts prepared a joint report and gave concurrent evidence in the course of the hearing in what has colloquially been referred to as a "hot tub". 52 Both the joint report and the evidence given by the experts concurrently at the hearing, together with the comprehensive and detailed reports prepared by each of them, demonstrated that other than with respect to some ultimately minor matters of emphasis, particularly on "blockage discounts", the only substantive disagreements between them on the sale prices that Mr Sheehy could have expected to have achieved on the various scenarios that the experts were asked to consider were driven by assumptions as to the length of time it would take for the shares to be sold. 53 I consider in more detail the evidence given by the experts later in these reasons in addressing what damages Mr Sheehy might have expected to have been awarded had he otherwise been successful in establishing the causes of action that he seeks to advance in these proceedings.

Establishment of Nuix 54 Nuix was founded by Mr Jim McInerney. He died in 2004 and his wife, Agnes McInerney, inherited ownership of Nuix. 55 In late 2005, a group of six investors invested approximately $510,000 in Nuix (Angel Investors) to fund its recapitalisation and restructuring.

2006 Employment Contract 56 On 12 June 2006, Mr Sheehy commenced employment with Nuix as its CEO. The Chairman of Nuix at that time was Mr Tony Castagna who remained the Chairman until 2021, apart from a period between 2013 and 2015 when the Chairman was Mr David Standen. 57 Mr Sheehy was employed pursuant to a written agreement in the form of a letter from Mr Castagna dated 12 April 2006 and signed by Mr Sheehy on 19 June 2006 (Employment Contract). 58 The total compensation package offered in the Employment Contract comprised a guaranteed cash component, an "at-risk" bonus and an equity participation. The "at-risk" bonus comprised a sales bonus and a separate profitability bonus. 59 The Employment Contract provided, under the heading "Equity participation", that Mr Sheehy would be: …offered the opportunity to purchase 30,000 shares, or 3% of the issued capital in the company via an options scheme. The terms and conditions for these stock options will be provided to you in a separate document, but the essential terms will be: • Vesting over 36 months, commencing June 2006 • 12-month "cliff" for vesting, such that should you leave prior to June 2007, no stock options would vest • 12 month "accelerated" vesting in the event of a change of control of the company • 90-day period after your departure from the company in which you may exercise these options … 60 Under the heading "Equity participation", the Employment Contract also provided that Mr Sheehy may be granted an additional 25,000 fully-paid shares at the discretion of the Nuix Board. 61 The Employment Contract stated the compensation package "provides a strong incentive for [Mr Sheehy] to unlock the value inherent in the opportunity" available to Nuix. 62 Mr Sheehy subsequently received an "Offer to Take up Options Under the Employee Option Plan (EOP)" dated 23 July 2007 (2007 Offer). Mr Sheehy was invited to apply for the 2006 Options under the Employee Option Plan Rules of Nuix dated 17 July 2007 (EOP Rules) on the terms and conditions set out in the 2007 Offer. The options were stated to be otherwise subject to the EOP Rules. The options were exercisable for five years after the date on which they vested. 63 The EOP Rules provided: (a) for the accelerated vesting of options in the event of a "Change of Control event", which "denotes an event where 51% of the company's Shareholding changes ownership" (cl. 11); and (b) that in the event of a "reorganisation of the capital of the Company the terms of the Options shall be reorganised in accordance with the relevant re-organisation plan as at the date of reorganisation" (cl. 10.1). 64 On 23 July 2007, Mr Sheehy accepted the 2007 Offer.

2008 Option Agreement 65 The Employment Contract was due to be reviewed at the end of the 2007 financial year. 66 On 17 September 2008, a further remuneration arrangement was ultimately agreed between Mr Sheehy and Nuix pursuant to the terms of the 2008 Option Agreement. 67 The 2008 Option Agreement was in the form of a letter from Mr Castagna and Mr Smith that Mr Sheehy signed as received and accepted on 17 September 2008. 68 The 2008 Option Agreement commenced by acknowledging the work that Mr Sheehy had done, in particular, the "growth and focus you have brought to the CEO role". 69 It then relevantly provided as follows: The package we are proposing is one that unambiguously aligns your incentives with those of existing shareholders. In particular, it provides very strong incentives for you to look for a sale event for Nuix before the end of 2010; a sale event at particular valuations during this time will see you enjoy a significant reward. We are therefore pleased to offer you a new package as follows: l) An unrestricted stock grant of 75,000 shares, vesting immediately. I know you are aware that there will likely be tax consequences for you on this grant, and that you acknowledge these tax consequences will be borne by you. 2) A series of "call options" over Nuix stock, exercisable in the event of a sale of the business at particular prices. Note that these options are only exercisable in the event of a sale; a valuation of the business in the context of an additional funding round will not trigger the call option. These call options will be structured as follows: Note that these stock options are both incremental and cumulative; meaning, by way of example, that a sale price of $10,000,000 would see you able to exercise options to purchase 40,000 shares at $0.85 PLUS 100,000 shares at $2.00. Please note that the $2.00 exercise price is in - place for all new option grants since 2007; however, given the time taken to negotiate this package, we acknowledge that you would have normally received an additional stock option grant on the 12-month anniversary of your employment in June 2007. This grant would have been at the previous $0.85 exercise price, and so this will prevail for the first 40,000 additional options. … 3) You will also receive a cash bonus, in the event of a sale in excess of certain$ thresholds before certain nominated dates as follows: • For a sale in excess of $10,000,000 on or before 31 December 2009, you will receive a cash bonus (pre-tax) equivalent to 20% of the total cash gain (net of exercise price but pre-tax) you receive from the sale via your equity ownership. • For a sale in excess of $20,000,000 on or before 31 December 2010, you will receive a cash bonus (pre-tax) equivalent to 20% of the total cash gain (net of exercise price but pre-tax) you receive from the sale via your equity ownership. 4) Please note that your equity position (unrestricted stock and options) has been expressed in absolute terms, not as a relative % of the company. Obviously, should additional financing rounds take place, and the total number of shares outstanding increase, your relative % ownership will decline, but the absolute number of shares & options held (and the $ thresholds for exercise) will remain constant. 70 The 2008 Option Agreement concluded: Eddie, let me again indicate the strong support you enjoy from the Board. We hope the package as outlined in this email [sic] reinforces that support and provides you with clear incentives to grow the business and achieve the sale event that the current shareholders seek. 71 The 2008 Option Agreement was not stated to be subject to the EOP Rules, including any provision linking the exercise of the options to a change of control or any provision for the reorganisation of the terms of the options upon reorganisation of Nuix's share capital. 72 On 17 September 2008, Mr Sheehy was issued with the 2008 Options, being 540,000 call options issued pursuant to the terms of the 2008 Option Agreement.

Failure to sell Nuix by 2010 and 2011 share acquisition by Macquarie 73 The business of Nuix was not sold by 31 December 2010. 74 On 18 May 2011, the Angel Investors, other than Ferodale Limited (Ferodale), entered into a subscription and share purchase agreement with Macquarie Group Capital Limited for the sale of all of their Nuix shares to Macquarie. 75 On 31 May 2011, Macquarie paid approximately $8 million in consideration for the transfer of the Nuix shares from the Angel Investors. Macquarie also invested a further $2.5 million in return for the issuance of new shares. At this point, Macquarie became the largest shareholder in Nuix. 76 On 9 June 2011, Mr Standen and Mr Phillips were appointed to the Nuix Board.

2016 payment to Mr Sheehy and his resignation 77 In October 2016, Macquarie made an offer to acquire 20% of all shares and options held by Nuix employees, for approximately $20 million pursuant to the Macquarie 2016 Transaction. 78 On 18 October 2016, the Nuix board considered and approved the Macquarie 2016 Transaction. The Nuix board also passed a resolution at the board meeting held on that day waiving any option exercise conditions as part of its approval of the Macquarie 2016 Transaction. 79 As part of the Macquarie 2016 Transaction, Mr Sheehy sold all of the 2006 Options and 86,727 of the 2008 Options to Macquarie in exchange for a payment from Macquarie of $10,354,467. This sale left Mr Sheehy with the Remaining 2008 Options totalling 453,273 options. Macquarie immediately exercised the 2006 Options and the 2008 Options that it had purchased from Mr Sheehy and was issued with shares by Nuix in accordance with those options.

Share Split and resignation of Mr Sheehy 80 On 29 November 2016, the directors of Nuix, including Mr Sheehy, formally passed a resolution to propose the Share Split to existing shareholders of Nuix for their approval. The Share Split provided for a division of the ordinary shares of Nuix pursuant to the mechanism contained in s 254H of the Corporations Act so that each ordinary share would be subdivided into 50 ordinary shares. This resolution formalised an agreement between the Nuix directors, including Mr Sheehy, in August 2016 that was recorded in a document entitled "Resolution by signed minute" and emailed to Nuix board members on 12 August 2016 (Share Split board resolution). 81 On 5 December 2016, Mr Sheehy signed the Share Split board resolution. 82 On 9 December 2016, Mr Sheehy received the payment of $10,354,467 from Macquarie and resigned from his employment with Nuix, with effect from 27 January 2017. 83 On 15 December 2016, the Share Split was approved by Nuix shareholders. 84 On 14 March 2017, the Share Split was completed. 85 The Share Split was implemented due to the high price of Nuix shares (at that time $100 per share), the impact of a high share price on the recruitment of staff and on the ability of Nuix to conduct an IPO. 86 In preparation for the Share Split, Mr Castagna appeared in a webinar to staff to explain its effect on their shares and options (Webinar). In the course of that Webinar he stated that: …we are going to do a 50 to 1 share split. Those of you who have already got options will get a letter from us saying - advising you of the split - and what that means is that, if I just use a very simple example; for every one option that you have, post-split - post the 50 to 1 split - you will have 50 share options. So, for every one share option that you have you will be able to translate that into 50. and but essentially applying the principle of fairness and equity nothing changes as a result of the split because what we are really saying is the size of the cake is the same instead of having fat - one fat slice you have got -you have got 50 slices that add up to the same one fat slice - they are just thinner slices - the addition of each of those 50 slices ends up being the same as the slice had you got only one. 87 Mr Castagna also gave a PowerPoint presentation at a series of Town Hall meetings relating to the Share Split (Town Hall Meetings). The slides for that presentation included two worked examples in which the number of options were multiplied by 50 and the equivalent price to exercise the options was divided by 50. The slides included statements that "the relative price ratio remains unchanged" as a result of the Share Split, and that "the pre & post split total price to exercise remains unchanged".

2018 Proceedings 88 On 22 May 2018, Mr Sheehy commenced the 2018 Proceedings in the Commercial List of the Supreme Court of New South Wales. 89 In the 2018 Proceedings, Mr Sheehy relevantly sought (in his Summons): 1 A declaration that 453,273 options granted over unissued shares of the defendant that the plaintiff holds (Options) are exercisable by the Plaintiff on the occurrence of a sale of the defendant's business in accordance with the agreement between the plaintiff and the defendant made on or around 17 September 2008. 2 An order under section 175(1) of the Corporations Act 2001 (Cth) that the defendant correct its register to record the Options. 90 On 7 November 2019, Mr Sheehy made an offer to settle the 2018 Proceedings (Settlement Offer). 91 On 21 November 2019, Nuix accepted the Settlement Offer. 92 On 26 November 2019, the Supreme Court made declarations and orders in the terms of prayers 1 and 2 of Mr Sheehy's Summons pursuant to the Consent Judgment.

Commencement of these proceedings 93 On 26 October 2020, Mr Sheehy commenced these proceedings.

Initial Public Offering 94 On 18 November 2020 Nuix issued a prospectus in relation to an IPO of its shares. 95 The total number of shares to be issued and transferred under the IPO was 179.5 million and the total number of shares in Nuix on completion would be 317.3 million. 96 As at the date that the prospectus for the IPO was issued, Macquarie held 76.2% of the shares in Nuix and 66.1% of the shares on a fully diluted basis (that is existing shares and shares to be issued on the exercise of options). 97 On completion, Macquarie would hold 30.1% of the shares in Nuix and 30.0% on a fully diluted basis. New investors in the IPO would hold 55.8% of the shares in Nuix and 55.4% of the shares on a fully diluted basis. 98 On 20 November 2020, Mr Sheehy's solicitors sent a letter to Nuix's solicitors indicating that he intended to exercise the Remaining 2008 Options. 99 On 3 December 2020, Nuix's solicitors stated in response to Mr Sheehy's solicitors that there had not been a sale of Nuix for the purposes of his purported exercise of the Remaining 2008 Options, with the result that those options were not exercisable. 100 On 4 December 2020, the IPO proceeded and Nuix was listed on the ASX.

Purported exercise of the Remaining 2008 Options 101 On 27 January 2021, Mr Sheehy provided Nuix with the Option Exercise Notice in relation to the Remaining 2008 Options. This was rejected by Nuix on 2 February 2021.

Introduction 102 Nuix relies on res judicata/cause of action estoppel, issue estoppel, Anshun estoppel and abuse of process preclusionary defences that it alleges arise from the Consent Judgment in the 2018 Proceedings. 103 It is necessary to address the potential application of these defences before considering the substantive claims that Mr Sheehy seeks to advance in these proceedings. If Nuix can establish any of these defences, then the claims made by Mr Sheehy must be dismissed or, to the extent that the defences may be established with respect to some of the claims advanced by Mr Sheehy, then those claims must be dismissed.

Principles 104 Res judicata/cause of action estoppel (or "claim estoppel") requires both that a "claim to a right or obligation" was asserted in a prior proceeding and that the claim was finally determined in that proceeding. It operates "to preclude assertion in a subsequent proceeding of a claim to a right or obligation which was asserted in the proceeding and which was determined by the judgment": Tomlinson v Ramsey Food Processing Pty Limited (2015) 256 CLR 507; [2015] HCA 28 (Tomlinson) at [22] (French CJ, Bell, Gageler and Keane JJ) (see also [20] regarding res judicata); Clayton v Bant (2020) 272 CLR 1; [2020] HCA 44 (Clayton) at [29] (Kiefel CJ, Bell and Gageler JJ). 105 Consent judgments attract the operation of the doctrine of res judicata/cause of action estoppel: Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502; [1988] HCA 21 (Chamberlain) at 505 (Brennan J), 508 (Deane, Toohey and Gaudron JJ), 512 (Dawson J); see also Somanader v Minister for Immigration and Multicultural Affairs [2000] FCA 1192 at [36] (Merkel J). So, too, do declarations: Spautz v Butterworth (1996) 41 NSWLR 1 at 20. 106 In Re South American and Mexican Co; ex parte Bank of England [1895] 1 Ch 37 (South American and Mexican Co), a matter where a consent order for financial provision was held to bar a further application by the former wife, Lord Herschell, LC stated at 50: The truth is, a judgment by consent is intended to put a stop to litigation between the parties just as much as is a judgment which results from the decision of the Court after the matter has been fought out to the end. And I think it would be very mischievous if one were not to give a fair and reasonable interpretation to such judgments, and were to allow questions that were really involved in the action to be fought over again in a subsequent action. 107 The focus of cause of action estoppel is on "substance rather than form": Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (In Liq) (1992) 36 FCR 406 (Trawl Industries) at 418 (Gummow J); cited with approval in Clayton at [34] (Kiefel CJ, Bell and Gageler JJ) and [68] (Edelman J). Absolute identity between the sources and incidents of rights asserted or capable of being asserted is not required. There need only be "substantial correspondence" or that the rights are "of a substantially equivalent nature and cover substantially the same subject matter": Clayton at [34] (Kiefel CJ, Bell and Gageler JJ). 108 In Trawl Industries, Gummow J held that the dismissal of a claim for misleading or deceptive conduct under ss 52 and 53 of the Trade Practices Act 1974 (Cth) (TP Act) gave rise to a cause of action estoppel against a claim in negligence. The applicant had previously brought proceedings in negligence based on some of the same representations, and sought damages measured in the same way and in the same quantum as in the subsequent proceedings. Gummow J stated at 422: In my view, Effem has made out its case of cause of action estoppel against Trawl. This is so, even though no claim previously was made in negligence. The substance of the controversy embraces such a claim. The gist of the recovery sought both in negligence and for contravention of the TP Act is the same. … 109 To similar effect, in Zavodnyik v Alex Constructions Pty Ltd (2005) 67 NSWLR 457; [2005] NSWCA 438 (Zavodnyik) a builder's claim in restitution was barred by cause of action estoppel by reason of the dismissal of the builder's earlier claim in contract: [30], [31], [33] (Handley JA, Mason P and Latham J agreeing). And in Lee v Kim (2006) 68 NSWLR 433; [2006] NSWCA 384 (Lee), Handley JA (Beazley and Santow JJA agreeing) found that a cause of action estoppel arose where a party, having failed in a claim for defamation based on the publication of material in two issues of a newspaper, sought to later sue for the publication of other material in the same issues (said to convey the same defamatory implications): at [27]. That was so despite the fact that the causes of action were technically different: see [15]-[17]. 110 In considering whether cause of action estoppel arises, it is irrelevant whether the plaintiff knew, when he brought the first action, the facts on which he relies in the second: Honeywood v Munnings (2006) 67 NSWLR 466; [2006] NSWCA 215 at [11]-[19] (Handley JA, Giles JA and Hislop J agreeing); French & Anor v NPM Group P/L [2008] QCA 217 at [47]-[54].

Submissions of Mr Sheehy 111 Mr Sheehy submits that the "claim to a right or obligation" in the 2018 Proceedings was the claim that the Remaining 2008 Options continued to exist contrary to the contention by Nuix that they had expired. 112 More specifically, Mr Sheehy submits that the claim was that Nuix was in breach of contract because it had refused to recognise the continued existence of the options. He submits that claim was determined by the declaration in paragraph 1 of the Consent Judgment that the options "are exercisable by the plaintiff on the occurrence of a sale of the defendant's business". He submits that this declaration said nothing about the particular terms of the Remaining 2008 Options. 113 Mr Sheehy submits that his claim that the options had not expired and continued to exist was the claim that merged in the Consent Judgment. He submits that each of the breach of contract, oppression and unconscionability claims in the present proceedings are entirely different.

Submissions of Nuix 114 Nuix relies on three matters to establish that Mr Sheehy's claim in these proceedings that he is entitled to 22,663,650 shares is precluded by cause of action estoppel. 115 First, Nuix submits that Mr Sheehy's claim to hold a particular number of options following the Share Split (the claim brought in the 2018 Proceedings) is substantively equivalent to his claim to be entitled to a particular number of shares on exercise of his options (the claim brought in these proceedings). 116 Nuix submits that the 2018 Proceedings dealt with one of the "two ways" the Share Split could be applied to Mr Sheehy's Remaining 2008 Options. The 2018 Proceedings necessarily involved the effect of the Share Split on Mr Sheehy's Remaining 2008 Options because one of the ways the Share Split could arguably affect those options was by multiplying their number and Mr Sheehy was seeking a declaration as to the number of options he held post the Share Split. It follows that the substantively equivalent claim Mr Sheehy now makes as to the effect of the Share Split on the Remaining 2008 Options - namely, that it multiplied the number of shares to which those options entitle him - was also part of that controversy. 117 It submits that this has the consequence that Mr Sheehy's claimed entitlement to 22,663,650 shares is, as a matter of substance, the same as the claim determined by the 2018 Proceedings. The "substance of the controversy" litigated in the 2018 Proceedings "embrace[d]" the claim Mr Sheehy now makes. It submits that claim is thereby precluded by cause of action estoppel. 118 Second, Nuix submits that, by reason of Order 2 in the Consent Judgment (prayer 2 of Mr Sheehy's Summons in the 2018 Proceedings), Nuix was required to rectify its Options Register to record that Mr Sheehy held 453,273 options (Rectification Order). Pursuant to s 170 of the Corporations Act, a company's options register must contain particular information, including the number of shares over which the options were granted and the exercise price of the options: s 170(1)(d) and (h). It submits that as such, the Rectification Order required Nuix to specify these matters in its register with respect to the Remaining 2008 Options and must, therefore, have determined them. The order cannot have required Nuix to breach s 170 of the Corporations Act by including incomplete information on the Options Register. 119 Moreover, Nuix submits that the Consent Judgment must be understood in light of Mr Sheehy's contentions in the Commercial List Statement in the 2018 Proceedings (CLS). In particular, that the Rectification Order encompassed details of Mr Sheehy's options is reflected in the terms of the CLS at [14(b)], where Mr Sheehy stated that the order would require Nuix to record "accurate particulars of the Remaining Sheehy Options in Nuix's register of options". 120 Nuix submits that is reinforced by the fact that Mr Sheehy: (a) pleaded that he held 453,273 options (CLS at [9]); (b) particularised the 2008 Option Agreement in support of a term that those options existed and were exercisable (CLS at [5]); and (c) pleaded the requisite particulars of those options in the CLS at [5], by particularising cl 2 of the 2008 Option Agreement (excluding the final paragraph). That part of the 2008 Option Agreement recorded the exercise price for the options (in the third column of the table) and that one option entitled Mr Sheehy to one share (by the text at the bottom of the table, read together with the table itself). 121 Third, Nuix submits that the declaration made by the Consent Judgment stated that the Remaining 2008 Options were exercisable by him "on the occurrence of the sale of the defendant's business in accordance with the agreement between the plaintiff and the defendant made on or around 17 September 2008". By doing so, the declaration in the Consent Judgment determined that the 2008 Option Agreement: (a) contained the terms pleaded and particularised in the CLS at [5]; and (b) had terms which were express or implied by law only, as particularised in the CLS at [4]. 122 Nuix submits that in view of these matters, the Court determined by the Consent Judgment, not only that Mr Sheehy's options remained in existence, but also their number (453,273), exercise prices (being those set out in the third column of the table in the 2008 Option Agreement), and number of shares over which they were granted (one share for each option). As a matter of res judicata, Mr Sheehy's claimed rights with respect to those matters therefore merged in the Consent Judgment. In terms of cause of action estoppel, Mr Sheehy's claim in this proceeding to an entitlement to 22,663,650 shares upon exercise of his options is precluded or estopped.

