In the matter of Mayne Pharma Group Limited

1. [1]

   The Plaintiff, Mayne Pharma Group Limited (“MPG”) is an Australian public company listed on the Australian Securities Exchange (“ASX”). Its business is focused on pharmaceuticals and it has a significant business presence in the United States and Australia. Its headquarters is in North Carolina in the United States of America. The First Defendant, Cosette Pharmaceuticals, Inc. (“Cosette”) and the Second Defendant, Cosette Australia Bidco Pty Ltd (“Cosette Sub”) (together, “Cosette Parties”) are each wholly-owned subsidiaries of Cosette Pharmaceuticals Holdings, Inc (“Cosette Holdings”) which is jointly owned and controlled by Avista Capital Holdings LP (“Avista”) and Hamilton Lane Advisors LLC (“Hamilton Lane”).

2. [2]

   By a Scheme Implementation Deed (“SID”) dated 20 February 2025, Cosette and MPG agreed the terms and mechanism of a proposed scheme of arrangement which provided for the acquisition of all of MPG’s ordinary shares by Cosette Sub. Under the proposed scheme, MPG shareholders would be paid A$7.40 per share they own and the maximum scheme consideration payable would be A$614,933,421.40. I made orders under ss 411 and 1319 of the Corporations Act 2001 (Cth) (“Act”) relating to that proposed scheme of arrangement and associated orders on 15 May 2025 for the reasons set out in my judgment in Re Mayne Pharma Group Ltd [2025] NSWSC 513.

3. [3]

   On 17 May 2025, Cosette issued its first notice of a material adverse change under cll 3.5(c) and 3.7(a) of the SID to MPG (“First MAC Notice”) and, on 4 June 2025, Cosette sent a notice of termination of the SID (“First Termination Notice”) to MPG. By Originating Process filed in these proceedings on 4 June 2025, MPG seeks declarations that the First MAC Notice was not validly issued and that Cosette did not validly terminate the SID by its First Termination Notice. The basis of that claim is in turn set out in MPG’s Concise Statement filed on 4 June 2025 (“CS”) and the Cosette Parties filed their Response to that Concise Statement on 13 June 2025 (“RCS”).

4. [4]

   By its Cross-Summons filed on 13 June 2025, Cosette in turn seeks a declaration that it validly terminated the SID and seeks an order that MPG pay it a break fee pursuant to the SID and further relief, and it relies on its Cross-Claimant’s Amended Concise Statement (“CCS”) filed 23 September 2025 in that regard. MPG relies on a Response to the Cross-Claimant’s Amended Concise Statement (“CCSR”) also filed on 23 September 2025 and Cosette relies on a Further Amended Reply to the CCSR filed late in the hearing on 8 October 2025 (“CCS Reply”). The parties agreed that the larger part of these proceedings concerned Cosette’s Cross-Claim and Cosette first led evidence and made submissions at the hearing. I will generally refer to Cosette when dealing with the Cross-Claim and to the “Cosette Parties” in dealing with MPG’s claim to which both are defendants and with the proceedings generally.

5. [5]

   The Cosette Parties have declined to extend the End Date (as defined) under the SID, namely 20 November 2025, and a delay in resolving these proceedings would potentially have the consequence that that date would be reached, the scheme would lapse and MPG and its shareholders would be deprived of the commercial benefit of any success in the proceedings. That result would be the antithesis of the just determination of the proceedings. These proceedings have therefore been conducted and determined in circumstances of extreme commercial urgency, and judgment has been given within several days of the conclusion of the hearing. That should allow sufficient time for either or both parties to bring any appeal from my judgment and, preferably, have any appeal determined before the End Date before the scheme expires: Yowie Group Ltd v Keybridge Capital Ltd [2025] NSWCA 142 at [5]. I have reviewed all evidence and submissions as the hearing progressed and after I reserved judgment but I have necessarily focussed in this judgment on key issues and the matters that it is necessary to decide in order to deliver judgment within the necessary time frame.

6. [6]

   I should also note that there was a debate between the parties, in opening, as to which party had the onus of proof. Ms Collins, for the Cosette Parties, recognised that, ordinarily, the party who seeks relief has the burden of satisfying the Court of facts which justify the grant of that relief. Plainly, Cosette here seeks extensive relief in its Amended Cross-Claim and would ordinarily have that onus in respect of the maters for which it contends. Ms Collins submitted that, here, MPG had assumed that onus by seeking declarations that the First MAC Notice was invalidly issued and that the SID was not validly terminated. I am inclined to think that proposition is not correct, for the reasons put by Mr Hutley in MPG’s opening submissions. However, nothing turns on this matter, where this case will be decided by reference to the evidence as it emerged at the hearing and there is no issue where a party would succeed or fail by reference to any question of which party had the onus of establishing a particular matter.

Affidavit evidence

1. [7]

   I now turn to the affidavit evidence and cross-examination. In addressing that evidence, I recognise that this hearing took place not long after the events in issue but I also have regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318–319; Varma v Varma [2010] NSWSC 786 at [424]–[425]. I also have regard to the fact that objective evidence, where available, is likely to be the most reliable basis for determining matters of credit that arise as to the affidavit evidence: Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 at 57; Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 at [10] (“Colorado”). I also bear in mind the observations of Bell P (as the Chief Justice then was, with whom Bathurst CJ agreed) in ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 at [27]–[28]:

2. [8]

   I have here drawn on my summary of the applicable principles in, inter alia, Re 1derful Pty Ltd [2024] NSWSC 1414 at [7]ff. I have also borne in mind the cautionary observations of Basten JA (Handley JA agreeing) in Sangha v Baxter [2009] NSWCA 78 at [155], applied by Nixon J in Firmtech Aluminium Pty Ltd v Xie; Zhang v Xu; Xie v Auschn Conveyancing & Associates Pty Ltd [2024] NSWSC 1293 at [42], that:

3. [9]

   I also bear in mind that the allegations of breach of the continuous disclosure requirements made by Cosette against MPG have potential civil penalty consequences, and I should apply the standards set out in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 and its equivalent under s 140 of the Evidence Act 1995 (NSW) (“Evidence Act”) in this regard. Where a party advances allegations of impropriety, the Court must take account of the gravity of the matters alleged in deciding whether the inference should be drawn and, although the standard of proof remains proof on the balance of probabilities, the strength of the evidence necessary to establish a given fact to the civil standard may vary according to the nature of what it is sought to be proved: Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 449 –450; [1992] HCA 66. Section 140 of the Evidence Act similarly provides that, in a civil proceeding, the Court must find the case of a party proved if it is so satisfied on the balance of probabilities and that, without limiting the matters that the Court may take into account in deciding whether it is so satisfied, it is to take into account the nature of the cause of action or defence, the nature of the subject matter of the proceeding and the gravity of the matters alleged. I approach the evidence in Cosette’s claim for breach of MPG’s continuous disclosure obligations on that basis.

4. [10]

   The Cosette Parties read three affidavits dated 22 July 2025, 7 September 2025 and 21 September 2025 of Mr Apurva Saraf, who is the President and Chief Executive Officer of Cosette, a director of Cosette and a director of Cosette Holdings. In his first affidavit, Mr Saraf set out the background to the Cosette Group, his experience, and provided a detailed chronological account of dealings with MPG, and I refer to aspects of his evidence in setting out the chronology of events below. Mr Saraf did not there, or in subsequent affidavits, address the modelling undertaken by Cosette or its advisers in any detail. Ultimately, little turns on that in these proceedings, where Cosette has not established any representational case as to which reliance would become significant.

5. [11]

   Mr Saraf was cross-examined. He was an intelligent and careful witness who slowly read each document he was shown before he answered any question concerning it. I was left with the strong impression that his affidavit was in significant part a reconstruction of events from documents that he had been shown. In cross-examination, Mr Saraf was reluctant to address and generally would not concede matters which were potentially adverse to Cosette’s claims or his evidence. A striking example of his approach was his prolonged reluctance to acknowledge an obvious and significant error in the treatment in his affidavit of a valuation of MPG that had been prepared by Santander Bank, S. A. (“Santander”), an investment bank retained by Cosette. It is plain that, when preparing his affidavit, he had misunderstood that valuation as made in AUD rather than USD, and that had led him wrongly to claim that Cosette had substantially increased the price that it (or, strictly, Cosette Sub) would pay for MPG shares in the course of the transaction. Mr Saraf was plainly reluctant to acknowledge the impact of that misunderstanding in cross-examination, although that impact must have been immediately apparent to him given his obvious intelligence and expertise (Saraf XX, T146–150, 199–206). When this difficulty emerged, he gave evidence that he did not remember whether Cosette had substantially increased its valuation for MPG in this way, although his affidavit had plainly represented that that had occurred. It seemed to me that Mr Saraf’s as to this matter was, at best, guarded and, possibly, evasive.

