Australian Securities and Investments Commission v GetSwift Limited (Liability Hearing)
[2021] FCA 1384
•10 November 2021
FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v GetSwift Limited (Liability Hearing) [2021] FCA 1384
File number: VID 146 of 2019 Judgment of: LEE J Date of judgment: 10 November 2021 Catchwords: CORPORATIONS – the GetSwift saga – story of the rise and fall of a nascent ‘tech start up’ listed on the ASX – market offering ‘software as a service’ – purported ‘exclusive multi-year’ agreements with 13 Enterprise Clients – underlying facts reveal agreements far less than certain –focus on influencing market perceptions through ‘price sensitive’ ASX announcements – ‘do or die’ approach to success – “[b]it by bit until we get to a $7.50 share price :)” – company re-domiciled to Canada during currency of regulatory proceeding
PRACTICE AND PROCEDURE – pleadings in continuous disclosure cases – leave sought to rely on a fifth further amended statement of claim – whether the Australian Securities and Investments Commission ran an ‘all or nothing’ case – whether one sub-element of an omitted category of information can undermine the combined total – not an ‘all or nothing case’ – rejection of amended pleading – same case as was always run – no prejudice to GetSwift
CORPORATIONS – elephantine continuous disclosure case – consideration of continuous disclosure obligations – s 674 of the Corporations Act 2001 (Cth) – ASX Listing Rule 3.1 – where listed public company announced to market that it had entered into ‘exclusive multi-year’ agreements – whether information about trial periods, termination and other qualifying aspects material – need to wade through factual narrative of each of the 13 Enterprise Clients –prodigious documentary case – all contraventions made out
CORPORATIONS – materiality of omitted information – ex ante analysis – influence of expert and lay evidence –identity of relevant investors – consideration of how relevant investors determine whether to acquire or dispose of securities – consideration of what influences investors in deciding whether to acquire or dispose of securities – consideration of share price in ex ante analysis – consideration of subjective views of directors to objective question of materiality – consideration of whether omitted of information was material
CORPORATIONS – whether directors of company contravened s 674(2A) of the Corporations Act – whether directors knowingly concerned in contravention by company of s 674(2) – consideration of state of knowledge that must be established before a person is knowingly concerned in a contravention for the purpose of s 674(2A) – whether actual knowledge required – directors found to have been knowingly involved in some contraventions
CORPORATIONS – misleading and deceptive conduct claim – was it necessary? – s 1041H of the Corporations Act 2001 (Cth) and s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) – consideration of a substantial number of representations – majority misleading or likely to mislead – consideration of continuing and future representations – representations made by an officer – whether two of the directors should be personally liable for GetSwift’s misleading and deceptive conduct – circumstances in which they were the directing mind of the company – where they drafted and/or authorised the transmission of ‘price sensitive’ announcements to the ASX
CORPORATIONS – directors’ duties – whether directors of company contravened s 180(1) of the Corporations Act by failing to exercise care and diligence in causing or permitting company to contravene the relevant statutory norms – consideration of the interaction between different contraventions – objective inquiry – directors found to have breached s 180(1) of the Corporations Act
EVIDENCE – drawing of inferences in absence of direct evidence – where defendant directors did not give evidence – consideration of the relevant principles – application of rule in Jones v Dunkel in civil penalty proceedings
Legislation: Australian Securities and Investments Commission Act 2001 (Cth) ss 12BA, 12BAA, 12BAB, 12BB, 12DA, 12DB, 19
Competition and Consumer Law Act 2010 (Cth) Sch 2 s 4
Corporations Act 2001 (Cth) ss 9, 79, 180(1), 206C(1), 206E(1), 674(2), 674(2A), 675, 676, 677, 708A(5)(e), 761A, 764A(1)(a), 1001A, 1002B(2)(a), 1041H, 1042C(1), 1317G(1A), 1317R
Evidence Act 1995 (Cth) ss 55, 56, 128, 136, 140
Federal Court of Australia Act 1976 (Cth) Pt VB
Trade Practices Act 1974 (Cth) s 51A
Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) Sch 3, item 6
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Oxford English Dictionary Online (Oxford University Press, October 2021)Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub‑area: Regulator and Consumer Protection Number of paragraphs: 2618 Date of last submissions: 12 October 2020 Date of hearing: 15 – 18, 22 – 25 and 29 – 30 June 2020; 1 – 2, 7, 9, 13 and 15 July 2020; 14 August 2020; 30 September 2020 ; 12 October 2020 Counsel for the Plaintiff: Mr J Halley SC with Mr Y Shariff SC, Ms N Moncrief and Ms G Westgarth Solicitor for the Plaintiff: Johnson Winter & Slattery Counsel for the First Defendant: Mr M Darke SC with Mr P Flynn SC, Mr A Shearer, Ms A Munro and Mr R Jedrzejczyk Counsel for the Second Defendant: Mr S Finch SC with Mr S Lawrence Counsel for the Third Defendant: Dr R Higgins SC with Mr N Bender Solicitor for the First, Second and Third Defendants: Quinn Emanuel Urquhart & Sullivan Counsel for the Fourth Defendant: Mr J Potts SC with Ms B Ng Solicitor for the Fourth Defendant: Baker McKenzie ORDERS
VID 146 of 2019 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Plaintiff
AND: GETSWIFT LIMITED (ACN 604 611 556)
First Defendant
BANE HUNTER
Second Defendant
JOEL RICHARD STUART MACDONALD
Third Defendant
BRETT EAGLE
Fourth Defendant
ORDER MADE BY:
LEE J
DATE OF ORDER:
10 NOVEMBER 2021
THE COURT ORDERS THAT:
1.The parties file by 5pm on 17 November 2021 an agreed minute or competing minutes of order to reflect these reasons.
2.The proceeding be adjourned for a case management hearing at 9:30am on 19 November 2021.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
CONTENTS:
A INTRODUCTION
[1]
A.1 Overview of case
[3]
A.2 The GetSwift platform and business model
[20]
A.3 Statements regarding continuous disclosure
[29]
A.4 GetSwift announcements
[35]
A.5 Summary of claims
[38]
B PRINCIPAL CONCLUSIONS
[44]
C THE DEFENDANTS, THE BOARD AND OTHER KEY PLAYERS
[49]
C.1 The defendants
[49]
C.2 Operations of the board of GetSwift
[53]
C.3 Other personnel at GetSwift
[57]
D THE EVIDENCE GENERALLY
[59]
D.1 ASIC’s evidence
[61]
D.2 The position of the Defendants
[70]
E A DISPUTE ABOUT ASIC’S PLEADED CONTINUOUS DICLOSURE CASE
[71]
E.1 The iterations of ASIC’s pleaded case
[72]
E.2 The application to amend
[79]
E.3 Relevant principles
[83]
E.4 Pleadings and continuous disclosure cases
[86]
E.5 Consideration
[94]
F APPROACH TO FACT FINDING
[102]
F.1 The nature of the contest at trial
[103]
F.2 The principled approach to fact finding
[107]
F.2.1 Affidavits and the documentary case
[108]
F.2.2 The oral evidence generally
[113]
F.2.3 Burden and standard of proof
[116]
F.3 Jones v Dunkel and Civil Penalties
[123]
G FACTUAL BACKGROUND IN RESPECT OF GETSWIFT’S CLIENTS AND SHARE PLACEMENTS
[141]
G.1 The Enterprise Clients
[145]
G.1.1 Fruit Box
[145]
The development of the Fruit Box Agreement
[146]
The Fruit Box Announcement
[161]
Fruit Box’s’ Trial of the GetSwift Platform
[176]
Ms Gordon’s involvement in the Fruit Box trial
[180]
Termination of the Fruit Box Agreement
[184]
Conversation between Ms Gordon and Ms Mikac on 22 March 2017
[193]
GetSwift Board Meeting on 27 March 2017
[195]
Draft of Fruit Box termination announcement
[198]
End of GetSwift engagement with Fruit Box
[200]
G.1.2 Commonwealth Bank of Australia
[203]
The CBA Agreement
[204]
The First and Second Meeting: 8 December 2016 and 20 January 2017
[206]
Non Disclosure Agreement and initial draft terms of the CBA Agreement
[209]
The Third Meeting: 13 February 2017
[215]
Drafting of the CBA Announcement and CBA Agreement
[222]
Provision of draft media announcement to CBA and negotiation of the CBA Agreement
[231]
Initial CBA response to the draft media release
[235]
Draft of the media release prepared by Mr Polites
[243]
CBA handover from Mr Armstrong to Ms Kitchen
[252]
CBA proposed amendments to the CBA Agreement and further discussions
[256]
GetSwift reaction to the CBA revised draft of the media release
[266]
Further negotiation of the CBA Agreement
[268]
Mr Hunter reinserts the 55,000 figure into the draft media release and ASX announcement
[273]
GetSwift provides CBA with the revised media release with the 55,000 figure reinserted
[276]
Mr Budzevski and Ms Kitchen query whether GetSwift figures in media release are global
[281]
Mr Hunter responds to CBA query about global figures
[289]
Further consideration by Mr Budzevski and Ms Kitchen of the 55,000 figure
[296]
Ms Kitchen again queries the 55,000 figure with Mr Polites and Mr Budzevski
[302]
Mr Budzevski’s further consideration of the 55,000 retail merchant figure
[317]
Further exchange of drafts of the CBA Agreement
[326]
Execution of the CBA Agreement
[340]
Final arrangements for the CBA Announcement
[343]
Development of the GetSwift App for CBA
[365]
Conduct of CBA after the CBA Announcement
[370]
GetSwift responses to the projections queries in the ASX aware letters
[374]
Mr Begbie’s email
[381]
G.1.3 Pizza Pan Group Pty Ltd
[383]
GPS Delivery Tracking Project and the Pizza Hut Test Store Site
[386]
Pizza Pan’s entry into an agreement with GetSwift
[389]
The Pizza Hut Announcement
[413]
Pizza Pan is not part of Pizza Hut International
[433]
Pilot postponed
[437]
Recommencement of the trial and decision not to continue
[441]
G.1.4 All Purpose Transport
[448]
Preparation of the APT Agreement
[450]
Entry into the APT Agreement
[455]
The APT Announcement
[457]
Variation of the APT agreement with GetSwift and issues with the csv. file
[462]
APT’s demonstration of the GetSwift Platform to Mr Nguyen of Fantastic Furniture
[477]
Mr Macdonald learns of the current circumstances
[482]
GetSwift’s Weekly Transaction Reports record zero deliveries for APT
[492]
G.1.5 CITO Transport Pty Ltd
[498]
Negotiations between CITO, PMI and GetSwift
[502]
FRF Couriers is selected to provide the delivery services
[524]
Entry into the CITO Agreement
[525]
GetSwift’s engagement of FRF Couriers
[529]
The CITO Announcement
[532]
CITO participation limited to provision of warehousing services
[536]
Interview with Australasian Transport News
[538]
The alleged training
[542]
The alleged trial of the PMI online store giving CITO access to the GetSwift Platform
[559]
G.1.6 Hungry Harvest LLC
[560]
Negotiation of the Hungry Harvest Agreement
[561]
Preparation of the Hungry Harvest Announcement
[568]
G.1.7 The First Placement
[573]
Trading Halt
[573]
Tranche 1 Placement
[578]
Tranche 2 Placement
[587]
G.1.8 Fantastic Furniture
[595]
Initial dealings and negotiation of the Fantastic Furniture Agreement
[596]
Clarification of termination prior to the end of the trial period
[608]
Preparation and release of the Fantastic Furniture and Betta Homes Announcement
[611]
The initial trial of the GetSwift Platform by Fantastic Furniture
[628]
Termination of the Fantastic Furniture Agreement
[632]
G.1.9 Betta Homes
[642]
Initial dealings and negotiation of the Betta Homes Agreement
[644]
The Fantastic Furniture & Betta Homes Announcement
[669]
Implementation of the Betta Homes Agreement
[672]
G.1.10 Bareburger Group LLC
[685]
Negotiation of the Bareburger Agreement
[686]
Preparation and release of the Bareburger Announcement
[696]
Integration with Toast
[709]
G.1.11 NA Williams
[714]
GetSwift’s approach to Genuine Parts Company
[719]
First contact between NA Williams and GetSwift
[722]
27 July 2017 meeting
[724]
Feedback from NA Williams following the meeting
[739]
Negotiation of the NAW Agreement
[741]
Circulation of drafts of the First NAW Announcement
[749]
Consideration of the “1.15 billion” transactions figure
[763]
GetSwift’s knowledge of size of addressable market and competitors’ pricing
[769]
Further GetSwift internal circulation of a draft of the First NAW Announcement
[772]
GetSwift dealings with Advance and O’Reilly Auto Parts
[777]
GetSwift releases the First NAW Announcement
[778]
Hunter’s concern that the First NAW Announcement was not marked as price sensitive
[779]
Insertion of revenue figure in the Second NAW Announcement
[783]
The Third NAW Announcement
[796]
Subsequent events
[801]
G.1.12 Johnny Rockets
[802]
Preparation of the Johnny Rockets Agreement
[803]
Entry into the Johnny Rockets Agreement
[814]
Preparation and release of the Johnny Rockets Announcement
[816]
Subsequent communications
[826]
Deferral of limited roll out
[829]
Mr Roman’s email
[831]
G.1.13 Yum Restaurant Services Group, LLC
[833]
Initial contact between GetSwift and Yum
[834]
Negotiations between Pizza Hut International and GetSwift in relation to a Pilot
[840]
Initial Proposal by GetSwift
[844]
Pizza Hut International unable to secure two test markets for the Pilot
[861]
Non disclosure Agreement
[868]
Revised Proposal by GetSwift
[869]
Negotiations of the MSA
[880]
Yum MSA
[893]
Preparation and Release of the Yum Announcement
[896]
Pizza Hut International’s reaction to the Yum Announcement
[913]
Complaint to ASX about Yum Announcement
[925]
Negotiation of the SOW and pilot in the Kuwait market
[933]
G.1.14 Amazon Corporate LLC
[956]
Initial contact between GetSwift and Amazon
[957]
Trial Hosted Services Agreement
[960]
Pilot and Negotiation of the Amazon MSA
[964]
Completion of a trial?