Consideration 123 The claim or right determined by the declaration in the Consent Judgment was whether the 453,273 options granted to Mr Sheehy remained exercisable by him on the sale of the business of Nuix in accordance with the terms of the 2008 Option Agreement. The order for the correction of the Options Register in the Consent Judgment was ancillary to that declaration. It did not expand or qualify the claim or right determined by the declaration. 124 The claims and rights the subject of these proceedings are directed not at the continued existence of the Remaining 2008 Options but rather at the number of shares over which the options can be exercised given the 50 for 1 share split and whether there had relevantly been a "sale of the business" of Nuix in late 2020. Unlike Trawl Industries, Zavodnyik and Lee this is not a case where an applicant is seeking to advance a new cause of action based on the same conduct that had been relied upon and determined in a prior proceeding. 125 There was no "substantial correspondence" between a right to exercise an option and the determination of a conversion ratio from options to shares following a share split. Nor are those discrete rights "of a substantially similar nature and cover substantially the same subject matter". The substance of the controversy in the 2018 Proceedings was the continuing existence of the Remaining 2008 Options, not their conversion ratio into Nuix shares. 126 I accept that a method by which a share split might typically be addressed in order to prevent prejudice to an option holder would be to multiply the number of options they hold and to preserve the existing conversion ratio. I also accept that the Consent Judgment necessarily precluded Mr Sheehy from advancing any case in these proceedings that the number of options that he held following the Share Split could be multiplied by 50 to reflect the impact of the Share Split. I do not accept, however, that this incidental or consequential effect of the Consent Judgment on claims or rights that Mr Sheehy might subsequently pursue against Nuix had the consequence of expanding the controversy litigated in the 2018 Proceedings to the claims now advanced by Mr Sheehy in these proceedings. 127 Nor do I accept that the pleading and particularisation of the 2008 Option Agreement in the CLS can expand the controversy litigated in the 2018 Proceedings. An order to correct a register to reflect the specific claim or right the subject of a declaration cannot expand the controversy beyond the terms of the declaration. Nor can the identification in a declaration of the agreement under which options are to be exercised have that effect. The Consent Judgment necessarily by its terms determined the number of options that Mr Sheehy held following the Share Split. It did not determine their exercise price nor the number of shares over which they were granted. The controversy was limited to whether Mr Sheehy could still exercise the Remaining 2008 Options. 128 For these reasons, I am satisfied that the claims made by Mr Sheehy in these proceedings are not precluded by cause of action estoppel or the doctrine of res judicata.

Principles 129 Issue estoppel is a principle whereby "judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies": Blair v Curran (1939) 62 CLR 464; [1939] HCA 23 at 531 (Dixon J) cited with approval in Tomlinson at [22] (French CJ, Bell, Gageler and Keane JJ). Issue estoppel can arise even where the causes of action in the two proceedings are entirely different: Jackson v Goldsmith (1950) 81 CLR 446; [1950] HCA 22 (Jackson) at 467 (Fullagar J). Issue estoppel similarly involves consideration of substance over form: see Ku-Ring-Gai Council v Ichor Constructions Pty Ltd [2014] NSWSC 1534 at [33] (Stevenson J); Tomlinson at [22] (French CJ, Bell, Gageler and Keane JJ); Clayton at [34] (Kiefel CJ, Bell and Gageler JJ). 130 Unlike res judicata where only the actual record is generally relevant, any material may be looked at which will show what issues were raised and decided: Jackson at 467 (Fullagar J). 131 Consent judgments can give rise to issue estoppel: Robinson v Deep Investments Pty Ltd [2018] FCAFC 232; (2018) 364 ALR (Robinson) at [137] (Jagot and Colvin JJ); Commissioner of Taxation v Day (2007) 164 FCR 250; [2007] FCAFC 193 at [15] (Spender J, Edmond J agreeing); Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (No 2) (2001) 119 FCR 1; [2001] FCA 1861 at [1148] (Goldberg J); Ekes v Commonwealth Bank of Australia [2014] NSWCA 336 (Ekes) at [111] (Bathurst CJ, Beazley P and Emmett JA agreeing); Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231 at [186] (and the authorities cited therein) (McColl JA, Giles and Campbell JJA agreeing); Makhoul v Barnes (1995) 60 FCR 572 at 582 (Hill, Cooper and Branson JJ); and NHB Enterprises Pty Ltd v Corry (No 7) [2021] NSWSC 741 at [400], [402], [414] (Bell P). 132 In Robinson, Jagot and Colvin JJ observed at [137] that, when considering the extent to which a consent judgment may give rise to an issue estoppel: …there must be an inquiry as to the issues that were determined by the consent judgment and any issue estoppel only arises to the extent that the consent determined a particular issue. 133 In that case, the Court was directly concerned with the effect of a consent judgment (although ultimately decided the dispute on the basis that the subsequent proceedings were an abuse of process). 134 In considering the extent of issue estoppel arising from a consent judgment, the subjective motivations of the parties to the consent judgment are irrelevant and the question of its effect is objective (however regard can be had to the background leading up to the order): Ekes at [114]-[115] (Bathurst CJ, Beazley P and Emmett JA agreeing).

Submissions of Mr Sheehy 135 Mr Sheehy submits that issue estoppel cannot exist without a full determination on the merits: Zetta Jet Pte Ltd v The Ship "Dragon Pearl" (No 2) (2018) 265 FCR 290 (Zetta) at [20] (Allsop CJ, Moshinsky and Colvin JJ). He submits that as there was no reasoned judgment on the merits underpinning the Consent Judgment, therefore, the doctrine of issue estoppel has no role to play in this case. 136 Mr Sheehy submits that, moreover, and in any event, it remains unclear from Nuix's submissions what issue it contends was resolved in the 2018 Proceedings so as to give rise to an issue estoppel. He submits that the issues of how the 2008 Option Agreement is to operate in the event of a share split, how the Share Split affects his rights under the 2008 Option Agreement and whether the shares are exercisable were not considered or resolved at all in the 2018 Proceedings.

Submissions of Nuix 137 Nuix submits that the 2019 Consent Judgment necessarily determined (a) the number of options Mr Sheehy held post Share Split (being 453,273) and (b) the number of shares Mr Sheehy was entitled to on exercise of his options (by reason of the matters that it relied upon to establish cause of action estoppel). 138 Nuix submits that it is clear that in making the Rectification Order, the Court must have decided the number of shares over which the options were granted and the exercise price of the options (as matters required to be specified pursuant to s 170(1)(d) and (h) of the Corporations Act). 139 Nuix submits that in considering the issues decided by the 2019 Consent Judgment, the Court should also give, if anything, greater weight to the terms of the CLS, including the allegations that: (a) the Rectification Order would require Nuix to record "accurate particulars of the Remaining Sheehy Options in Nuix's register of options": [14(b)]; he held 453,273 options (CLS at [9]); (b) the 2008 Option Agreement supported a term that those options existed and were exercisable (particulars to [5]); and (c) the requisite particulars of those options were those set out in cl 2 of the 2008 Option Agreement, which recorded the exercise price for the options (in the third column of the table) and that one option entitled Mr Sheehy to one share (by the text at the bottom of the table, read together with the table itself) (particulars to [5]). 140 Nuix submits that in circumstances where the Consent Judgment reflected identically all of the relief claimed by Mr Sheehy in the Summons, the CLS provides a strong indication of the issues that it determined.

Consideration 141 The contentions advanced by Nuix in support of its issue estoppel case largely replicate those that it advances in support of its cause of action/res judicata case. Those contentions are no more persuasive for issue estoppel. 142 The making of the Rectification Order in the context of the specific requirements of ss 170(1)(d) and (h) of the Corporations Act did not carry with it any necessary implication that the issues determined in the 2018 Proceedings travelled beyond the Consent Judgment. 143 The declaration in the Consent Judgment was in the same terms as the declaration sought in the Summons. It addressed only the issue as to whether the Remaining 2008 Options held by Mr Sheehy remained exercisable in accordance with the terms of the 2008 Option Agreement. It did not address the question of the applicable conversion ratio post the Share Split. That was not an issue that was raised or sought to be litigated in the 2018 Proceedings.

Anshun estoppel 144 As the High Court explained in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45 (Port of Melbourne) at 598, what has become known as Anshun estoppel: …operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding. 145 The question of unreasonableness is derived significantly from the matter being "so relevant" to the subject matter of the first proceeding: Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245; [2010] NSWCA 33 (Champerslife) at [3] (Allsop P, as his Honour then was). The determination of unreasonableness in that sense involves at least two related assessments; namely, "was the matter so relevant that it can be said to have been unreasonable not to rely upon it in the first proceeding?": Champerslife at [3] (Allsop P). 146 The broad merits-based or value judgment to which Allsop P referred in Champerslife is not at large. It is to be directed to the making of those two related assessments. Thus, a close connection between the facts in separate sets of proceedings may make it unreasonable not to have agitated the issue in the earlier proceedings: Accord Pacific Holdings Pty Ltd v Gleeson as Liquidator of Accord Pacific Land Pty Ltd (in liq) [2011] NSWSC 1021 at [137] (Ward J, as her Honour then was) and the cases cited therein. 147 In deciding the question, the onus is on the party asserting the estoppel to prove that the other party's choice to refrain from asserting the claim or raising the issue, in the course of the first proceeding, was unreasonable: Clayton at [30] (Kiefel CJ, Bell and Gageler JJ); Preston v Nikolaidis [2021] NSWSC 36 at [271] (Williams J). To this end, "any facts which bear upon the reasonableness of the conduct in question are admissible": Beck v Weinstock [2012] NSWCA 289at [73] (Campbell JA, McColl and Meagher JJA agreeing). As was said in Port of Melbourne at 603 (and recently cited with approval in Clayton at [31] (Kiefel CJ, Bell and Gageler JJ)): there are a variety of circumstances ... why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings eg expense, importance of the particular issue, motivations extraneous to the actual litigation, to mention but a few. 148 Anshun estoppel arises even where the omission in the earlier proceedings was due to negligence, inadvertence or even accident: Henderson v Henderson [1843] 67 ER 313 at 319; Port of Melbourne at 598. Relatedly, a deficiency in legal advice is not a matter that can be taken into account in determining whether an Anshun estoppel arises: Donnelly v Kempsey Local Aboriginal Land Council [2020] NSWSC 1548 at [98] (Williams J).

Abuse of process 149 Abuse of process may be invoked in areas in which estoppels also apply, although it is "inherently broader and more flexible than estoppel": Tomlinson at [22], [25] (French CJ, Bell, Gageler and Keane JJ). For example, the failure to make a claim or raise an issue in an earlier proceeding, which ought reasonably to have been made or raised in the earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel: Tomlinson at [26] (French CJ, Bell, Gageler and Keane JJ); Walton v Gardiner (1993) 177 CLR 378; [1993] HCA 77 at 393 (Mason CJ, Deane and Dawson JJ) and the authorities cited therein. 150 The circumstances when the Court will have the power to stay proceedings as an abuse of the process of the Court are incapable of being distilled into closed categories. Rather, the Court's power can be enlivened in circumstances "where the use of the court's procedures occasion unjustifiable oppression to a party, or where the use serves to bring the administration of justice into disrepute": UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45 at [1] (Kiefel CJ, Bell and Keane JJ); Tomlinson at [25]. 151 The onus of satisfying the Court that there is an abuse of process is a "heavy one" and it falls on the party asserting the abuse of process: Williams v Spaultz (1992) 174 CLR 509; [1992] HCA 34 at 529 (Mason CJ, Dawson, Toohey and McHugh JJ); Goldsmith v Sperrings Ltd [1977] 1 WLR 478 at 498 (Scarman LJ).

Requirements for Anshun estoppel 152 Mr Sheehy submits that Anshun estoppel is a "true estoppel" and therefore, it can only apply if the party asserting the estoppel relied on the state of affairs giving rise to the estoppel to its detriment or it would be unconscionable for the other party to resile from an expectation that it had created: see Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 (Sidhu) at [1]-[2], [58], [61] and [77] (French CJ, Kiefel, Bell and Keane JJ). In this regard, Mr Sheehy submits that the use of the language of "true estoppel" in the context of Anshun estoppel in Tomlinson at [22] (French CJ, Bell, Gageler and Keane JJ) and in Rogers v The Queen (1994) 181 CLR 251; [1994] HCA 42 (Rogers) at 275 (Deane and Gaudron JJ) must have been intended to mean that some form of reliance is required to make good the estoppel. 153 Mr Sheehy submits that Nuix has not established any form of detrimental reliance sufficient to give rise to an Anshun estoppel. 154 Mr Sheehy submits that the Nuix decision-makers in the 2018 Proceedings were "plainly well-aware" that he did not intend to compromise his rights in relation to the Share Split. He points to the email sent by Mr Castagna on 27 November 2019 after Nuix entered into the Consent Judgment (Castagna November 2019 Email), and in particular, that the compromise for 1/50th of the original amount was "most surprising" and "I have no doubt we will hear the screams of angst from Eddie in the fullness of time" and the response from Mr Krupczak, Nuix's then general counsel, that it was "truly unbelievable". He submits that none of the parties to these communications was called to give evidence in these proceedings and therefore, the Court should conclude that the true position was that Nuix was well aware that he was not intending to give up any rights in relation to the impact of the Share Split on the Remaining 2008 Options. Mr Sheehy submits that this conclusion would have been obvious to any reasonable person involved in the settlement of the 2018 Proceedings. 155 Mr Sheehy submits that, in the circumstances, it cannot be said that Nuix believed that he was electing not to proceed with his claims in relation to the Share Split at the time that he settled the 2018 Proceedings or relied on any such assumption. Hence for the purposes of Anshun estoppel there is no basis for Nuix to contend that it would be unreasonable for him to pursue his present claims.

Relevance and reasonableness 156 Mr Sheehy submits that it was not unreasonable for him to have not raised the issue of the Share Split in the 2018 Proceedings for the following reasons. 157 First, the 2018 Proceedings were narrowly confined to the issue of whether the Remaining 2008 Options continued to exist or not and the present claims concern an "entirely different feature" of the 2008 Option Agreement. 158 Second, there was nothing to suggest to him that there could be any issue between him and Nuix about the application of the Share Split to the 2008 Options. He submits that during the 2018 Proceedings, Nuix disclosed extracts from the Options Register as it stood at a specific date in 2017 to him. He submits that in those extracts it was expressly noted that the Remaining 2008 Options, like the options of other option-holders, resulted in the number of shares associated with each option being multiplied by 50 post the Share Split in Column N, albeit those extracts wrongly recorded that the Remaining 2008 Options had been forfeited. He submits that these documents demonstrate that there was no dispute as to the shares associated with his options being multiplied by 50. He further submits that there was no reason for him to conclude that the Share Split was something that needed to be determined in the 2018 Proceedings. 159 Third, the number of 2008 Options he held were not determined adversely to him in the 2018 Proceedings. He obtained exactly what he sought in the 2018 Proceedings, namely confirmation that the Remaining 2008 Options remained in existence. 160 Fourth, the defence of Nuix to the 2018 Proceedings was "always a hopeless one" and was "in reality yet another contrivance and was of no value to Nuix whatsoever". No weight should be given to Nuix's claim that its defence in the 2018 Proceedings, that the Remaining 2008 Options had expired, could also have been relied upon in these proceedings, had it not been extinguished by the Consent Judgment. In any event, it is not clear that that any of Nuix's relevant decision makers genuinely believed that the Remaining 2008 Options had expired, as evidenced by an email from Mr Castagna dated 27 November 2019 to Nuix executives. Mr Castagna's affidavit was not read and it should be inferred that his evidence would not have assisted Nuix's case. 161 He submits that Mr Standen's evidence in cross-examination, that he believed the Remaining 2008 Options had expired when the business of Nuix was not sold by late 2010, was "entirely inconsistent with all of the contemporaneous documentation". Mr Sheehy also points to the evidence of Mr Phillips in cross-examination in which he "largely stepped back" from the evidence he had given in his affidavit that he had held a similar belief. 162 Fifth, it is not correct to contend that he had advanced no good reason for not raising his present claims in the 2018 Proceedings. Neither party raised the effect of the Share Split on the Remaining 2008 Options in the 2018 Proceedings. Mr Sheehy's evidence in cross-examination, in these proceedings, that if he had turned his mind to the effect of the Share Split in the course of the 2018 Proceedings he would have believed he held 22 million of the Remaining 2008 Options with an exercise price of 4 cents was explicable in the context of his current claims because it was only "one of the two interpretations you can have" and "one of the two ways it works". 163 Sixth, despite the earlier 2018 Proceedings and the present proceedings both being concerned with the terms of the 2008 Option Agreement, this fact does not support an estoppel. The way in which Nuix recorded the Remaining 2008 Options in the Options Register following the Consent Judgment showed that the 2018 Proceedings did not resolve critical issues in relation to those options.

Requirements for Anshun estoppel 164 Nuix submits that the High Court's decisions in Tomlinson and Rogers do not suggest that a characterisation of Anshun estoppel as a "true estoppel" imports any requirement as to detrimental reliance. It submits that the requirements of Anshun estoppel have been addressed by the High Court on a number of occasions, including in Tomlinson at [22] (French CJ, Bell, Gageler and Keane JJ); Clayton at [30] (Kiefel CJ, Bell and Gageler JJ) and in Port of Melbourne. It submits that on none of those occasions has detrimental reliance been identified as a matter that must be proved. 165 Nuix submits that Anshun estoppel is "[f]ounded on the twin policies of ensuring finality in litigation (thereby promoting respect for and efficient use of courts as well as avoiding inconsistent judgments) and of ensuring fairness to litigants (by sparing them the stress and expense of duplicative proceedings)": Clayton at [34] (Kiefel CJ, Bell and Gageler JJ). It submits that neither of these policies suggests that establishing detrimental reliance is a necessary element to Anshun estoppel. Rather, Anshun estoppel proceeds on the premise that detriment will inevitably arise if litigants are permitted to act inconsistently with these policies. 166 Nuix submits that the statements made by the High Court in Tomlinson and Rogers that Anshun estoppel was a "true estoppel" must be understood in context. In both cases a distinction was being drawn between res judicata and the common law doctrine of estoppel in relation to judicial determinations, which were characterised as "true estoppels".

Relevance and reasonableness 167 Nuix submits that the 2018 Proceedings and Mr Sheehy's claims in this proceeding are so closely connected it was unreasonable for Mr Sheehy not to have raised them earlier. It relies on the following principal matters in support of that contention. 168 First, Mr Sheehy's claim regarding the number of shares he is entitled to is merely an alternative formulation of the claim determined in the 2018 Proceedings. Mr Sheehy himself emphasised in oral evidence that there were two ways the Share Split could have applied to the Remaining 2008 Options, with his options being multiplied by 50 being one of them ("one of the two ways it works"). Importantly, Mr Sheehy accepted that, holding that view, if he had thought in the 2018 Proceedings about the Share Split and its effects on his options, he would have appreciated the need to amend his Summons to claim a larger number of options. 169 Second, both sets of claims concern the terms of the same agreement and features of the options granted under that agreement. 170 Third, both sets of claims concern matters that should have been recorded in the Options Register with respect to the Remaining 2008 Options. Both seek orders that the Option Register be corrected. The orders are sought by reference to events that pre-date the 2018 Proceedings. 171 Fourth, Nuix's defence to the 2018 Proceedings would also be a defence to Mr Sheehy's claims in this proceeding (i.e. if the options had expired or ceased to exist they would not be exercisable and no shares would be granted). 172 Fifth, no good reason has been offered for Mr Sheehy's failure to advance the claims made in these proceedings in the 2018 Proceedings. The only explanation he has provided is to the effect that he did not turn his mind to the impact of the Share Split on the Remaining 2008 Options, and was not told of the risks. Indeed, he accepted in oral evidence that, if he had thought about the Share Split and its effects on his options in the 2018 Proceedings, he would have appreciated the need to amend his Summons to claim a larger number of options. Mr Sheehy is an adequate proxy for a reasonable litigant and he accepted that, but for his own inadvertence, in the 2018 Proceedings he would have claimed that his 2008 Options had the benefit of the Share Split. That is evidence of what a reasonable litigant would have done in the circumstances. 173 Sixth, it is unsurprising that Nuix had not raised any dispute with Mr Sheehy prior to the commencement of the 2018 Proceedings as to the application of the Share Split to the Remaining 2008 Options, given its position that the options had expired. That no dispute was on foot was the result only of Mr Sheehy failing to assert a claim to a higher number of options or shares - Mr Sheehy cannot rely upon the very failure that founds Anshun estoppel to defeat it. 174 Seventh, the contention advanced by Mr Sheehy that the Court cannot be satisfied that Nuix would not have settled the 2018 Proceedings on the terms that it did if Mr Sheehy had made the same claims in those proceedings as he makes in this one, is both irrelevant and untenable. As outlined earlier in these reasons, Nuix submits that it is irrelevant because detrimental reliance is not a necessary element of Anshun estoppel. It submits that it is untenable because (a) any subjective belief as to whether Nuix would have settled the proceedings on that basis cannot be relevant as to whether it was unreasonable for Mr Sheehy not to raise the claims he is now advancing in these proceedings in the earlier 2018 Proceedings; and (b) in circumstances where Nuix is defending the present proceedings it defies credulity to suggest it may have conceded the claims had they been raised in the 2018 Proceedings.