6. [12]

   By a second affidavit dated 7 September 2025, Mr Saraf responded to aspects of the affidavit evidence of Mr O’Brien, MPG’s Chief Executive Officer, which I address below. Mr Saraf and Mr O’Brien have different recollections as to some matters, but it is largely not necessary to resolve those differences in order to determine these proceedings. In his third affidavit dated 21 September 2025, Mr Saraf “corrected”, or sought to reshape, aspects of his first affidavit. He sought to make a significant change to his explanation of his email dated 9 September 2024, which I address below; gave evidence (Saraf 21.9.25 [9]) that his references to the basis of financial modelling referred to his understanding of those matters; and retreated (Saraf 21.9.25 [10]) from the position that Cosette’s modelling was “based on” information provided by MPG to the proposition that it was “informed by” that information. That was a particularly significant change where it reflected, without frankly acknowledging, the substantial documentary evidence that indicated that Cosette and its advisers (sensibly enough) had largely not used information provided by MPG to model MPG’s likely financial performance.

7. [13]

   In closing submissions, the Cosette Parties submitted that the Court should find that Mr Saraf was a truthful witness whose evidence was corroborated by contemporaneous documents. I am not able to accept that submission without significant qualification. While Mr Saraf’s evidence in respect of the chronology of events largely followed the documentary evidence, I approach his evidence as to contested matters with caution for the reasons noted above.

8. [14]

   The Cosette Parties also read the affidavit dated 21 July 2025 of Mr David Burgstahler, who is a director of Cosette Holdings and the Managing Partner and Chief Executive Officer of Avista, a major shareholder in Cosette Holdings. Mr Burgstahler outlines his experience and the relationship between Avista and the Cosette Group. He refers (Burgstahler 20.7.25 [20]) to his first having become aware of an opportunity to acquire MPG in early 2024 and to having exchanged emails with Mr Saraf about the acquisition in September 2024. Mr Burgstahler’s evidence (Burgstahler 20.7.25 [21]) is that he received information and updates as to due diligence that was conducted into the proposed acquisition of MPG, that he discussed that with Cosette management, and that the information he received included financial modelling. Like Mr Saraf, Mr Burgstahler did not address the content of that modelling in any detail. Ultimately, little turns on that in these proceedings, where Cosette has not established any representational case as to which reliance would become significant.

9. [15]

   Mr Burgstahler also refers (Burgstahler 20.7.25 [22]) to his dealings with MPG representatives during the due diligence, including a discussion with the Chair of MPG after the proposed acquisition had “stalled” in December 2024. I will address his evidence as to the 17 February 2025 virtual meeting and the directors’ meeting of Cosette and Cosette Holdings on 18 February 2025 in dealing with the chronology of events below. Mr Burgstahler did not there refer to any events between the entry into the SID on 20 February 2025 and his receipt, on 26 March 2025, of an email from Mr Casten containing MPG’s February CFO report, which he characterises (in evidence admitted with a limiting order under s 136 of the Evidence Act as his understanding) as reflecting “significant misses by [MPG], including a shortfall in underlying [earnings before accounting for interest, taxes, depreciation and amortisation (“EBITDA”)] for February 2025 of A$11,287,000.” I also address Mr Burgstahler’s response to Cosette’s receipt of MPG’s 9+3 forecast for the financial year ended 30 June 2025 (“FY25”) (“FY25 9+3 Forecast”) in the chronology below. For the reasons that I explain below in dealing with Mr Burgstahler’s evidence of the 17 February meeting, I am unable to give any real weight to Mr Burgstahler’s evidence, other than where it is corroborated by contemporaneous documents.

10. [16]

    The Cosette Parties also read the affidavits dated 22 July 2025 and 8 September 2025 of Mr Richard Casten, who is a Senior Vice President and Chief Financial Officer of Cosette and a director of Cosette Sub. In his first affidavit dated 22 July 2025, Mr Casten there refers to his academic qualifications and experience and to the nature of the Cosette Group. I address other aspects of his evidence in the chronology of events below. In his second affidavit dated 8 September 2025, Mr Casten responds to the affidavit evidence of Mr Gray, who is MPG’s Chief Financial Officer, which I address below, including Mr Gray’s reference to the key risks and opportunities sections in MPG’s forecasts. Mr Casten’s evidence is that he does not recall (but does not deny) a discussion with Mr Gray as to how key risks and opportunities were identified and assessed by MPG and does not recall Mr Gray referring to the potential meaningful impact of such risks and opportunities on MPG’s EBITDA. Assuming, without deciding, the correctness of that proposition, those risks and opportunities were nonetheless prominently disclosed in those forecasts and Mr Casten, rightly, does not suggest that he did not read or understand them, without the need for further discussion with Mr Gray. Mr Casten also there gave evidence (Casten 8.9.25 [13]) that he did not recall Mr Gray having advised, in meetings in the due diligence process, that MPG had experienced significant volatility in its forecasts; its forecasts had improved and were still improving; and that there were deviations that modelling would not pick up, In cross-examination, Mr Casten partly accepted and partly did not recall, but did not deny, that those matters had been disclosed to him. As I note below, I accept Mr Gray’s evidence that those matters were disclosed to Mr Casten.

11. [17]

    In closing submissions, Cosette submits that Mr Casten gave truthful evidence and that his evidence should be accepted. Mr Casten is plainly well qualified and highly experienced and, in significant parts of his evidence, was honest as to the limits of his recollection. It was plain, from contemporaneous correspondence, that Mr Casten had a healthy scepticism as to the nature of forecasts and was conscious of the possibility that MPG may have been too optimistic as to its future sales and in anticipating growth in its earnings. Mr Casten was reluctant in cross-examination to acknowledge the extent of his scepticism, likely because he recognised that his sensible approach to the uncertainties of forecasting and the risks of over-optimism in forecasts would have undermined his superiors’ evidence and Cosette’s claims. I approach Mr Casten’s evidence with caution in respect of issues of reliance on information provided by MPG, where it seems to me that he preferred acquiescence in Cosette’s claims to frankly acknowledging his more sceptical approach.

12. [18]

    The Cosette Parties also read the affidavit dated 22 July 2025 of Mr Alain Dury, who is a director, Business Development and Scientific Affairs at Cosette and reports to Dr Serge IIin-Schneider (Cosette’s Senior Vice President, Corporate Development and General Counsel) who, notably, did not give evidence. Mr Dury is involved in the evaluation of products for acquisition or licensing and the medical review of promotional materials for Cosette’s products. He was involved in assisting Cosette in due diligence on MPG’s products and he refers to his review of the website relating to Nextstellis, an oral contraceptive distributed by MPG. I will adopt the term “Nextstellis” to refer to that product, but maintain the inconsistent usages adopted by the parties to refer to it in quotations.

13. [19]

    Mr Dury also refers to his request for access to advice obtained by MPG from the Office of Prescription Drug Promotion (“OPDP”) within the U.S. Food and Drug Administration (“FDA”) as to promotional material for Nextstellis and for communications between OPDP and MPG in 2022 which were then produced by MPG in due diligence. Mr Dury’s evidence is that he recognised, at that point, that the OPDP had previously expressed concerns in 2022 about one claim made by MPG in respect of Nextstellis and that a similar claim was still being made in its website at the time of due diligence. He also refers to the positive view formed by another employee of Cosette as to MPG’s marketing material, which he does not appear to have shared. By his second affidavit dated 7 September 2025 in reply, Mr Dury responded to evidence of Ms Nataline, but her evidence was not read as a result of a narrowing of the issues between the parties in respect of an “untitled letter” issued on 28 April 2025 by OPDP to MPG which raised concerns about MPG’s promotion of Nextstellis (“FDA Letter”), which I address below. By a third affidavit dated 23 September 2025, Mr Dury made several amendments to his first affidavit. I refer to other aspects of his evidence in the chronology below. Mr Dury was cross-examined and I have regard to that cross-examination although it will have no material impact on the outcome of the proceedings. In closing submissions, Cosette submits Mr Dury was a truthful witness and made concessions where appropriate and that I should accept his evidence. I generally accept that submission.