[989]
Preparation and release of the First Amazon Announcement
[992]
ASX reaction to the First Amazon Announcement
[999]
Updated draft of proposed Service Order provided to Amazon
[1007]
Preparation and release of the Second Amazon Announcement
[1008]
Amazon’s reaction to the Second Amazon Announcement
[1018]
Amazon aware, or agreed to, the making of a regulatory announcement
[1023]
Continued preparation of Service Order and Service Order never entered into
[1029]
G.1.15 The Second Placement
[1034]
Trading Halt
[1034]
Second Placement Completion Announcement
[1041]
Second Placement Cleansing Notice
[1050]
G.1.16 2018 ASX Market Update Announcements
[1054]
H CONTINUOUS DISCLOSURE CLAIMS
[1060]
H.1 The Relevant law
[1065]
H.1.1 Background and rationale
[1065]
H.1.2 The relevant provisions
[1072]
H.1.3 Information
[1075]
H.1.4 Awareness of information
[1077]
H.1.5 General availability of information
[1086]
H.1.6 Materiality
[1091]
H.2 Overarching Findings
[1105]
H.2.1 Existence and awareness
[1109]
H.2.2 General availability of information
[1116]
Agreement Information
[1117]
GetSwift Prospectus
[1118]
Perpetually on Trial and Terminable at Will Contention
[1121]
ASIC’s contentions
[1126]
Consideration
[1131]
Further omitted information
[1142]
H.2.3 Materiality
[1144]
ASIC’s case theory
[1147]
Information relevant to investors
[1148]
The evidence of Mr Molony
[1152]
Investor witnesses
[1168]
GetSwift’s materiality contentions
[1196]
The Absence of Quantifiable Benefits Contention
[1198]
The Continuing Periods Contention
[1212]
The Share Price Contention
[1230]
The Subjective Views Contention
[1257]
Conclusions on the proper approach to materiality in this case
[1259]
H.3 The Enterprise Clients
[1265]
H.3.1 Fruit Box
[1268]
Fruit Box Agreement
[1269]
Fruit Box Announcement
[1270]
Fruit Box Agreement Information
[1277]
Existence
[1277]
Awareness
[1278]
General availability
[1280]
Materiality
[1283]
Conclusion
[1292]
Fruit Box Projection Information
[1293]
Fruit Box Termination Information
[1302]
Existence
[1302]
Awareness
[1306]
General availability
[1311]
Materiality
[1312]
Conclusion
[1315]
H.3.2 Commonwealth Bank of Australia
[1316]
CBA Agreement
[1317]
CBA Announcement
[1318]
CBA Projection Information
[1321]
Existence
[1321]
Awareness
[1350]
General availability
[1356]
Materiality
[1357]
H.3.3 Pizza Pan Group Pty Ltd
[1365]
Pizza Pan Agreement
[1366]
Pizza Hut Announcement
[1367]
Pizza Pan Agreement Information
[1370]
Existence
[1370]
Awareness
[1379]
General availability
[1382]
Materiality
[1394]
Conclusion
[1403]
H.3.4 All Purpose Transport
[1404]
APT Agreement
[1405]
APT Announcement
[1406]
APT Agreement Information
[1407]
Existence
[1407]
Awareness
[1408]
General availability
[1409]
Materiality
[1410]
Conclusion
[1418]
APT No Financial Benefit Information
[1419]
Existence
[1419]
Awareness
[1434]
General availability
[1442]
Materiality
[1443]
Conclusion
[1450]
H.3.5 CITO Transport Pty Ltd
[1451]
CITO Agreement
[1452]
CITO Announcement
[1453]
CITO Agreement Information
[1454]
Existence
[1454]
Awareness
[1458]
General availability
[1459]
Materiality
[1460]
Conclusion
[1470]
CITO No Financial Benefit Information
[1471]
Existence
[1471]
Awareness
[1480]
General availability
[1484]
Materiality
[1485]
Conclusion
[1488]
H.3.6 Hungry Harvest LLC
[1489]
Hungry Harvest Agreement
[1490]
Hungry Harvest Announcement
[1491]
Hungry Harvest Agreement Information
[1493]
Existence
[1493]
Awareness
[1495]
General availability
[1496]
Materiality
[1497]
Conclusion
[1499]
H.3.7 The First Placement
[1500]
Tranche 1 Cleansing Notice
[1501]
First Placement Information
[1502]
Tranche 2 Cleansing Notice
[1504]
H.3.8 Fantastic Furniture
[1505]
Fantastic Furniture Agreement
[1506]
Fantastic Furniture & Betta Homes Announcement
[1507]
Fantastic Furniture Agreement Information
[1509]
Existence
[1509]
Awareness
[1510]
General availability
[1512]
Materiality
[1513]
Conclusion
[1517]
Fantastic Furniture Termination Information
[1518]
Existence
[1518]
Awareness
[1529]
General availability
[1530]
Materiality
[1531]
Conclusion
[1539]
H.3.9 Betta Homes
[1540]
Betta Homes Agreement
[1541]
Fantastic Furniture & Betta Homes Announcement
[1542]
Betta Homes Agreement Information
[1547]
Existence
[1547]
Awareness
[1548]
General availability
[1551]
Materiality
[1552]
Conclusion
[1558]
Betta Homes No Financial Benefit Information
[1559]
Existence
[1559]
Awareness
[1560]
General availability
[1564]
Materiality
[1565]
Conclusion
[1569]
H.3.10 Bareburger Group LLC
[1570]
Bareburger Agreement
[1571]
Bareburger Announcement
[1573]
Bareburger Agreement Information
[1575]
Existence
[1575]
Awareness
[1576]
General availability
[1577]
Materiality
[1578]
Conclusion
[1581]
H.3.11 NA Williams
[1582]
NAW Agreement and NAW Agreement Execution Information
[1583]
Existence
[1583]
Awareness
[1585]
General availability
[1589]
Materiality
[1590]
Conclusion
[1593]
First NAW Announcement
[1594]
Second NAW Announcement
[1597]
NAW Projection Information
[1602]
Existence
[1602]
Awareness
[1621]
General availability
[1643]
Materiality
[1652]
Conclusion
[1656]
Third NAW Announcement
[1657]
H.3.12 Johnny Rockets
[1661]
Johnny Rockets Agreement
[1662]
Johnny Rockets Announcement
[1663]
Johnny Rockets Agreement Information
[1665]
Existence
[1665]
Awareness
[1666]
General availability
[1667]
Materiality
[1668]
Conclusion
[1671]
Johnny Rockets Termination Information
[1672]
Existence
[1672]
Awareness
[1678]
General availability
[1681]
Materiality
[1682]
Conclusion
[1684]
H.3.13 Yum Restaurant Services Group, LLC
[1685]
Yum MSA
[1686]
Yum Announcement
[1688]
Yum MSA Information
[1690]
Existence
[1690]
Awareness
[1696]
General availability
[1701]
Materiality
[1706]
Conclusion
[1710]
Yum Projection Information
[1711]
Existence
[1711]
Awareness
[1720]
General availability
[1731]
Materiality
[1742]
Conclusion
[1746]
H.3.14 Amazon Corporate LLC
[1747]
Amazon MSA
[1748]
First Amazon Announcement
[1749]
Second Amazon Announcement
[1751]
Amazon MSA Information
[1754]
Existence
[1754]
Awareness
[1755]
General availability
[1756]
Materiality
[1765]
Conclusion
[1775]
H.2.15 Second Placement
[1776]
Second Placement Trading Halt / Completion Announcement
[1776]
Second Placement Cleansing Notice
[1778]
Second Placement Information
[1780]
Existence
[1781]
Awareness
[1782]
General availability
[1783]
Materiality
[1784]
Conclusion
[1786]
H.3.16 Overall conclusion for s 674(2) contraventions
[1787]
H.4 Accessorial liability
[1788]
H.4.1 The principles
[1790]
General principles
[1791]
The “quality” of knowledge required
[1796]
H.4.2 The directors and their approach to ASX announcements
[1808]
Approach to the Fruit Box and CBA Announcements
[1809]
Delivery volumes and revenue important to investor expectations
[1831]
Positioning of the Pizza Hut Announcement
[1835]
Strategic timing of announcements to maximise impact on share price
[1842]
Marking ASX announcements as price sensitive
[1852]
Delaying announcements and using news coverage
[1869]
H.4.3 Overarching observations
[1895]
Inferential reasoning
[1896]
The director’s knowledge at a broad level
[1901]
Giving particularity to the role and knowledge of each director
[1914]
Mr Hunter and Mr Macdonald
[1915]
Distinguishing Mr Macdonald from Mr Hunter?
[1923]
Mr Eagle
[1940]
A pleading point
[1958]
Principles applicable to inferential reasoning continued
[1963]
Jones v Dunkel and the current proceeding
[1970]
H.4.4 The contraventions alleged
[1976]
Mr Hunter
[1977]
Hunter Agreement Information
[1979]
Hunter Projection Information
[1998]
Hunter No Financial Benefit Information and Termination Information
[2007]
NAW Agreement Execution Information
[2017]
Conclusion
[2021]
Mr Macdonald
[2023]
Macdonald Agreement Information
[2025]
Macdonald Projection Information
[2049]
Macdonald No Financial Benefit and Termination Information
[2057]
NAW Agreement Execution Information
[2068]
Conclusion and the PwC Report
[2071]
Mr Eagle
[2075]
Eagle Agreement Information
[2077]
Eagle Projection Information
[2093]
Fruit Box Termination Information
[2097]
NAW Agreement Execution Information
[2100]
Conclusion
[2102]
I MISLEADING AND DECEPTIVE CONDUCT CLAIMS
[2103]
I.1 Statutory scheme and applicable principles
[2106]
I.1.1 General principles
[2106]
I.1.2 Continuing representations
[2117]
I.1.3 Representations made by an officer
[2119]
I.1.4 Section 12DA of the ASIC Act
[2130]
I.1.5 Future representations
[2143]
I.2 Overarching findings
[2164]
I.3 General representations
[2175]
I.3.1 First Agreement After Trial Representation
[2176]
I.3.2 First Quantifiable Announcements Representation
[2182]
I.3.3 Second Agreement After Trial Representation
[2190]
I.3.4 Second Quantifiable Announcements Representation
[2196]
Was the representation misleading or deceptive?
[2201]
I.3.5 Third Quantifiable Announcements Representation
[2206]
Was the representation misleading or deceptive?
[2210]
I.4 Specific representations
[2213]
I.4.1 GetSwift’s threshold contentions
[2214]
I.4.2 Messrs Hunter and Macdonald
[2222]
I.4.3 Fruit Box
[2225]
Fruit Box Agreement Representations
[2226]
Do the representations arise?
[2227]
Were the representations misleading or deceptive?
[2237]
Fruit Box No Termination Representations
[2240]
Fruit Box Conclusions
[2244]
I.4.4 CBA
[2245]
CBA Agreement Representations
[2246]
Do the representations arise?
[2247]
Were the representations misleading or deceptive?
[2261]
CBA Price Sensitivity Representation
[2266]
CBA Conclusions
[2269]
I.4.5 Pizza Hut
[2270]
Pizza Pan Agreement Representations
[2271]
Do the representations arise?