Requirements for Anshun estoppel 175 Contrary to the position advanced by Mr Sheehy, I do not accept that it is necessary to prove detrimental reliance as an additional and discrete element in order to establish an Anshun estoppel. 176 In Tomlinson, the plurality identified the three forms of preclusionary estoppel recognised by the common law of Australia at [22] (French CJ, Bell, Gageler and Keane JJ). After addressing "cause of action estoppel" and "issue estoppel", the plurality stated with respect to Anshun estoppel, that: The third form of estoppel is now most often referred to as "Anshun estoppel", although it is still sometimes referred to as the "extended principle" in Henderson v Henderson. That third form of estoppel is an extension of the first and of the second. Estoppel in that extended form operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding. The extended form has been treated in Australia as a "true estoppel" and not as a form of res judicata in the strict sense. Considerations similar to those which underpin this form of estoppel may support a preclusive abuse of process argument. (Footnotes omitted) 177 The plurality stated at [23]: The present significance of the recognition of those three forms of estoppel is that each has the potential to preclude assertion of a right or obligation, or the raising of an issue of fact or law, between parties to a proceeding or their privies. Absent a principled basis for distinction - and none has been suggested - one principle must govern the identification of privies for the purpose of all forms of estoppel which result from the rendering of a final judgment in an adversarial proceeding. 178 In Rogers, Deane and Gaudron JJ stated at 275: Of course, there may be true estoppels which prevent a person from raising an issue bearing on a matter to be judicially determined. An estoppel of that kind may come about because of the way in which proceedings have been conducted with the result that the issue cannot thereafter be raised in those proceedings or on appeal. And if a party fails to raise an issue although he or she might reasonably have done so, there may well be a true estoppel which precludes that party from raising it in later proceedings. Considerations bearing on estoppel resulting from the failure to raise some issue which could reasonably have been raised in earlier proceedings have sometimes been conflated with considerations relevant to the various principles aimed at ensuring the final, binding and conclusive nature of judicial determinations. This seems to have been the case with the so-called "extended principle" in Henderson v Henderson which would allow that: [t]he plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. It is clear that that principle, if it be one, is to be treated with caution. It may be that some cases of true estoppel resulting from the failure to raise a matter which could reasonably have been raised in earlier proceedings will also prove, on analysis, to involve an impermissible challenge to the incontrovertible correctness of the judgment given in those proceedings. Indeed, there seems to have been a conjunction of that kind in Port of Melbourne Authority v Anshun Pty Ltd. However, in our view, estoppel is separate and distinct from the principles which secure the final, binding and conclusive nature of judicial determinations and their conflation can only result in confusion. (Footnotes omitted, emphasis added.) 179 Mr Sheehy's reliance on Sidhu is misplaced. It is a decision concerned with the various forms of equitable estoppel such as promissory estoppel, proprietary estoppel and estoppel by acquiescence: see Sidhu at [1] (French CJ, Kiefel, Bell and Keane JJ). In Sidhu, there is no reference to Anshun estoppel. 180 Indeed, the majority in Sidhu, in the footnote to their passage at [1], expressly reject the notion that equitable estoppels which share a common "fundamental purpose" should support "a single unifying doctrine of estoppel". The High Court has also continued to recognise various species of estoppel by conduct which lends further support to the proposition that there is no single doctrine: see Bofinger v Kingsway Group Pty Ltd (2009) 239 CLR 269; [2009] HCA 44 at [72], [74], [75] (Gummow, Hayne, Heydon, Kiefel and Bell JJ); Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 at [36]-[44] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 at [7], [42] (Gleeson CJ, McHugh, Gummow and Callinan JJ). It follows from this that the requirement for detrimental reliance for various forms of equitable estoppels does not carry with it any implication that establishing other "true estoppels" must also depend on establishing detrimental reliance. 181 In CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345; [1997] HCA 33, the majority observed at 394 (Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ) that: It may be that the bringing of proceedings with respect to one claim is properly to be seen, in the circumstances of the case, as an election … not to proceed on another claim … thus giving rise to an estoppel by conduct such that it would be unconscionable for that other claim to be pursued … 182 In the footnote to that passage, their Honours noted: cf Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 noting, however, that the judgments in that case do not proceed by reference to the ordinary principles of estoppel. See also British Airways Board v Laker Airways Ltd [1985] AC 58 at 81 183 Three propositions emerge from these statements of principle by the High Court. 184 First, the references to Anshun estoppel being a "true estoppel" are to distinguish it from res judicata and issue estoppel principles that are directed at the final, binding and conclusive nature of judicial determinations. 185 Second, the touchstones for Anshun estoppel are the extent of the connection of the claim or issue sought to be advanced to claims or issues determined in a prior proceeding and the objective reasonableness of the party not raising the claim or issue in the prior proceeding. This bears closer resemblance to the principles governing the application of estoppel by conduct and unconscionable conduct rather than the various forms of equitable estoppel the subject of the High Court's reasons in Sidhu. 186 Third, in neither Port of Melbourne nor any subsequent explanation of the nature and scope of Anshun estoppel has the High Court alluded to any requirement to prove detrimental reliance. 187 Detrimental reliance may well inform or otherwise be relevant to the determination of the objective reasonableness of a decision not to advance a claim or raise an issue in a prior proceeding but it has not been identified as a necessary element of Anshun estoppel.

Anshun estoppel and abuse of process 188 Although Anshun estoppel involves a merits-based judgment and a broader enquiry than either cause of action estoppel or issue estoppel, it remains as for those other forms of estoppel, an objective enquiry: Champerslife at [106]-[107], [112] (Handley JA). The question is ultimately whether the implications of the Share Split on Mr Sheehy's entitlements under the 2008 Option Agreement were so relevant that it was objectively unreasonable for Mr Sheehy not to raise it in the 2018 Proceedings. 189 I am satisfied for the following reasons that Nuix has discharged its onus and established that the 2018 Proceedings and Mr Sheehy's claims in these proceedings are so closely connected that it was unreasonable for Mr Sheehy not to have raised the present claims as a relevant issue in the 2018 Proceedings. 190 First, given it is a broad merits-based enquiry and value judgment, the absence of any evidence of any dispute that might have arisen between Mr Sheehy and Nuix prior to the commencement of the 2018 Proceedings and the Consent Judgment as to the impact of the Share Split on the conversion ratio for the Remaining 2008 Options is a relevant, but not a determinative consideration. Nor, while it is relevant, is it determinative that the Summons and the CLS in the 2018 Proceedings were directed at the question of whether the Remaining 2008 Options were still capable of being exercised not at post Share Split conversion ratios. Nor does it follow that there is no close connection because the question of whether or not the conversion ratio for the exercise of the Remaining 2008 Options was to be multiplied by the divisor for the Share Split was not specifically addressed in the Consent Judgment. 191 Second, the explanations provided by Mr Castagna in late 2016 in the Webinar and in the slides presented at the Town Hall Meetings made it clear that the effect of the Share Split was that options in Nuix were to be multiplied by 50 and their exercise price was to be divided by 50. The submission made by Mr Sheehy that there was nothing to suggest to him at the time that he commenced the 2018 Proceedings that there could be any issue between him and the application of the Share Split to the Remaining 2008 Options if he were to assert that each of the Remaining 2008 Options was, on exercise, to be converted to 50 shares, cannot be accepted. 192 Third, the information recorded in the Options Register after the Share Split is not consistent with the case that Mr Sheehy now seeks to advance. Most significantly, the spreadsheet behind the OPTIONS tab in the Options Register as it stood at 8 August 2017, that was provided to Mr Sheehy in the course of the 2018 Proceedings in the form of a PDF file, recorded in Column AS that 46,727 of the 2008 Options had been exercised on 9 December 2016 and in Column AT that the Remaining 2008 Options (in aggregate 453,273) had been forfeited. 193 Each of the Option Registers in evidence, including the Options Register as it stood at 8 August 2017, included a table behind the "CAP TABLE" tab headed "Summary Capitalisation Table (as of [a particular post Share Split date])" and a table headed "Summary Capitalisation Table Above PRESPLIT". Those tabs demonstrated that the number of options held by each option-holder was 50 times greater after the Share Split. 194 I am satisfied that when the information in the spreadsheets in each CAP TABLE tab and in each OPTIONS tab are read together, that Column N in the spreadsheets in the "OPTIONS" tab in each of the Nuix Option Registers is to be construed as a reference to the number of options after the Share Split not the number of shares to which those options could be exercised. Of course, given the 1:1 conversion ratio these numbers would be the same. Any ambiguity, however, is cured in the summary information in the spreadsheets behind the CAP TABLE tab that refers expressly to the number of options held by all option-holders both prior to the Share Split and at specific post Share Split dates. 195 I also accept the evidence of Ms Roche that the number of shares over which options could be exercised prior to the Share Split is identified in Column AU of the spreadsheet behind the OPTIONS tab in each Options Register and the number of shares after the Share Split is identified in Column AY. Hence, contrary to the submissions of Nuix, it does not follow that if the entries in Column N of the OPTIONS tab are to be construed as references to the numbers of options after the Share Split, not the number of shares over which those options could be exercised, that Nuix would have contravened s 170 of the Corporations Act by not recording in the Options Registers the shares to be issued if options are exercised by option holders. 196 Mr Sheehy gave evidence in cross-examination that he did not recall ever seeing the information in the tab behind the CAP TABLE tab. Given my general concerns about the evidence given by Mr Sheehy, I place little weight on that evidence. In any event, given the significance of the Remaining 2008 Options to Mr Sheehy and the potential impact of the Share Split on them, I am satisfied that it would have been unreasonable of Mr Sheehy not to have sought express confirmation of the impact of the Share Split on the Remaining 2008 Options or if such confirmation was not forthcoming asked to inspect the Options Register as a whole. It was not objectively reasonable in the circumstances to rely on entries in a column in a spreadsheet in the Options Register headed "Share Split". In context, the heading was inherently ambiguous given it referenced an event not a description of the type of security and the number would be the same whether it was a reference to either the number of options originally issued and adjusted for the Share Split or the number of shares over which options were held after the Share Split. 197 Fourth, there is a fundamental tension between the limited relief sought in the 2018 Proceedings as reflected in the Summons and the declaration and the practical consequences of the Rectification Order the subject of the Consent Judgment. That tension was highlighted by the following entries made by Nuix in the Options Register to give effect to the Rectification Order: Option Holder: Eddie Sheehy ESOP: As per Consent Court Order dated 26 Nov 2019 Grant Date: l7-Sep-08 Last Exercise Date: As per Consent Court Order dated 26 Nov 2019 Option Price: As per Consent Court Order dated 26 Nov 2019 Number of Options: 453,273 Share split: 453,273 Lapse or Exercise Date: As per Consent Court Order dated 26 Nov 2019 Vesting Start Date: As per Consent Court Order dated 26 Nov 2019 Vesting End Date: As per Consent Court Order dated 26 Nov 2019 Total Cost: $906,546 198 As submitted by Mr Sheehy, the Consent Judgment did not in fact address any of the EOP, Last Exercise Price, Option Price, Lapse or Exercise Date, Vesting Start Date and Vesting End Date. The contemporaneous email correspondence of Ms Roche demonstrates that she did not know how to record the effect of the Consent Judgment. These omissions, combined with the absence of any reference in the declaration to the conversion ratio might assist Mr Sheehy in resisting the cause of action estoppel and issue estoppel claims advanced by Nuix. They do not assist him, however, in responding to the Anshun estoppel claim. The objectively foreseeable and inevitable consequence of the Rectification Order was that each of the matters referred to above would have to be entered in the Options Register. By reason of s 170(1)(d) of the Corporations Act these matters included the number of shares over which the options were issued. The figure inserted for "Share split" of 453,273 reflected the existing, at least implicit, conversion ratio of 1:1 in the 2008 Option Agreement. 199 Mr Sheehy knew or ought reasonably to have known at the time he commenced the 2018 Proceedings, by reason of his position as the CEO of Nuix until January 2017, the Webinar and the presentations at the Town Hall Meetings, that Nuix was taking the position that the practical effect of the Share Split was that Nuix share options were to be multiplied by 50 and the exercise price for each share option was to be divided by 50. Further, Mr Sheehy knew or ought reasonably to have appreciated that the Rectification Order would require Nuix to record in the Options Register the number of shares over which the Remaining 2008 Options had been granted. 200 Fifth, contrary to the submissions of Mr Sheehy, I am not prepared to draw any Jones v Dunkel inference by reason of the absence of any evidence from any decision maker of Nuix as to whether they believed Mr Sheehy had abandoned any claims arising out of the Share Split. There was nothing that was required to be explained or contradicted: Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 at 321 (Windeyer J). Any subjective state of mind of any decision maker of Nuix cannot be relevant to the objective question of whether it was reasonable for Mr Sheehy not to have raised his present claims in the 2018 Proceedings. 201 For the foregoing reasons, I am satisfied that it was unreasonable for Mr Sheehy not to have raised in the 2018 Proceedings his contentions that he now seeks to raise as to the impact of the Share Split on the Remaining 2008 Options. 202 Further, and in any event, if contrary to my conclusion above it is necessary to establish detrimental reliance to give rise to an Anshun estoppel, I am satisfied that Nuix agreed to a settlement of the 2018 Proceedings on the basis that Mr Sheehy was not seeking to contend that the effect of the Share Split was that his entitlement to shares on the exercise of the 2008 Options would be multiplied by 50. In agreeing to the settlement of the proceedings on that basis, Nuix acted to its detriment in that it was precluded from subsequently contending that the Remaining 2008 Options had expired and further, or alternatively, it would be unconscionable for Mr Sheehy to resile from the expectation that he had created that he would not subsequently seek to raise any claim about the impact of the Share Split on the Remaining 2008 Options given the terms of the Rectification Order. 203 Mr Standen, a director of Nuix at the time of the Consent Judgment, gave the following evidence in his affidavit at [29]: In November 2019, Mr Sheehy offered to settle the proceedings on the basis that the parties agree to a declaration that Mr Sheehy was entitled to a specific number of options, namely 453,273 options. Nuix agreed to settle the dispute by consent judgment. I was involved in the decision making for Nuix in relation to that offer. I considered Nuix accepting that offer to be a significant compromise because I thought that the agreement was clear that the ability to exercise the options by Mr Sheehy ended in 2010. Nevertheless, I agreed to accepting the resolution proposed by Mr Sheehy because I thought the litigation was an unnecessary distraction and because Mr Sheehy was not seeking to maintain that the options he was claiming had been subject to the Share Split I referred to above. I would not have agreed to resolve the dispute on the basis of the declaration proffered by Mr Sheehy if it had referred to 22,663,650 options or that the options could be converted for 22,663,650 shares. I also would not have agreed to Nuix accepting the offer if Mr Sheehy had contended that the options were exercisable on the basis that a 'sale of the business' had occurred for the purposes of Mr Sheehy's 2008 Options Agreement. 204 Mr Phillips gave evidence to similar effect in his affidavit at [32]: In November 2019, Nuix agreed to resolve those proceedings after receiving an offer from Mr Sheehy that the proceedings be resolved on the basis of a court declaration that Mr Sheehy was entitled to 453,273 options in accordance with the terms of the 2008 agreement. I was initially reluctant to accept the proposed declaration because I was strongly of the view that the options were no longer capable of being exercised and that it would be best for the Court to rule on that issue. However, I ultimately agreed to accept the proposed settlement on the basis that I thought the proceedings were a distraction and that Mr Sheehy was not contending that the options should be multiplied by 50 following the Share Split. I would not have agreed to the proposed declaration if Mr Sheehy had contended that the register should record that he holds 22,663,650 options or would in any way have been entitled to that many shares in the event of a sale of the business. I am also very strongly of the view that I would not have agreed to that settlement if Mr Sheehy had sought an order or contended that a sale of business had occurred which permitted the exercise of those options if they continued to be valid. 205 I accept this evidence of Mr Standen and Mr Phillips. Both were challenged in cross-examination about whether and on what basis each believed the Remaining 2008 Options had expired but neither was challenged on their evidence that they would not have agreed to Nuix resolving the 2008 Proceedings pursuant to the Consent Judgment if Mr Sheehy had contended that he held 22,663,650 options or he would in any way have been entitled to that many shares in the event of a sale of the business of Nuix. 206 Moreover, the evidence of Mr Phillips is consistent with contemporaneous documents and the apparent logic of events. 207 The Castagna November 2019 Email relevantly states: Please know that we have settled the above case. Judgement by the Court was recorded by mutual consent yesterday. The basis of settlement was indeed most surprising and presented to us by Eddie's legal team for agreement. In essence, Eddie asked, and we agreed to have his request for 543,273 options at $2.00/share exercise price to be recorded in our options register and that each party meets its own legal costs. What is Notable: The option number is post-split. This was contrary to his original claim for $41 million based on the value of those options pre-split. The settlement is therefore, one-fiftieth of his original claim. There were extensive 'what ifs' presented to our barrister regarding [redaction for legal professional privilege] Extraordinary! I have no doubt that we will hear the screams of angst from Eddie in the fullness of time. 208 The above extract from the Castagna November 2019 Email makes clear that Nuix had agreed to the settlement on the understanding that on a post Share Split basis, Nuix would recognise in the Options Register that Mr Sheehy had 543,273 options that were exercisable on payment of an exercise price of $2.00. That understanding necessarily meant that Nuix was proceeding on the basis that Mr Sheehy was not pressing for the Remaining 2008 Options to be multiplied by 50 or that there be any adjustment to the original exercise price of $2.00 per share. 209 The effect of the Consent Judgment was to extinguish the Nuix defence that the Remaining 2008 Options had expired. It was therefore not open for Nuix to raise that defence in these proceedings. Nor did Mr Sheehy plead in these proceedings that the expiration defence was unmeritorious and the issue has not been tried. In the circumstances it is not open to this Court to make any determination of the merits of that defence except to perhaps observe that (a) it was relied upon by Nuix in the 2018 Proceedings prior to the Consent Judgment; (b) the Options Register as and from at least 8 August 2017 had recorded the Remaining 2008 Options as "Forfeited"; (c) given Mr Sheehy is no longer the CEO of Nuix the commercial rationale for the operative provisions of the 2008 Option Agreement has fallen away; and (d) given that Nuix is defending these proceedings it is indeed, as submitted by Nuix, that it "simply defies credulity" to suggest that, had the same claims been made in the 2018 Proceedings that Nuix would have still settled the claims on the same basis as it did in the Consent Judgment. 210 To the extent that it is relevant, the speculation by Mr Castagna as to any "screams of anguish" from Mr Sheehy or any comment by Mr Krupczak that the terms of the Consent Judgment were "truly unbelievable" cannot alter the objective basis on which Mr Sheehy agreed to settle the 2018 Proceedings, including most relevantly the terms of the Rectification Order, or affect their entitlement to settle the proceedings on that specific basis and subsequently rely on its terms if Mr Sheehy subsequently sought to bring subsequent proceedings directed at the terms of the Remaining 2008 Options or his ability to exercise them. 211 Given my conclusion in relation to the Anshun estoppel defence it is not necessary for me to determine whether the claims sought to be advanced by Mr Sheehy in these proceedings give rise to an abuse of process. In any event, the submissions of Nuix directed at the abuse of process contention were in effect, confined to the proposition that a failure to raise an issue in an earlier proceeding may constitute an abuse of process, even if the failure might not otherwise have given rise to an estoppel, citing Tomlinson at [26].

Introduction 212 Mr Sheehy contends that Nuix is in breach of the 2008 Option Agreement because it has refused to recognise that he is entitled to 22,663,650 shares in Nuix on his purported exercise of the Remaining 2008 Options. 213 Mr Sheehy contends that it was an implied term of the 2008 Option Agreement that if the shares in Nuix as they stood in September 2008 were split by a particular divisor, upon exercise of the options, he would be issued with shares equivalent to the number of options set out in the 2008 Option Agreement, multiplied by the divisor (Implied Term). 214 Mr Sheehy submits that the Implied Term: (a) arose by implication from the express terms of the 2008 Option Agreement; or (b) was to be implied as necessary to give business efficacy to the 2008 Option Agreement.

Principles 215 An implication can arise from the construction of the express terms of a contract: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 (Brambles) at [28]-[29] (Heydon JA). Textual implications of this nature are the result of construing the text of the contract as a whole and in accordance with ordinary principles of construction. The meaning of the contract must be determined objectively and by reference to what a reasonable person in the circumstances of the parties would have understood the terms to mean: Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [47] (French CJ, Nettle and Gordon JJ). That inquiry requires attention to be given to the language of the contract, the commercial context which it addresses and the objects which it is intended to secure: McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 at [22] (Gaudron J). 216 Unless a contrary intention is indicated, a court should adopt a business-like interpretation on the assumption that the parties intended to produce a commercial result: Re Golden Key Ltd [2009] EWCA Civ 636 at [28] (Arden LJ) cited with approval in Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35] (French CJ, Hayne, Crennan and Kiefel JJ). 217 In this context the relevant inquiry is not whether the term is necessary to give business efficacy to the contract. Thus, the requirements in BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266 (BP Refinery) at 283 are not applicable: Boreland v Docker [2007] NSWCA 94 at [110]-[111] per (Beazley JA, Mason P and lpp JA agreeing); Brambles at [30] (Heydon JA). 218 While commercial contracts are to be given a commercial and business-like meaning, that does not permit a court to rewrite the parties' bargain: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; [1973] HCA 36 at [109] (Gibbs J, as his Honour then was); Kooee Communications Pty Ltd & Anor v Primus Telecommunications Pty Ltd [2008] NSWCA 5 at [27] (Basten JA, Giles and Tobias JJA agreeing); Newey v Westpac Banking Corporation [2014] NSWCA 319 at [91] (Gleeson JA, Basten and Meagher JJA agreeing). 219 Relatedly, it is necessary to bear in mind the limits of any recourse to concepts such as commercial common sense in the interpretation of contracts: Maggbury Pty Ltd v Hafele Aust Pty Ltd (2001) 210 CLR 181; [2001] HCA 70 at [43] (Gleeson CJ, Gummow and Hayne J); MP Water Pty Limited in its capacity as Trustee for the MP Water Trust v Veolia Australia Pty Ltd [2022] NSWCA 127 at [100] (Mitchelmore JA, Ward P and Macfarlan JA agreeing). 220 It is to be noted that the implication of a term is "not an orthodox instance" of interpretation: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; [1982] HCA 24 (Codelfa) at 345 (Mason J, as his Honour then was). An "implication" contained in the express words of a contract is, in substance, not the implication of an entirely new and separate term but a process of construing the express terms of the contract: Brambles at [31] (Heydon JA).