14. [20]

    The Cosette Parties tendered expert evidence of Mr Hosier, which I address in dealing with the FDA Letter below.

15. [21]

    The Cosette Parties also tendered the report dated 1 August 2025 of Mr Pete Meyers (Ex C6), who has experience in finance roles relating to the pharmaceutical industry, as a Chief Financial Officer and investment banker and has experience of overseeing preparation of a company’s financial statements and financial forecasts. Mr Meyers had been asked to give evidence as to whether MPG’s approach to recognising earnings is consistent with the usual process adopted by pharmaceutical companies operating in the United States and as to whether MPG had reasonable grounds for its forecast of underlying EBITDA based on six months actual and six months forecast results (FY25 6+6 Forecast”) as at 17 and 20 February 2025. MPG obtained but did not seek to tender the report dated 1 September 2025 of Mr Bahl in response. The Cosette Parties then tendered a report dated 7 September 2025 of Mr Meyers in reply (Ex C6A), much of which was not properly in reply in the first place and other parts of which were no longer relevant when Mr Bahl’s report was not tendered.

16. [22]

    I should here say something further as the process by which expert evidence was led in the proceedings, which reflected the pressure of preparation of the proceedings for hearing within a relatively short time. Orders for expert evidence were originally made by consent on 11 June 2025 without express reference to r 31.19 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) which prevents expert evidence being led at trial unless directions are sought under that rule, unless the Court otherwise orders. On 8 August 2025 orders were made pursuant to UCPR r 31.28 extending the time for Cosette to serve its expert evidence until 4 August 2025.

17. [23]

    If the approach which Mr Meyers proposed to adopted had been disclosed in an application that expressly sought directions under UCPR r 31.19, I would likely have declined leave to rely on his report, adopting the principles in Botany Bay City Council v Minister for Planning and Infrastructure [2014] NSWCA 141, Shellharbour City Council v Minister for Planning [2011] NSWCA 195 at [35] and NorthWest Healthcare Australia RE Limited v Australian Unity Funds Management Ltd [2023] NSWSC 86 at [16]ff (“NorthWest Healthcare”). I would have taken that course because, as I observed in NorthWest Healthcare at [28]:

18. [24]

    My concerns as to these matters reflects the nature of expert evidence, which I should emphasise given the importance of this issue in this case. Section 76 of the Evidence Act provides that evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion is expressed. Section 79 of the Evidence Act states an exception to the opinion rule, as follows:

19. [25]

    In well-known observations in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 (“Makita”), Heydon JA noted (at [85]) that what will ordinarily be necessary in order to lead admissible evidence includes an explanation that shows that the opinion is substantially based on the witness's expertise as applied to facts assumed or observed to produce the relevant opinion. I bear in mind that, as subsequent case law has recognised, the observations of Heydon JA in that case may be something of a counsel of perfection, and the Court does not apply those observations with a view to finding a way to exclude the expert report, rather than assessing its admissibility in a more pragmatic way. In Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21 (“Dasreef”), the plurality pointed to the fact that, for expert evidence to be admissible, the witness must have relevant specialised knowledge based on his or her training, study or experience; the opinion must be wholly or substantially based on that knowledge; and the report should be presented in a form which makes it possible to determine whether the opinion is wholly or substantially based on that knowledge. In Lang v R (2023) 278 CLR 323; [2023] HCA 29, the High Court referred to Makita and Dasreef as identifying the applicable principles in respect of the admissibility of the opinion of an expert under the uniform evidence legislation, and Kiefel CJ and Gageler J observed (at [11]) that:

20. [26]

    Here, Mr Meyers has no personal knowledge of what MPG did or did not do. He refers in his report to eleven letters of instruction. The first of those letters dated 28 June 2025 (Ex C6, 240) identified the questions which he was asked to address and provided limited factual background, which he has presumably assumed, and some documents. He was then provided further documents, without identification of any facts that he was asked to assume by reference to them, by letters dated 5 July 2025 (Ex C6, 247), 9 July 2025 (Ex C6, 251), 11 July 2025 (Ex C6, 253), 14 July 2025 (Ex C6, 257), 24 July 2025 (Ex C6, 259) and 25 July 2025 (Ex C6, 261). By letter dated 27 July 2025 (Ex C6, 265), he was provided with further questions and asked to identify his assumptions in the body of his report (Ex C6, 265), which he has generally not done; he was provided with further documents, again without identification of any facts that he was asked to assume by reference to them, by letters dated 29 July 2025 (Ex C6, 268) and 30 July 2025 (Ex C6, 271); and he was provided with two assumptions and the expert witness code of conduct by letter dated 31 July 2025 (Ex C6, 273).

21. [27]

    As I have pointed out, the instructions given to Mr Meyers did not define the factual assumptions which could properly be made by reference to the documents that were provided to him and he has plainly undertaken an extended exercise in fact finding by reference to those documents, without reference to any other part of the evidence that is now available, including from Mr Gray’s lengthy cross-examination. Parts of his evidence were objected to and rejected on that basis. Where he generally made no attempt to identify what assumptions he has made in his report, it was literally impossible to know what information that he perceived (and I use that term advisedly) MPG had at any relevant time or what he perceived that it did or did not do with that information. Here, as in NorthWest Healthcare, there would be little utility and a real risk of error in drawing conclusions from an expert report where the expert’s perception of the facts did not or may not:

22. [28]

    On balance, and with real hesitation, I granted leave to the Cosette Parties to rely on Mr Meyers’ reports, where the orders as to expert evidence had not squarely addressed that matter; Mr Meyers had already travelled from the United States for cross-examination and MPG was ready to cross-examine him; and there was a possibility that these matters might be cured by his oral evidence. They were not and his evidence is of little utility for the reasons noted above. I will nonetheless now address his report in greater detail.

23. [29]

    Mr Meyers addresses (Ex C6, 173ff) the typical roles of a chief financial officer and finance team in the US pharmaceutical industry, (Ex C6, 174ff) the revenue recognition practices in the US pharmaceutical industry and (Ex C6, 167, 178ff) the relationship between revenue and EBITDA in the US pharmaceutical industry, including the significance of “gross to net” calculations in revenue recognition. He then refers (Ex C6, 180ff) to supply chain finance and channel inventory monitoring practices; (Ex C6, 182ff) the implications of channel inventory for expected EBITDA; and (Ex C6, 183ff) identifies several “Key Mayne Products” for the purposes of his report.

24. [30]

    Mr Meyers then outlines the background to MPG’s performance in the third quarter of the financial year ended 30 June 2025 (“Q3 FY25”) by reference to a review of documents and events which should be treated as matters of assumption. He then expresses the opinion (Ex C6, 168), largely without reference to identified assumptions of facts and partly in reliance on parts of his report that were not admissible and were not admitted, that, as at 17 or 20 February 2025, MPG did not have reasonable grounds for its forecast of underlying EBITDA for the remainder of FY25 reflected in the FY25 6+6 Forecast. He refers, in his review of MPG’s FY25 6+6 Forecast, to customary practice in the United States for companies to have access to and monitor certain kinds of data. He there identifies at least some assumptions that he has made by reference to his eleventh letter of instruction, from which he concludes that MPG at least had access to daily “ex-factory” shipment data. He also refers to other information which he “would expect” MPG to have received, although it is not apparent whether he has assumed that MPG in fact received what he expected it to receive, or has assumed that it did not and is critical of that matter. Mr Meyers also undertakes an analysis relating to the “pace” of MPG’s “ex-factory” shipments (Ex C6, 170), on the premise that that calculation provides meaningful information. These matters underpin Mr Meyers’ opinion that there was no reasonable basis for MPG’s FY25 6+6 Forecast given its projected increases in ex-factory shipments and, consequently, EBITDA for the Key Mayne Products (as defined in his report) in February and March 2025.