[2272]
Were the representations misleading or deceptive?
[2282]
Pizza Pan Quantifiable Benefit Representations
[2285]
Pizza Hut Conclusions
[2287]
I.4.6 APT
[2288]
APT Agreement Representations
[2289]
Do the representations arise?
[2290]
Were the representations misleading or deceptive?
[2300]
APT Quantifiable Benefit Representation
[2303]
APT Financial Benefit Representations
[2305]
Do the representations arise?
[2306]
Were the representation misleading or deceptive?
[2313]
APT Conclusions
[2317]
I.4.7 CITO
[2318]
CITO Agreement Representations
[2319]
Do the representations arise?
[2320]
Were the representations misleading or deceptive?
[2327]
CITO Quantifiable Benefit Representation
[2330]
CITO Financial Benefit Representations
[2332]
Do the representations arise?
[2333]
Were the representations misleading or deceptive?
[2343]
CITO Conclusions
[2349]
I.4.8 Hungry Harvest
[2350]
Hungry Harvest Agreement Representations
[2351]
Do the representations arise?
[2352]
Were the representations misleading or deceptive?
[2356]
Hungry Harvest Quantifiable Benefit Representation
[2358]
Conclusion
[2360]
I.4.9 First Placement
[2361]
Tranche 1 Cleansing Notice Representation
[2362]
Tranche 2 Cleansing Notice Representation
[2366]
Conclusion
[2368]
I.4.10 Fantastic Furniture
[2369]
Fantastic Furniture Agreement Representations
[2370]
Do the representations arise?
[2371]
Were the representations misleading or deceptive?
[2374]
Fantastic Furniture Quantifiable Benefit Representation
[2376]
Fantastic Furniture No Termination Representation
[2378]
Second Fantastic Furniture No Termination Representation
[2383]
Conclusion
[2386]
I.4.11 Betta Homes
[2387]
Betta Homes Agreement Representations
[2388]
Do the representations arise?
Were the representations misleading or deceptive?
[2392]
Betta Homes Quantifiable Benefit Representation
[2394]
Betta Homes Financial Benefit Representation
[2396]
Do the representations arise?
[2401]
Were the representations misleading or deceptive?
[2404]
Conclusion
[2408]
I.4.12 Bareburger
[2409]
Bareburger Agreement Representations
[2410]
Do the representations arise?
[2411]
Were the representations misleading or deceptive?
[2414]
Bareburger Price Sensitivity Representation
[2416]
Bareburger Quantifiable Benefit Representation
[2418]
Conclusion
[2421]
I.4.13 NA Williams
[2422]
First NAW Agreement Representations
[2423]
Do the representations arise?
[2424]
Were the representations misleading or deceptive?
[2438]
NAW Quantifiable Benefit Representation
[2449]
Second NAW Agreement Representations
[2452]
How the representations arise
[2453]
Were the representations misleading or deceptive?
[2456]
Conclusion
[2458]
I.4.14 Johnny Rockets
[2459]
Johnny Rockets Agreement Representations
[2460]
Do the representations arise
[2463]
Were the representations misleading or deceptive?
[2469]
Johnny Rockets Price Sensitivity Representation
[2472]
Johnny Rockets Quantifiable Benefit Representation
[2475]
Johnny Rockets No Termination Representations
[2478]
Conclusion
[2482]
I.4.15 Yum
[2483]
Yum MSA Representations
[2484]
Do the representations arise?
[2488]
Were the representations misleading or deceptive?
[2498]
Yum Price Sensitivity Representations
[2502]
Yum Quantifiable Benefit Representation
[2506]
Conclusion
[2508]
I.4.16 Amazon
[2509]
Amazon MSA Representations
[2510]
Amazon Quantifiable Benefit Representation
[2514]
Amazon conclusions
[2516]
I.4.17 Second Placement
[2517]
Second Placement Cleansing Notice Representation
[2518]
Conclusion
[2522]
J DIRECTORS’ DUTIES CLAIMS
[2523]
J.1 Statutory scheme and applicable principles
[2525]
J.1.1 General principles
[2525]
J.1.2 The interaction between each of the contraventions
[2536]
The relationship between ss 674(2) and 180(1) contraventions
[2537]
The relationship between ss 674(2A), 1041H, 12DA and 180(1)
[2540]
J.2 Overview of the director’s duties contraventions
[2545]
J.2.1 Revisiting some basal facts and the position of each director
[2546]
The circumstances of GetSwift
[2547]
The position of each director
[2548]
J.2.2 The degree of care and diligence to be exercised generally
[2553]
J.3 The Directors
[2562]
J.3.1 Mr Hunter
[2563]
Did Mr Hunter breach s 180(1)?
[2566]
Mr Hunter unique contraventions
[2573]
Mr Hunter s 180(1) conclusions
[2577]
J.3.2 Mr Macdonald
[2578]
Did Mr Macdonald breach s 180(1)?
[2581]
Mr Macdonald unique contraventions
[2585]
The PwC Report
[2589]
Mr Macdonald s 180(1) conclusions
[2590]
J.3.3 Mr Eagle
[2591]
Did Mr Eagle breach s 180(1)?
[2593]
Mr Eagle s 180(1) conclusions
[2614]
K CONCLUSION AND ORDERS
[2615]
LEE J:
A INTRODUCTION
This is a long judgment. I am tempted to say too long, but as will become evident to anyone who has the misfortune of being required to read it, the case advanced by the Australian Securities Investment Commissions (ASIC) was vast in scope, involving the need to wade doggedly through a prodigious documentary case and make innumerable findings along the way. After finally emerging from the Daedalian maze, one suspects that without detracting from the ultimate regulatory outcome, ASIC’s case could have been refined significantly. But alas, this litigious battle was fought on a broad front.
In an attempt to make the judgment less unreadable, I have divided it into what can be seen from the index to be manageable chunks, broadly mirroring the hydra-headed case mounted. Additionally, at [1064] and [2105] below, I have included ready-reckoners for the continuous disclosure and misleading and deceptive conduct claims, providing details of my conclusions, and providing a “roadmap” to where important findings are made. Referencing matters in the body of the text would, in a judgment this size, be overwhelming, and so I have adopted the expedient of using footnotes (although, because of a desire to avoid repetition, a footnote or cross reference is often illustrative, rather than the exclusive source of the relevant reference).
A.1 Overview of case
The case concerns GetSwift Limited (GetSwift), a former market darling listed on the Australian Securities Exchange (ASX). As it happens, it is no longer listed on the ASX. In an unusual development during the pendency of regulatory proceedings, at around the same time the evidence concluded in the liability phase of this case before me, GetSwift entered into an implementation deed in relation to a proposed scheme of arrangement, the intended purpose of which was to re-domicile GetSwift to Canada (being a scheme ultimately approved, but over the opposition of ASIC): see GetSwift Limited, in the matter of GetSwift Limited (No 2) [2020] FCA 1733 (at [12], [52], [81], [138], and orders 17 December 2020 per Farrell J).
In any event, returning to the period relevant to this liability hearing, this case comes against the background of GetSwift experiencing a dramatic ascension in the value of its shares from an issue price of 20 cents upon listing in December 2016 to over $4, prior to a trading halt announcement in December 2017, in advance of its second placement, by which GetSwift successfully raised $75 million from investors. One year later, on 7 December 2018 the share price dropped to $0.52 – a percentage decrease of almost 90% from its all‑time high of $4.30, as recorded on 4 December 2017.[1]
[1] First Molony Report (GSW.0002.0004.0001_R) at [7]; GSW.0003.0005.0325 at 5.
It is notable that GetSwift, which might aptly be described as an early stage “tech” company, was able to generate such significant momentum and interest in its share price at a time when the company had “incurred historic operating losses to date”.[2] This is especially so in circumstances where potential investors would have likely faced some difficulties in assessing the true value of GetSwift shares due to the absence of any successful track record and its “limited operating history”.[3]
[2] Prospectus (GSW.1001.0001.0478) at 0489.
[3] Prospectus (GSW.1001.0001.0478) at 0522.
Put broadly, the case concerns whether GetSwift failed to disclose material information in a series of announcements to the ASX, including by not revealing the status of its actual engagements with regard to its various customers. It also examines whether GetSwift engaged in misleading or deceptive statements regarding the nature and scale of the financial benefit that GetSwift stood to obtain from each agreement.
This proceeding also relevantly focusses on the conduct of three directors of GetSwift, namely:
(1)Mr Bane Hunter, the second defendant, who was the executive chairman and chief executive officer of GetSwift;
(2)Mr Joel Macdonald, the third defendant, who was the managing director of GetSwift; and
(3)Mr Brett Eagle, the fourth defendant, a solicitor, who was a non‑executive director and GetSwift’s general counsel.
Despite the skilful submissions made on behalf of the defendants, a close review of the contemporaneous record reveals with clarity to any sentient person what went on at GetSwift. At the risk of over‑generalisation, what follows reveals what might be described as a public‑relations‑driven approach to corporate disclosure on behalf of those wielding power within the company, motivated by a desire to make regular announcements of successful entry into agreements with a number of national and multinational enterprise clients.
There is a plethora of documentary evidence in the form of emails exchanged between some of the directors revealing efforts directed at the strategic timing of ASX announcements, making sure that announcements were marked as “price sensitive”, orchestrating simultaneous media coverage, and evincing an appreciation that the failure to release announcements of new client agreements would or could have a negative impact on investor expectations.
As will appear in more detail below, numerous emails from Mr Hunter are most telling as to GetSwift’s approach to communicating with the market, and the level of control he sought to assert. Among many examples is an email to a fellow director, Ms Jamila Gordon (who is not a defendant) sent on 24 February 2017 in the wake of the release of one ASX announcement, in which he stated: “Bit by bit until we get to a $7.50 share price :)”.[4] He then followed this email up with the following missive to his fellow directors:
I wanted to take a quick moment and just put some things into context – today’s strategic account contract capture [sic] information and the timing of the release added approx. $3.8m to the companies [sic] market cap. That’s making all our shareholders much happier.
To date since IPO listing price I am pleased to inform you that the company [sic] share price is up 140% - the strongest performer on the ASX. That means that I have driven the market value of the company up by more than $36m in 3 months. We are now worth more than $63M and heading towards $200m in very short order. These results are not accidental.
Therefore please keep that in mind when I insist on certain structural and orderly processes that there are much more complex requirements that are at play.
It is also important to stress that it is imperative that non commercial [sic] structures and resources we have in place are fully supporting the revenue and market cap based portions of the company. These have absolute priority over anything else. Without those as our primary focus not much progress will be made.
We have a tremendous year ahead of us and the timely planning and delivery of key commercial accounts is paramount. … Failure to do so will prompt an [sic] revised management structure.
In May we will be under the spotlight again with another significant investment round planned leading up to a much larger and final round in Oct or thereabouts. So as you can imagine I will not wait until May to course correct this organization staffing [if] we are not tracing as planned or better than planned.
Folks I am serious about this , please do not that there was no fair notice given of the expectations needed. Please do not confuse my friendly attitude for tolerance or forgiveness when it comes to achieving the deliverables set in front of us. There is too much at stake to allow for any lack of control. If you are unable or unwilling to operate as such please let me know.
This company if we achieve or our objectives in 2 years [sic] be valued well above the $800M + market cap, and no excuse will stand in our way to reach that goal. The rewards will be fantastic and amazing especially when you consider the timeline, so let’s stay focussed now more than ever.[5]
[4] GSWASIC00025659.
[5] GSW.0015.0001.0808 (emphasis added).
Mr Hunter had a habit of writing in evocative terms. This is reflected in many communications including an email sent by Mr Hunter on 6 October 2017 to Mr Macdonald making reference to an apparent long-term aim discussed between them: “no rest till we are north of 1$b and I know you are taken care of for the future ‑ I made you a promise ‑ do or die on my part”.[6]
[6] GSWASIC00030902.
Not only did Mr Hunter demonstrate a high level of concern over the content of the ASX announcements, it is evident that he sought to exercise close control over the release of such announcements. This is vividly illustrated by Mr Hunter’s emails in late August 2017, including one sent to Ms Susan Cox (of GetSwift) on 25 August 2017 in which he stated: “You know that any market release have [sic] to be vetted by us” (“us” being a reference to both himself and Mr Macdonald).[7] In the same email chain, Mr Hunter also said the following to Ms Cox:
You have made an incredible misjudgment [sic] and overstepped your bounds. I am flabbergasted that you thought it was ok to release anything on the ASX without Joel and my approval…Let me make this crystal clear ‑ we have NEVER released anything EVER without Joel or mine [sic] approval or review first.[8]
[7] GSWASIC00012280.