Submissions of Mr Sheehy 221 Mr Sheehy submits that the Implied Term is a business like construction which reasonable parties would have understood from the contractual text of the 2008 Option Agreement. 222 Mr Sheehy submits that the 2008 Option Agreement would not be workable in a business sense without an implied term addressing the impact of a share split. He submits that unless a term is to be implied addressing a conversion ratio in the event of a share split, the agreement would fail entirely to achieve this purpose as it would permit Nuix to unilaterally reduce the value of his options to zero, or close to zero. 223 Mr Sheehy submits that it is inherent in the nature of an option agreement that it contain a conversion ratio to identify in some way the number of shares that will be issued upon the exercise of the option. He submits that the 2008 Option Agreement only contained an "example" of a conversion ratio from options to shares. Thus, he submits the Court must infer from the express terms of the contract what reasonable parties would have intended the conversion ratio to be. 224 Mr Sheehy submits that reasonable parties to the 2008 Option Agreement would have intended that Mr Sheehy be granted options over Nuix shares as they stood at the time of entry into the 2008 Option Agreement and if those shares were subsequently split, Mr Sheehy would be entitled to "all of the component parts" into which the Remaining 2008 Options were split. Hence, he submits that initially the conversion ratio was 1:1 and following the Share Split it was 1:50. 225 Mr Sheehy submits that it is important to understand in this context that a share split does not involve the issue of any "new shares". Rather, he submits, it is a corporate device adopted for reasons that are extraneous to the substantive equity interests of existing shareholders and option-holders and it does not increase or decrease the share capital of a company. 226 Mr Sheehy submits that the number of shares to be issued on the exercise of the Remaining 2008 Options must be adjusted in the event of a share split in order to preserve "equivalence of value and equivalence of incentive" to Mr Sheehy. 227 Mr Sheehy submits that is clear from the worked example below the table in the 2008 Option Agreement and the attached spreadsheet (Option Agreement Spreadsheet) that the 1:1 conversion ratio applied on the explicit assumption that there were 2,957,456 shares outstanding in Nuix. He submits that if there was a subsequent share split a reasonable person would expect that the option or share numbers identified in the table would increase by the same multiple.

Submissions of Nuix 228 Nuix submits that the Implied Term did not arise from the express terms of the 2008 Option Agreement for the following reasons. 229 First, Mr Sheehy has failed to identify any specific express words of the 2008 Option Agreement from which the Implied Term is said to have arisen and in fact there are none. Moreover, the Implied Term is inconsistent with the Option Agreement Spreadsheet that made clear that the conversions ratio was 1:1. 230 Second, Nuix submits that by seeking the implication of the Implied Term into the 2008 Option Agreement, Mr Sheehy is (a) impermissibly asking the Court to rewrite the parties bargain, (b) failing to appreciate the limited recourse the Court can have to concepts such as commercial common sense in construing contracts and (c) seeking to impose an entirely new and separate term rather than engaging in a process of construing the express terms of the contract. 231 Third, Nuix submits that it cannot be presumed that if the parties had turned their mind to the effect of any share split on Mr Sheehy's entitlements under the 2008 Option Agreement they would have agreed that there should be any change to those entitlements if there were a capital reorganisation. It submits that the implication of a term to the effect of the Implied Term was not obvious. It submits that there was at least as much reason to believe that, had Nuix turned its mind to the possible effect of a share split on Mr Sheehy's entitlements, it would not have agreed to the Implied Term given (a) that at the time of entry into the 2008 Option Agreement a share split was a "remote and distant possibility" and (b) the commercial incentives provided to Mr Sheehy in the agreement were directed at him achieving a sale of the business of Nuix between September 2008 and December 2010.

Consideration 232 I am not persuaded that the Implied Term can be implied from the express terms of the 2008 Option Agreement or be incorporated by reference to the Option Agreement Spreadsheet. 233 First, it is necessary to have due regard to the 2,957,456 "Shares outstanding" assumption in the Assumptions table in the Option Agreement Spreadsheet but it is not determinative. The immediate relevance of that assumption is that it is used as the base figure in the column in the table in the spreadsheet headed "equals, Fully diluted total shares". Each row in that column records at various sale prices between $5,000,000 and $40,000,000 the aggregate of the base figure and the number of shares that would be issued to Mr Sheehy if he exercised the options that he would be entitled to receive at each sale price that might have been achieved for the sale of the business of Nuix. 234 The inclusion in the Option Agreement Spreadsheet of calculations of a "fully diluted" position for Nuix is somewhat curious given that the fourth operative paragraph of the 2008 Option Agreement expressly provides "Please note that your equity position (unrestricted stock and options) has been expressed in absolute terms, not as a relative % of the company." Nevertheless, Mr Sheehy's shares on the exercise of the 2008 Options are not expressed in the Option Agreement Spreadsheet as a percentage of total shares outstanding in Nuix. 235 Moreover, I am satisfied that both the worked example under the table in the 2008 Option Agreement and the Option Agreement Spreadsheet proceed on an implicit assumption of a 1:1 conversion ratio. I find, to the extent that it might remain in issue, that a term is to be implied from the express terms of the 2008 Option Agreement and the Option Agreement Spreadsheet, being the figures reflecting that assumption, that the parties had agreed a 1:1 conversion ratio, at least in circumstances where the shares outstanding in Nuix at the time of any exercise of the 2008 Options remained at 2,957,456 or the number of shares outstanding increased as a result of an "additional financing round" taking place. 236 I do not accept, however, that it is possible to imply from the express terms of the 2008 Option Agreement or the Option Agreement Spreadsheet that any other conversion ratio can be implied in the event that there was any subsequent variation in the shares outstanding in Nuix by way of either a consolidation or share split. There are no express terms in the 2008 Option Agreement or the Option Agreement Spreadsheet from which any other conversion ratio, including that alleged in the Implied Term, could be implied. It was not an issue that was addressed in either the 2008 Option Agreement or the Option Agreement Spreadsheet. The implication of the Implied Term would lead to the implication of an entirely new and separate term and would not constitute a process of construing the express terms of the contract 237 I address the other submissions advanced by Nuix in opposition to the implication of the Implied Term from the express terms of the 2008 Option Agreement in the course of my consideration of the contentions advanced by Mr Sheehy on the implication of the Implied Term to give business efficacy.

Principles 238 The conditions necessary to ground the implication of a term in a "formal" contract on an ad hoc basis were summarised by the majority opinion of the Privy Council in BP Refinery at 283 and have been repeatedly adopted by the High Court, including in Secured Income Real Estate v St Martin's Investments Pty Limited (1979) 144 CLR 596; [1979] HCA 51 (Secured Income) at 606 (Mason J, as his Honour then was), namely: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression;(5) it must not contradict any express term of the contract. 239 In relation to "informal" contracts, the High Court said in Hawkins v Clayton (1988) 164 CLR 539; [1988] HCA 15 (Hawkins) at 573 (Deane J) that the test for determining if a term may be implied is simply whether the term "is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case". It is still necessary, however, in the case of an "informal contract" to show that the asserted implied term is so obvious that it goes without saying and not inconsistent with any express term of the contract: Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588; [2000] HCA 25 at [46]-[47]; see also Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 at 121 (Deane J). 240 It has been said that "the courts are slow to imply a term" and that "in many cases what the parties have actually agreed upon represents the totality of their willingness to agree": Codelfa at 346 (Mason J, as his Honour then was). Implying a term is a principle "sparingly and cautiously used": Equitable Life Assurance Society v Hyman [2002] 1 AC 408 at 549 (Lord Steyn). It is also the case that "courts have been at pains to emphasize that it is not enough that it is reasonable to imply a term", it must be clearly necessary: Codelfa at 346. It must be clearly necessary to imply the term "in order to make the contract operative according to the intention of the parties as indicated by the express terms": Heimann at 695 (Jordan CJ). 241 The fact that a provision would provide a greater protection for one party is not a sufficient reason for implying it: Secured Income at 605 (Mason J, as his Honour then was). The difficulty, in a particular case, of identifying with any degree of certainty the term which the parties would have settled upon had they considered the question is an additional reason to approach a purported implication with caution: Codelfa at 346 (Mason J, as his Honour then was). 242 The requirement that the term to be implied must "give business efficacy" has been said to contemplate a term that is needed "to make the agreement work, or conversely, in order to avoid an unworkable situation" and this involves an enquiry as to what is necessary to make it workable "in a business sense": Sekisui Rib Loe Australia Pty Ltd v Rocla Pty Ltd [2012] SASCFC 21 (Sekisui) at [50] (Sulan J, David and Peek JJ agreeing), citing BP Refinery at 292 and Colliers Jardine (NSW) Pty Ltd v Balog Investments Pty Ltd & J Dan Pty Ltd [1996] ANZ Conv R 527 at 96. Thus, it is not enough that a contract can operate without the implied term; it must be able to operate "effectively": Re Ronim Pty Ltd [1999] 2 Qd R 172 at [18] per de Jersey CJ, Pincus and Thomas JJ. A term may be "commercially necessary, notwithstanding that the contract can operate without it": Sekisui at [50]. 243 No term should be implied when "it is possible to hold that reasonable men could have contemplated the circumstances as they exist and yet have entered into the bargain expressed in the document": Scottish Navigation Co. Ltd. v W. A. Souter & Co [1917] 1 KB 222 at 249, cited with approval in Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169; [1943] HCA 43 at 198 (Latham CJ), 223 (Williams J).

Submissions of Mr Sheehy 244 Mr Sheehy submits that the 2008 Option Agreement was an "informal" contract because the parties did not identify the applicable conversion ratio or what was to occur in the event of a share split or consolidation. Mr Sheehy submits by reference to the statement of Deane J in Hawkins at 573, that the test for the implication of a term is only whether the term "is necessary for the reasonable or effective operation of the contract in the circumstances of the case". 245 Mr Sheehy submits that the Implied Term is best understood as "a limited implication beyond the meaning of the express words" rather than as a "new and separate term". He submits, that in any event, all of the requirements for the implication of the Implied Term are met, irrespective of whether they are to be derived from BP Refinery or Hawkins. 246 Mr Sheehy submits that is it "obviously" reasonable and fair that he receive a greater number of shares on the exercise of the Remaining 2008 Options proportionate to the extent of the subdivision of the Nuix shares under s 254H of the Corporations Act. He submits that any dilution of the holdings of existing shareholders is irrelevant. Rather, the relevant question is what was he promised, which was an offer by reference to Nuix stock, as it then stood, not a later subdivision following the Share Split. Hence, there would be no relevant "reduction" to the holdings of other shareholders if the Implied Term were to be implied, those holdings would simply reflect the agreement that Nuix had reached with Mr Sheehy.

Business efficacy 247 Mr Sheehy submits that the Implied Term is necessary to give business efficacy to the 2008 Option Agreement. He submits that in the absence of an express conversion ratio it is necessary to imply a term providing for a conversion ratio and the Implied Term is necessary to ensure that the purpose of providing an incentive to Mr Sheehy is not eliminated by a reduction of his options to "zero, or close to zero" in the event of a share split. 248 Mr Sheehy submits that the implication of the Implied Term to give business efficacy to the 2008 Option Agreement is supported by the inclusion of express terms addressing capital reorganisations in the options issued by Nuix under the EOP rules. He submits that the effect of the EOP rules was that all option-holders "were treated as being entitled to 50 times the number of shares on exercise as compared to prior to the share split". 249 Mr Sheehy, seeks to distinguish the decision of the Privy Council in Forsayth Oil & Gas NL v Livia Pty Ltd (1985) 59 ALJR 746 (Forsayth) which is relied upon by Nuix. Mr Sheehy distinguishes Forsayth on the basis that their Lordships (a) were addressing a reduction of capital and not a purely administrative measure of a consolidation or subdivision of shares that had no impact on a company's share capital or asset position; (b) made plain any determination "is dependent upon the precise terms of the option contract"; (c) stated the company could not unilaterally alter the terms of the options which expressly provided that the option-holder was entitled to $1 shares not 25 cent shares; and (d) considered that given the company was the party seeking to imply the term it was unnecessary as the company retained the power to change its capital as it sought fit and the present circumstances were a "misfortune that the shareholders brought upon themselves". 250 Mr Sheehy also submits that Forsayth can also be distinguished on the basis that (a) the options in Forsayth were tradeable and the Court would be more reluctant to imply terms into tradeable instruments; (b) that a company may be at liberty, short of fraud, to reorganise its capital, including consolidation or subdividing its shares does not address the effect of a consolidation or subdivision of shares on an option holder; and (c) immediately after Forsayth the Australian Associated Stock Exchange updated its listing requirements to provide that options to acquire shares in a company listed on the ASX must include terms which address the impact of a capital reorganisation of the company, including a share split. 251 Mr Sheehy submits that the question of the implication of terms did not arise in Leadenhall Australia Ltd v Digicall Group Ltd (1996) 19 ACSR 141 (Leadenhall) and any statement that the principle was well settled by reference to Forsayth must be understood by what in fact was decided by the Privy Council.

Other BP Refinery factors 252 Mr Sheehy submits that it would have been so obvious so as to go without saying that reasonable commercial parties would not have expected that when the 2008 Option Agreement was entered into that Mr Sheehy's rights could be diluted by a share split and certainly not by 98% pursuant to the Share Split. He submits that this is particularly the case in circumstances where the incentives provided to Mr Sheehy could "essentially be rendered worthless" by a share split. 253 Mr Sheehy submits with respect to the fourth and fifth BP Refinery factors that the Implied Term is capable of clear expression and it does not contradict any express terms of the 2008 Option Agreement. He submits that the references to the absolute number of shares and options remaining constant was in the context of an increase in the total assets of Nuix through additional financing rounds and he is not seeking a percentage interest in the company, rather an equivalent absolute interest to reflect the impact of the Share Split.

Reliance on post-contractual conduct 254 Mr Sheehy submits that the following post-contractual conduct of Nuix demonstrates that it treated the 2008 Options as being subject to the Share Split: (a) the entries in columns M and N of the Nuix capitalisation and option tables that recorded the "number of options" and "share split" respectively for the Remaining 2008 Options; (b) Nuix always referred to it having undertaken a share split; (c) Nuix did not issue new option certificates to record that the number of options held by each option-holder had increased by 50 following the Share Split; and (d) the Webinar sent by Mr Castagna to all staff explaining the effect of the Share Split stated "for every one option you will be able to translate it into 50 shares". 255 Mr Sheehy submits that the entries in the "share split" column N of OPTIONS tab of the Nuix capitalisation tables and option tables must have been a reference to the number of shares over which options were held. He submits that otherwise, Nuix would have been acting in contravention of s 170(1)(d) of the Corporations Act because it has not identified where it has recorded this information if it had not been identified in column N.

Submissions of Nuix 256 Nuix submits that the Implied Term is a new and separate term that purports to address a set of circumstances not otherwise addressed or alluded to in the 2008 Option Agreement and therefore all five Codelfa factors must be satisfied. 257 Nuix further submits that the 2008 Option Agreement was not an informal contract and it was complete on its face. It submits that (a) the evidence discloses that it was "carefully negotiated" over a "lengthy period"; (b) the conversion ratio of 1:1 was "clearly indicated" in the agreement; and (c) providing for the possibility of a share split is not an essential term of an option contract.

Business efficacy 258 Nuix submits that the Implied Term was not necessary to give business efficacy to the 2008 Option Agreement. It submits that authority stands against the proposition that it is necessary to imply a term such as the Implied Term into an option contract as a matter of business efficacy. Nuix relies on the reasoning of the Privy Council in Forsayth and the Full Court's consideration of Forsayth in Leadenhall. 259 Nuix submits that the fact that the parties chose not to make the Remaining 2008 Options subject to the EOP Rules is a powerful indicator that they did not intend any equivalent provisions addressing share splitting in the 2008 Option Agreement.

Other BP Refinery criteria 260 Nuix advances the following submissions with respect to the other BP Refinery criteria. 261 First, Nuix submits that the Implied Term contradicts express terms of the 2008 Share Agreement. It submits that it contradicts the 1:1 conversion ratio of options to shares in the table in the second operative paragraph and the statement in the fourth operative paragraph that Mr Sheehy's equity participation had been stated in absolute terms not as a relevant percentage of the company. 262 Second, Nuix submits that the Implied Term is not so obvious that it goes without saying. It submits that: (a) it was far from obvious that the parties intended that Mr Sheehy would receive the same share splitting protections provided in the EOP Rules when he was not subject to any of the detriments following a termination of employment contained in the EOP Rules; (b) if any term was to be implied it would be a term providing for an increase or decrease in options, not adjustments to the conversion ratio, not least because that would not infringe the ASX Listing Rules, unlike a term adjusting the conversion ratio; (c) the object of the 2008 Option Agreement was to incentivise Mr Sheehy to achieve a sale of the business of Nuix prior to the end of 2010 and there was no reason or evidence to suggest that the parties had contemplated any share split in that period, not least because the share price for Nuix shares at that time was between $0.35 and $0.40; and (d) on three separate occasions two separate sets of solicitors for Mr Sheehy had asserted on his behalf that the Remaining 2008 Options should have been multiplied by 50 not that the conversion ratio should have been increased from 1 to 50. 263 Third, Nuix submits that the Implied Term was neither reasonable nor equitable. It submits that it would significantly reduce the value of Nuix shares held by existing shareholders and it would give Mr Sheehy the benefit of the reorganisation benefits in the EOP Rules without any of the post-employment detriments. It further submits that the Implied Term would have the potential to render the grant of the 2008 Options a less effective incentive to achieve a sale of the business of Nuix by the end of 2010. 264 Fourth, Nuix submits that the Implied Term is not capable of clear expression. It submits that if the conversion ratio were to be adjusted to 1:50 there would be no need to adjust the exercise price but Mr Sheehy has pleaded in the Further Amended Statement of Claim at [9] that the "exercise price of the options would be the exercise price divided by the divisor". It further submits that the attempts by Mr Sheehy to overcome this difficulty by referring to the "exercise price of the options (on a per share basis)" are flawed because there is no such thing as an exercise price for part of an option.

Reliance on subsequent conduct 265 Nuix submits that even if it were permissible to have regard to post-contractual conduct in support of the existence of an implied term, the material relied upon by Mr Sheehy does not rise higher than the subjective beliefs of the employees of Nuix responsible for the creation of those documents. It submits it is well established that subjective beliefs and intentions pre-contract cannot be relevant to the construction or implication of a contract's terms and the position must be all the clearer for post-contract subjective beliefs and intentions. 266 In particular, Nuix submits that the state of mind of Ms Roche in 2011 and thereafter cannot possibly be evidence of what Nuix and Mr Sheehy may have objectively intended when they entered into the 2008 Option Agreement. 267 Nuix submits that, contrary to the position advanced by Mr Sheehy, the Options Register records the number of each option-holder's options after the Share Split; not the number of shares to which they were entitled on the exercise of their options.

Consideration 268 The proposition that in order to give business efficacy to an option contract, it was not necessary to imply terms to address how a share split or consolidation was to be treated if the contract was otherwise silent, was at the heart of the submissions made by Nuix in opposition to the implication of the Implied Term. 269 If contrary to my conclusion above that Mr Sheehy is precluded by Anshun estoppel from pursuing his claims in these proceedings, I am satisfied that it would have been necessary, in order to give business efficacy to the 2008 Option Agreement, to imply the Implied Term into the agreement. 270 It is first necessary to address the contentions advanced by Nuix with respect to Forsayth and Leadenhall.

Forsayth and Leadenhall 271 Given the reasoning of the Privy Council in Forsayth and the Full Court in Leadenhall, I accept, at least as a general proposition, that it is not necessary to imply terms as to how share splits or consolidations are to be treated in order to give business efficacy to an option contract if the contract is otherwise silent as to what is to occur. 272 In Forsayth, a company had consolidated and written down the value of its share capital and was seeking the implication of a term that the rights of certain option holders would be adjusted to the same extent. The company had reorganised its capital so that for every ten shares of $1 held by a shareholder, they would now hold one share of 25 cents. In terms of nominal value this had the effect of reducing their entitlements to 1/40 of their previous holding. The company submitted that a similar reduction ought to be implied into the options as a matter of commercial sense, so as to prevent the rights of option-holders being increased forty-fold. As to that contention, it was said at 749C-E: Their Lordships are not able to accept this proposition. The option is clear in its terms. The contract contains no provision for variation in the event of a reconstruction of the company. No power was reserved by the company to alter the terms of the options unilaterally. Nor did the company seek the prior agreement of the option holders to a novation of the option contracts. If the reorganization of the company's capital has occasioned a disadvantage to the shareholders vis-a-vis the option holders, it is a misfortune which the shareholders brought upon themselves. There is no need to imply any term into the contract as a matter of business sense. The option left the company free to increase or reduce its capital, to increase the number of shares by subdivision and to reduce the number of shares by consolidation. If the company had increased its capital and so diluted the potential rights of the option holders, the option holders could not have complained; see Hirsch & Co v Burns (1897) 77 LT 377 . Short of fraud, the company was free to reorganize its capital as it thought fit, with such advantages or disadvantages as might ensue to the option holders. The company could have protected itself as it thought fit when it decided the terms upon which the options should be granted. It elected not to do so, and indeed it did not need to do so because the whip-hand always lay with the company, which alone could decide whether or not to re-organize its capital. 273 In the present context, the party seeking the implication of the term is the option-holder, not the company. Much of the underlying rationale for their Lordships' reasoning would appear to be that the company could have protected itself as it thought fit when it decided the terms on which it determined to grant the options, it held "the whip-hand" in that it alone could decide whether or not to re-organise its capital and if the reorganisation disadvantaged the shareholders against the option-holders, it was a misfortune that the shareholders had brought upon themselves. A further consideration that focused on the particular position of the company was that no power had been reserved by the company to unilaterally alter the terms of the options. 274 Nevertheless, their Lordships concluded that in the absence of fraud, a company was "free to reorganize its capital as it thought fit, with such advantages or disadvantages as might ensue to the option holders". The inclusion of "or disadvantages" does not appear to find much support in the underlying rationale for their Lordships' reasoning in declining to imply the term sought by the company. The reference to option-holders not being in a position to complain was to a dilution that might have arisen from an increase in capital, not a share split independently of any increase in capital. 275 The conclusion in Forsayth has been embraced, without qualification, by the Full Court of this Court in Leadenhall. A company had issued options that were subject to provisions that in the event of a subdivision or consolidation of the shares of the company, there was to be a pro-rata adjustment to the number and exercise price of the options. The option holders sought to rely on those provisions in circumstances where the members of the company had passed a special resolution pursuant to s 195 of the Corporations Act reducing the issued capital of the company. The issued capital of the company was reduced from $6,266,448.50, made up of 12,532,895 shares of 50 cents each, to $2,506,579 divided into 12,532,895 shares of 20 cents. The capital reduction was achieved by cancelling paid up capital which had been lost or not represented by available assets of 30 cents of the paid up value of the shares. 276 Their Honours (Beaumont, Hill and Tamberlin JJ) observed at 144 with respect to the rights conferred by the options granted to the option holder that: It is well settled that the only rights granted by the options were contractual; and that, in the absence of specific provisions such as paras 11 and 12, a company is not fettered in its activities by granting options. Subject to the operation of such provisions, a company is free, in the absence of fraud, to reorganise its capital as it thinks fit, with such advantages or disadvantages as might ensue to option holders (see Forsayth Oil & Gas NL v Livia Pty Ltd (No 2) (1985) 59 ALJR 746 at 747 per Lord Brightman). 277 Neither Forsayth nor Leadenhall was concerned with a share split. Each was concerned with a reduction of capital and in Forsayth it was followed with a consolidation. I am satisfied, however, that the statement of general principle articulated in Forsayth and endorsed in Leadenhall that a company is free, in the absence of fraud, to reorganise its capital as it thinks fit, with such advantages or disadvantages as might ensue to option holders applies, at least as a general proposition, with equal force to a share split. 278 For the reasons that follow, however, I have concluded that Mr Sheehy has identified a proper basis on which those authorities can be distinguished and that I would be justified in not applying the general principle for which they stand in the present case. 279 I am not persuaded that the 2008 Option Agreement can be characterised as an "informal agreement". It was not an oral agreement and the parties had attempted to reduce their agreement to writing in a formal agreement complete on its face following an extensive period of negotiations between them. It is thus necessary for Mr Sheehy to establish all five of the BP Refinery criteria if the Implied Term is to be implied into the 2008 Option Agreement.