25. [31]

    The difficulties with that analysis are, first, that it is undermined by Mr Gray’s evidence in cross-examination, which I address below and accept, as to the lack of utility in shipment information for such an analysis; and second, it is not possible to know how it takes into account the other information available to MPG to support a forecast where, as I have noted above, Mr Meyers does not identify the assumptions (or findings that he has made) which underpin his view to allow then to be tested. Mr Meyers implicitly assumes that all that was known to MPG and those preparing the FY25 6+6 Forecast is what emerges from the particular documents which were provided to him, which were a fraction of the evidence led in the proceedings, whatever (unidentified) factual inferences he has drawn from them and the information that the FY25 6+6 Forecast discloses on its face. It is impossible to test his conclusions formed on that incomplete basis against the evidence in this case, including the matters addressed in the extended cross examination of Mr Gray, where Mr Meyers does not disclose what assumptions of fact he has made. Where the body of knowledge which Mr Meyers thinks was known to MPG, at the time it prepared the FY 6+6 Forecast, cannot be identified, then his evidence as to whether that unidentified body of information provides a reasonable basis for MPG’s view does not assist.

26. [32]

    Mr Meyers also addresses (Ex C6, 171, 208ff) the risks and opportunities disclosed in MPG’s 6+6 Forecast and asserts that scenarios where all risks and no opportunities, or vice versa, occur at the same time are “by definition” considered unlikely to occur and are therefore not useful as a management and planning tool. That proposition may be true in the limited sense that any unlikely event is unlikely until it occurs, when it is then certain. I readily accept that management would have greater regard to likely than unlikely events. Nonetheless, it seems to me that the identification of risks and opportunities in a forecast document will often expose, and here did expose in the FY25 6+6 Forecast, the possibility that those risks and opportunities may come home in part or, perhaps less likely, in whole.

27. [33]

    The Cosette Parties also tendered a further expert report of Mr Meyers dated 7 September 2025, purportedly in reply. A significant part of the report was not properly evidence in reply and was rejected for that reason, and other parts of which were no longer relevant when Mr Bahl’s report was not tendered. Mr Meyers there expresses the view that nothing in Mr Bahl’s report, Mr Gray’s affidavit (24.8.25) or Mr O’Brien’s affidavit (24.8.25) caused him to revise the expert opinions set out in his first report. Others parts of that evidence in reply addressed his disagreement with aspects of the evidence of fact given in Mr Gray’s affidavit; Mr Meyers in turn suggests that aspects of MPG’s forecast process were “atypical” based on his experience in leading the forecasting process for commercialised pharmaceutical companies; and other aspects of that evidence were factual assertions and argumentative statements, particularly as to the adjustment made by MPG as to projected sales from February 2025. Mr Meyers there appears to treat it as self-evident that the shortfall in sales in January 2025 was quantitively material (although, as I have accepted below and Mr Meyers may also accept, it reflected a small proportion of annual sales) and did not reflect seasonal or temporary factors that could reverse, where that is a matter to determined with regard to the evidence led in the proceedings. Further parts of that evidence were not admitted over objection. Mr Meyers’ evidence in reply provided little assistance in determining the proceedings.

28. [34]

    The Cosette Parties also led accounting evidence of Ms Friend which I address below in determining Cosette’s claim that an MMAC resulted from the Q3 FY25 Sales Performance Matters (as defined in Cosette’s CCS). Cosette also read a further affidavit dated 21 September 2025 of its solicitor, Mr Argyris, which proved, as a formal matter, changes in MPG’s share price on 17 September 2025. I address this below in dealing with Cosette’s continuous disclosure claim in respect of the FDA Letter.

29. [35]

    It is important here to note not only the evidence led by Cosette Parties, but also the substantial evidence that they did not lead. In particular, the Cosette Parties led no evidence from the employees of Cosette’s advisers and the employees of Avista who accessed (Ex M3, Tab E) MPG’s “Cash flow by month F25” (Ex M4) in the virtual data room (“VDR”) in the course of the due diligence, which disclosed MPG’s EBITDA decline in January 2025. The Cosette Parties instead led evidence of senior executives who, it appears, did not personally access that information and were not informed of its existence by their deal teams and, in their affidavit evidence, wrongly assumed that that information had not been provided to Cosette, its advisers and Avista. Notwithstanding that Cosette’s advisers undertook detailed financial modelling of MPG, and one of those advisers, McKinsey & Company (“McKinsey”), adopted a more conservative view than either Cosette or MPG as to MPG’s forecast product sales, the Cosette Parties led no evidence from any of those advisers as to the analysis that they had undertaken. I am conscious that the proceedings were prepared for hearing under time pressure, by reason of the Cosette Parties’ refusal to extend the End Date for the scheme which, if it passed, would leave MPG without remedy. It is not necessary to draw any inference that the evidence not called by the Cosette Parties would not have assisted them, and it is sufficient to note that the Cosette Parties’ not leading such evidence likely left the Court with a partial account of events.

30. [36]

    Turning now to MPG’s affidavit evidence, MPG read the affidavit dated 24 August 2025 of Mr Shawn O’Brien, its Chief Executive Officer and Managing Director. Mr O’Brien there addressed his background and experience in the pharmaceutical industry and MPG’s business operations including several areas of business and its key products. Mr O’Brien’s evidence as to MPG’s business operations (O’Brien 24.8.25 [31]ff) demonstrated their complexity, involving distribution of multiple branded products across several distribution and sales channels, including wholesale distribution in the United States and distribution to many pharmacies and special pharmacies and through a mail order pharmacy owned by MPG and located in the United States. He also addressed the history of Nextstellis, the development of the proposed transaction between MPG and Cosette, the steps taken by the parties after the entry into the SID and matters relating to the FDA Letter. Mr O’Brien also addressed (O’Brien 24.8.25 [114]) the process adopted by MPG to prepare quarterly forecasts, including its 3+9 forecast dated 31 October 2024 for FY25, based on three months of actual results and nine months of forecast results for FY25 (“FY25 3+9 Forecast”), its FY25 6+6 Forecast and its FY25 9+3 Forecast. His evidence is that:

31. [37]

    I refer to other aspects of Mr O’Brien’s evidence in the chronology set out below. Mr O’Brien was cross-examined at some length as to the extent of his involvement in MPG’s forecasts (O’Brien XX, T295ff); the manner in which MPG’s FY25 6+6 Forecast was prepared (O’Brien XX, T299); the information available to MPG, including Mr O’Brien (O’Brien XX, T312ff); the history and significance of Nextstellis (O’Brien XX, T323ff); the significance of revenue from MPG’s women’s health business to its forecast EBITDA (O’Brien XX, T327); the circumstances of the subsequent decline in sales reflected in MPG’s later forecasts and financial performance (O’Brien XX, T393ff); and other events which I address in the chronology set out below.

32. [38]

    In closing submissions, the Cosette Parties submit that Mr O’Brien’s evidence should not be accepted in significant aspects and where that evidence was not reflective of contemporaneous documents. I do not accept that there was any significant inconsistency between Mr O’Brien’s evidence and the contemporaneous documents. It seems to me that Mr O’Brien was a cautious and careful witness, who typically wished to review his affidavit and contemporaneous correspondence before responding to questions. I was nonetheless satisfied that he was giving evidence to the best of his recollection and, had it been necessary to resolve matters as to which Mr Saraf and Mr O’Brien had different recollections, I would largely have preferred Mr O’Brien’s evidence to Mr Saraf’s evidence as to those matters.

33. [39]

    MPG also read the affidavit dated 24 August 2025 of Mr Aaron Gray, who is MPG’s Chief Financial Officer and is based in the United States. Mr Gray addressed his education and experience, including in forecasting, as to which he has significant expertise, and in senior finance roles. Mr Gray has a postgraduate qualification which included quantitative analysis courses. He has worked in financing roles at an industrial company in which he had responsibility for forecasting the relevant business; in a global medical technology business where he also had responsibility for forecasting orders, revenue and profit and managed that company’s large data analytics team; and he then had responsibility for forecasting equipment revenue for all of the diagnostic imaging business for North America at that company. He joined MPG as its Chief Financial Officer in August 2022 and, as the evidence demonstrated, has since introduced more sophisticated forecasting approaches at MPG, particularly from late 2024.