[8] GSWASIC00012280.
The intense focus that Mr Hunter and Mr Macdonald placed on the ASX announcements forms an important aspect of this case, to which I will return in detail below (at Part H.4.2). However, at a broad level, these illustrative emails are reflective of another aspect of the evidence; that is, the nature of the relationship between Mr Hunter and his colleagues. As will be seen from the numerous communications (liberally sprinkled with capitalised words) reproduced below, Mr Hunter displayed a management style that owed little to the influence of the late Dale Carnegie. He was demanding, forceful and regularly brusque to the point of rudeness.
The evidence does not disclose whether Ms Gordon was conscious of Mr Hunter displaying his self-described “friendly attitude” towards her at any time: c.f. [10] above. What is evident is that their relationship does not appear to have been a congenial one after March 2017, when Ms Gordon started to raise concerns in relation to the processes employed by Messrs Hunter and Macdonald as to announcements GetSwift made to the ASX.[9] On one occasion, Mr Hunter told Ms Gordon that he had more experience in corporate governance than her, and suggested that the questions she was asking were naïve.[10] But her concerns were not those of an ingénue and it is worth noting that, as at 9 December 2016, Ms Gordon was the only director on the board with any corporate governance training.[11]
[9] Gordon Affidavit (GSW.0009.0021.0001_R) at [35].
[10] Gordon Affidavit (GSW.0009.0021.0001_R) at [41].
[11] GSWASIC00065793.
On another occasion, at a September 2017 board meeting in which she was participating remotely, Ms Gordon was told by Mr Hunter she was on the “hot spot” in relation to her questions as to the materiality of an ASX announcement.[12] Mr Eagle then spoke uninterrupted for about 12 minutes, apparently from a document, upbraiding her for “governance issues”, including causing delays in making announcements. Ms Gordon (who was born in Somalia and escaped that country before civil war broke out in 1991 and studied English at a TAFE college before university)[13] was trying to write down what was being said, could not keep up, and asked for a copy of the document that Mr Eagle was reading from so she could counter the criticism properly. Mr Hunter responded by saying words to the effect, “Let me put it to you in English you can understand” and then repeated the details of her perceived deficiencies at similar length. She eventually responded:
[A]s a director I’m accountable having these announcements released without my total understanding and having a board meeting where… my objections, if I have objections, are minuted, therefore I have huge exposure and responsibility and that’s why I’m raising these issues.[14]
[12] Gordon Affidavit (GSW.0009.0021.0001_R) at [47].
[13] GSW.0003.0003.0404 at 0421.
[14] T247.41–44 (Day 4).
To this Mr Hunter responded: “that’s why you have director’s insurance.”[15]
[15] T247.1–248.2 (Day 4).
By 24 October 2017, Mr Hunter was writing to his fellow director as follows:
[D]o NOT reach out to our customers where you do not own the relationship without prior approval -you were explicitly told you are not to get involved with commercial discussions . You only own the CBA relationship that’s it. You are NOT authorized to negotiate on behalf of the company with any other entity. This is an instant termination for cause if you do.[16]
[16] Gordon Affidavit (GSW.0009.0021.0001_R) at [177].
Ms Gordon was removed from GetSwift shortly thereafter.
I will return below to the importance and clarity of Ms Gordon’s evidence, the way the board of GetSwift operated, the relevance of the relationship between the directors, and their respective roles and power within the entity.
A.2 The GetSwift platform and business model
Before progressing further, it is useful to provide a brief summary of the GetSwift platform and its business model.
GetSwift’s business and fee structure model was described in a prospectus that GetSwift lodged with ASIC in late 2016 with regard to an initial public offering (Prospectus).[17] GetSwift was in the business of providing clients with a “software as a service” (SaaS) platform (GetSwift Platform) for the management of “last-mile delivery” services globally. “Last mile delivery”, as might be expected, describes the carriage of goods from a transportation hub to its final destination. The GetSwift Platform could be used to effect delivery services either through a client’s own driver network or with a contracted service.
[17] Prospectus (GSW.1001.0001.0478).
GetSwift described itself as offering a “white label” solution, enabling technology to companies for a low, “pay as you use” transaction‑based fee.[18] Its revenue was generated on a “per delivery basis”, which involved charging a $0.29 transaction fee per delivery.[19] Discounts were applied to larger clients through a tiered fee structure based on the client’s monthly transactional volume and the length of contract commitment. There were no fixed maintenance or upfront fees. A client could incur additional fixed subscription fees for fleet management and smart routing and SMS charges were “on‑charged” as status updates.[20]
[18] Prospectus (GSW.1001.0001.0478) at 0607.
[19] Prospectus (GSW.1001.0001.0478) at 0607.
[20] Prospectus (GSW.1001.0001.0478) at 0607.
The Prospectus highlighted that GetSwift intended to “expand” by capturing market share and scaling its existing footprint.[21] Its key strength was its “high growth” and the number of so‑called “client industry verticals” it serviced.[22] However, there were also risks, including that “[e]ven once clients are successfully attracted to the GetSwift platform and related services, clients may terminate their relationship with the Company at any time”.[23] As GetSwift explained, this meant that if clients terminated their relationship, this could adversely impact GetSwift’s business, financial position, results of operations, cash flows and prospects.[24] Further, as an “early stage technology company”, the Prospectus stated that GetSwift had accumulated a loss of approximately $946,402 as at 30 June 2016.[25]
[21] Prospectus (GSW.1001.0001.0478) at 0490.
[22] Prospectus (GSW.1001.0001.0478) at 0491, 0506, and 0523.
[23] Prospectus (GSW.1001.0001.0478) at 0523 (emphasis added).
[24] Prospectus (GSW.1001.0001.0478) at 0522.
[25] Prospectus (GSW.1001.0001.0478) at 0489.
GetSwift focussed on two main client segments: larger organisations with multi‑site requirements and the capability for 10,000 or more deliveries per month (Enterprise Clients); and small and medium businesses (Self‑serve Clients).[26]
[26] Prospectus (GSW.1001.0001.0478) at 0607–0608.
In addition to making the general statement that clients may terminate their relationship with GetSwift at any time (see [23]), GetSwift made three important statements in the Prospectus as to its Enterprise Clients: first, GetSwift typically granted a 90‑day proof of concept trial (POC) before the client moved to a standard contract; secondly, contracts for Enterprise Clients were initially for two years in length; and thirdly, those Enterprise Clients who had entered into a POC had a 100% sign up rate to contracts as at the date of the Prospectus.[27]
[27] Prospectus (GSW.1001.0001.0478) at 0490, 0507.
By making each of these statements in its Prospectus, ASIC alleges that GetSwift represented to investors that:
(1)a POC (or trial phase) would be completed before GetSwift entered into an agreement with an Enterprise Client for the supply of GetSwift’s services for a reward;
(2)any agreement entered into by GetSwift with Enterprise Clients for the supply of GetSwift’s services were not conditional upon completion of concept or trial; and
(3)Enterprise Clients would only enter into an agreement after the proof of concept or trial phase had been successfully completed.
(collectively, the First Agreement After Trial Representation)
In addition to the statements made in the Prospectus, on 9 May 2017, GetSwift created a PowerPoint presentation for investors, which was submitted to the ASX.[28] This presentation stated that Enterprise Clients were multi‑regional businesses, typically with over 10,000 transactions per month. Further, it specified that Enterprise Clients have a “POC 60‑90 day trial” and that these clients received contracted services for typically two to three years (Second Agreement After Trial Representation).[29]
[28] GSW.1001.0001.0562.
[29] GSW.1001.0001.0562 at 0576; Agreed Background Facts (GSW.0002.0002.0001) at [18].
I will return to whether each of these representations was conveyed below (at Part I.3), where findings are made as to whether the conduct of GetSwift, Mr Hunter and Mr Macdonald was misleading or deceptive, or likely to mislead or deceive.
A.3 Statements regarding continuous disclosure
As noted above, the focus of much of this case concerns the alleged continuous disclosure contraventions. GetSwift’s own continuous disclosure policy was referred to in the Prospectus (Continuous Disclosure Policy).[30] As is typical, this policy set out certain procedures and measures that were designed to ensure that GetSwift complied with the continuous disclosure requirements of the ASX Listing Rules (Listing Rules) and the applicable sections of the Corporations Act 2001 (Cth) (CorporationsAct).[31] It also provided protocols related to the review and release of ASX announcements and media releases. Further, the Prospectus relevantly and correctly stated that GetSwift would be required to disclose to the ASX any information concerning the company that was not generally available and that a reasonable person would expect to have a material effect on the price or value of its shares.[32] I will return to the significance of the Prospectus and Continuous Disclosure Policy below.
[30] Prospectus (GSW.1001.0001.0478) at 0532.
[31] Continuous Disclosure Policy (GSW.0016.0000.0001).
[32] Prospectus (GSW.1001.0001.0478) at 0532.
By publishing the Continuous Disclosure Policy to the ASX, it is said that GetSwift’s executive directors represented that they would conduct themselves consistently with the policy. In addition, during 2017, GetSwift made three important public statements concerning GetSwift’s approach to continuous disclosure.
First, in its Appendix 4C and Quarterly Review submitted to and released by the ASX on 28 April 2017 (April Appendix 4C), GetSwift stated (First Quantifiable Announcements Representation):
[T]he company is starting to begin harvesting the markets it has prepared the groundwork over the last 18 months. Transformative and game changing partnerships are expected and will be announced only when they are secure, quantifiable and measurable. The company will not report on MOUs only on executed contracts. Even though this may represent a challenge for some clients that may wish in [some] cases not [sic] publicize the awarded contract, fundamentally the company will stand behind this policy of quantifiable non hype driven announcements even if it results in negative short term perceptions.[33]
[33] April 2017 Appendix 4C (GSW.1001.0001.0459) at 0461–0462 (emphasis added).
Secondly, in its Appendix 4C and Quarterly Review submitted to and released by the ASX on 31 October 2017 (October Appendix 4C), GetSwift stated (Second Quantifiable Announcements Representation):
Please Note: The Company will only report executed commercial agreements. Unlike some other groups it will not publicly report on Memorandum of Understandings (MOU) or Letters of Intent (LOI), which are not commercially binding and do not have a valid assurance of future commercial outcomes.[34]
[34] October 2017 Appendix 4C and Third NAW Announcement (GSW.1001.0001.0277) at 0279 (emphasis added).
Thirdly, in its announcement submitted to and released by the ASX on 14 November 2017 and entitled “GetSwift Executes on Key Integration Partnerships”,[35] GetSwift stated (Third Quantifiable Announcements Representation):
The Company is taking a measured approach in ensuring that only quantifiable and impactful announcements are delivered to the market. With that in mind it has chosen to announce 9 of these integrations once they all have been completed rather than individually.
The company in addition expects to announce key commercial agreements shortly and is pleased that the overall strategy of becoming a global leader and not just a regional leader is being manifested.[36]
[35] Key Partnerships Announcement (GSW.1001.0001.0286).
[36] Key Partnerships Announcement (GSW.1001.0001.0286) at 0287.
It is alleged that the making of the latter two representations amounted to contravening conduct. Similarly, I will return to whether these representations were conveyed and whether they amounted to contraventions below (at Part I.3).
A.4 GetSwift announcements
Another component of this case involves analysing the commercial background, content and implications that emanated from the announcements that GetSwift made to the ASX. These announcements, made between 24 February 2018 and 1 December 2017, stem from agreements that GetSwift entered into with respect to 13 individual Enterprise Clients.
As noted above, during the period leading up to the second placement, GetSwift announced to the ASX that it had entered into agreements with a number of Enterprise Clients. GetSwift made these announcements, notwithstanding that some of the agreements had allegedly not progressed beyond a “trial period”, and before the potential benefits under the agreements were secure, quantifiable or measurable. In this context, a question arising is whether the release of regular price sensitive announcements to the ASX of GetSwift’s entry into agreements with major Enterprise Clients had the effect of reinforcing and engendering investor expectations that the GetSwift platform was being adopted by a growing number of major Enterprise Clients. These expectations are alleged to have been fashioned by the GetSwift Prospectus, investor presentations and its quarterly Appendix 4C reports (as described above).
It is further alleged that, in the same period, GetSwift failed to inform the market of information that materially qualified the ASX announcements. This included, among others, the termination of a number of agreements that had been the subject of an announcement, and decisions by clients that GetSwift’s services would no longer be utilised beyond the expiry of trial periods. In circumstances where GetSwift had a limited operating history and had incurred historic net losses, and where publicly available information about recent operations and performance was lacking, an important issue is whether GetSwift’s failure to disclose such information would have had a significant influence on whether an investor would acquire or dispose of GetSwift Shares. This must be considered in the light of all relevant circumstances, including the share placement which was to take place.