Business efficacy 280 At the outset, it is important to emphasise that the relevant enquiry is whether it is necessary to imply the Implied Term into a specific option agreement, namely the 2008 Option Agreement, in order to give the agreement business efficacy. It is not a general enquiry as to whether it is necessary to imply a term in the nature of the Implied Term into an agreement that provides a person with options to acquire shares in a company, in order to give it business efficacy. 281 The question of whether it is necessary to imply the Implied Term into the 2008 Option Agreement in order to give the agreement business efficacy ultimately turns on whether it is necessary in order to make the agreement workable in a business sense according to the intention of the parties as indicated by its express terms: Heimann at 695 (Jordan CJ). 282 It is readily apparent from its express terms that the object of the 2008 Option Agreement was intended to provide incentives to Mr Sheehy to secure a sale of the business of Nuix. It was stated in the second paragraph of the agreement that: The package we are proposing is one that unambiguously aligns your incentives with those of existing shareholders. In particular, it provides very strong incentives for you to look for a sale event for Nuix before the end of 2010; a sale event at particular valuations during this time will see you enjoy a significant reward. 283 The incentives provided in the 2008 Option Agreement comprised: (a) an incremental and cumulative issue of options to Mr Sheehy depending on the consideration that he was able to achieve for the sale of the business of Nuix, as specified in the Table in the second operative paragraph (first incentive); and (b) an additional cash bonus if he was able to achieve a sale of the Nuix business on or before 31 December 2019 in an amount in excess of $10 million or a sale on or before 31 December 2020 in an amount in excess of $20 million (second incentive). 284 The two incentives are provided cumulatively; they are not alternatives. The first incentive focuses only on the sale price achieved independent of any temporal connections. The second incentive is principally directed at achieving a sale as quickly as possible - if not by 31 December 2019, then at least by no later than 31 December 2020. The focus on a timely sale is emphasised by doubling the sale price hurdle for the payment of the cash bonus if a sale can only be achieved in the period 1 January 2020 to 31 December 2020. 285 The introduction of the second incentive in the 2008 Option Agreement with the phrase "in particular" does not render the first incentive otiose or superfluous. The first incentive is not extinguished if a sale of the business of Nuix is not achieved by 31 December 2020. It continues to offer an incentive to Mr Sheehy by way of an incremental and cumulative issue of options depending on the sale price obtained for the Nuix business. It unambiguously aligns his interests with those of the existing shareholders of Nuix by providing him with a greater number of options if higher prices can be achieved for the sale of the Nuix business. 286 It is in this context that it is then necessary to determine whether the implication of the Implied Term is necessary to give business efficacy to the 2008 Option Agreement. 287 I am satisfied that a term to the effect of the Implied Term is necessary in order to make the 2008 Option Agreement work effectively in a business sense and is commercially necessary. The first incentive would be liable to be rendered entirely nugatory in the absence of a term that adjusted the conversion ratio between options and shares to reflect any subsequent share split or consolidation of the share capital of Nuix. The intention of the parties as indicated by the express terms of the 2008 Option Agreement was to provide a compelling incentive to Mr Sheehy to sell the Nuix business in a timely manner and to maximise its sale price. Given that the second incentive elapsed if the sale of the Nuix business had not occurred prior to 31 December 2020, the agreement would no longer be capable of operating effectively in the absence of a term that adjusted the conversion ratio in the event there was a subsequent share split or consolidation. The incentives of Mr Sheehy and existing shareholders of Nuix would no longer be aligned. 288 I now turn to consider whether the other BP Refinery factors are satisfied.

Other BP Refinery factors 289 I am satisfied that the Implied Term is reasonable and equitable. 290 The purpose and effect of the Implied Term is to preserve the value of the commercial incentives provided to Mr Sheehy to achieve a timely sale of the Nuix business and to maximise the sale price for the benefit of existing shareholders in Nuix. As drafted, the 2008 Sale Agreement provided by necessary implication from its express terms a conversion ratio of one option to one share. Any adjustment to the conversion ratio by way of a share split or a consolidation would distort that ratio and the incentives provided to Mr Sheehy. 291 In the event of a share split it would not be reasonable nor equitable for the benefits that would be otherwise received by Mr Sheehy on the successful sale of the Nuix business being lost or significantly diminished but the existing shareholders position being substantially improved because of the marked reduction in the dilutive impact of any exercise of the Remaining 2008 Options. By reason of the Share Split, in the absence of the Implied Term, existing shareholders had their shareholding increased by a factor of 50 but the Remaining 2008 Options, given the 1:1 conversion ratio would not convert to any greater number of shares. The value to Mr Sheehy of the options would thus be reduced by a factor of 50 and the existing shareholders, between them, would receive a corresponding benefit because their relative percentage interest in Nuix would increase because Mr Sheehy would only receive 453,273 shares, not 22,663,650 shares, if he exercised the Remaining 2008 Options. 292 I am satisfied that the need to imply a term to the effect of the Implied Term is obvious and goes without saying for essentially the same reasons that I concluded that the Implied Term is necessary to give business efficacy and it would be reasonable and equitable. The conversion ratio is central to the efficacy and fairness of the first incentive provided in the 2008 Option Agreement. If that ratio is distorted by a subsequent share split or consolidation it must go without saying that the parties would have objectively contemplated that there would be a proportionate adjustment in the conversion ratio to preserve the commercial efficacy of the agreement. In the absence of such a proportionate adjustment the object of the contract would be entirely defeated because it could no longer operate effectively as an incentive and the respective positions of Mr Sheehy and existing Nuix shareholders would be distorted. 293 I do not consider that the specific text of the term to be implied is determinative of whether the implication of a term is obvious and goes without saying. The question of whether a term might be obvious and might go without saying focuses attention on the specific matter that has not been addressed in a commercial agreement but was necessary to give the agreement business efficacy. There may be multiple ways in which a term might be formulated to address that omission in order to give business efficacy to a commercial agreement. 294 In the present case, it might well be accepted that the omission to address the consequences of a share split or consolidation could equally be addressed by either (a) providing for a proportionate alteration to the number of options to be issued and a pro-rata adjustment to the option price; or (b) a proportionate change in the conversion ratio. The first approach would be consistent with the approach specified in the EOP rules and in the ASX rules for options granted by companies listed on the ASX. The second approach would only require the inclusion of a term to address the conversion ratio, whereas the first would require the implication of additional terms to address not only the number of options to be issued but also provide for variations to the exercise price. 295 As a matter of substance, however, both approaches would achieve the same result. Each would ensure that the value of the interest that Mr Sheehy might receive in Nuix if the Remaining 2008 Options were exercisable was preserved by providing for proportionate variations to the conversion ratio or to the number of options to be exercised and their exercise price. It is the need for a term to provide for these proportionate variations that was obvious and went without saying. 296 I am also satisfied that the Implied Term is capable of clear expression. An earlier potential ambiguity with which the Implied Term was expressed has been addressed by the amendment made to the expression of the Implied Term in the second further amended statement of claim that was filed by consent at the commencement of closing oral submissions. 297 Finally, I am satisfied that the Implied Term does not contradict any express terms in the 2008 Option Agreement. The impact of any subsequent share split or consolidation on the conversion ratio is not addressed in the 2008 Option Agreement. The conversion ratio of 1:1 to be implied from the express terms of the agreement is limited to a conversion ratio applicable to the issued share capital of Nuix as at the date of entry into the agreement, subject only to there being no adjustment to Mr Sheehy's equity position in circumstances where additional shares might be issued in connection with additional financing rounds. The issuing of new shares in the context of an increase in capital is fundamentally different to a share split or consolidation where there is no change to the capitalisation of a company.

Relevance of post-contractual conduct 298 I am not otherwise persuaded that Mr Sheehy's reliance on post-contractual conduct assists in determining whether the Implied Term should be implied into the 2008 Option Agreement. 299 It is well established as a general principle that it is not permissible to use as an aid in construction of a contract anything which the parties said or did after it was made: Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 at [35] (Gummow, Hayne and Kiefel JJ). 300 Post-contractual conduct is not admissible for the purpose of construing the provisions of a formal written conduct: Regreen Asset Holdings Pty Ltd v R [2015] VSCA 286 (Regreen) at [134] (Warren CJ, Kyrou and McLeish JJA). 301 The question of whether evidence of post-contractual conduct is admissible for the purpose of determining whether a term can be implied into a contract, however, is not settled: Regreen at [135]. 302 In Arthurson v Victoria [2001] VSC 244 (Arthurson), Gillard J stated at [314]-[315]. Whilst it is accepted that a party may make an admission of law, it would indeed be a very rare case, that a court could admit into evidence a party's statements or conduct, on the question of whether or not the Court should imply a term into a contract. This must be so, because the implication of a term is the result of the presumed intention of the parties, and is a question of law. It follows that it is difficult to place any probative value on any statements or conduct. First, the party may have an erroneous view as to what the contract meant. Secondly, the party may have an erroneous view as to the effect of the contract. Thirdly, the admission of such evidence would not be permitted if it involved the question of construction, and the implication of a term is a question closely allied to the question of what a contract means. It would be difficult in practice, in most cases, to keep the questions separate. Finally, any such evidence would have to be clear and unequivocal, leading to a clear conclusion that it was the presumed intention of the parties. In my opinion, as a matter of strict principle, the conduct of the parties subsequent to an alleged contract may be admissible to determine what the terms of the contract were, including an implied term. This would be because their conduct may establish the presumed intention of the parties at the date the contract was made. It must follow again, on principle, that one party to the agreement may make an admission which accords with the presumed intention of the parties. But in considering the evidence, it must be borne in mind that it is not admissible on the construction of the term. Although the evidence of an admission may be admissible, it would be a rare case that any weight could be given to the admission. 303 In Sydney City Council v Goldspar Australia Pty Ltd [2006] FCA 472 (Goldspar), Gyles J observed at [164]: I can see no difficulty in regarding subsequent conduct as relevant to the question as to whether a term is necessary to give business efficacy to the contract. Indeed, if a contract has been performed without adhering to, or without inconsistency with, the claimed term, without complaint or commercial difficulty, that would be powerful evidence that the term is not necessary. The law prefers facts to prophecies. It would be odd to imply a term as necessary where such a conclusion would be contrary to the facts as they later appeared. If conduct may be relevant to negative the implication of a term as being necessary then it should also be relevant to support the implication of a term on the same basis. (Citations omitted.) 304 After referring to these statements by Gillard J in Arthurson and Gyles J in Goldspar, their Honours, Warren CJ, Kyrou and McLeish JJA stated in Regreen at [138]-[140]: In ACN 074 971 109 Pty Ltd v The National Mutual Life Association of Australasia Ltd, this court cited Goldspar for the proposition that evidence of post-contractual conduct "might be admissible in support of the existence of an implied term."76 The Court did not give any reasons for this statement because the possibility of an implied term of the type postulated in that case was excluded by the express inconsistent provisions of the contract under consideration. In Fenridge Pty Ltd v Retirement Care Australia (Preston) Pty Ltd, Hargrave J held that it was impermissible for the defendant in that case to rely on evidence of the plaintiff's subsequent conduct for the purpose of determining whether a particular term should be implied in the contract under consideration. He cited FAI in support of this conclusion. In Intermail Explorenet Pty Ltd v Vardanian [No2], Moore J held that, as implication of a term arises because the parties have not addressed the subject matter to which the postulated implied term relates, it is difficult to see how subsequent conduct can be taken to be a manifestation of the parties acting conformably with the term. As discussed at [75] above, in Barker, French CJ, Bell and Keane JJ referred to the view of Mason J in Codelfa that the implication of a term is an instance - albeit not an orthodox instance - of the construction of a provision of a contract. However, despite the similarities in the two processes, the law on the admissibility of evidence of post-contractual conduct has not developed with the same clarity for both processes. Fortunately, for the reasons set out at [152] to [158] below, it is not necessary for us to seek to reconcile the authorities relating to the admissibility of evidence of post-contractual conduct on the implication of a term, or to express a view on this issue. (Footnotes omitted) 305 Even accepting for present purposes that it may be possible to have regard in limited circumstances to post-contractual conduct in implying terms into contracts, I am not satisfied that the conduct relied upon by Mr Sheehy assists in any implication of the Implied Term into the 2018 Option Agreement. 306 First, I do not accept that the subjective beliefs and intentions of Nuix employees after the Share Split in 2016 which were communicated or recorded in the context of the proposed IPO could be relevant to a determination of the objective intentions of the parties when they entered into the 2008 Option Agreement. 307 Second, as I explain above, the Nuix capitalisation tables and option registers read as a whole record that it was the number of options that were multiplied by 50 after the Share Split, not the number of shares to which each option related. 308 Finally, I note that I have only addressed above whether the Implied Term should be implied into the 2008 Option Agreement. I address below whether there was any breach of the 2008 Option Agreement after addressing the oppression and unconscionable conduct claims advanced by Mr Sheehy.

Introduction 309 Mr Sheehy contends that in refusing to recognise Mr Sheehy's entitlement to 22,663,650 shares in Nuix, on the exercise of the Remaining 2008 Options, Nuix has acted in a manner that is oppressive, unfairly prejudicial and unfairly discriminatory contrary to s 232(e) of the Corporations Act.

Principles 310 Section 232 of the Corporations Act requires proof of oppression or proof of unfairness, and proof of mere prejudice to or discrimination against a member is insufficient to attract the Court's jurisdiction to intervene: Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459; [1985] HCA 68 (Wayde) at 472 (Brennan J). 311 Further, fairness cannot be assessed in a vacuum: In the matter of Tzavaras & Sons Pty Ltd [2022] NSWSC 359 at [226] (Ward CJ in Eq, as her Honour then was). The question of fairness is one of fact and degree, and the objective test by which it is to be assessed assumes that reasonable directors weigh the furthering of the corporate object against the disadvantage, disability or burden that their decision would impose: see HNA Irish Nominees Ltd v Kinghorn (No 2) [2012] FCA 228 at [504] (Emmett J). 312 The mere fact that a decision by directors might affect the interests of a shareholder adversely is not of itself sufficient to render the decision oppressive, unless there is a lack of good faith or the decision was one that no reasonable directors could have made: see John J Starr (Real Estate) Pty Limited v Robert R Andrew (Australasia) Pty Limited (1991) 6 ACSR 63 (John J Starr) at 67 (Young J). 313 The task of deciding whether there has been commercial unfairness is to be undertaken in the context of the particular relationship which is in issue and the assessment of commercial unfairness will not infrequently involve a balancing exercise between competing considerations including an examination of the conduct of the applicant: Joint v Stephens [2008] VSCA 210 at [136] (Nettle, Ashley and Neave JA); see also Re London School of Electronics Ltd [1986] Ch D 211 at 222: The conduct of the petitioner may be material in a number of ways, of which the two most obvious are these. First it may render the conduct of the other side, even if it is prejudicial, not unfair: cf. In re R.A. Noble & Sons (Clothing) Ltd. Secondly, even if the conduct on the other side is both prejudicial and unfair, the petitioner's conduct may nevertheless affect the relief which the court thinks fit to grant under subsection. 314 The concept of fairness must be applied judicially, and the content that is given to it by the Court must be based upon rational principles: O'Neill v Phillips [1999] 1 WLR 1092; [1999] UKHL 24 at 1098. Intervention on the basis of a finding of oppression should not occur unless it has been shown that there is a lack of good faith or no reasonable board could have come to the decision reached: Dick v Alan Powell Holdings and Ors [2009] QSC 184 at [44] (Philippides J) citing with approval Wayde at 467-468, 469 and John J Starr at 67 and quoting from Latimer Holdings Ltd v SEA Holdings NZ Ltd [2005] 2 NZLR 328; [2004] NZCA 226 at [71]: Judges are ill-equipped to evaluate business strategies, and have accordingly exercised self-restraint ... See Howard Smith Ltd v Ampol Petroleum [1974] UKPC 3; [1974] AC 821 per Lord Wilberforce, ... it would be wrong for the court to substitute its opinion for that of management, or indeed to question the correctness of management's decision ... if bona fide arrived at (at p832) ... This is sometimes called the 'business judgment' rule. Judges, on the other hand, do have training and expertise in dealing, for instance, with fraud, illegality, or conflicts of interest.

Submissions of Mr Sheehy 315 Mr Sheehy advances the following principal submissions in respect of his oppression claim against Nuix. 316 First, Mr Sheehy submits that Nuix's conduct had the effect of depriving him of 98% of the value of his option rights, in return for no benefit at all. Mr Sheehy submits that there is no reasonable basis for Nuix's conduct and it is not sufficient for Nuix to submit that it acted as such because it was "entitled to do so". 317 Second, Mr Sheehy submits that it was not sufficient for Nuix to rely on the asserted effect of the Consent Judgment to justify why he was the only option holder treated differently in relation to the share split. Mr Sheehy points to Nuix's application of the share split to 300,000 options granted to Ferodale (now known as Blackall Limited) in November 2011 (Ferodale Options) such that the Options Register as at 28 February 2017 recorded that on exercise of the Ferodale Options, 15,000,000 shares would be issued to Ferodale. Mr Sheehy submits that Nuix's approach to the Ferodale Options is important because they were not expressly governed by the EOP Rules and in a Nuix board resolution dated 11 May 2011, there was the following statement: Each option so issued entitling Ferodale to subscribe for 1 ordinary share in the capital of the Company for an exercise price of AUD $01 (Proposal). 318 Mr Sheehy submits that the statement is an express term that sets out how the Ferodale Options would be treated in the event of a share split, being a conversion ratio of 1:1. Yet despite this express term, Nuix applied the Share Split to the Ferodale Options. Given there was no express term setting out how the Remaining 2008 Options would be treated in the event of a share split, Mr Sheehy submits that there was no valid reason for Nuix to not treat the Remaining 2008 Options and the Ferodale Options in the same way, particularly if it meant that Ferodale was not prejudiced by the Share Split, but he was. 319 Third, Mr Sheehy submits that relief should not be refused because of any "dilutive effect this might have on Nuix's shareholders" in circumstances where they were impacted to a "broadly equivalent extent" by the application of the Share Split to Ferodale. Further, Mr Sheehy submits that his claim was disclosed in the prospectus in relation to the Nuix IPO and Nuix shareholders must be taken to have acquired or retained their shares in the knowledge that his claim might be successful. 320 Finally, Mr Sheehy submits that the other benefits he received from his employment with Nuix are not relevant to the question of whether Nuix has contravened s 232 of the Corporations Act. Mr Sheehy submits that in the Macquarie 2016 Transaction, Macquarie was obtaining something of value to itself by paying him for his options, as was acknowledged by Mr Standen and Mr Phillips in cross-examination. Therefore, the suggestion by Nuix that this was an ex gratia payment to him should not be accepted.