34. [40]

    Mr Gray addressed aspects of MPG’s business relevant to his role and explained the way in which quarterly forecasts were prepared in MPG’s business. Mr Gray outlined MPG’s women’s health, dermatology and international business and its dealings with speciality pharmacies, large wholesalers and its mail order pharmacy, to which I referred above in addressing Mr O’Brien’s evidence. He also addressed the complexities of the application of US health insurance plans to MPG’s products and “co-pay” assistance programs which MPG offers in the United States. He explained, at length, the manner in which MPG calculates EBITDA, the data sources used in that calculation and the timing of its access to those data sources. He also explained the steps that he has taken, since he joined MPG, to introduce a single forecast as a management tool, combining previously separate financial and supply chain forecasts, and updating that forecast on a quarterly basis. He also explained (Gray 24.8.25 [106]ff) the use of statistical modelling as the first step in preparation of MPG’s forecast, commencing with the 3+9 Forecast that was prepared by MPG early in the period in issue in these proceedings. He also referred (Gray 24.8.25 [109]) to matters that are not readily captured by statistical modelling and to the steps taken by MPG to address those matters, including by review meetings undertaken by his team to obtain information from the business that is then included in forecasting. He outlined the steps taken in that forecasting (Gray 24.8.25 [123]ff) and explained the basis on which he considered those steps gave rise to a robust forecasting process. Mr Gray specifically addressed the preparation of the FY25 6+6 Forecast, which I address below, and also addressed subsequent developments. Mr Gray also addressed (Gray 24.8.25 [205]ff) his dealings with Cosette in respect of the proposed acquisition of MPG, and I will address that evidence in the chronology set out below. By a second affidavit dated 23 September 2025, Mr Gray corrected aspects of his first affidavit, which are not material to the determination of these proceedings.

35. [41]

    Mr Gray was cross-examined at substantial length and as to matters of considerable detail. I will largely deal with the cross-examination of Mr Gray here, since that allows a clearer presentation of the density and detail of that cross-examination, although I also address some aspects of that cross-examination in the chronology below. Mr Gray was cross-examined (Gray XX, T419–420) as to MPG’s timing of access to information, including prescription data, co-pay data and information as to daily gross sales. He was cross-examined (Gray XX, T422) as to MPG’s knowledge, as at 17 February 2025, that MPG’s underlying EBITDA for the month of January 2025 was negative approximately $5.1 million and, after referring to his affidavit, he accepted that proposition. As emerged from the evidence and (much) later in his cross-examination, that negative EBITDA figure involved an adverse change of A$800,000 in MPG’s budgeted EBITDA for January 2025. As I will find below, that information had also been made available to Cosette, its advisers and Avista by the “Cash flow by month F25” (Ex M4) which MPG placed in the VDR on 19 February 2025, albeit only shortly before the SID was executed. Mr Gray was also cross-examined (Gray XX, T423) as to the commencement of his work in preparing the FY25 6+6 Forecast and (Gray XX, T424) as the process adopted by MPG, as disclosed in his affidavit evidence, to monitor the performance of its sales representatives and the use of that information for forecasting purposes.

36. [42]

    Mr Gray was also cross-examined (Gray XX, T426) about, and explained, why there was little utility in reviewing the number of units shipped, where that was secondary information to information as to the level of demand that emerged from the prescriptions issued for relevant products. He pointed to demand as the primary data and noted that there was one set of demand data, which was then visualised or aggregated by MPG in different ways for review. He was also cross-examined (Gray XX, T427ff) in some detail, as to the percentage of MPG’s products, within different areas of its business, which are distributed through different distribution mechanisms. Significant parts of this and other aspects of Mr Gray’s cross-examination presented as having an investigative character, as the cross-examiner explored the accuracy of Mr Gray’s detailed affidavit evidence, rather than advancing any suggestion that Mr Gray’s evidence was not correct, and that investigation largely supported the accuracy of Mr Gray’s explanation of MPG’s financial and forecasting processes in his evidence in chief.

37. [43]

    The questions that Mr Gray was asked were often complex and addressed matters of detail. He accepted in cross-examination (Gray XX, T433–434) that MPG’s top products drive the majority of units shipped across all products, reflecting the fact that they are the top products in the business. He was then asked to recall (Gray XX, T433) what proportion of total units shipped were represented by MPG’s four products in women’s health and two in dermatology; it was not clear whether that question was directed to each product or the six products collectively, and Mr Gray, unsurprisingly, was not able to answer a question of that detail from recollection. A later question (T434) was directed to a variation to that proposition, namely the proportion of total units shipped that were represented by the top six products but, unsurprisingly, Mr Gray also did not remember that number.

38. [44]

    Mr Gray was cross-examined as to the history of MPG’s adopting statistical modelling. His evidence in cross-examination (Gray XX, T435), consistent with his affidavit evidence, was that MPG introduced more advanced statistical modelling in advance of the FY25 3+9 Forecast prepared in the early part of the time period in issue in these proceedings. He was also cross-examined (Gray XX, T436) as to his review of MPG’s forecasts and pointed out that he reviewed outputs of the forecasts which were created in different versions. He was cross-examined (Gray XX, T439) as to whether he had reviewed an earlier output of the statistical modelling for the FY25 6+6 Forecast; his evidence was that he had done so and he was then criticised, somewhat unfairly given the length and detail of his affidavit evidence, for not having referred to that matter in his affidavit. Mr Gray was also cross-examined (Gray XX, T440–441) as to meetings of the heads of business to identify matters relevant to MPG’s forecasts, although his team rather than he attended those meetings; his evidence was that no changes were made to the statistical forecast by reason of those matters, but additional views generated by those meetings were compared to the statistical forecast. He was also cross-examined as to the review of units and gross margins that took place as part of the quarterly process to generate a forecast in the business; he did not participate in work done by his team prior to that review but he and Mr O’Brien both participated in the gross margin review itself. Mr Gray was also cross-examined (Gray XX, T459) as to the circumstances in which forecasts of the number of units for Nextstellis for the second half of FY25 were reduced; it was suggested to him that he was mistaken in that recollection as to this matter, and his evidence was that he specifically recalled a conversation about that matter and I accept that evidence.

39. [45]

    Mr Gray was then further cross-examined (Gray XX, T461ff) as to the FY25 3+9 Forecast and as to the methodology adopted in that forecast and the key risks and opportunities noted in respect of that forecast. Mr Gray rightly pointed out (Gray XX, T462–463) that there were occasions on which the mathematical model did not return a reasonable value and a divergence between the model and the final forecast was not then a risk or opportunity and on other occasions a risk or opportunity could result in a departure from the mathematical model. Mr Gray was also cross-examined, at considerable length, as to the detail of individual spreadsheets which were prepared in the forecasting process (Gray XX, T464ff–466ff), including as to individual numbers and line items contained in those forecasts, although the significance of those matters for Cosette’s case was not clear where the Cosette Parties brought no challenge to the detail of that process.

40. [46]

    Mr Gray was also cross-examined as to the “run rate” which reflects the daily volume of units sold within the business against a goal or other number (Gray XX, T481). It appears from a spreadsheet shown to Mr Gray in his cross-examination that Ms Mateer of MPG had run rate information as at 15 January 2025, by the time of the meeting on 27 January 2025, although Mr Gray’s evidence (Gray XX, T483), which I accept, is that that information was not and would not ordinarily be provided to him at that meeting. He also pointed out and I accept that:

41. [47]

    Mr Gray accepted in cross-examination (Gray XX, T491) that, on comparing the forecasts for January 2025 for MPG’s US business between 28 January and 13 February 2025, it appeared that forecast result for that month had fallen by more than $6 million, and that would be a significant change between a forecast result and an actual result (T491); that was a good example of Mr Gray’s willingness to make proper concessions against MPG’s apparent interest and supports his credit. I address the significance of that matter to Cosette’s cross-claim below.

42. [48]

    Mr Gray also fairly accepted in cross-examination (Gray XX, T492) that MPG had, for January 2025, fallen short of its forecast EBITDA result in the FY25 3+9 Forecast, which he noted was the relevant version to be compared with actual results in January 2025. Mr Gray also accepted (Gray XX, T495) that the adjustments made, implicitly between the FY25 3+9 Forecast and the FY25 6+6 Forecast, involve shifting projected unit sales to later months, so that it would be necessary for those months to perform better (in the cross-examiner’s words) in order to achieve the forecast. However, he also pointed out (Gray XX, T495) and, I accept, that that shift was not significant:

43. [49]

    The cross-examiner then rightly anticipated (Gray XX, T496) Mr Gray’s expectation that MPG could have recovered that modest shortfall in actual sales within the next several months and Mr Gray broadly accepted that proposition.