A.5 Summary of claims
As noted above, the claims made by ASIC are complex and multifarious, but can be placed broadly into four categories by reference to each of the defendants.
First, ASIC alleges that GetSwift engaged in 22 contraventions of s 674(2) of the Corporations Act. In respect of these contraventions, ASIC seeks an order under s 1317G(1A) of the Corporations Act that GetSwift pay a pecuniary penalty in respect of the alleged continuous disclosure contraventions. Further, ASIC alleges that GetSwift engaged in misleading or deceptive conduct in contravention of s 1041H of the Corporations Act and/or s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). It also seeks declaratory relief in respect of each of the alleged contraventions.
Secondly, ASIC alleges that Mr Hunter was directly, or indirectly, knowingly concerned, within the meaning of s 79 of the Corporations Act, in the continuous disclosure contraventions by GetSwift of s 674(2) of the Corporations Act, and was knowingly involved in 19 of the 22 contraventions alleged against GetSwift. By reason of this conduct, Mr Hunter contravened s 674(2A) of the Corporations Act. Further, ASIC alleges that Mr Hunter contravened s 1041H of the Corporations Act, and further or alternatively, s 12DA of the ASIC Act. Finally, ASIC alleges that Mr Hunter failed to exercise his powers and discharge his duties as a director and executive chairman of GetSwift with the degree of care and diligence; thus contravening s 180(1) of the Corporations Act.
Thirdly, ASIC alleges that Mr Macdonald was directly, or indirectly, knowingly concerned, within the meaning of s 79 of the Corporations Act, in the continuous disclosure contraventions by GetSwift of s 674(2) of the Corporations Act, and was knowingly involved in all 22 of the contraventions alleged against GetSwift. By reason of this conduct, Mr Macdonald contravened s 674(2A) of the Corporations Act. Further, ASIC alleges that Mr Macdonald contravened s 1041H of the Corporations Act, and further or alternatively, s 12DA of the ASIC Act. Finally, ASIC alleges that Mr Macdonald failed to exercise his powers and discharge his duties as a director and managing director of GetSwift with the degree of care and diligence; thus contravening s 180(1) of the Corporations Act.
Fourthly, ASIC alleges that Mr Eagle was directly, or indirectly, knowingly concerned, within the meaning of s 79 of the Corporations Act, in the continuous disclosure contraventions by GetSwift of s 674(2) of the Corporations Act, and was knowingly involved in nine of the 22 contraventions alleged against GetSwift. By reason of this conduct, Mr Eagle contravened s 674(2A) of the Corporations Act. Further, ASIC alleges that Mr Eagle failed to exercise his powers and discharge his duties as a director of GetSwift with the degree of care and diligence; thus contravening s 180(1) of the Corporations Act.
In respect of each of the contraventions of ss 674(2A) and 180(1) of the Corporations Act by each of the directors, ASIC seeks pecuniary penalties. Further, ASIC seeks disqualification orders pursuant to s 206C(1) and/or s 206E(1) of the Corporations Act. Importantly, with the consent of the parties, the hearing conducted in 2020 was an initial hearing directed to issues of liability and the entitlement of ASIC to declaratory relief. Therefore, any issues of penal orders are to be determined separately and at a later date.
B PRINCIPAL CONCLUSIONS
Given the length of what follows, it is useful to set out a summary of the principal conclusions that I have reached in relation to each claim.
First, GetSwift engaged in:
(1)22 contraventions of s 674(2) of the Corporations Act; and
(2)40 contraventions of s 1041H of the Corporations Act and s 12DA of the ASIC Act.
Secondly, Mr Hunter:
(1)was knowingly involved in 16 of the 22 contraventions of GetSwift and thereby contravened s 674(2A) of the Corporations Act
(2)engaged in 29 contraventions of s 1041H of the Corporations Act and s 12DA of the ASIC Act; and
(3)failed to exercise his powers and discharge his duties as a director with the degree of care and diligence required and thereby contravened s 180(1) of the Corporations Act.
Thirdly, Mr Macdonald:
(1)was knowingly involved in 20 of GetSwift’s 22 contraventions and thereby contravened s 674(2A) of the Corporations Act;
(2)engaged in 33 contraventions of s 1041H of the Corporations Act and s 12DA of the ASIC Act; and
(3)failed to exercise his powers and discharge his duties as a director with the degree of care and diligence required and thereby contravened s 180(1) of the Corporations Act.
Fourthly, Mr Eagle:
(1)was knowingly involved in three of GetSwift’s 22 contraventions and thereby contravened s 674(2A) of the Corporations Act; and
(2)failed to exercise his powers and discharge his duties as a director with the degree of care and diligence required and thereby contravened s 180(1) of the Corporations Act.
C THE DEFENDANTS, THE BOARD AND OTHER KEY PLAYERS
C.1 The defendants
GetSwift was incorporated on 6 March 2015 and from 7 December 2016, was a public company registered under the provisions of the Corporations Act. Relevantly, GetSwift was a listed disclosing entity and was subject to the continuous disclosure requirements of s 674 of the Corporations Act; and was subject to and bound by the Listing Rules.[37]
[37] Agreed Background Facts (GSW.0002.0002.0001) at [6].
Mr Hunter has been a director of GetSwift since 26 October 2016, is the chief executive officer of GetSwift, and was the executive chairman of GetSwift between 26 October 2016 and 25 April 2018.[38] Mr Macdonald has been a director of GetSwift since 26 October 2016, is the so‑called “President” of GetSwift, and was the managing director of GetSwift between 26 October 2016 and 25 April 2018.[39]
[38] Agreed Background Facts (GSW.0002.0002.0001) at [7].
[39] Agreed Background Facts (GSW.0002.0002.0001) at [8].
Mr Eagle was a non‑executive director of GetSwift between 26 October 2016 and 29 November 2018, between August 2017 and 21 August 2018, held the position of “General Counsel & Corporate Affairs” at GetSwift pursuant to a retainer between Eagle Corporate Advisers Pty Ltd (Eagle Corporate Advisers) and GetSwift, and between 26 October 2016 and 29 November 2018, was a solicitor admitted in New South Wales and the principal and sole director of Eagle Corporate Advisers.[40]
[40] Agreed Background Facts (GSW.0002.0002.0001) at [9].
Beyond the facts as agreed between ASIC and GetSwift, there is additional evidence, as raised by Mr Hunter (and implied by Mr Macdonald) in their submissions, that Mr Eagle carried out the role of general counsel of GetSwift beginning no later than early February 2017 (rather than August 2017).[41] Three aspects of the evidence are drawn upon to support this conclusion: first, in an email dated 8 February 2017, it was requested that a GetSwift business card be made for Mr Eagle with the title “General Counsel & Corporate Affairs”;[42] secondly, in an email dated 17 March 2017, Mr Eagle stated “I am a director of GetSwift Ltd and also general counsel”;[43] and thirdly, in an email dated 24 April 2017, Mr Eagle stated “I am general counsel at GetSwift”.[44] In the absence of any explanation by Mr Eagle himself, the evidence supports a conclusion that Mr Eagle was the General Counsel of GetSwift (or at least the de facto General Counsel of the company) from at least 8 February 2017.[45] Therefore, between February and August 2017, it would appear that things at GetSwift were simply being done in a relatively informal way concerning Mr Eagle’s position. Although, as will become evident below, this finding is immaterial to the disposition of any aspect of the case.
[41] See DEF.0002.0003.0423 at [16]–[17].
[42] SWI00096266 attaching SWI00096267.
[43] SWI00118884.
[44] SWI00078505.
[45] See also T1191.44–1194.18 (Day 18).
C.2 Operations of the board of GetSwift
During 2017, Messrs Hunter and Macdonald were based in New York,[46] Mr Eagle was based in Sydney,[47] and Ms Gordon worked in Melbourne from December 2016 to June 2017, and thereafter from Sydney until the conclusion of her engagement in November 2017.[48]
[46] Gordon Affidavit (GSW.0009.0021.0001_R) at [16].
[47] Gordon Affidavit (GSW.0009.0021.0001_R) at [16].
[48] Gordon Affidavit (GSW.0009.0021.0001_R) at [13].
The evidence reveals that board meetings were conducted intermittently when Mr Hunter determined they should be called by the circulation of an invitation from him.[49] The formality of the invitation and documentation differed depending on what was required.[50] The directors received reports for quarterly, half yearly and annual reporting, but nothing else.[51] There were otherwise no “board packs” or equivalent sets of documents circulated before board meetings.[52] The board meetings were usually conducted via video conference.[53]
[49] Gordon Affidavit (GSW.0009.0021.0001_R) at [31].
[50] Gordon Affidavit (GSW.0009.0021.0001_R) at [31].
[51] Gordon Affidavit (GSW.0009.0021.0001_R) at [31].
[52] Gordon Affidavit (GSW.0009.0021.0001_R) at [31].
[53] Gordon Affidavit (GSW.0009.0021.0001_R) at [31].
Mr Scott Mison, the company secretary for a large part of 2017, held an essentially administrative role.[54] He was not responsible for preparing the agenda for board meetings and he otherwise prepared certain formal documents relating to the issue of shares.[55] Shortly after he was appointed as company secretary and sometime in early 2017, Mr Hunter (somewhat unusually for a public company) instructed Mr Mison not to attend board meetings.[56] To Mr Mison’s recollection, he only attended a board meeting in December 2016 and in January 2017 by telephone.[57]
[54] Affidavit of Scott Adrian Mison affirmed 4 October 2019 (Mison Affidavit) (GSW.0009.0036.0001_R) at [21].
[55] Mison Affidavit (GSW.0009.0036.0001_R) at [21].
[56] Mison Affidavit (GSW.0009.0036.0001_R) at [23].
[57] Mison Affidavit (GSW.0009.0036.0001_R) at [23]–[25].
Apart from board meetings, most communication between directors was by email, as is revealed by the deluge of emails admitted into evidence.[58]
[58] Gordon Affidavit (GSW.0009.0036.0001_R) at [32].
C.3 Other personnel at GetSwift
GetSwift had few employees or staff. As at September 2016, the non-director employees included Mr Keith Urquhart (software developer and client services) based in Melbourne, Mr Joash Chong (software developer) based in Melbourne, Ms Stephanie Noot (accounts, payroll and finance) based in Sydney, Ms Susan Cox (administration and human resources) based in Perth, and the abovementioned Mr Mison (who was later replaced in August 2017) and was based in Perth.[59] Other key employees of GetSwift included Mr Jonathan Ozovek, Mr Daniel Lawrence, Mr Brian Aiken and Mr Kurt Clothier.
[59] Gordon Affidavit (GSW.0009.0021.0001_R) at [16]; Mison Affidavit (GSW.0009.0036.0001_R) at [60].
GetSwift was assisted by Mr Harrison Polites and Ms Elise Hughan (from Media and Capital Partners) (M+C Partners). M+C Partners was responsible for managing GetSwift’s media, including the generation of media, journalist enquiries and the preparation of media releases for the press.[60] GetSwift was also assisted by Mr Zane Banson (from The CFO Solution). The CFO Solution was managed by Mr Phillip Hains.[61] It provided bookkeeping, accounting, preparation of board papers and company secretarial work.[62] In July 2017, The CFO Solution was approached by GetSwift to provide it with accounting services.[63] Following the resignation of Mr Mison, Mr Hains and The CFO Solution commenced performing secretarial work for GetSwift in late August 2017.[64] While Mr Hains was the company secretary, Mr Banson had primary responsibility for assisting GetSwift (if that is the right word) with the lodgement of ASX announcements.[65]
[60] Affidavit of Harrison James Polites affirmed 26 September 2019 (Polites Affidavit) (GSW.0009.0019.0001_R) at [16].
[61] Affidavit of Zane Kyle Banson affirmed 4 October 2019 (Banson Affidavit) (GSW.0009.0042.0001_R) at [7].
[62] Banson Affidavit (GSW.0009.0042.0001_R) at [7].
[63] Banson Affidavit (GSW.0009.0042.0001_R) at [11].
[64] Banson Affidavit (GSW.0009.0042.0001_R) at [15], and [17].
[65] Banson Affidavit (GSW.0009.0042.0001_R) at [18].
D THE EVIDENCE GENERALLY
As indicated above, this case was primarily run on the basis of documentary evidence, supplemented by affidavit and expert evidence.
It is useful to make a few observations about the evidence generally.