Submissions of Nuix 321 Nuix advances the following principal submissions in response to the oppression claim of Mr Sheehy. 322 First, Nuix submits that it should be inferred that the acquisition by Mr Sheehy of a parcel of 1,000 shares in Nuix on 17 December 2020 because he was "asked by my lawyers to make sure I remained a shareholder" was to address the requirement of standing to bring proceedings for relief under s 233 of the Corporations Act. It submits that this highlights the lack of any real connection between Mr Sheehy's claims and his membership of Nuix. 323 Nuix submits that Mr Sheehy became an option holder solely by reason of his status as an employee of Nuix. It submits that Mr Sheehy's claims are, in substance, for employment entitlements. The case is not one in which the benefits of membership in Nuix were tied to being an employee of the company. Mr Sheehy's entitlement to options was not a benefit flowing from or awarded to him by reason of his membership of Nuix; it was purely part of the remuneration he received for his work as Nuix's CEO. 324 Nuix submits that ss 232 and 233 of the Corporations Act are not the appropriate vehicle for the advancement of his present claim. It submits that if Mr Sheehy's oppression claim were to succeed it would significantly alter the rights Mr Sheehy had under the contractual arrangements he entered into with Nuix to govern his employment relationship with the company and the benefits to which he was entitled as a consequence of that relationship and the performance of his position as CEO of the company. 325 Second, Nuix submits that in circumstances where the Consent Judgment determined the number of share options in Nuix that were held by Mr Sheehy, the following matters are relevant to an assessment of the fairness of the conduct of Nuix in not accepting the Option Exercise Notice: (a) no Nuix option holder has been issued with a conversion ratio of more than one share for each option exercised; (b) Mr Sheehy was aware of the Share Split prior to commencing the 2018 Proceedings; (c) Mr Sheehy did not seek to address in those proceedings the implications of the Share Split; (d) Mr Sheehy conceded that he had been provided with an extract from the Options Register in the 2018 Proceedings and that, had he thought about it at the time, he would have amended his Summons to claim that he held 22 million 2008 Options with an exercise price of four cents per share; (e) Mr Sheehy does not complain that he was misled into consenting to the Consent Judgment or that its terms or any conduct of Nuix in connection with the 2018 Proceedings was unfair; (f) Mr Sheehy was represented by solicitors throughout the 2018 Proceedings, including for their settlement; and (g) Mr Sheehy voluntarily consented to the Consent Judgment and has not taken any steps to set it aside. 326 Third, Nuix submits that it is material to a proper assessment of the fairness of Mr Sheehy's treatment by Nuix overall to have regard to the significant benefit he received in 2016 as a result of the sale of options to Macquarie that Nuix facilitated. Nuix submits that its decision to permit Mr Sheehy to sell the 20,000 2006 Options that had expired and to waive the requirements for the exercise of the options issued under the 2008 Option Agreement that it had acquired from Mr Sheehy resulted in a very substantial payment to Mr Sheehy of more than $10 million. 327 Finally, Nuix submits that even if the Court were satisfied that the elements of s 232 were satisfied, it would not follow that relief should be granted to Mr Sheehy under s 233. The grant of such relief is discretionary: In the Matter of Infinite Plus Pty Ltd (2017) 95 NSWLR 282; [2017] NSWSC 470 at [59]; Shelton v National Roads and Motorists Association Ltd [2004] FCA 1393 at [15]. 328 Nuix submits that before relief is granted under s 233, the interests of the members of Nuix as a whole must be properly weighed. Moreover, even if grounds for intervention were established, any remedy chosen must be the least intrusive: Re Enterprise Gold Mines NL (1991) 9 ACLC 168 at 174; Ehsman v Nutectime International Pty Ltd (No 2) [2009] NSWSC 1096 at [87]-[88] (reversed on appeal but not on this aspect). It submits that, whatever else might be said, the circumstances of this case do not warrant a declaration that Mr Sheehy is entitled to 22,663,650 shares upon the exercise of his 453,273 Remaining 2008 Options given the dilutive effect this would have on Nuix's shareholders.

Consideration 329 I am satisfied that Mr Sheehy has not established that there was any lack of good faith or that no reasonable board could have come to the decision that the number of Nuix shares that would be issued on the exercise of the Remaining 2008 Options would not, by reason of the Share Split, be 50 times the number of options exercised. 330 First, the general approach taken by Nuix was that the effect of the Share Split was that the number of options were to be multiplied by 50 and the exercise price was to be divided by 50. That approach was consistent with the EOP Rules and the ASX requirements for the issue of options by companies listed on the ASX and was explained in those terms by Mr Castagna in the course of the Webinar and the Town Hall Meetings. 331 Second, as I have found above Mr Sheehy knew or ought reasonably to have been aware of Nuix's approach to the effect of the Share Split on options but he failed to raise in the 2018 Proceedings its application to any exercise of the Remaining 2008 Options and his entitlements under the 2008 Option Agreement. Had he turned his mind to the issue, I am satisfied consistently with his concession in cross-examination that had he thought about it in the course of the 2018 Proceedings he would have amended his Summons as he would have recognised that it was a matter that needed to be determined as the Nuix approach of multiplying the options by 50 and dividing the exercise price by 50, if not applied to the 2008 Option Agreement, would render the Remaining 2008 Options of little, if any, value. 332 Third, the Consent Judgment determined the number of options that Mr Sheehy held under the 2008 Option Agreement. Mr Sheehy consented to that judgment and has not subsequently alleged that he was misled by Nuix in providing that consent or has otherwise sought to have it set aside. 333 Fourth, contrary to the submissions advanced by Mr Sheehy, I accept that the payment it made to Mr Sheehy for approximately 20% of his 2008 Options was, in substance, an ex gratia payment to him and did not carry with it any acknowledgment by Macquarie that the 2008 Options had any value independent of the waiver of the conditions to their exercise provided by the Nuix board. 334 As Mr Standen explained in cross-examination, when pressed on the reasons why Macquarie acquired options from Mr Sheehy in 2016: MR JACKMAN: On your view of things, those options simply didn't exist in any meaningful sense in 2006 [sic][2016]; correct?---Unless they - unless they were waived, yes, correct. Or restructured, correct. Right. So it was meaningless, on your evidence, for Macquarie to be paying money to Mr Sheehy for a transfer of his options which you regarded as valueless; correct?---It was - this was a golden handshake to Mr Sheehy. Correct. So you're saying, are you, on your evidence, that the real substance and intention of Macquarie's transaction with Mr Sheehy was a golden handshake?---It was - where - certainly was to pay a sum of money to Mr Sheehy to reflect his contribution to the company and the fact that he would leave on good terms and support the business going forward in a productive way. … Right. And that was a way of dressing up what you say was, in true substance and intention, an ex-gratia golden handshake to Mr Sheehy; correct?---The commercial outcome - that's the commercial outcome we wanted. And - and so 30,000 of the 2006 options, which I think was 85 cent, I don't know, just roughly, I think, if I recall, represent about a third of the 10 million. So 3 million was for the 2006 15 options and circa 7 million or the balance for the - from the 2008 options to achieve the commercial outcome of a - a benefit to Mr Sheehy. But you claim that, to your understanding, the 2008 options in Mr Sheehy's hands were valueless, don't you?---Yes, unless the company - unless the company waived 20 the ability to exercise them. Yes. … But, on your evidence, the true nature and intention of Macquarie was to give Mr Sheehy an ex-gratia golden handshake; correct?---Our commercial objective was to give him that. Our proposed transaction was to acquire the options as waived and be issued shares in the company so that we got security and more shareholding in the company. That was positive for us. Mr Sheehy got the benefit of $10 million he wasn't otherwise entitled to get. And we didn't have a situation where it would be seen that he gold a golden handshake on leaving and a lot of long-term employees in the business who had made contributions - including those that had, you know, developed the core software in the business - weren't sitting there and basically seeing a golden handshake being done where they had to continue to plough on with no incremental reward along the way. 335 The following evidence of Mr Phillips in cross-examination was also compelling and consistent with the apparent logic of events: And is it your evidence that you agreed to structuring the transaction with Mr Sheehy by way of acquiring his options because you saw the benefits of providing Mr Sheehy with significant value to smooth his retirement from the company and because it still achieved Macquarie Capital's objectives?---Yes. Right. And the true intent of the acquisition of Mr Sheehy's options, on your 25 evidence, was to make a payment to Mr Sheehy which would reward him for his endeavours with the company and to smooth the transition to a new CEO. Correct?---Yeah. That's - that's correct. 336 Both Mr Standen and Mr Phillips acknowledged that there was no reference to the ex gratia payment objective in any contemporaneous documents. I do not consider that the absence of any reference to this objective in any contemporaneous board minutes or other documents casts any material doubt on this evidence. The evidence of both Mr Standen and Mr Phillips makes clear that to their observation the relationship between Mr Sheehy and the balance of the Nuix board had broken down and it was in Macquarie's interest for Mr Sheehy to leave on terms that were favourable to him and on terms that enabled it to obtain a more significant shareholding in Nuix. Further, as Mr Standen explained, Macquarie was concerned that the payment not appear as a "golden handshake" given concerns that other long-term employees who had made significant contributions to the development of Nuix might have had about such an arrangement. This concern was reflected in the decision of Macquarie to make an equivalent offer to purchase approximately 20% of the options of all Nuix option holders pursuant to the Macquarie 2016 Transaction, not just options held by Mr Sheehy. Moreover, there could be expected to be an understandable sensitivity about recording an overtly "commercial purpose" for a transaction that was being employed to facilitate a very significant payment to facilitate the departure of a CEO on good terms. 337 Fifth, given the ex gratia payment to Mr Sheehy, at least to the extent that it was concerned with the acquisition of 2008 Options (estimated by Mr Standen to be in the vicinity of $7 million) any comparison with the position that Nuix might have taken to the impact of the Share Split on the Ferodale Options is not material. There was no suggestion that the Ferodale options might otherwise have expired by the time of the Share Split nor any ex gratia payment being made in connection with the Ferodale Options because the conditions for their exercise had not been enlivened. . 338 Further, I accept that Mr Sheehy's claims are in substance employment claims. The 2008 Options were issued to him as an employee to provide an incentive for him as the CEO to achieve a timely sale of Nuix and to maximise the sale price. They were not provided to him in his capacity as a member of Nuix and I readily infer that Mr Sheehy only acquired a small parcel of Nuix shares in December 2021 to provide him with standing to seek relief for oppression under s 232 and s 233 of the Corporations Act. 339 Finally, I note for completeness, that if I was otherwise mistaken in concluding that Mr Sheehy has not established his oppression claim, I would not decline to grant the declaratory relief sought by Mr Sheehy by reason of any dilutive effect that it might have on Nuix's shareholders. Any dilutive effect would only place Mr Sheehy in the same position as he would have enjoyed, prior to the Share Split, with respect to other Nuix shareholders.

Introduction 340 Mr Sheehy's unconscionability claim is essentially based on the same conduct as his oppression claim.

Principles 341 Section 21 of the ACL relevantly provides: 21 Unconscionable conduct in connection with goods or services (1) A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of goods or services to a person; or (b) the acquisition or possible acquisition of goods or services from a person; engage in conduct that is, in all the circumstances, unconscionable. 342 For present purposes, it is necessary to focus on the requirements in s 21 that: (a) the impugned conduct was in trade or commerce; (b) the impugned conduct was in connection with the acquisition of services from a person; and (c) the impugned conduct was in all the circumstances unconscionable.

Trade or commerce 343 Conduct in "trade or commerce" was considered in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594; [1990] HCA 17 (Concrete Constructions) wherein Mason CJ, Deane, Dawson and Gaudron JJ stated at 604 (in considering s 52 of the TP Act): What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those [trading or commercial] activities or transactions which, by their nature, bear a trading or commercial character... (emphasis added) 344 The following remarks made by Dowsett J (in dissent) in Hearn v O'Rourke (2003) 129 FCR 64; [2003] FCAFC 78 at [29] were cited with approval by Buchanan J in Westpac Banking Corporation v Wittenberg (2016) 242 FCR 505; [2016] FCAFC 33 (Wittenberg) at [194] (McKerracher J agreeing at [340]): …the focus must be upon the conduct in question and not upon the range of activities in which a relevant corporation may be engaged. In other words, one does not simply identify the conduct in question, note that the relevant corporation is engaged in commercial activity of some kind, then look for a connection between the two. Because corporations are usually formed to engage in commercial activities, it will rarely be difficult to find such a connection. 345 Conduct that occurs in an employment context may be conduct in trade or commerce if the conduct bears a trading or commercial character: Bride v Shire of Katanning [2016] FCA 65 at [20]-[26] (McKerracher J); Zaghoul v Woodside Energy Limited (No 7) [2019] FCA 818 at [113]-[121] (McKerracher J). 346 Conduct occurring in the negotiation of employment terms (for example, misleading statements) might be in trade or commerce: Walker v Salomon Smith Barney Securities Pty Ltd [2003] FCA 1099 at [180]-[185] (Kenny J). However, matters arising within an employment relationship are unlikely to meet that description: Wittenberg at [186] (Buchanan J). By way of example, the engagement of staff by an enterprise engaging in activities by way of trade or commerce and the necessary associated incidental negotiations with such staff, however necessary, have been stated not in themselves to be of a trading or commercial nature, but rather the internal affairs of the enterprise: Martin v Tasmania Development and Resources [1999] FCA 593 at [77] (Heerey J). Equally a communication by a company's chief executive officer to selected employees when its board had approved a one-off bonus was held not to be conduct in trade or commerce, but rather was in the nature of an "internal" communication to staff, in Murphy v Westpac Banking Corporation [2014] FCA 1104 at [790]-[791] and [904]-[905] (reversed on appeal, but not on this issue, see Wittenberg at [195]-[196]). On the other hand, it has been said that it would be clearly open to conclude that representations made by an employer in the course of negotiating a loan from an employee was conduct in trade or commerce: Chaplin v Birdogan (1998) 146 FLR 243 at 248 (Ashley J).

Acquisition of services 347 The definition of "services" in s 2 of the ACL provides that "services … does not include rights or benefits being the supply of goods or the performance of work under a contract of service". This has been held to mean that "services" does not include rights or benefits arising from the performance of work under an employment contract: Hardcastle v Mitch Enterprises Pty Ltd [2016] FCA 1569 (Hardcastle) at [48] (Bromwich J); Adamson v New South Wales Rugby League Limited (1991) 27 FCR 535; [1991] FCA 9 at 548-549; Adamson v West Perth Football Club Inc (1979) 39 FLR 199; [1979] FCA 81 at 228-229. In Hardcastle, Bromwich J stated at [47]: the evident purpose behind the exclusion in the definition of 'services' was to leave conditions of employment for employment law rather than for what might generally be called trade practices or consumer protection law.

Unconscionable conduct 348 An allegation of statutory unconscionability is a serious conclusion to be drawn about the conduct of a person or an enterprise. To behave unconscionably often involves dishonesty, predation, exploitation, sharp practice, unfairness of a significant order, a lack of good faith, or the exercise of economic power in a way worthy of criticism: Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 266 FCR 631; [2018] FCAFC 155 (Unique) at [155] (Allsop CJ, Middleton and Mortimer JJ). 349 In Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90 (Lux), Allsop CJ, Jacobson and Gordon JJ described the task to be undertaken by the Court in approaching questions of unconscionability at [23]: The task of the Court is the evaluation of the facts by reference to a normative standard of conscience. That normative standard is permeated with accepted and acceptable community values. In some contexts, such values are contestable. Here, however, they can be seen to be honesty and fairness in the dealing with consumers. The content of those values is not solely governed by the legislature, but the legislature may illuminate, elaborate and develop those norms and values by the act of legislating, and thus standard setting. The existence of State legislation directed to elements of fairness is a fact to be taken into account. It assists the Court in appreciating some aspects of the publicly recognised content of fairness, without in any way constricting it. Values, norms and community expectations can develop and change over time. Customary morality develops "silently and unconsciously from one age to another", shaping law and legal values: Cardozo, The Nature of the Judicial Process (Newhaven, Yale University Press, 1921) pp 104-105. These laws of the States and the operative provisions of the ACL reinforce the recognised societal values and expectations that consumers will be dealt with honestly, fairly and without deception or unfair pressure. These considerations are central to the evaluation of the facts by reference to the operative norm of required conscionable conduct. 350 Further, in Paciocco v Australian and New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50 (Paciocco), Allsop CJ stated at [296]: The working through of what a modern Australian commercial, business or trade conscience contains and requires, in both consumer and business contexts, will take its inspiration and formative direction from the nation's legal heritage in Equity and the common law, and from modern social and commercial legal values identified by Australian Parliaments and courts. The evaluation of conduct will be made by the judicial technique referred to in Jenyns. It does not involve personal intuitive assertion. It is an evaluation which must be reasoned and enunciated by reference to the values and norms recognised by the text, structure and context of the legislation, and made against an assessment of all connected circumstances. The evaluation includes a recognition of the deep and abiding requirement of honesty in behaviour; a rejection of trickery or sharp practice; fairness when dealing with consumers; the central importance of the faithful performance of bargains and promises freely made; the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage; a recognition that inequality of bargaining power can (but not always) be used in a way that is contrary to fair dealing or conscience; the importance of a reasonable degree of certainty in commercial transactions; the reversibility of enrichments unjustly received; the importance of behaviour in a business and consumer context that exhibits good faith and fair dealing; and the conduct of an equitable and certain judicial system that is not a harbour for idiosyncratic or personal moral judgment and exercise of power and discretion based thereon.

Submissions of Mr Sheehy 351 Mr Sheehy advances the following principal submissions in respect of his claim that Nuix has engaged in unconscionable conduct, contrary to s 21 of the ACL, in refusing to correct the Options Register to record the alleged impact of the Share Split on the Remaining 2008 Options or refusing to recognise his alleged entitlement to exercise the Remaining 2008 Options and refusing to confirm and/or acknowledge that a "sale of business" of Nuix had occurred such that the options were exercisable (together, the Impugned Conduct). 352 First, Mr Sheehy submits that the Impugned Conduct bears a trading or commercial character and does not concern rights solely arising from an existing employment relationship. He submits that the Share Split that was implemented by Nuix had the purpose of making Nuix's shares more attractive and to prepare for the IPO. Further, at the time that Nuix refused to recognise his entitlement to exercise the Remaining 2008 Options, he was not an employee of Nuix at all and his only relationship with Nuix was that of a shareholder and option-holder. Therefore, the non-application of the Share Split to the Remaining 2008 Options can be characterised as conduct "in trade or commerce" for the purposes of s 21 of the ACL. 353 Second, Mr Sheehy submits that the Remaining 2008 Options are not rights or benefits conferred under a contract of employment and therefore, the exclusion in s 2 of the ACL, which Nuix relies upon, does not apply. Although the 2008 Options were granted in the context of his employment with Nuix, the Remaining 2008 Options are free-standing rights that continued to exist after he had ceased his employment with Nuix. 354 Third, Mr Sheehy submits that Nuix's Impugned Conduct was unconscionable as it had the effect of diluting his rights by 98% without good reason. He alleges that he was singled out by Nuix and treated differently from all other option-holders, including Mr Castagna. Prior to his resignation and Nuix deciding in June 2017 to contend that the Remaining 2008 Options had expired in December 2010, Nuix itself treated the Remaining 2008 Options as subject to the Share Split. The Consent Judgment did not provide a valid reason to treat the applicant differently from other option-holders.

Submissions of Nuix 355 Nuix advances the following principal submissions in response to the unconscionablity claim by Mr Sheehy. 356 First, Nuix submits that its Impugned Conduct was not in "trade or commerce" for the purposes of s 21 of the ACL. Rather, its alleged failure to record the impact of the Share Split on the Remaining 2008 Options in the Options Register and its determination that Mr Sheehy was not entitled to exercise the Remaining 2008 Options were concerned with its internal affairs. Further, it submits that Mr Sheehy has incorrectly characterised Nuix's Impugned Conduct as relating to the Share Split. Rather, it submits, the claim concerns its treatment of Mr Sheehy's options following the Share Split. 357 Second, Nuix submits that its "services" in connection with the Remaining 2008 Options constitutes rights or benefits which arose from Mr Sheehy's performance of work under a contract of employment, which engages the exclusion in s 2 of the ACL. It submits that Mr Sheehy was granted the 2008 Options solely by reason of his status as an employee of Nuix and are unarguably benefits arising from his employment contract with Nuix and the performance of that contract. It points to the survival of the Remaining 2008 Options following the termination of Mr Sheehy's employment with Nuix. It submits that this survival is analogous to confidentiality and restraint of trade obligations which also survive termination of an employment relationship but owe their existence to the former employment relationship. It also submits that the 2008 Option Agreement varied Mr Sheehy's employment contract with Nuix which further supports the conclusion that the Remaining 2008 Options are rights or benefits arising from the performance of Mr Sheehy's work under his employment contract.

Consideration 358 The submissions of Mr Sheehy focused on the two threshold issues he needed to establish to advance his unconscionable conduct claim pursuant to 21 of the ACL, namely, (a) was the Impugned Conduct in trade and commerce; and (b) was the Impugned Conduct not concerned with rights or benefits that involved the supply of goods or the performance of work under a contract or service. 359 The decisions by Nuix not to record the alleged impact of the Share Split on the Remaining 2008 Options, not to recognise Mr Sheehy's alleged entitlement to exercise the Remaining 2008 Options and its refusal to accept that there had been a sale of the business of Nuix were not decisions or conduct that were in trade or commerce. They were not decisions or conduct that bore a "trading or commercial character": Concrete Constructions at 604. They were internal decisions made by Nuix concerning the application of a share split to options issued to a former chief executive as an integral component of his remuneration and whether those options remained exercisable in January 2021. They were not concerned with conduct in connection with negotiations leading to the employment of Mr Sheehy. Rather, they were directed at conduct after the conclusion of an employment relationship with respect to benefits provided as part of a remuneration negotiation conducted in 2008 within an employment relationship. 360 I am satisfied that the decisions by Nuix were concerned with rights or benefits that involved the supply of goods or the performance of work under a contract of service. The 2008 Options were provided to Mr Sheehy pursuant to the negotiation of a revised remuneration package. They were rights or benefits issued in return for the performance of work under a contract of service. The survival of those rights or benefits beyond the employment relationship does not alter that position. 361 Moreover, s 21 of the ACL is relevantly directed at conduct in connection with "the acquisition or possible acquisition of goods or services from a person". Given the termination of the employment relationship between Mr Sheehy and Nuix by the time of the Impugned Conduct it is not apparent what "services" were being acquired or may possibly have been acquired from Mr Sheehy at that time that would engage s 21. 362 If contrary to these findings, it were to be subsequently determined that the Impugned Conduct was in trade or commerce and was not concerned with rights or benefits that involved the supply of goods or the performance of work under a contract of service, the conduct was not unconscionable for the reasons :(a) advanced above in response to the oppression claim sought to be pursued by Mr Sheehy in these proceedings; and (b) below in response to the alleged sale of the business of Nuix giving rise to an alleged entitlement to exercise the Remaining 2008 Options.

Introduction 363 The 2008 Option Agreement provided that the 2008 Options were only exercisable on a sale of the business of Nuix. 364 Mr Sheehy pleads that a sale of the business of Nuix occurred for the purposes of the 2008 Option Agreement as a result of one or more of the following matters: (a) the sale by shareholders other than Macquarie of shares to Macquarie between 30 September 2013 and 3 December 2020, such that Macquarie acquired over 50% of the issued shares of Nuix; (b) the IPO; (c) Macquarie ceasing to hold more than 50% of the issued shares of Nuix following the IPO; and (d) more than 50% of the issued shares of Nuix came to be held by new investors in Nuix shares following the IPO. 365 Mr Sheehy submits that, even if the right to exercise the Remaining 2008 Options had not been enlivened by a sale of the business of Nuix, it would be contrary to s 232 of the Corporations Act for Nuix not to permit him to exercise the Remaining 2008 Options.