44. [50]

    Mr Gray was cross-examined as to the forecasting methodology recorded in the FY25 6+6 Forecast (Ex J1, 10A/7809; Gray XX T507ff). Mr Gray accepted (Gray XX, T509–510) that the “miss” disclosed in his CFO report to MPG’s board for January 2025 was about A$800,000 to forecast and he rejected the proposition that the likelihood of a “miss” in subsequent months would be increased by increasing the number of units forecast for subsequent months, on the basis that “the demand meaning prescriptions dispensed, continued” and that:

45. [51]

    Mr Gray’s evidence (Gray XX, T511) was, and I also accept, that a “miss” in the run rate for shipped units as at mid-February 2025 did not indicate a significant likelihood that MPG would not be able to achieve the forecast EBITDA for February 2025 because:

46. [52]

    Mr Gray nonetheless fairly acknowledged (Gray XX, T512) that, as events developed, there was a “significant miss” to forecast EBITDA for February 2025, which became apparent when he received MPG’s February results in March 2025. Mr Gray’s evidence (Gray XX, T519) was that further analysis undertaken by MPG had been able to exclude particular causes for the decline in demand in February 2025, and the only remaining hypothesis that could not be excluded was an impact of steps then being taken by MPG to change its sales team and that this hypothesis was very difficult mathematically to prove or disprove. Mr Gray also rightly then pointed out (Gray XX, T519–520) that it was a fact that there was specific demand softness in the third quarter of FY25, commencing in January 2025, in that the “demand was lower than what we had forecasted and what we expected”; the demand in that period did not reflect what MPG believed to be the trend of the demand and was a change from what had been the case in the first half of the financial year; and that the uncertainty was as to the cause of that matter, where the only remaining explanation related to the change in the sales team. He nonetheless confirmed (Gray XX, T521) that, as at 14 February 2025, he believed that prescription data until early February 2025, which was the data then available, and co-pay data supported the then forecast.

47. [53]

    Mr Gray was also cross-examined (Gray XX, T556ff) as to a spreadsheet which he had prepared to compare demand and wholesaler inventory (Gray 24.8.25 [92]) that used both prescription data and information as to units dispensed; Mr Gray fairly accepted (Gray XX, T560) that that document did not support the forecast made as a February 2025 for unit sales for Nextstellis, where at least two years data would be needed for a trend line in forecasting. He confirmed in cross-examination (Gray XX, T561) that his review of three years’ data in relation to prescriptions which he undertook on an ongoing and monthly basis had supported the forecast number of units for Nextstellis for February to June 2025 in the FY25 6+6 Forecast. He again pointed out (Gray XX, T562):

48. [54]

    His evidence (Gray XX, T561) was also that, as a February 2025, the “slope of the [demand] line supported by the history would show that there was going to be a rebound”. Mr Gray also noted, in cross-examination (Gray XX, T588) the complexities introduced by a change in foreign exchange rate in the second half of FY25, which were not fully explored in his cross-examination or in the proceedings. Mr Gray’s evidence (Gray XX, T597–599) was that he did not realise until after the end of February 2025 that there would be a shortfall in gross sales, although he fairly acknowledged that units shipped as at mid-February 2025 did not support meeting forecast gross sales for that month, while also noting that gross sales might be made up in the second half of February, pointing to the continuance of demand over that period.

49. [55]

    In closing submissions, the Cosette Parties submit that there are material gaps in Mr Gray’s affidavit as to the process that MPG followed in preparation of the FY25 6+6 Forecast and that:

50. [56]

    I do not accept this submission. I recognise that Mr Gray’s affidavit, although long and detailed, did not contain the degree of detail that emerged from his cross-examination over a day and a half, but that was likely inevitable given the practical constraints in preparation of affidavit evidence, particularly in a case prepared under an accelerated timetable. It was hardly surprising that, given the length of Mr Gray’s cross-examination, additional matters emerged from that cross-examination which largely elaborated on and were consistent with his affidavit evidence and, in other cases, involved appropriate concessions and qualifications to that evidence. That matter seems to me to support Mr Gray’s credit rather than the reverse.

51. [57]

    In closing submissions, the Cosette Parties also advance lengthy submissions to the effect that Mr Gray’s evidence as to MPG’s statistical model changed in the course of cross-examination. I do not accept that submission, beyond the unsurprising proposition that, where Mr Gray was cross-examined at length as to that statistical model, his evidence about it grew steadily more detailed, as additional aspects of it were disclosed and exhaustively examined by that cross-examination. I also note that the suggested “changes” in that model, to the extent that they exist, often reflected an ongoing failure in the cross-examination to draw the distinction between the underlying statistical model and its outputs in various forms, although Mr Gray was generally precise in distinguishing the two in his cross-examination.

52. [58]

    It seems to me that Mr Gray responded to very detailed questions, covering a very large body of information, over a relatively long cross-examination, in a direct and constructive way. He plainly had a strong understanding of MPG’s financial reporting, he was responsive in dealing with questions and frequently made concessions in respect of particular matters which were potentially adverse to MPG’s case and he was otherwise clear and direct in indicating where he disagreed with other matters put to him by the cross-examiner and, when asked, why he did so. I have no hesitation in accepting his evidence across the range of matters as to which he gave evidence, and preferring his evidence to Mr Saraf’s and Mr Casten’s evidence in those areas where there was a conflict between their evidence.

53. [59]

    MPG also reads MPG reads the affidavit dated 25 August 2025 of Mr Turner, its Vice President of Marketing, also based in the United States, which addressed issues relating to the marketing of Nextstellis, before and after the receipt of the FDA Letter. I will address that affidavit and his cross-examination in dealing with the FDA Letter below. The Cosette Parties advance criticisms of Mr Turner’s evidence in cross-examination in closing submissions. I accept that Mr Turner had little experience to allow him to express views as to whether an “untitled letter” issued by the FDA was a serious matter, at least from a regulatory rather than a marketing perspective. I do not accept that there was any inconsistency between that evidence and his evidence that allegations from a regulatory agency like the FDA were “absolutely taken very seriously”, where that proposition is plainly sensible, irrespective of whether a regulator’s concerns are well-founded in the particular case. I also do not accept there is any basis for criticism of Mr Turner, so far as he referred in cross-examination to the steps which were already being taken by MPG to change its marketing approach. That evidence was properly given where, to give accurate evidence, Mr Turner had properly to distinguish between the steps which he plainly already wished to take to alter MPG’s marketing approach to Nextstellis, and the effect of the FDA Letter which provided him an opportunity to accelerate those steps.

54. [60]

    MPG also read the affidavit dated 25 August 2025 of Mr Button, the Head of Supply Chain at Mayne Pharma International Pty Ltd, a wholly owned subsidiary of MPG, who is a member of that company’s senior leadership team and reports to MPG’s executive leadership team. Mr Button works at MPG’s South Australian facility and addressed an inspection of that facility by the Therapeutic Goods Administration (“TGA”) on 11 and 13 March 2025, a letter dated 4 April 2025 from the TGA to MPG (“TGA Letter”) and steps which have since been taken by MPG in response to that letter. He there identified the matters raised in the TGA Letter, MPG’s first and second responses to that letter and noted that TGA has accepted MPG’s second response to the TGA letter. He set out the estimated costs associated with steps taken or required to be taken by MPG in respect of the matters identified in the TGA letter. Mr Button was cross-examined, although more briefly than most of MPG’s witnesses, and presented as a credible witness with close knowledge of the operational matters which were addressed by his evidence. It is not necessary to address his evidence further, where Cosette subsequently abandoned its claims arising from the TGA Letter in its cross-claim.

55. [61]

    MPG also led expert evidence of Ms Selman, which I address in dealing with the FDA Letter below, and accounting evidence of Ms Wright, which I address below in determining Cosette’s claim that an MMAC resulted from MPG’s Q3 FY25 Sales Performance Matters. MPG also read an affidavit dated 25 August 2025 of its solicitor, Mr Jagarajah, who led evidence as to the operation of the VDR maintained under the SID, the index to that VDR and the disclosure letter provided by MPG in respect of the transaction.

56. [62]

    MPG did not lead evidence of any representative of Jefferies Group LLC (“Jefferies”), its financial advisers in respect of the transaction, although it is not apparent that Jefferies would have been able to provide significant assistance in the determination of the proceedings, by contrast with the advisers not called by the Cosette Parties to whom I referred above.

Chronology and background facts

1. [63]

   There is a degree of common ground as to the background facts which emerge from the pleadings. There are differences between Australian time and US time in respect of communications to which I refer in the chronology below but no issue generally arises here as to the precise timing of any communication. I have adopted the date shown on the relevant document, rather than seeking to convert between Australian and US times in that chronology.