D.1 ASIC’s evidence
As I noted in Webb v GetSwift Limited (No 6) [2020] FCA 1292 (at [9]):
ASIC relied upon [39] witnesses from customers of GetSwift: four witnesses who were former associates of GetSwift; 10 witnesses from ASIC, the Australian Securities Exchange and Chi‑X Australia (a securities and derivatives exchange); and four witnesses from organisations who were large investors in GetSwift. It also relied on opinion evidence from Mr Molony as a “professional investor”. Senior Counsel for GetSwift accepted on this application that none of the witnesses called by ASIC were challenged on their credit.
Out of this total of 39 witnesses, ASIC called four witnesses who were GetSwift employees and associate witnesses: Jamila Gordon (GetSwift); Scott Mison (GetSwift); Zane Banson (CFO Solution); and Harrison Polites (MC Partners).
The 19 customer witnesses of GetSwift were: Martin Halphen (Fruit Box); Veronika Mikac (Fruit Box); Ciara Dooley (Fruit Box); Allan Madoc (CBA); Bruce Begbie (CBA); Edward Chambers (CBA); David Budzevski (CBA)c; Natalie Kitchen (CBA); Patrick Branley (Pizza Pan); Alex White (APT); Paul Calleja (CITO); Mark Jenkinson (CITO); Devesh Sinha (Yum); Simon Nguyen (Fantastic Furniture); Abdulah Jaafar (Fantastic Furniture); Mariza Hardin (Amazon); Amelia Smith (Betta); Adrian Mitchell (Betta); and Roger McCollum (NAW).
The four investor witnesses were: Anthony Vogel; Timothy Hall; Maroun Younes; and Katherine Howitt.
The ten witnesses from ASIC, the ASX and Chi‑X Australia (a securities and derivatives exchange) were: Kristina Czajkowskyj (ASX); Andrew Black (ASX); Andrew Kabega (ASX); Stuart Dent (ASIC): Benjamin Jackson (ASX); Jamie Halstead (ASX); Stephanie Yu‑Ching So (ASX); Michael Somes (Chi‑X); Martin Wood (ASIC); and Michael Hassett (ASIC). ASIC also relied on expert opinion evidence from Andrew Molony as a “professional investor”.
Out of these witnesses, 25 were cross‑examined: Scott Mison; Jamila Gordon; Martin Halphen; Veronika Mikac; Ciara Dooley; Allan Madoc; Edward Chambers; David Budzevski; Natalie Kitchen; Harrison Polites; Patrick Branley; Alex White: Paul Calleja; Mark Jenkinson; Simon Nguyen; Abdulah Jaafar; Amelia Smith; Devesh Sinha; Mariza Hardin; Maroun Younes; Katherine Howitt; Timothy Hall; Anthony Vogul; Roger McCollum; and Andrew Molony.
Despite the cross‑examination which took place, the evidence of the witnesses was not the subject of any real challenges as to credit: see Webb v GetSwift Limited (No 6) (at [9]). Accordingly, although some findings made below are necessarily based, at least to some extent, on my assessment of the credit of a witness, I have found it unnecessary to make general credit findings for the purposes of determining the relevant facts. Notwithstanding this, I do wish to make one general credit finding in relation to the evidence of one director of GetSwift: Ms Gordon was a highly impressive witness, was both careful and sober in her presentation, made appropriate concessions, and was clearly a witness of truth. I accept her evidence in its entirety.
Ms Gordon became a director of GetSwift on 20 March 2016. She was the Global Chief Information Officer (CIO) from 2 February 2017 until 13 June 2017. Ms Gordon undertook a variety of roles at GetSwift. When she was first engaged by GetSwift, Ms Gordon’s role included reviewing the Prospectus, understanding GetSwift’s governance arrangements, “on‑boarding” clients once they had been “won”, as well as opening the Melbourne office. As CIO, she expanded GetSwift’s product offering by making it scalable, ensured that the right developers and testers worked on the GetSwift Platform, “on‑boarded” clients, and made sure specific customisations were made to the GetSwift Platform. On 13 June 2017, Ms Gordon ceased working as CIO and her responsibilities were significantly reduced. In addition to working as a director, Ms Gordon engaged in a so‑called “functional IT” role and managed the relationship with the CBA. As touched on above, her employment was terminated by GetSwift at a board meeting held on 7 November 2017. She ceased to be a director of GetSwift on 15 November 2017.[66]
[66] See Gordon Affidavit (GSW.0009.0021.0001_R).
As a director of GetSwift, Ms Gordon’s evidence sheds an important light on many of the internal happenings at GetSwift. In particular, she explained communications and discussions that she had with her fellow directors, particularly in respect to the timing, nature, and content of the ASX announcements. More specifically, she explained the GetSwift Platform, governance procedures and processes which were adhered to by the directors and employees of GetSwift, details from the 13 June 2017 and 7 September 2017 board meetings, the relationship between GetSwift and Fruit Box, CBA, Genuine Parts Company, and All Purpose Transport and finally, circumstances relating to her termination.[67]
[67] See Gordon Affidavit (GSW.0009.0021.0001_R).
D.2 The position of the Defendants
It is important to make a general observation about the way in which the defendants ran their case. The individual defendants did not go into the witness box, nor did they call any witnesses. Cross‑examination of ASIC’s witnesses was primarily conducted on behalf of GetSwift, not by counsel for the directors. Furthermore, although the defendants each had separate counsel teams, they were represented by the same solicitors (except for Mr Eagle, who was represented separately). The individual defendants maintained their privilege against exposure to a penalty.
E A DISPUTE ABOUT ASIC’S PLEADED CONTINUOUS DICLOSURE CASE
Before making factual findings, it is necessary at the outset to address one overarching and contested issue which arose at different stages throughout the proceeding, including during the trial. The issue concerned the way in which ASIC’s continuous disclosure case was pleaded and run.
E.1 The iterations of ASIC’s pleaded case
Even though ASIC took plenty of time prior to commencing its case, various iterations of the pleaded case have been served throughout this proceeding. This has resulted in unnecessary disputation and controversy as to whether ASIC has gone beyond its pleaded case. More particularly, the dispute concerns the substance of ASIC’s pleaded case in relation to the categories of information relied upon for the purposes of the alleged continuous disclosure contraventions.
GetSwift argues that ASIC has pleaded a case that requires it to prove that each individual element of the pleaded categories of information in itself was not generally available and was material. In this way, GetSwift’s contention is that ASIC has pleaded an “all or nothing” case: that is, it must prove that each individual element was both not generally available and material. If but one element or component cannot be proven, the entire relevant continuous disclosure case fails.
On the other hand, ASIC maintains that its case does not necessarily fail, even if an element of the pleaded categories of information are not made out. Put somewhat simplistically, ASIC argues that its pleaded case simply requires it to prove that the information as a whole, being the combination of the elements of the pleaded information it proved existed, was not generally available and was material.
In determining the substance of ASIC’s pleaded case, it is important to emphasise, as I did during the course of oral submissions on this issue, that ASIC has attempted to run a consistent case from the beginning of the proceeding. This view holds, notwithstanding that the various iterations advanced by ASIC make it appear as though ASIC might have changed its pleaded case, or even resuscitated or revived a previous case. Regrettably, it is necessary to descend into the brume of the various pleadings to explain this further.
In its original statement of claim – and all subsequent iterations of it up to and including the further amended statement of claim filed on 24 December 2019 (FASOC) – ASIC adopted the formulation of “individually, collectively or in any combination” in respect of the various defined sets of information alleged for the purposes of the continuous disclosure contraventions. One example suffices. In the FASOC (at [29]), ASIC defined a set of information as: “(individually, collectively, or in any combination, the Fruit Box Agreement Information)” (emphasis altered).
In the second further amended statement of claim filed on 14 April 2020 (2FASOC), ASIC deleted the words “individually, collectively or in any combination” and replaced those words with the word “together” in respect of the various defined sets of information. This new formulation prevailed in a third further amended statement of claim filed on 18 June 2020 (3FASOC). In the 3FASOC (at [29]), for example, ASIC states: “(together, the Fruit Box Agreement Information)” (emphasis altered).
When it became apparent to ASIC that GetSwift was contending that this change represented a fundamental case shift, ASIC then sought to undo and reverse the amendments made in the 2FASOC in a proposed fourth further amended statement of claim (4FASOC) (which was circulated in June 2020), by reintroducing the deleted words “individually, collectively or in any combination”. The application for leave to amend to make this change was heard during the trial, which I refused.
E.2 The application to amend
ASIC contended that it had sought to revert to the formulation adopted up to and including the FASOC in the proposed 4FASOC in response to submissions that had been made by GetSwift by way of opening. Relevantly, it was proposed to meet an argument that the word “together” in the 2FASOC had the consequence that ASIC had “to prove each individual element in itself was not generally available and more particularly was material”.[68] Since this was not ASIC’s case, and was said to have “never been the case”,[69] ASIC explained that it had simply reinserted the previous formulation in the proposed 4FASOC to avoid ambiguity and make it clear that “there is a single contravention, but it may comprise any one or more of those elements”.[70]
[68] T331.22–23 (Day 5).
[69] T331.23 (Day 5).
[70] T331.25–26 (Day 5).
Put in another way, ASIC contended that its case, as it had always been, was that it had to prove that “the information as a whole was not generally available and the information as a whole was material”.[71]
[71] T331.36–38 (Day 5).
As one might expect, GetSwift disagreed with ASIC’s characterisation of the pleading. Its primary contention was that by attempting to reintroduce the deleted words in the proposed 4FASOC, ASIC was essentially resuscitating a case it had “abandoned” when it had filed the 2FASOC.[72] GetSwift asserts that leave to amend should be refused and that GetSwift should relevantly be held to the pleaded case as submitted in the 2FASOC and 3FASOC.
[72] T329.13–15 (Day 5).
For example, GetSwift argued it would be unjust for ASIC to “reverse [a] deliberate forensic decision” previously taken absent adequate explanation; that GetSwift would suffer forensic prejudice; and that the amendment, went against the evidence of ASIC’s own expert, Mr Molony.[73] GetSwift further contended ASIC had been afforded plenty of opportunities to amend and the delay in seeking the amendment after the commencement of the trial was particularly problematic.[74] Finally, GetSwift asserted that granting leave to amend could cause potential loss of public confidence in the legal system; and (less unrealistically) that such a course did not align with the parties’ obligation to act in accordance with the overarching purpose referred to in Pt VB of the Federal Court of Australia Act 1976 (Cth).
[73] T325.12 (Day 5). See T328.43–329.5 (Day 5) and GCS at [9]–[24].
[74] See T329.9–23 (Day 5).
E.3 Relevant principles
Unsurprisingly, there was no dispute between the parties as to the applicable legal principles which do not require excursus, save for two propositions that deserve particular emphasis.
First, an abundance of authority confirms the need for precision in pleadings, particularly in cases involving allegations of misleading and deceptive conduct, or which involve the contravention of a civil penalty provision. Indeed, it is of the “utmost importance” that such cases be “finally and precisely pleaded”: Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (1998) 42 IPR 1 (at 4 per Foster J). Insisting on precise pleading in cases concerning allegations of misleading or deceptive conduct is not mere pedantry. A fair trial of allegations of contravention of law requires “the party making those allegations … to identify the case which it seeks to make and to do that clearly and distinctly”: Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486 (at 502 [25] per French CJ, Gummow, Hayne and Kiefel JJ).
Secondly, notwithstanding that the authorities make it clear that pleadings must be drafted with precision, this does not mean that one should lose sight of the fact that the fundamental purpose of pleadings is procedural fairness and ensuring that an opposing party is aware of the case that it is required to meet. Pleadings are a means to an end and not an end in themselves: see Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279 (at 292–293 per Dawson J); Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490 (at 517 per Isaacs and Rich JJ); Ethicon Sàrl v Gill [2021] FCAFC 29 (at [687]–[689] per Jagot, Murphy and Lee JJ). The overarching consideration is always whether the opposing party knows the nature of the case they have to meet.
E.4 Pleadings and continuous disclosure cases
The real substance of the dispute is adapting and applying these general principles to the particular circumstances of this case.
Continuous disclosure cases often present challenges to a pleader. An important challenge, not present here, but present in class actions, is the deficiency in understanding at the outset of litigation the precise nature of the information within the knowledge of a disclosing entity at the time it is alleged that certain information should have been disclosed. This asymmetry of information is cured in ordinary civil cases by discovery or interrogation, which leads to frequent amendment in cases of this type. But that does not apply to the present case. Prior to commencement, the regulator had the means to procure the necessary information to allow it then to make wholly informed decisions as to how the information alleged to be material was to be identified and then pleaded.