Submissions of Mr Sheehy 366 In summary, Mr Sheehy submits that, properly construed, the 2008 Option Agreement provides that the Remaining 2008 Options are exercisable upon a sale of a controlling interest of the business of Nuix, either by way of a sale of business agreement or the shares in Nuix. He submits that the sale of the business of Nuix must be construed as meaning the sale of "50% or more of the shares in Nuix". 367 In his oral closing address, Mr Jackman placed considerable emphasis, by reference to the text of the 2008 Option Agreement, to the distinction between a "valuation" of the Nuix business and a "sale price" that might be achieved for the Nuix business. He submitted that: Well, this is a matter now. Of the proper construction of the agreement, because this issue relates to whether a sale of the business can include a sale of less than a hundred per cent of the shares in the business. And what's put against me is, well, that can't be right because the sale price of Nuix in the table on that page must be the sale price of all of Nuix, that is, it must be all of Nuix that's being sold. And I'm saying that's not necessarily the case just looking at that page because the word "valuations" is broader than sale price and the two must be construed harmoniously so that the use of sale price doesn't rule out the possibility that the parties intended a sale of less than a hundred per cent of the shares, but we then go back to the next spreadsheet at page 2947 and this isn't a submission we developed in writing, but can I put it now, what this spreadsheet is doing is working out what is the value of each share, given various so-called sale prices, 5 million through to 40 million dollars. So at $5million, the sale price per share is a dollar 63 and at $40 million, it's $11.20. Now, the value of that share is taken by, in the first line, the figure of $5 million divided by all of the issued shares in the company, 2 million 957,456, and the sale price, therefore, must be the value of the whole of Nuix, and if there is a sale of business at - the sale of the business comprising a sale of less than 100 per cent of the shares in Nuix then that share price can readily be calculated by imputing the per share value from that transaction to the whole of the company, which is really, what this table is seeking to do, so this table doesn't rule out the possibility that a sale of the business might be a sale of less than a hundred per cent of the shares because there is a method of calculation in this table which shows how one gets a dollar per share figure related to the value of Nuix as a whole.

Submissions of Nuix 368 Nuix submits that there is no textual support in the 2008 Option Agreement for any contention that the sale of the business of Nuix can be construed to extend to a sale of part of the business of Nuix. It submits that it must follow from the unqualified references to "the" and to a singular "business" that the natural and ordinary meaning of the expression "sale of the business" is to the whole of the business of Nuix. 369 In his closing oral address, Mr Darke SC submitted that the operative clause governing any exercise of the 2008 Options was clause 2 which provided that the options were exercisable in the "event of the sale of the business" of Nuix. He then submitted: References to a sale event in other parts of the agreement, plainly reference this to an event of the kind specified in clause 2, in our submission. So where one sees, for example, the reference to a sale event in the second paragraph of the letter that's plainly talking about the event of a sale of the business, in clause 2. Now, the ordinary and natural meaning of that expression is to a single event or transaction by which the whole of the business of Nuix is sold. That is the event of a sale of the business. Event doesn't encompass multiple events or transactions, in our submission. And the business doesn't mean merely some part of the business.

Consideration 370 The 2008 Option Agreement is set out in full in the Factual Background above and its terms relevant to the implication of the Implied Term are set out above in the Breach of the 2008 Option Agreement section of these reasons. 371 I identify below the provisions of the 2008 Option Agreement that are relevant to the exercise of option contentions advanced by Mr Sheehy and Nuix. 372 The second introductory paragraph to the 2008 Option Agreement refers to the provision of strong incentives to obtain a "sale event for Nuix" before the end of 2010 and that a "sale event" at "particular valuations" during this time will provide a significant reward to Mr Sheehy. 373 The second operative paragraph refer to a series of call options over Nuix stock that are exercisable in the event of "a sale of the business" at particular prices. The table that is included in this paragraph has three columns. The first column is headed "Sale price of Nuix (all figures in AUD)". The second column identifies by reference to the ranges of sale prices of Nuix listed in the first column, the number of additional call options available for exercise by Mr Sheehy. The third column identifies the exercise price for these additional call options. The note to the table makes clear that the options are both incremental and cumulative. 374 The second operative paragraph also makes clear that the call options are only exercisable in the event of a "sale of the business" and that a "valuation of the business" in the context of any additional funding arrangement would not enliven the call options. 375 The third operative paragraph provides for the payment of a cash bonus to Mr Sheehy in the event of "a sale in excess of certain $ thresholds". The thresholds are then stated to be for "a sale in excess of $10,000,000 on or before 31 December 2009" and "a sale in excess of $20,000,000 on or before 31 December 2010". In both cases the cash bonus for reaching the threshold is stated to be an amount equivalent to 20% of the total cash gain (net of exercise price but pre-tax) that Mr Sheehy receives "from the sale via your equity ownership." 376 The fourth operative paragraph provides that if "additional financing rounds take place" and "the total number of shares outstanding increase" then Mr Sheehy's relative percentage ownership would decrease but the number of shares and options held together with the exercise price for the options would remain constant. 377 The spreadsheet that was attached to the 2008 Option Agreement used the term "Sale price" for the purpose of explaining in more detail the "equity component of the offer". 378 It is readily apparent that the 2008 Option Agreement provides that the trigger event for the exercise of the Remaining 2008 Options is "a sale of the business of Nuix at particular prices". I am satisfied for the following reasons that the 2008 Option Agreement, properly construed, only provides for the exercise of the Remaining 2008 Options on the sale of the whole of the business of Nuix. None of the four matters relied upon by Mr Sheehy constituted a sale of the whole of the business. 379 First, there is no textual support for any construction that anything less than the sale of the whole of the business of Nuix, either by way of a sale and purchase agreement or the sale of all the shares in Nuix, would constitute a "sale of the business of Nuix". Rather, all the textual indications are to the contrary. The 2008 Option Agreement provides for additional and cumulative options at specified option prices by reference to a single "Sale price of Nuix" not by reference to any valuation of the whole of the business of Nuix that might be extrapolated from a sale of part of the business of Nuix. The cash bonuses in the third operative column are payable by reference to a single and indivisible sale price for Nuix. The more detailed explanation of the equity component of the offer to Mr Sheehy utilises a single and indivisible sale price for Nuix. 380 Second, the references to "sale events" for Nuix in the introductory paragraphs must be read in the context of the references to "the sale of the business" of Nuix and the "sale price of Nuix" in the operative paragraphs. They do not provide any support for the proposition that a "sale event" may encompass a sale of something less than a "sale of the business" of Nuix. 381 Third, any attempt to use arithmetic to imply a value for the whole of the company, where only some of the shares have been sold, produces results that the parties plainly did not intend as it would distort the commercial incentives identified in the introductory paragraphs to the 2008 Option Agreement. This can best be illustrated by assuming a sale of 50% of the business of Nuix for $5,000,000 on or before 31 December 2009. On Mr Sheehy's approach, this would imply a "sale price of Nuix" for the purposes of the 2008 Option Agreement of $10,000,000 and thus give rise to an entitlement for him to receive an additional 100,000 options at an exercise price of $2.00 and a cash bonus pursuant to the third operative clause. In contrast, had Mr Sheehy achieved a sale of 100% of the business of Nuix for $5,000,000 on or before 31 December 2009, he would not have been entitled to receive either of these benefits. 382 Fourth, had the parties intended to provide any incentive for Mr Sheehy to sell a controlling interest in the business of Nuix rather than the whole of the business of Nuix that could readily have been expressed in the 2008 Option Agreement. 383 Fifth, the contention advanced by Mr Sheehy in his reply submissions that a sale of the whole of the business of Nuix can be achieved by the sale of a controlling interest in Nuix does not assist Mr Sheehy. As a general proposition, it might be thought commonplace to speak of a sale of a business being achieved by the sale of a controlling interest in the company conducting the business but that is not the relevant enquiry in the current context. The "sale of the business" must be construed in the context of the 2008 Option Agreement read as a whole. That reading makes clear that the quantity of options and their exercise price is determined by the sale price achieved for the whole of the business of Nuix. For the reasons advanced above, it is not possible to construe the provisions of the 2008 Option Agreement to provide for an allocation of options on a proportionate basis to reflect a sale of less than the whole of the business of Nuix.

The submissions of Mr Sheehy 384 Mr Sheehy submits that it is oppressive of Nuix to refuse to allow him to exercise the Remaining 2008 Options in circumstances where it had previously permitted Macquarie to exercise options issued under the 2008 Option Agreement that it had acquired from him pursuant to the Macquarie 2016 Transaction. 385 Mr Sheehy submits that the "clear and obvious meaning" of the following extract from the minutes of the Nuix board meeting on 18 October 2018 is that the 2008 Options were exercisable and Nuix has not advanced any evidence to suggest the minutes were wrong: It was noted that the Company had previously granted some Options to Eddie Sheehy, Damian Smith and Folklore Enterprises Pty Ltd under an undocumented executive options plan (EXEC CNT Plan). It was further noted that nothing under the EXEC CNT Plan would restrict the above mentioned securityholders from transferring their Options and/or Shares granted or issued under the EXEC CNT Plan, or Macquarie from exercising such Options in connection with the Proposed Transaction.

The submissions of Nuix 386 Nuix submits that there was no connection between the decision by the Nuix board in accepting the exercise by Macquarie in 2016 of the options issued under the 2008 Option Agreement that it had acquired from Mr Sheehy and its subsequent decision in January 2021 not to accept the Option Exercise Notice. It submits that its subsequent decision not to accept the notice could not give rise to any contravention of s 232 of the Corporations Act.

Consideration 387 The extract from the 18 October 2016 board minutes on which Mr Sheehy seeks to rely is immediately followed by the following resolution: It was resolved that, for the avoidance of doubt and subject to any of Eddie Sheehy, Damian Smith or Folklore Enterprises Pty Ltd accepting the [Macquarie] Offer, the Company waives any requirements under the EXEC CNT Plan, which could possibly restrict the above mentioned securityholders from transferring their Options and/or Shares to Macquarie, or Macquarie from exercising such Options in connection with the Proposed Transaction. 388 Read in context, it is readily apparent that the board minutes go no further than waiving any requirement that might have precluded Mr Sheehy from transferring the 2008 Options to Macquarie or Macquarie from exercising those options in connection with the "Proposed Transaction". The Proposed Transaction is the Macquarie 2016 Transaction in which Macquarie provided Mr Sheehy and other Nuix employees with what was stated to be "an opportunity to realise in an orderly fashion some value" in relation to their shares and options and for Macquarie to acquire a significant shareholding in Nuix. 389 They do not contain any acceptance that there had been any "sale of the business of Nuix" or that any of the Remaining 2008 Options could be exercised independently of the "Proposed Transaction". Moreover, the minutes erroneously refer to the issue to Mr Sheehy of options under "an undocumented executive options plan". It would appear that little, if any, consideration was given to the specific terms of the 2008 Option Agreement. That conclusion is consistent with the use of the expressions "for the avoidance of doubt" and "which could possibly restrict" in the waiver resolution. 390 I therefore do not accept that the approach taken by Nuix to the exercise of the 2008 Options by Macquarie in connection with the Macquarie 2016 Transaction, as recorded in the 18 October 2016 board minutes, provides any plausible basis for any contention that Nuix's subsequent conduct in not accepting the Option Exercise Notice in 2021 was oppressive.

Introduction 391 Given my findings above in relation to Anshun estoppel, oppression, unconscionability and the preconditions to the exercise of the Remaining 2008 Options, the issue of the quantification of any damages or compensation that might be payable to Mr Sheehy does not arise. Nevertheless, in the event that these findings are reversed on appeal, I now address the valuation evidence relied upon by the parties for the purposes of undertaking a determination of the quantum of damages and compensation that Mr Sheehy may have otherwise been entitled to recover from Nuix as damages for breach of contract or compensation for unconscionable conduct. 392 The quantification of damages or compensation that Mr Sheehy might otherwise have been awarded turns on: (a) the date on which he would have sought to exercise the Remaining 2008 Options; (b) the time by which Nuix would have issued shares following the exercise of the 2008 Options; (c) the date by which Mr Sheehy would have sold the shares; and (d) the appropriate blockage discount, given the sale of a large parcel of shares, that should be applied. 393 The experts relied upon by the parties, Ms Planinic and Mr Potter were instructed to determine the likely value Mr Sheehy would have obtained had he sold the 22,663,650 Nuix shares that he alleges he would have been entitled to had he been permitted to exercise the Remaining 2008 Options (Shares). 394 Ms Planinic was asked to assess the value of the Shares on the following dates: (a) 8 December 2020 - on the basis that Mr Sheehy would have sold the Shares into the market in the two months following that date (Scenario 1); (b) 28 January 2021 - on the basis that Mr Sheehy would have sold the Shares into the market quickly after that date in order to do so prior to the announcement of Nuix's first half year results on 26 February 2021 (Scenario 2); and (c) 4 March 2021 - on the basis that Mr Sheehy would have sought to sell the Shares into the market as quickly as possible after the announcement of Nuix's first half year results on 26 February 2021 (Scenario 3). 395 Mr Potter was asked to assess the value of the Shares for each of the Scenarios considered by Ms Planinic but on the basis that the Shares were sold over a two month period from each date. 396 Mr Potter was also asked to assess the value of the Shares on the following additional dates: (a) 12 April 2021 - on the basis that Mr Sheehy would have sold the shares into the market in the two months following that date (Scenario 4); and (b) 11 May 2021 - on the basis that Mr Sheehy would have sold the shares into the market in the two months following that date (Scenario 5). 397 The only substantive dispute between Ms Planinic and Mr Potter, was the rate of the blockage discount to be applied to the scenarios they were asked to address. The experts agreed on the following likely range of blockage discounts for the three common scenarios they were asked to consider: (a) for Scenario 1 - a range of 10% to 15% (b) for Scenario 2 - a range of 12.5% to 17.5% (c) for Scenario 3 - a range of 15% to 20% 398 For each scenario, however, Ms Planinic considered the mid-point of the range was the appropriate figure to use in calculating a blockage discount whereas Mr Potter selected the low point of the range for Scenario 1 and the high point of the range for Scenarios 2 and 3. Mr Potter also selected the high point of the range that he had identified for the blockage discounts for Scenarios 4 and 5 (being the same ranges that Ms Planinic and he had agreed for Scenario 3). 399 Ms Planinic and Mr Potter agreed that it was appropriate to prepare what they described as an Option A and an Option B for their valuations of the Shares in each scenario they considered. Option A reflected a fully diluted value for the Shares on the basis that investors had accepted the position taken by Nuix that Mr Sheehy would not succeed in establishing his claims. Option B reflected a 75% dilution in the value for the Shares on the basis that investors would have assigned no greater than a 50% probability to Mr Sheehy succeeding in his claim and a 50% probability that he would have been able immediately to realise the Shares. 400 The respective valuations of the experts are summarised in the following table: Scenario Ms Planinic Mr Potter 1A $165,539,041 $170,287,826 1B $168,359,218 $173,173,942 2A $166,390,937 $109,509,123 2B $169,225,627 $111,365,131 3A $93,296,968 $84,174,778 3B $94,886,405 $85,601,388 4A NA $60,867,586 4B NA $61,899,167 5A NA $47,043,711 5B NA $47,841,005

Principles 401 Where a commercial contract requires something to be done, but does not fix a time for that to occur, the law generally implies a term that the act must be done within a reasonable time: Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd (2019) 101 NSWLR 679; [2019] NSWCA 185 (Donau) at [104] (Bell P, Basten JA agreeing). As Lord Watson observed in Hick v Raymond (1893) AC 22 at 32: When the language of a contract does not expressly, or by necessary implication, fix any time for the performance of a contractual obligation, the law implies that it shall be performed within a reasonable time. [This] has invariably been held to mean that the party upon whom it is incumbent duly fulfils his obligation, notwithstanding protracted delay, so long as such delay is attributable to causes beyond his control, and he has neither acted negligently nor unreasonably. 402 The nature of the obligation to be performed is relevant to any determination of the time within which an act is to be performed is to be implied: Donau at [104] (Bell P, Basten JA agreeing). 403 In a contract with mutually dependent obligations, an intimation by one party that it would be "useless" for the other party to perform their obligations will relieve the second party from performing their obligations under the contract, provided the other party has not repudiated the contract and was ready, willing and able to perform their obligations under the contract up to the time the intimation was given. As Brennan J stated in Foran v Wright (1989) 168 CLR 385; [1989] HCA 51 (Foran) at 427: In the light of this discussion, I would state the relevant principles thus: if an executory contract creates obligations which are mutually dependent and concurrent and, before the time for performance of the obligations arrives, one party, A, gives the other party, B, an intimation that it will be useless for B to tender performance and B abstains from performing his obligation in reliance on A's intimation, B is dispensed from performing his obligation and A's obligation is absolute provided that B had not repudiated the contract and he was ready and willing to perform his obligation up to the time when the intimation was given. It is immaterial that A's intimation amounts to a repudiation of the contract unless B terminates the contract by accepting the repudiation. If, at the time when the intimation was given, B was substantially incapable of future performance of his obligation or had already definitively resolved or decided not to perform it, B was not ready and willing. If B was not then ready and willing, A's failure to perform his obligation when the time for performance arrives is no breach of contract.

Exercise of the 2008 Options 404 Mr Sheehy submits that had Nuix accepted had been entitled to exercise the Remaining 2008 Options, he would have exercised them at the time of the IPO. He submits that this is not only consistent with his evidence, but also with the behaviour of virtually all other option-holders, who elected to cancel their options in return for cash at the time of the IPO. He submits that of the 40,339,623 options in existence immediately prior to the IPO, 38,961,508 options were cancelled for cash. 405 Mr Sheehy also submitted, by reference to the statement of Brennan J in Foran at 427, that properly understood, he had an obligation to deliver a notice of exercise of the Remaining 2008 Options and to tender the purchase price. He submits that he was relieved of that obligation because Nuix gave him an intimation by the time of the IPO that it would be "useless" for him to do so. He submits that as a result, Nuix is taken to have an absolute obligation which it has failed to perform and thereby breached the 2008 Option Agreement at that time. 406 Mr Sheehy submits that if the Court concludes that he would not have exercised the Remaining 2008 Options in December 2020, the latest point at which the Court should find that the notice of exercise would have been issued is 27 January 2021.

Issue of the Shares 407 Mr Sheehy submits that on the assumption that the Remaining 2008 Options were exercisable, Nuix was then obliged to issue the Shares to him immediately upon exercise. 408 Mr Sheehy submits that the 2008 Option Agreement makes clear that the Remaining 2008 Options are exercisable on the sale of the business of Nuix and there is no provision affording to Nuix any reasonable period of time to issue the Shares. 409 Moreover, Mr Sheehy submits that Nuix cannot rely on the evidence of Mr Egan as to the steps necessary to issue the Shares because it was premised on the unproven assumptions that: (a) the Nuix board was aware that it was only contractually obliged to issue the Shares "within a reasonable period of time" in accordance with the case "now belatedly advanced by Nuix"; and (b) Nuix had received advice to the effect that the notice of exercise of the Remaining 2008 Options should be considered by the Board for "potential approval". 410 Mr Sheehy submits that the reference to "potential approval" and the reference by Mr Egan to obtaining advice to "confirm that the options were exercisable in the manner required by Mr Sheehy" suggests that the Remaining 2008 Options may not in fact have been exercisable. He submits that even assuming that Nuix should be given a reasonable amount of time to issue the Shares, this could not include advice on this issue as if the Court is considering the value of the Shares it would have accepted the implication of the Implied Term. Therefore, he submits, Nuix should not be given time to determine whether it was contractually obliged to issue the Shares. 411 Mr Sheehy submits it was therefore unnecessary for him to challenge any of Mr Egan's evidence in cross-examination. 412 Mr Sheehy also submits that: (a) Mr Egan did not address in his evidence whether Nuix board meetings could be held more frequently than monthly; (b) if Nuix was under an obligation to act reasonably it could not "simply sit on its hands and wait for months" until the next scheduled board meeting; (c) a period of 2 to 3 weeks to obtain advice was inconsistent with any contractual obligation to issue the Shares within a reasonable period of time if it is assumed that Nuix properly understood their contractual obligations; and (d) no evidence was led by Nuix from any lawyers as to how long it would take to provide the advice.

Sale of the Shares 413 Mr Sheehy submits that the Court should accept his evidence that (a) if Nuix issued shares to him following his exercise of the Remaining 2008 Options, he would have sold those shares in the following month, prior to the announcement of Nuix's half year results on 26 February 2021; and (b) he would not have waited a year to sell the Shares in order to realise the capital gains benefits that he would have received had he held the Shares for that period of time.

Blockage discounts 414 Mr Sheehy submits that the selection by Ms Planinic of the mid-point of the range for blockage discounts is the approach that should be accepted by the Court. He submits that the selection of the high points of those ranges by Mr Potter for scenarios 2 to 5 to justify higher discounts is "double-counting" because the matters used to justify the higher discount have already been incorporated in the determination of each blockage discount range.

Exercise of the Remaining 2008 Options 415 Nuix submits that, irrespective of any dispute with Nuix, the earliest date by which Mr Sheehy would have exercised his options was 27 January 2021. It submits that not only was that Mr Sheehy's express oral evidence, but that is when Mr Sheehy in fact exercised his options, even though he was in a position to do so much earlier.

Issue of the Shares 416 Nuix submits that it was obliged only to issue the Shares in a reasonable time, with reasonableness informed by the steps Nuix was required to take to lawfully and prudently issue them. 417 Nuix submits by reference to the unchallenged evidence of Mr Egan that the steps that it would have to take to issue the Shares if Mr Sheehy had been permitted to exercise the Remaining 2008 Options would have meant that the Shares would not have been available for trading until at least after 12 April 2021, and there would have been a real possibility that they would not have been available until 11 May 2021. These steps included obtaining approval from the Nuix Board to seek legal advice on the notice of exercise of the Remaining 2008 Options received from Mr Sheehy. Mr Egan identified nine matters on which he considered legal advice was necessary, in particular, the number of shares to which the notice of exercise pertained and the steps necessary to ensure compliance with the ASX Listing Rules, including with respect to the issuing of a notice pursuant to s 708A(6) (typically referred to as a cleansing notice). 418 Nuix submits by way of summary that the evidence of Mr Egan establishes that: a. it is probable the Nuix Board would have considered the appropriate course of dealing with the notice and authorised the procurement of legal advice at its next scheduled meeting on 25 February 2021; b. legal advice would have been required on a variety of technical and complex issues, including the requirement for and content of a cleansing notice under s 708A of the Corporations Act. That advice may have taken 2-3 weeks, but likely would have taken longer. As a result of that advice, Nuix would have later issued a cleansing notice; c. the Board needed to approve the issuance of Mr Sheehy's shares, which would not have occurred prior to its scheduled meeting on 18 March 2021 (and may have occurred at a later time, if legal advice was delayed); and d. it would have taken at least 27 business days (and very possibly longer) after Board approval for Nuix to complete the process required for the shares to be issued, quoted on the ASX and transferred such that they were available for trading by Mr Sheehy.