2. [64]

   From about mid-July 2024, Cosette undertook (Saraf 22.7.25 [24]ff) initial preparatory work done in relation to a potential acquisition of MPG and identified an indicative price for such an acquisition, by reference to estimated EBITDA figures. Mr Saraf’s evidence (Saraf 22.7.25 [34]) that Santander identified an indicative fair value for MPG shares of A$4.74–$6.04. I think it likely, by reference to the derivation of that figure, that it was a reference to US$4.74–$6.04. Mr Saraf was reluctant to accept that matter in cross-examination, although he conceded the correctness of the calculation that led to that result. When he prepared his affidavit, Mr Saraf misunderstood that those figures were in AUD rather than USD, and that misunderstanding contributed to a significant error in another aspect of his evidence, which I address below.

3. [65]

   Mr Casten’s evidence (Casten 22.7.25 [22]) is that was that he was first told about a proposed transaction to acquire MPG in or around mid-August 2024 when Mr Saraf told him that Mr Saraf was meeting Mr O’Brien in person to receive an overview of MPG’s business and operations.

4. [66]

   On 23 August 2024, MPG released its FY24 Annual Report, Mr O’Brien and Mr Gray delivered its FY24 results presentation and MPG released an ASX announcement as to its results on the same day.

5. [67]

   On 26 August 2024, Santander prepared discussion materials (Ex J1, 6/4651) for Cosette in preparation for Mr Saraf’s first meeting with Mr O’Brien. That document valued MPG at US$2.62 per share, with no premium for control, but also pointed to higher valuations, including an analyst high valuation of US$4.71. It identified an implied enterprise value for MPG between US$390 and US$518 million, on a multiple of FY25 estimated EBITDA between 10.3 and 13.6; an equity value of between US$466 million and US$594 million; a value per share of between US$4.74 and US$6.04; and a “Wall Street Median Price Target” of US$4.57.

6. [68]

   Mr Saraf first met with Mr O’Brien on 29 August 2024 (Saraf 22.7.25 [35]). Mr Saraf’s evidence is that Mr O'Brien indicated, in substance, that any offer to acquire MPG’s shares would need to be at least A$6 per share and would have to include a significant premium. Mr O’Brien also addressed (O’Brien 24.8.25 [63]ff; see also O’Brien XX, T329ff) the circumstances in which he was introduced to Mr Saraf, by an investment banker at Santander and met with Mr Saraf on 29 August 2024. Mr O’Brien denied Mr Saraf’s evidence that he had indicated a price that would be needed for any offer to acquire MPG, although he agreed that he said “the Board would be resistant to any takeover that does not reflect the value they see in the Company in the future”. It is not necessary to determine the disagreement as to whether price was discussed in order to determine the proceedings.

7. [69]

   As of 6 September 2024, MPG and Cosette entered a Confidentiality Agreement (“Confidentiality Agreement”) (CCSR [18]) which provided, in cl 20.6, that it formed part of the SID. Clause 8 of the Confidentiality Agreement provided that neither the Disclosing Party nor any of its Representatives (as those terms are defined) make any representation or warranty, express or implied as to the accuracy or completeness of Confidential Information disclosed to the Recipient hereunder; and unless otherwise set forth in a separate agreement related to the Purpose, neither the Disclosing Party nor any of its Representatives shall be liable to the Recipient or any of its Representatives relating to or resulting from the Recipient’s use of any of the Confidential Information or any errors therein or omissions therefrom. The Confidentiality Agreement defined “Confidential Information” in cl 1 so as to include, inter alia, forecasts, sales and other financial results, subject to exclusions in cl 2 for certain information generally available to the public or otherwise received by the Recipient; and the “Purpose” to be a potential further business consensual collaboration between the parties. MPG relies (CCSR [18]) on the effect of that disclaimer; Cosette responds (CCS Reply [3]) by pointing to cl 20.6 of the SID and the need to read the Confidentiality Agreement and the SID together.

8. [70]

   Mr Saraf again met with Mr O’Brien on 9 September 2025 (Saraf 22.7.25 [37]). After that meeting, Mr Saraf sent an email to Mr Casten which referred to a forward 12 months EBITDA estimate for MPG of US$40-45 million and a last 12 month EBITDA estimate for MPG of $22.9 million (Casten 22.7.25 [23]). Mr O’Brien also addressed that meeting in his evidence (O’Brien 24.8.25 [72]; see also O’Brien XX, T329ff). He there takes issue with some aspects of Mr Saraf’s evidence of that meeting and does not recall telling Mr Saraf other things that are attributed to him in Mr Saraf’s affidavit. It is not necessary to determine the difference in those accounts in order to determine these proceedings.

9. [71]

   From about mid-September 2024, Cosette undertook due diligence in relation to the proposed transaction (CCS [18]; CCSR [18]). Also from mid-September 2025, MPG established the VDR, initially with Firmex, and MPG or its advisers then caused documents to be uploaded to the VDR (CCS [19]–[20]). MPG pleads (CCSR [20]), and I accept, that the terms of access to the VDR contained strong warnings and disclaimers as to, inter alia, forecasts and forward looking information contained in the VDR, although Cosette points (CCS Reply [4]) to the fact that those terms of access in turn recognised the effect of the SID, when executed.

10. [72]

    Mr Saraf in turn refers to early due diligence undertaken by Cosette (Saraf 22.7.25 [43]ff) and to financial modelling prepared by and on behalf of Cosette including by two investment banking advisers, UBS, which was engaged to liaise with MPG’s financial advisers (Jefferies) and Santander which was engaged by Cosette to review the structure of the transaction (Saraf 22.7.25 [55]). Mr Saraf’s recollection (Saraf 22.7.25 [55]) is that Santander created and maintained the valuation model, but Cosette’s due diligence team provided Santander with assumptions, information and input to be incorporated into that model. I address the developments of Cosette’s valuation and earnings models of MPG below.

11. [73]

    Mr Casten’s evidence (Casten 22.7.25 [24]) is that he had limited day-to-day involvement in early due diligence in respect of the proposed transaction, which was performed by Cosette’s business development team comprising Dr Ilin-Schneider and others, none of whom gave evidence for the Cosette Parties in the proceedings. His evidence was that he became more involved after an Exclusivity Deed was entered into between MPG and Cosette and a formal due diligence process commenced.

12. [74]

    Mr Casten refers (Casten 22.7.25 [27]) having spoken to MPG’s Chief Financial Officer, Mr Gray, for the first time on or around 20 September 2024, and to a discussion about the timing of MPG’s monthly close process. Mr Casten’s evidence is that Mr Gray told him that MPG’s financial projections were “best in class” due to their enhanced data strategy and use of artificial intelligence, and that Mr Gray then put Mr Casten in touch with representatives of Jefferies. Mr Gray also gives evidence (Gray 24.8.25 [208]) of that meeting (which he notes took place by Microsoft Teams) and accepts that he there described the timing for MPG’s monthly close. He denies Mr Casten’s evidence that he said that MPG’s gross to net (“GTN”) procedures or financial procedures were “best in class” but accepts that he said that those procedures were “approaching best in class”. It is not necessary to resolve that dispute to determine the proceedings.

13. [75]

    Mr Casten’s evidence (Casten 22.7.25 [29]–[30]) is that, around early October 2024, Cosette engaged Santander and UBS to assist with early due diligence and the preparation of an initial offer to MPG; that Santander was engaged to liaise with Jefferies and UBS were engaged to review the structuring of the deal; and, throughout October 2024, Santander and UBS prepared several models of MPG’s project financial performance (including its EBITDA) for FY25 and beyond and continued to refine modelling of MPG’s projected performance, with Cosette’s input, throughout that period. Mr Casten there rightly observed (Casten 22.7.25 [32]), in the context of preparation of financial models of MPG, that:

14. [76]

    The evidence indicates that Mr Casten did maintain that level of scepticism throughout the transaction, although, as I noted above, he was not prepared to acknowledge the extent of his scepticism in cross-examination. Mr Casten also outlined the extent of his involvement in the due diligence process and the work carried out by Cosette up to the entry into an Exclusivity Deed on 24 November 2024 (Casten 22.7.25 [33]ff).