However, another common challenge was present. It arises because, as explained below, the whole obligation to make continuous disclosure focuses upon the concept of “information”. It is information that is not generally available; and that a reasonable person would expect, if it were generally available, to have a material effect on the price or value of the relevant securities that must be notified. Several questions arise, the underlying thrust of which is the need to understand the content of the information said to enliven the obligation to disclose. Most obviously, there is a need to examine:
(1)When can it be said that an entity has the information?
(2)When is the information generally available?
(3)When would a reasonable person expect that information to have a material effect on the price or value of the relevant securities?
Identifying the relevant information, proving it existed, and also proving it was not generally available and material is fundamental. What is also evident is that in cases of any complexity, there are aspects of the information that are integral and other aspects that might be described as peripheral or supplementary and may not, in and of themselves, be material. An illustration of this can be seen by reference to the James Hardie litigation, in which the question considered here arose in a different context; that is, whether it is each individual element or the information as a whole that must be found to have not been generally available.
In Australian Securities and Investments Commission (ASIC) v Macdonald (No 12) [2009] NSWSC 714; (2009) 259 ALR 116, it was held that a James Hardie entity, JHINV, had failed to notify the ASX of the relevant information (defined as the ABN 60 Information) in an identified period. In doing so, it had contravened s 674 of the Corporations Act. The ABN 60 Information was defined as consisting of a number of distinct elements, including (at [201] per Gzell J):
(1)the execution of a deed of covenant, indemnity and access (DOCIA) by JHINV and another James Hardie entity, JHIL;
(2)the issue of 1000 shares by JHIL to the ABN 60 Foundation; and
(3)the cancellation by JHIL of its one fully paid share owned by JHINV for no consideration.
In the Court of Appeal of New South Wales, a dispute arose as to whether some aspects of the ABN 60 Information had, in fact, been generally available: James Hardie Industries NV v Australian Securities and Investments Commission (ASIC) [2010] NSWCA 332; (2010) 274 ALR 85. JHINV contended that it had made available all of the information in a public report, absent the first element (i.e. the indemnity in the DOCIA). It therefore argued that the information required to be disclosed had been “readily available” within the meaning of s 676(2) of the Corporations Act. In this way, JHINV’s case was that, with the exception of one element, the information had been disclosed and was thus “generally available”.
This case was rejected by the Court (at 198 [545]) on the basis that the DOCIA was such an integral part of the ABN 60 Information that its absence from the public report meant that there had been no relevant disclosure of the ABN Information. The fact that an integral part of the defined information was not generally available was sufficient to find that there had been no disclosure of the pleaded information as a whole, notwithstanding that other elements of the information were generally available.
Here, absent an overly-technical literal reading, any common sense review of the pleading reveals that the material information has been pleaded in such a way as to make it sufficiently evident that some aspects or individual components of the information could not of themselves be material (although they were of significance contextually), whereas some aspects are integral in assessing whether the information not generally available, as a whole, was material.
E.5 Consideration
Informed by the above principles and the reality that omitted “information”, if it is of any complexity, will almost always have different components with different degrees of importance, I am unpersuaded by GetSwift’s contention that ASIC has pleaded a case that requires it to prove that each individual element of the pleaded categories of information, however marginal, was not generally available and was material.
ASIC’s pleaded case has been substantively consistent throughout the proceeding and was well understood by GetSwift. It is notable that no evidence was adduced indicating directly that those advising GetSwift were labouring under any misapprehension as to the nature of ASIC’s case and made any specific forensic decision based upon such a misapprehension. The reason why there was no such direct evidence is tolerably clear – there was no real misunderstanding and I expect no solicitor could conscientiously swear to the contrary.
GetSwift says it made it “expressly clear in its opening submissions that it was holding ASIC strictly to its pleaded case and that it did not acquiesce in the conduct of any trial beyond the pleaded case”,[75] and it otherwise made that position clear in the course of the trial. So much may be true, but that is beside the point. GetSwift knew the case it had to meet. To the extent that any of the various iterations of ASIC’s written pleadings were vague or unclear, by way of opening, on 18 June 2020, Mr Halley SC, senior counsel for ASIC, who was not in the case when it was originally pleaded, explained that Mr Darke SC, who appeared for GetSwift:
wishes to advance a case that, if your Honour is not satisfied that every single element is not generally available and every single element, in themselves, is not material, then we fail. And we reject that, understandably, out of hand.
…
[T]hat’s why we moved away from the individually or collectively or in any combination pleading, because that’s not our case. Our case is that the information as a whole was not generally available and the information as a whole was material.[76]
[75] GOS at [18]; GCS at [9].
[76] T232.30–45 (Day 4).
As of 23 January 2018, this integration had not been completed and no further contact had been received: see [684]. This was five months after GetSwift had announced an “exclusive commercial multi-year agreements with BETTA Home Living”; at this point in time, the market would have been under the impression that a trial period or proof of concept had already taken place, and that the Betta Homes Agreement would be generating revenue. As the director with primary carriage of the Betta Homes relationship, I am satisfied he ought to have known that not providing an update as to the Betta Homes Agreement might harm GetSwift’s interests by exposing it to the risk of legal proceedings, legal costs and penalties.
The PwC Report
For completeness, I should revisit the engagement of PwC. I have already dealt with this issue at a general level (see [1933]–[1939]) and in the context of the accessorial liability case against Mr Macdonald (see [2073]–[2074]). It suffices to simply note here that I am not satisfied that the mere fact of the engagement of PwC, or that Ms Reid sent a copy of Mr Macdonald’s 19 February 2018 letter to the ASX, is of significance.
Mr Macdonald s 180(1) conclusions
I am satisfied that, subject to the qualifications I have outlined, Mr Macdonald caused or permitted GetSwift to contravene ss 674(2) and 1041H of the Corporations Act and s 12DA of the ASIC Act in circumstances where it was reasonably foreseeable that engaging in the conduct referred to might harm the interests of the company by exposing GetSwift to the risk of legal proceedings, legal costs and penalties. Mr Macdonald also failed to take reasonable steps to mitigate the Announcement Risks, thereby exposing GetSwift to the risk of legal proceedings, legal costs and penalties.
J.3.3 Mr Eagle
The position with respect to Mr Eagle is a little more complex. Mr Eagle had a limited latitude to call the shots, was often micromanaged in relation to client agreements and his input on ASX announcements was an optional extra.
I have found above that Mr Eagle was knowingly involved in three of GetSwift’s s 674(2) contraventions, namely with respect to: (a) the Fruit Box Agreement Information; (b) the Fruit Box Termination Information; and (c) the NAW Agreement Information (collectively, the Eagle accessorial liability contraventions). No case was brought against Mr Eagle for personally making misleading and deceptive representations, and no findings have been made to such effect. It is first convenient to address briefly those contraventions I found Mr Eagle was knowingly involved in, before turning to those that remain.
Did Mr Eagle breach s 180(1)?
I am amply satisfied that Mr Eagle failed to exercise care and diligence in causing or permitting GetSwift to contravene s 674(2) of the Corporations Act in respect of the Fruit Box Agreement Information and the Fruit Box Termination Information.
Mr Eagle argues that he was only asked to comment on the announcement initially in his capacity as a non-executive director, that he reviewed the announcement “carefully” and provided comments as appropriate, and given that he did not have knowledge of the contents of the announcement, there was little more that he could, or should, have done.[2985] Indeed, he says that there was no reason or requirement for Mr Eagle, as a non-executive director, to ask for the Fruit Box Agreement when reviewing the Fruit Box Announcement, particularly given that other members of the board had been directly dealing with Fruit Box and the management of that commercial relationship.[2986] This submission is not to the point. The contravention alleged by ASIC against Mr Eagle commences on 27 February 2017, and for good reason.
[2985] ECS at [193]–[195].
[2986] ECS at [195].
Indeed, prior to 27 February 2017, as I have found above (at [166]), Mr Eagle had limited (if any) involvement with Fruit Box. He first became involved when he was circulated a draft of the Fruit Box Announcement on 23 February 2017, the night before it was released to the ASX: see [165]. Although Mr Eagle did provide comments, including one comment as to the calculation of the number of deliveries per year (see [165]), there is no evidence he had seen the Fruit Box Agreement by this stage. This is further indicated by his comments identifying superficial and grammatical errors only: see [165]. I accept this demonstrates Mr Eagle’s had no involvement in the underlying commercial transaction with Fruit Box and that he had no communications or dealings with Fruit Box personnel about the Fruit Box Agreement.[2987] I also accept, contrary to ASIC’s submissions, there is no evidence that Mr Eagle knew that the Fruit Box Announcement had been marked price sensitive (he was not party to the instructions issued by Mr Hunter to Mr Mison (see [164]) or by Mr Macdonald to Mr Mison (see [169]) and there is no reference to marking the announcement price sensitive in the email exchange in which Mr Eagle provided his comments to Mr Mison (see [165]) or in the confirmation Mr Mison circulated to the directors of GetSwift by email (see [171])).[2988] However, on 24 February 2017, Mr Eagle received Mr Hunter’s email that the Fruit Box Announcement had added $3.8 million to GetSwift’s market capitalisation: see [1817].
[2987] ECS at [164].
[2988] ACS at [1600], and [1665].
The evidence, however, does not stop there. While, as I said above, I am hesitant to infer that Mr Eagle simply receiving a copy of the Fruit Box Agreement on 20 March 2017 would have evidenced that the Fruit Box Agreement Information had been omitted and was material, given there is no evidence that he had previously been involved with the Fruit Box Agreement in any way, the content of Mr Halphen’s email which was forwarded to him on the same day could not have been clearer: “Joel. You still need to address your misleading statement and how you are going to rectify it. No contract for 3 years has been entered into as it is conditional on a trial. That is a material omission” (emphasis added): see [187]–[188]. This is compounded by the fact that at the board meeting on 27 March 2017, the issue of the Fruit Box Announcement and Fruit Box’s response appears to have been front and centre: see [195]–[197].
Mr Eagle’s main defence to why he did not breach his duties to act with due care and diligence is twofold. First, it is said that the evidence reveals Mr Hunter, as the chairman, decided to “own” the announcement,[2989] and as a non-executive director who had no contact with Fruit Box, the Court should be satisfied that Mr Eagle did not follow up on the Fruit Box Termination Information because he assumed Mr Hunter owned it and took responsibility for it, and had dealt with it.[2990] Secondly, Mr Eagle in effect says well, Ms Gordon was in the same position, if not more of a culpable position than him (given she had some involvement with Fruit Box) and ASIC makes no complaint about the behaviour of Ms Gordon.[2991]
[2989] ECS at [195].
[2990] ECS at [197].
[2991] ECS at [196]–[197].
These contentions should be rejected.
First, while it is true that in some circumstances it may be reasonable for a director to rely on others to discharge particular functions (see ASIC v Healey (at 330 [167]), and that a non-executive director may rely on management and other officers to a greater extent than an executive director (see Morley at 355 [807]), one cannot hide from reality by reason of the fact that someone has put their hand up to deal with a matter. Indeed, in considering the reasonableness of the reliance, a number of factors are of importance, including: (a) the extent to which the director is put on inquiry, or given the facts of a case, should have been put on inquiry; (b) the risk involved in the transaction and the nature of the transaction; and (c) the extent of steps taken by the director, for example, inquiries made or other circumstances engendering “trust”: see Adler (at [372]).
While I accept that Mr Eagle, as a non-executive director, had a lesser involvement in the negotiation of client agreements and input of ASX announcements (as Fruit Box demonstrates), this is one of the clearest examples where he had been put on notice that something was seriously wrong. The email of Mr Halphen dated 20 March 2017, which was forwarded to him, was pellucid in its terms (see [187]–[188]): it made plain that there was information omitted from the announcement, conveying, quite directly, the substance of what is asserted by the Fruit Box Agreement Information, and that this was thought by the client to be material. Immediately, this should have rung alarm bells in a director’s mind, particularly one who was a solicitor.
It is within this context that one must view the circumstances of the board meeting of 27 March 2017 and Mr Hunter’s email that follows. The evidence reveals heated discussion at the board meeting, where it was clearly recognised that the issue of the termination was of significance. This is evident by Ms Gordon conscientiously raising the need to communicate to the market, and Mr Hunter’s grudging acceptance of this point. Indeed, the significance of the state of affairs was confirmed by Mr Hunter’s email later that day, which attached a copy of a draft announcement entitled “Fruit Box declines to proceed with GetSwift” and which noted that he recognised that “Just in case Box is actually serious about terminating the contract and not trying to get better commercial terms we need to send out the notification to the ASX as part of the continuous disclosure rules”, noting that “we should put out forthright [sic] if its confirmed”: see [198].
When the evidence is viewed as a whole, any reasonable director in the position of Mr Eagle would have understood and appreciated the significance of the termination, known that GetSwift was currently in breach of its continuous disclosure obligations, and should have taken steps to ensure the disclosure was actually made.