Sale of the Shares 419 Nuix submits that Mr Sheehy would have held on the Shares for at least 12 months given: (a) the significant capital gains tax liability that would otherwise arise; (b) Mr Sheehy's previous concerns about the taxation implications of any exercise of the 2008 Options; (c) the need to minimise blockage discounts; (d) Mr Sheehy had no real reason to believe that the Nuix share price would decline; (e) the evidence of Mr Sheehy that he would have sold the Shares as soon as possible is inevitably infected by hindsight bias; and (f) the decision by Mr Sheehy not to exercise his options until 27 January 2021, rather than at the time of the IPO, is inconsistent with his stated desire to sell the Shares as soon as possible. 420 Nuix makes the following further submissions if the Court is not persuaded that Mr Sheehy would have held on to the Shares for at least 12 months and if Scenarios 4 and 5 were not accepted by the Court. 421 First, Scenario 1 can readily be dismissed given Mr Sheehy's evidence concerning when he would have sold the Shares in the absence of any dispute with Nuix. 422 Second, Scenario 3 is more probable than Scenario 2 because of the time it would take Nuix to issue the Shares following the exercise of the 2008 Options by Mr Sheehy on 27 January 2021. 423 Third, in both Scenario 2 and Scenario 3 a two month rather than a one month sale period is more appropriate. 424 As to Scenario 2, a two month sale period was more appropriate given (a) the unrealistic assumed start date of 28 January 2021 for the sale of the Shares given the steps that Nuix would have to take before the Shares were issued; (b) the experts' agreed that the volume of Nuix shares traded in the month following 27 January 2021 was relatively low; and (c) it was inherently unlikely that institutional investors would have had much interest in acquiring large blocks of shares from a former Nuix CEO in the month leading up to the release of the half year results of Nuix. 425 As to Scenario 3, a two month sale period was more appropriate given the experts' agreement that the interest of institutional investors would have declined after the release of Nuix's half year results.

Blockage discounts 426 Nuix submits that while both experts were able to agree on a range of blockage discounts for the Scenarios that they considered, Mr Potter, unlike Ms Planinic, was also able by reference to matters of degree also express an opinion, supported by cogent reasoning, as to which end of the range might be applicable. 427 It submits that Ms Planinic in adopting a mid-point for each blockage discount range had turned her mind to the appropriate range of discounts, not individual factors that would suggest that particular points within each range were more likely than other points. 428 Nuix submits that it is not exceptional and logically consistent for Mr Potter to have relied on the same matters to determine an appropriate range of blockage discounts and to determine where in that range the most probable discount lay.

Exercise of the Remaining 2008 Options 429 I am satisfied that Mr Sheehy would have exercised the Remaining 2008 Options on 27 January 2021 irrespective of whether there had been any dispute with Nuix about his entitlements under the 2008 Option Agreement. 430 The evidence given by Mr Sheehy in the course of his cross-examination about when he would have exercised the Remaining 2008 Options in the absence of any dispute with Nuix needs to be carefully scrutinised. 431 Mr Sheehy initially provided the following explanations: I would have preferred to exercise [the options] when the IPO happened. We were just informed by Nuix's lawyers that there - that was not going to be allowed. So that's actually the date when - or the first time I would have wanted to exercise them first". … My first preference would have been to do it [exercise the options] in early December 2020, and then we decided to do it in a more formal way in January 2021". 432 The cross-examiner then returned to the likely timing of the exercise of the Remaining 2008 Options in the following exchange with Mr Sheehy: Mr Sheehy, you ultimately issued a notice of exercise in relation to your options; correct?---Correct. And you did that at the end of January 2021; correct?---Correct. And what I'm seeking to have you accept is that, absent the dispute with Nuix, you would have issued a notice of exercise in relation to your options at around the same time?---Correct. That is, some time towards the end of January, 2021; correct?---Sorry, I didn't understand your previous question. My first preference would have been to do it in early December 2020, and then we decided to do it in a more formal way in January 2021. 433 After a series of questions that were objected to and rejected and an unresponsive answer from Mr Sheehy, Mr Darke then continued pressing Mr Sheehy as to when he would have exercised the Remaining 2008 Options in the absence of any dispute with Nuix: MR DARKE: I was asking you to explain, Mr Sheehy, why the fact - why you say the fact of the dispute between you and Nuix meant that you exercised your options later than you would have preferred to?---Nuix through Gilbert + Tobin told me -sorry, told me that I - they disputed my options were exercisable. In January, the share price of Nuix went - skyrocketed, and we thought it was a really good idea to exercise them as quickly as we could because we - you know, I - I really didn't want to be a shareholder or an option holder in Nuix once the first results came out. Mr Sheehy, you commenced these proceedings on 26 October 2020; correct?---Correct. That was prior to the IPO. Correct?---Correct. And at that time, the only issue between you and Nuix was whether your 450,000 options entitled you to 22 million-odd shares; correct?---That's what I understood. Yes. And were you sufficiently certain of your position in that regard to commence these proceedings in late October 2020; correct?--- Correct. On 20 November 2020, your lawyers wrote to Nuix lawyers asserting that your options were exercisable and that you intended to exercise them. Do you recall that?---Yes. And, again, at that time, 20 November 2020, you were sufficiently certain of your position on that issue to give your lawyers instructions to send that letter?---Correct. And on 18 December 2020, you served on Nuix your statement of claim in these proceedings, alleging that the IPO was the sale of the business of Nuix for the purposes of the 2008 option agreement. Correct?---Correct. I will hand up a copy of that document to you. If you go through to paragraph 8, you 5 see that you allege there that on the proper construction of the option agreement, the sale of Nuix - the respondent's business would occur where there was an initial public offering on the ASX?---Mmm. And then if you travel through, please, to paragraph 24. You say that on 2020 - on 10 20 November 2020, your solicitors informed Nuix' solicitors that you intended to exercise your options and that you expected to receive 22 million shares. Do you see that? And then, paragraph 25, you record the response of Nuix through its solicitors. Do you see that?---Yes. And then in paragraph 32, you allege that a sale of the respondent's businesses for the purposes of the 2008 option agreement occurred either, in passing down to paragraph B, as a result of the IPO. B, as a result of Macquarie ceasing to hold more than 50 per cent of the issued shares in the respondent following the IPO or D, as a result of more than 50 per cent of the issued shares in the respondents coming to be 20 held by new investors in shares of the respondent following the IPO. Do you see that?---I do. And if you go down to paragraph 34, you allege, don't you, that the denial by Nuix of your asserted right to exercise the options by reason of a sale of business was a 25 breach of the option agreement?---Correct. You were sufficiently certain by 18 December 2020 of your position on all of those matters to give instructions for this statement of claim to be served; correct?---Correct. Nothing more was needed, from your perspective, to decide to exercise your options at that time; correct?---Correct. But if you wanted to exercise your options, you could have done so at any time from at least 18 December 2020; correct?---Subject to the IPO actually occurring. Well, the IPO had occurred by that time, hadn't it?---You said November. I think it actually happened on 5 December. I do apologise if I misspoke, Mr Sheehy. That happens often and it's always entirely my fault. So my apologies. You had everything you needed by the time this statement of claim was served on 18 December 2020 to decide to seek to exercise your options; correct?---Correct. But you didn't do so until 27 January 2021; correct?---Correct. And you would have waited until 27 January 2021 to exercise your options even if there had been no dispute with Nuix; correct?---Correct. 434 I do not accept, contrary to the position advanced by Mr Sheehy that the last answer he gave above could be explicable on the basis that it was the result of a misunderstanding of the question he was asked. The question was the culmination of a structured and careful line of questioning designed to challenge the earlier evidence given by Mr Sheehy as to the relevance of the dispute with Nuix as to when he would have exercised the Remaining 2008 Options. 435 Further, I do not accept that the right to exercise a call option can be construed as an obligation to issue a notice of exercise of an option and to tender the exercise price for the purposes of the dispensation with the performance principle stated by Brennan J in Foran. It is important to focus on substance not form in distinguishing between rights and obligations. Mr Sheehy was under no obligation to exercise the Remaining 2008 Options, they were call options. I do not accept that it is permissible to in effect recast a right as an obligation by characterising a right to exercise a call option as a right that is contingent on an obligation to deliver a notice of exercise and to tender the exercise price. Mr Sheehy was no more under an obligation to deliver a notice of exercise and to tender the exercise price than he was to exercise the option. Nor is it possible to discern any material distinction between a right to exercise an option and a right to have shares issued in a company if a call option is exercised. The right can only be enlivened by the delivery of a notice of exercise and the tender of the exercise price. 436 Moreover, the present case is not analogous to the position in Foran. In that case the purchaser was contractually under an obligation to attend settlement and pay the purchase price, Mr Sheehy had no contractual obligation to exercise the Remaining 2008 Options.

Issue of the Shares 437 I accept that it is likely given the terms of the Consent Judgment, the extent of the dilutive impact on other Nuix shareholders of the exercise of the Remaining 2008 Options and the complexity and significance to Nuix of quoting in excess of 6% of its share capital on the ASX, that Nuix would have sought legal advice on most, if not all, of the following matters identified by Mr Egan in paragraph 15 of his affidavit, prior to issuing the Shares: (a) whether it was open to the company to issue the shares sought by Mr Sheehy in accordance with the ASX Listing Rules, the Corporations Act and any particular obligations assumed by the company during the course of the IPO; (b) whether, having regard to the terms of the grant of the Options, the Notice was a valid exercise and that the company was obliged to issue the claimed 22,663,650 shares in return for the number of options Mr Sheehy held; (c) the procedural steps that would have been necessary to cause the options register to be amended and the issuance of shares to occur (including any steps that would be necessary to be taken with ASIC and/or the ASX and whether such an issuance may require shareholder or other approvals); (d) the appropriate approach to engaging with the ASX in relation to the potential quotation of the shares, particularly having regard [to the ASX discretion to determine whether or not to quote an entity's securities on the ASX in the context of the principle that securities "should be issued in circumstances, and have rights and obligations attaching to them, that are fair to new and existing security holders"]; (e) whether there was any limitation on the company's ability to issue the shares, including because of the company's 15% placement capacity and whether there would be any need to seek shareholder approval for the issuance; (f) whether the company was in a position to give the requisite representations set out in Appendix 2A of the ASX Listing Rules to obtain ASX approval for the quotation of the shares (if issued), in particular, whether the possibility of Mr Sheehy selling the issued shares resulted in the company having to give notice under 708A of the Corporations Act (Cleansing Notice) in order to obtain such approval; (g) if a Cleansing Notice was required, the requirements necessary to issue the Cleansing Notice, including any requirements as to timing and the warranties and disclosures required to be given by the company under the relevant provision; (h) whether there were any restrictions on the company's ability to issue shares arising from the Nuix Prospectus or the arrangements it made with underwriters of the IPO; and (i) any market disclosure requirements that may have been associated with the potential issuance of the shares. 438 I do not accept, however, that the decision to obtain legal advice on these matters could not be made until the next scheduled board meeting of Nuix on 25 February 2021. It is inherently implausible, given the self-evident significance and complexity of the exercise of the Remaining 2008 Options and any subsequent issue of the Shares that it would not have been considered necessary for Nuix to obtain the legal advice. If the current CEO of Nuix or Mr Egan did not believe that they had sufficient authority to seek the advice, informal board consultation could have addressed any concerns as to authority or alternatively formal approval could be expected to have been readily obtained pursuant to a circular board resolution. This could have been done well before 25 February 2021. 439 I otherwise accept the unchallenged evidence of Mr Egan that it would take two to three weeks to obtain advice on these legal issues, I note this advice did not impermissibly include advice on whether Nuix was contractually obliged to accept the exercise of the Remaining 2008 Options, given the evidence proceeded on the assumption that Mr Sheehy was entitled to exercise the Remaining 2088 Options. 440 On balance, I am also satisfied that Nuix board approval was required for the issue of the Shares. 441 Clause 5(a) of the Nuix constitution provides that: Subject to the Applicable Law and any rights and restrictions attached to a class of Shares or other securities, the Company may by resolution of the Board issue Shares, options to acquire Shares, and other securities with rights of conversion to Shares on any terms, to any person, at any time and for any consideration, as the Board resolves. 442 An option to acquire shares is distinct from the issue of shares. It gives rise to a contractual obligation on the part of the company to issue the shares but is not an issue of shares. Clause 5(a) of the Nuix constitution makes plain that the company may issue shares by resolution of the Board. A resolution to issue options to acquire shares does not extend to an issue of shares pursuant to an exercise of an option. 443 I am also satisfied that prior to issuing the Shares, Nuix would have undertaken the following steps identified by Mr Egan in paragraph 20 of his affidavit, most of which were directed at complying with the formal requirements of the ASX, in particular the issue of a cleansing notice pursuant to s 708A(5) of the Corporations Act: a) caused the personal cheque provided by Mr Sheehy and enclosed with the Notice to be processed. I am advised it can take around 2 to 3 business days for a personal cheque to be deposited with Nuix's bank and then for Nuix to obtain confirmation that the relevant funds had been cleared; b) assuming the cheque cleared, seek to cause the options register to be updated to reflect the terms of the Notice which I estimate would have taken around 2 business days; c) prepare the necessary disclosure form required under the ASX Listing Rules in respect of the issuance of any shares to be issued and cause that to be sent to the ASX, which I estimate would have taken around 2 business days; d) conducting initial discussions with the ASX, preparation of information for ASX to consider including from the perspective of whether the proposed quotation of shares is fair to new and existing security holders and receive ASX determination, which I expect would have taken around 10 business days given the short time that had elapsed between the issuance and the Nuix IPO and the likelihood that the ASX would have required some time to consider the application and potentially seek any necessary additional information or clarifications; e) subject to the ASX determination, prepare the necessary disclosure form required under the ASX Listing Rules in respect of the issue and quotation of any shares to be issued and cause that to be sent to the ASX, which I estimate would have taken around 2 business days; f) if required, undertake the process to prepare a Cleansing Notice including by conducting due diligence with respect to that statement and the representations provided in Appendix 2A, and seek Board sign off on that cleansing statement, which I estimate would have added at least 10 business days to the process outlined above and could have been completed concurrently with other steps; and g) seek to cause the share register to be updated to reflect issue of Shares which I estimate would have taken around 2 business days given the need for me to liase with Nuix's share register, Link and then obtain their confirmation that the register had been amended. 444 Mr Egan also gives unchallenged evidence in paragraph 21of his affidavit that as the Shares would have been issued on an SRN (an issuer sponsored account), Mr Sheehy would need to have the Shares transferred to a HIN (a broker sponsored account), which would take about 5 business days and include the posting of a holding statement required for completion. 445 Given his experience as a company secretary and the specific responsibilities he has had as the company secretary of Nuix since October 2020, I accept the unchallenged evidence of Mr Egan that it would have taken no less than 17 business days for the Shares to have been issued, quoted and transferred to a broker sponsored account and a further 10 business days for the preparation and issuing of a cleansing notice. That estimate of 27 business days was made by Mr Egan on the basis that the steps that he had identified were necessary to be undertaken, with the exception of the cleansing notice, could have been undertaken concurrently with the following steps, (a) clearance of Mr Sheehy's cheque accompanying the notice of exercise of option (2 to 3 business days), (b) discussions with and provision of information to the ASX (10 days) and (c) the transfer of the Shares from an issuer sponsored account to a broker sponsored account (5 days). 446 Given my findings above, I have concluded that the most probable approximate start date for the sale of the Shares would have been 6 April 2021. That conclusion is based on the following timeline: (a) 27 January 2021 - receipt of notice of exercise of the Remaining 2008 Options; (b) 17 February 2021 - request and receipt of necessary legal advice (this is allowing 3 weeks rather than 2 weeks in order to accommodate any additional time to confirm that advice should be sought); (c) 25 February 2021 - scheduled board meeting of Nuix at which the Board approved the issue of the Shares to Mr Sheehy pursuant to the exercise of the Remaining 2008 Options; and (d) 6 April 2021 - issue of the Shares to Mr Sheehy, after allowing 27 business days (bearing in mind Easter public holidays) for the completion of the consequential steps identified by Mr Egan for the issue of the Shares.

Retention of the Shares 447 I am satisfied that Mr Sheehy would have sought to sell the Shares as soon as possible. I do not accept that it is equally likely that he would have retained the Shares for at least 12 months or that he would not have acted with urgency to sell them. 448 It is of course always necessary to pay close regard to the inherent risk of hindsight bias in considering evidence of what a person may have done in different circumstances. I am not persuaded, however, that this provides a compelling basis not to accept Mr Sheehy's evidence that he would have sought to sell the Shares as soon as possible given his concerns about the financial position of Nuix. Objectively, the significant deterioration in the financial position of Nuix was apparent as early as the release of its half year financial results in February 2021. Mr Sheehy may not have worked for Nuix for some four years by that time, but given this publicly available information and his knowledge of the business of Nuix that he had acquired as the CEO of Nuix, I accept that Mr Sheehy was in a position to make a relatively considered assessment of the likely future prospects of the Nuix business. I accept his evidence that at he had formed the view, as he stated in re-examination, that the current board of Nuix was "selling the market vapour" given the announcements of unrealistic growth rates and that the share price of Nuix was "about to go off a cliff". 449 I accept that the exposure to a significant capital gains tax liability if the Shares were not held for at least 12 months, Mr Sheehy's previous concerns about the taxation implications of any exercise of the 2008 Options and the desirability of pursuing a gradual sale of the Shares to reduce the impact of blockage discounts would likely have been significant matters for Mr Sheehy to take into account. I do not accept, however, that weighed against his concerns about the likely future prospects of the Nuix business, they would cause him not to sell the Shares as soon as possible.

Blockage discounts 450 I do not accept that it is double counting to take into account matters for the purpose of both identifying a range of blockage discounts and then determining a most likely point within that range. There is inevitably a significant degree of imprecision in the identification of blocking discounts that might arise if large parcels of shares are sought to be sold in a compressed time frame. It is not the case that if a range of likely blockage discounts is identified that it is equally likely that the most probable blockage discount is likely to be the mid-point of the range or that it is equally likely to be higher or lower than the mid-point. 451 In some circumstances, it may be the case that the most probable blockage discount might be the mid-point of the range, but in other cases an expert might well from the view that the most probable blockage discount would be at the lower or the higher end of the range. The objective matters taken into account by Mr Potter in determining a range of probable blockage discounts included the average volume of shares traded in Nuix, movements in the Nuix share price of Nuix and the anxiety of Mr Sheehy to sell the Shares. It is the relative degree or size of that data or concerns that may, as in the case of Mr Potter, inform a determination of a most probable point within a range of probable blockage discounts. In this regard the following opinions of Ms Planinic as recorded in the table in paragraph 21 of the Joint Expert Report with respect to the blockage discounts for Scenarios 2 and 3 are particularly apposite: (a) with respect to Scenario 2; Ms Planinic effectively adopts the mid point of the range (i.e. 15.0%) however acknowledges that if the sale period is extended to 2 months and the shares were not sold prior to the announcement of the half-year results then due to declining prices Mr Sheehy is likely to be a more anxious seller and the discount would move to the higher end of the range. (b) with respect to Scenario 3; Ms Planinic effectively adopts the mid point of the range (i.e. 17.5%) however acknowledges that if the sale period is extended to 2 months then due to declining prices Mr Sheehy is likely to be a more anxious seller and the discount would move to the higher end of the range. 452 I am otherwise satisfied that the blockage discount applied by Mr Potter for Scenarios 4 and 5 is appropriate. Both Scenarios 4 and 5 envisaged a sale of the Shares after the substantial continuing decline in the Nuix share price after the release of the poorly perceived results announcement on 26 February 2021. When this decline is combined with an extended likely sale period of 2 months, I accept that it would be appropriate for the blocking discount to be assessed at the higher end of the agreed blocking discount range for both Scenarios 4 and 5. Further, I note that the average daily trading in Nuix shares was relatively stable for each month from March 2021 to June 2021, fluctuating between a low of 3,881,711 in April 2021 and a high of 6,362,368 in June 2021. These volumes of Nuix shares represented between 17.13% and 28.07% of the postulated 22,630,650 Shares that would have been issued to Mr Sheehy had his exercise of the Remaining 2008 Options been accepted by Nuix.

Most probable Scenario 453 I am satisfied that the Scenario that would best reflect the probable value of the Shares is Scenario 4. The commencement date of 12 April 2021 for that scenario is the closest commencement date to the date that I have determined would have been the most probable approximate date by which the Shares would have been issued to Mr Sheehy. 454 I am also satisfied that a two month sale period, rather than a one month sale period, would have been necessary in order to reduce the impact of blockage discounts given the size of the bundle of shares that Mr Sheehy would be seeking to sell in a short period of time and in the wake of the negative impact that the release of the half year financial results of Nuix had on its share price. 455 It follows that the damages or compensation that would have been awarded to Mr Sheehy, had he otherwise been successful in the proceedings, would be calculated having regard to Mr Potter's valuations for Scenario 4A and 4B. In order to determine a final net figure it would be necessary to deduct the exercise price and related sale costs and determine whether the assumptions underpinning Option A or Option B were the more appropriate assumptions to make.

Disposition 456 For the foregoing reasons, the amended originating process is to be dismissed. 457 The parties will be given an opportunity to make short submissions on costs. In the absence of an agreed position on costs, the costs of the proceedings will be determined on the papers, unless a party seeks an oral hearing. I certify that the preceding four hundred and fifty-seven (457) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Halley.