Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd

Ingot Capital Investments Pty Ltd and others (the appellants) appealed to the Court of Appeal of New South Wales against decisions of the trial judge concerning claims of misleading or deceptive conduct under the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) arising from a convertible note issue. The primary dispute involved allegations that Macquarie Equity Capital Markets Ltd (MECML), acting as lead manager, underwriter, and broker, engaged in misleading or deceptive conduct before and after the issue of a prospectus, and in relation to securities after the prospectus was issued but before the securities were issued. The appellants contended that the company board relied on representations made by its due diligence committee, which in turn relied on information provided by MECML, and that but for MECML's contraventions, the note issue would not have proceeded, leading to their losses.

The Court of Appeal was required to determine whether MECML's conduct constituted misleading or deceptive conduct in relation to the capital raising. It also had to consider issues of causation, specifically whether the appellants could recover damages even if they themselves were not directly misled, and whether they had proven their loss. Further, the court examined whether the appellants were entitled to recover damages for both issue purchases and subsequent market purchases of the convertible notes, and whether the rule in *Potts v Miller* applied to limit their recovery.

The Court of Appeal, in its reasons delivered by Giles JA, Hodgson JA, and Ipp JA, found that the appeal against Mr Daya succeeded. The court set aside the trial judge's orders in respect of the claims against Mr Daya by several of the appellants, and ordered Mr Daya to pay substantial damages to each of them. The appeals were otherwise dismissed. Leave was granted to the appellants to amend their notice of appeal to rely on specific representations. The parties were directed to arrange a directions hearing for the further disposition of remaining matters, including costs, interest, and any other necessary orders.