Secondly, any attempt to rely on the fact that no complaint has been made in respect of the conduct of Ms Gordon is irrelevant. No such case is advanced by ASIC (understandably when one has regard to everything that happened within GetSwift); but irrespective as to what others ought to have done, what matters is what a director in the position of Mr Eagle ought to have done.
Furthermore, in respect of the NAW Agreement Execution Information, I am satisfied that even if I am wrong in relation to the accessorial liability case against Mr Eagle, in failing to take steps to ensure the First NAW Announcement was released to the market in a timely fashion, he contravened s 180(1) of the Corporations Act. I have found that Mr Eagle was aware of the NAW Agreement Execution Information on 18 August 2017: see [1586]–[1587]. That is, almost a month before the First NAW Announcement was made. With knowledge as to GetSwift’s continuous disclosure obligations, a reasonable director in his position would have appreciated the risk of not announcing a client agreement of such scale to the market. Even if I am wrong to conclude Mr Eagle knew of the First NAW Announcement as of 18 August 2017, and his knowledge instead is to be traced to his receipt of a copy of the first NAW Announcement on 5 September 2017 (see [775]), I am still satisfied that he breached s 180(1). The passage of seven days following the receipt of “highly sensitive” agreement should have raised significant questions in the mind of a director, particularly given the evidence reveals Mr Eagle engaged with the announcement on 18 August 2017, at which time the details of the NAW Agreement Execution Information do not appear on the evidence to have been contested. Mr Eagle took no steps to ensure the disclosure of this information.
The remaining contraventions relate to: (a) the Pizza Pan Agreement Information; (b) the Betta Homes Agreement Information; (c) the NAW Projection Information; (d) the Yum MSA information; and (e) the Amazon MSA Information.
First, in respect of the Pizza Pan Agreement, I have not reached the level of satisfaction to conclude that Mr Eagle contravened s 180(1). The evidence does not appear to indicate that he was involved in any of the commercial negotiations with Pizza Hut. Further, it reveals that while Mr Eagle was involved in the drafting of the Pizza Pan Agreement, his role was minimal and compartmentalised. For example, Mr Eagle was asked by Mr Macdonald to consider certain comments and contractual issues as specifically identified: see [405]. While he was copied into some further communication concerning the term sheet (see [406]–[407]), when it came to the Pizza Hut Announcement, his involvement was also limited. In what was developing as usual practice, he was asked to “review” the announcement, which he did, recommending the removal of the term “multi-year”: see [419]. These comments were not incorporated: see [428]. I am not satisfied that Mr Eagle, who was given a limited chance to comment on the announcement, contravened s 180(1), particularly given his comments sought to remove what must be inferred to be what he thought was a potentially misleading statement.
Secondly, the Betta Homes Agreement Information with respect to Mr Eagle raises issues of some complexity. I have found above that while Mr Eagle was aware of the Betta Homes Agreement Information (at [1549]–[1550]), I was not satisfied he knew this information to be material: see [2085]–[2086]. That was principally because, while Mr Eagle’s involvement in the Fantastic Furniture and Betta Homes Announcement is virtually non-existent: see [611]–[621], [669]–[670]. Indeed, as Mr Eagle submitted quite forcefully, he was not even in the country when the announcement was being negotiated, and landed only two hours before it was released (see [661], [1543]–[1546]), all of which was information the other directors’ knew: see [666]. Moreover, I found that while Mr Eagle was heavily engaged in talks with the ASX immediately following the release of the announcement due to it not being marked as price sensitive, his negotiations with the ASX were largely operational, raising an oversight by MAO: see [1944]–[1952]. In these circumstances, while he should have known that it omitted material information, I was not satisfied to the requisite level to conclude that he did.
But the difference between the subjective and the objective is brought into sharp focus in respect of the s 180(1) inquiry. Here, I do not have to satisfy myself that he knew the omitted information was material. Mr Eagle submits there is nothing in the evidence to demonstrate that there was any occasion for a non-executive director in the position of Mr Eagle to take any further action in relation to the Betta Homes Agreement Information following the announcement on 23 August 2017.[2992] I disagree. When the whole of the evidence is considered, I am satisfied a reasonable director in Mr Eagle’s position and with his knowledge ought to have known that Betta homes Announcement omitted material information. Mr Eagle had a significant involvement in the drafting of Betta Homes Agreement: see [655]–[660]. Further, while he was on an aeroplane when the drafts of the announcement were circulated, and was given practically no chance to raise an objection, he arrived just in time for the uproar that the announcement had not been marked as price sensitive. It is wholly unrealistic to think that Mr Eagle’s did not have to understand the detail of what was contained in the Fantastic Furniture and Betta Homes Announcement in the light of the commotion (and the absence of any evidence to the contrary). What a reasonable director in Mr Eagle’s position would have discovered, given they had assisted in drafting the agreement (see [655]–[660]), they knew of their continuous disclosure obligations, and was aware of the First and Second Agreement After Trial Representations, was that the picture painted by the announcement omitted critical information, pivotally that there was a trial period of two months (the commencement of which was conditional upon agreement that the software was operating effectively) and that Betta Homes actually had to elect to opt in to the 18-month term following the two-month trial period. Mr Eagle ought to have known that this important omission had the potential to harm GetSwift’s interests by exposing it to the risk of legal proceedings for contraventions of the Corporations Act, legal costs and penalties. No steps were taken to address this.
[2992] ECS at [283].
Thirdly, in respect of the NAW Projection Information, I am not satisfied Mr Eagle contravened s 180(1). The evidence reveals too little engagement and too little knowledge on his part. While I accept he reviewed and advised on the terms of the NAW Agreement (see [741]–[746]) and reviewed the First and Second NAW Announcements, his involvement was relatively insignificant. Further, the factual circumstances of which he was aware and ought to have been aware of are simply too tangential to conclude that a reasonable director in his position ought to have detected an issue and done something about it. I am therefore not satisfied Mr Eagle contravened s 180(1) with respect to the NA Williams Projection Information.
Fourthly, Mr Eagle’s involvement begins to shift when one turns to the Yum MSA Information and Yum Projection Information. As I have outlined in more depth above (see [2087]–[2090], [2095]), the evidence reveals Mr Eagle was substantially involved with the drafting of the Yum MSA and engaged directly with Yum’s legal counsel: see [882]–[884] and [887]–[892]. Mr Eagle submits that he did exercise due care and diligence by reviewing the draft Yum Announcement and providing his comments to Messrs Hunter and Macdonald who did not include his comments in the final version of the Yum Announcement. The fact of his input is correct, but the substance of this submission is a mischaracterisation of the evidence. The evidence reveals that Mr Eagle was circulated the draft ASX announcement for Yum earlier than was usual (see [905]) and made substantial changes and suggestions: see [902]–[903], including noting that:
I think in this particular announcement being a little bit legalistic has a powerful impact – see my language making clear up front that this agreement covers not just the ownership/affiliated chain of companies but also the franchisees, licensees and joint ventures – in the US and internationally. The language is lifted straight from our contract! [2993]
[2993] SWI00019038_UR (emphasis added).
Mr Eagle’s comments were not like those in respect of Pizza Pan, toning down potentially misleading comments; rather they were to ramp up the “powerful impact” of the Yum announcement. Although these changes were not included (see [906]), this email reveals Mr Eagle well across the terms of the Yum MSA, what was being presented by the Yum Announcement, and the influence that the Yum Announcement could have on the market.
I accept that in response to a complaint received by the ASX on 8 December 2017 (see [925]) Mr Eagle responded in the negative when asked whether the Yum MSA is subject to “any other material conditions” not contained in the Yum Announcement: see [926]. However, the test to determine a contravention of s 180(1) is objective. To my mind, a reasonable director in the position of Mr Eagle, with knowledge of GetSwift’s Prospectus, Continuous Disclosure Policy, and what was presented to the market in the April Appendix 4C, the May Investor Presentation, the October Appendix 4C and the Key Partnerships Announcement (that is, the First and Second Agreement After Trial Representations and the Quantifiable Announcements Representations), ought to have known the Yum Announcement mischaracterised the terms of the Yum MSA. In all the circumstances, I am satisfied Mr Eagle ought to have known that Yum Announcement omitted material information, with the potential to harm GetSwift’s interests by exposing it to the risk of legal proceedings, legal costs and penalties.
Fifthly, I am not satisfied that Mr Eagle breached his duties of care and diligence in respect of the Amazon MSA Information. As I outlined above in respect of accessorial liability (see [2091]), I accept that Mr Eagle had a heavier than usual involvement in the drafting and negotiation of the Amazon MSA and communicated directly with personnel from Amazon: see [971]–[973], [975], [979]–[980]. I also accept that I have found Mr Eagle was aware of the Amazon MSA information by reason of his involvement: see [1755]. But when it comes to the content of the announcement, Mr Eagle’s role is far more limited: see [896]–[912], [2091]. Further, after the ASX suspended GetSwift’s shares from trading, Mr Eagle took a number of steps that appear to be reasonable in the circumstances: (a) he arranged a meeting with the ASX to discuss the ASX’s issues with the First Amazon Announcement; (b) he retained the services of Mr Halstead of Clayton Utz, to assist; and (c) Mr Eagle prepared the Second Amazon Announcement which incorporated comments from the ASX, and was released with the approval of ASX personnel: see [1008]–[1017]. There is no complaint about any breach beyond the time of the Second Amazon Announcement. I am therefore not satisfied that Mr Eagle contravened s 180(1) in respect of the Amazon.
Mr Eagle s 180(1) conclusions
I am satisfied that, subject to the qualifications I have outlined, Mr Eagle caused or permitted GetSwift to contravene s 674(2) of the Corporations Act in circumstances where it was reasonably foreseeable that engaging in the conduct referred to might harm the interests of the company by exposing GetSwift to the risk of legal proceedings for contraventions of the Corporations Act, legal costs and penalties.
K CONCLUSION AND ORDERS
ASIC is entitled to declaratory relief against GetSwift, Mr Hunter, Mr Macdonald and Mr Eagle as indicated in these reasons. In framing proposed declarations, however, ASIC should be mindful of the admonition of Gray J as to the “fetish”, as his Honour described it, of certain regulators seeking, and the Court granting, declaratory relief simply because the Court finds that a contravention has occurred: Australian Competition and Consumer Commission v Francis [2004] FCA 487; (2004) 142 FCR 1 (at 36 [110]). As a general proposition, there is little point in declaratory relief if it has no impact on the penalty. As I said in Australian Securities and Investments Commission v AMP Financial Planning Pty Ltd (No 2) [2020] FCA 69; (2020) 377 ALR 55 (at 94 [151]), the “reality is that both the Court’s disapproval of contravening conduct and clarification of the law is much more likely to emerge from a perusal of reasons than the bare terms of essentially repetitive declarations”.
The parties are to file an agreed minute or competing minutes of order reflecting these reasons.
I cannot conclude, however, without remarking upon two matters. First, is that the vast scope and highly repetitive nature of the ASIC case has placed significant demands on the Court in resolving this case in a timely fashion. My preliminary view is that costs should follow the event against each of the defendants, but I will receive any oral submissions on costs generally and, in particular, as to whether costs should be recovered by ASIC in relation to the misleading and deceptive conduct case (which always seemed to me to be an exercise in supererogation). Secondly, despite my scepticism as to whether a case of this scope was necessary in order to achieve the relevant regulatory purpose, those acting on ASIC’s instructions (and all those acting for each of the defendants) conducted the case at trial with great efficiency, courtesy and professionalism, which has been of assistance in marshalling the material and preparing these reasons.
At the case management hearing I will also hear submissions about the future progress of the balance of the proceeding. In this regard, it is worth mentioning one further matter in advance of that hearing: the second further amended originating application not only seeks orders for the imposition of pecuniary penalties against all defendants, but also orders pursuant to s 206C(1) and/or s 206E(1) of the Corporations Act disqualifying Messrs Hunter, Macdonald and Eagle (prayers 13, 22 and 29) from managing corporations for a period to be determined by the Court. Given the differing findings I have made as to the individual defendants, and the relocation of GetSwift (and, for all I know, possibly some directors) to another jurisdiction after I was reserved (see [3]), ASIC should provide, prior to the case management hearing, a version of a third further amended originating application which specifies, with particularity, the penal orders it now seeks against each of the contraveners.
I certify that the preceding two-thousand-six-hundred-and-eighteen paragraphs (2618) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee. Associate:
Dated: 10 November 2021
ANNEXURE – TRADING VOLUME DATA
GSWASIC00031761_R; GSWASIC00059748_R.
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