15. [77]

    On 5 October 2024, Mr Saraf advised Mr Burgstahler and others (Ex J1, 7/5386) that that Jefferies were targeting the end of the month to “get us everything, including a management pack and a MP”. He noted that MPG had provided responses to several information requests in the last day in the VDR and observed that:

16. [78]

    Also on 5 October 2024, Mr Casten advised Mr Saraf and others (Ex J1, 7/5389) that:

17. [79]

    Mr Saraf responded (Ex J1,7/5388) that Mr Casten should deal directly with Santander and UBS, along with the Cosette business development team and indicated that Mr Saraf had set three targets for the modelling:

18. [80]

    On 11 October 2024 (Ex M3, Tab A) Mr Casten advised Mr Saraf of his dissatisfaction with the position as to Cosette’s forecasting of MPG as follows:

19. [81]

    The attachment is an operating model for MPG prepared by UBS and Santander, setting out a base case forecast for, inter alia, synergised EBITDA from FY25 until FY35 and supporting material, including a detailed breakdown of synergies.

20. [82]

    On 12 October 2024, Mr Casten advised Mr Ilin-Schneider of Cosette’s business development team and others including Mr Saraf (Ex M3, Tab B) that:

21. [83]

    Mr Saraf also refers to an email dated 16 October 2024 from UBS (Saraf 22.7.25 [72]ff) which attached a management presentation made by MPG and to the content of that document. Mr O’Brien also addresses (O’Brien 24.8.25 [76]) a presentation made by MPG to Cosette and representatives of its shareholders, Avista and Hamilton Lane, on 18 October 2024, attended by Mr Saraf, Mr Casten, other management personnel from Cosette, Mr Burgstahler of Avista, a representative of UBS and representative of Hayfin Capital Management LLP (“Hayfin”), which was the proposed lender to Cosette in respect of the transaction.

22. [84]

    On 22 October 2024, Mr Burgstahler advised Mr Saraf and others (Ex J1, 8/5712) that:

23. [85]

    On 23 October 2024, Mr Saraf responded to Mr Burgstahler (Ex J1, 8/5711) that Cosette did not need to wait for MPG’s long range forecast to put in a non-binding bid and that Cosette would work internally and with PricewaterhouseCoopers (“PwC”) and McKinsey to make its own forecasts and the forecast that MPG provided would then be used to “test our assumptions” prior to signing a definitive agreement.

24. [86]

    On 23 October 2024, Cosette submitted a non-binding indicative offer to acquire all of the issued share capital of MPG at $7.00 per share and was then given extended access to information from MPG (Saraf 22.7.25 [82]ff; O’Brien 24.8.25 [79]). Mr Saraf also refers (Saraf 22.7.25 [75]ff) to his review in late October 2024 of work undertaken by Santander as to the implied valuation of MPG at different prices and he there claims that the valuation range had increased from Cosette’s previous thinking based on (or, in a subsequent revision of his evidence) informed by updated forecasts from MPG and further conversations with Mr O’Brien. I am satisfied that evidence was incorrect and reflected the error Mr Saraf had previously made in mistaking USD for AUD in the indicative valuation provided by Santander in mid-July 2024. Mr O’Brien’s evidence is that he attended a meeting with Mr Saraf and Cosette Holdings’ board in late 2024, although he does not recall the date of the meeting (O’Brien 24.8.25 [83]).

25. [87]

    Cosette engaged PwC on about 25 October 2024 to advise Cosette in respect of aspects of the financial analysis of MPG, including synergies.

26. [88]

    On 31 October 2024, at an MPG directors meeting, Mr Gray outlined the approach to be taken to MPG’s FY25 3+9 Forecast. The FY25 3+9 Forecast (Ex J1, 8/5919) describes the forecasting methodology (Ex J1, 8/5921) and contains an “EBITDA bridge” comparing the FY25 budget and the FY25 3+9 Forecast (Ex J1, 8/5924). That document included a forecast $10 million in cost reductions and a forecast that MPG’s underlying EBITDA for FY25 would be A$71 million but also referred to and quantified a range of risks and opportunities that would increase or decrease that figure (Ex J1, 8/5926).

27. [89]

    Mr Saraf also refers (Saraf 22.7.25 [82]ff) to the continuance of Cosette’s due diligence from November 2024; the execution of an Exclusivity Deed in late November 2024; and confirmatory due diligence and the FY25 3+9 Forecast also in late November 2024.

28. [90]

    On 4 November 2024, MPG posted a Q1 FY25 trading update to the VDR, and Mr Bidwell of Santander forwarded it to Mr Saraf, Mr Casten and others (Ex J1, 8/6022). On 4 November 2024, Mr Saraf responded to Mr Bidwell, Mr Casten, Mr Burgstahler and other employees of Avista and Cosette advisers noting that the “underlying EBITDA” was A$7.7 million for Q1 FY25 and A$30.6 million for FY25 although MPG’s budget was approximately A$75 million in FY25. Plainly, this email recognised a potential shortfall of MPG’s earnings to budget. On 5 November 2024, Mr Bidwell responded (Ex J1, 8/6026):

29. [91]

    Mr Casten then sent an email to Mr Saraf only on 5 November 2025 (Ex J1, 8/6041) which plainly expressed his scepticism as to forecasting generally:

30. [92]

    In his affidavit evidence (Casten 22.7.25 [41]), Mr Casten explained his scepticism as follows:

31. [93]

    On 5 November 2024, Mr Bidwell also sent MPG’s trading update Q1 FY25 to Mr Burgstahler (Ex J1, 8/6029) noting that it included Q1 year-on-year variances and an implied FY2025 forecast “assuming [MPG] meets budget for the next three fiscal quarters.” The reference to “assuming” that matter unsurprisingly recognised that it was not a certainty. On 7 November 2024, MPG provided Cosette with a 5-year forecast. On 12 November 2024, Cosette made a second non-binding indicative offer for MPG, maintaining the price of A$7.00 per share which had been included in the initial non-binding indicative offer (O’Brien 24.8.25 [85]).

32. [94]

    On 12 November 2024, Mr Bidwell of Santander sent an email (Ex J1, 8/6076) to Mr Ilin-Schneider, Mr Saraf, Mr Casten, Mr Burgstahler and others attaching a document headed “Project Monarch Updated Valuation Materials” prepared by UBS and Santander and dated 11 November 2024 (Ex J1, 8/6078). [Redacted] I will refer to the development of Cosette’s modelling as at the point of its entry into the SID below.

33. [95]

    It is common ground (CCS [24]–[26]; CCSR [24]) that, on 21 November 2024, MPG published an announcement to the ASX comprising a presentation titled “Mayne Pharma Group Limited – Annual General Meeting” (Ex J1, 8A/6210). That presentation referred to MPG’s transformation between FY22 and FY24 and summarised the then position as follows:

34. [96]

    The next slide referred to FY24 underlying EBITDA in August 2024 as A$22.9 million (Ex J1, 8A/6220). The description of women’s health under the heading “FY 24 operating highlights” recorded:

35. [97]

    A further slide was headed “FY 24: strong financial results by delivering on all goals” and again referred to an underlying EBITDA of $22.9 million, increased from negative $95.3 million in FY23. That results presentation also referred to the position for July–October 2024, referring to an underlying EBITDA of $14.7 million and described MPG’s business outlook as follows:

36. [98]

    MPG rightly points out (CCSR [24]) that that document also contained a strong disclaimer as to the nature of forward looking statements contained in that document. Mr O’Brien took issue with Mr Saraf’s account of the reason for this update being made in November 2024 (Saraf 22.7.25 [109]; O’Brien 24.8.25 [86]). I would have preferred Mr O’Brien’s account that this release was consistent with MPG’s usual practice had it been necessary to determine this dispute.

37. [99]

    On 22 November 2024, Cosette decided to increase its offer price to A$7.40 per share (Saraf 22.7.25 [113]).

38. [100]

    Cosette then retained McKinsey by memorandum dated 23 November 2024 (Ex J1, 8B/6283). McKinsey were instructed to focus diligence on three primary workstreams:

39. [101]

    On 24 November 2024, Cosette entered into an Exclusivity Deed with MPG allowing Cosette exclusivity until 20 December 2024 for a confirmatory due diligence review for a proposed transaction to acquire all the shares in MPG at $7.40 per share (O’Brien 24.8.25 [87]; Saraf 22.7.25 [116]–[117]).

40. [102]

    It is also common ground (CCS [27]; CCSR [27]) that, on 24 or 25 November 2024, MPG caused the FY25 3+9 Forecast to be uploaded to the VDR. Mr Casten (Casten 22.7.25 [48]) refers to his review of the FY25 3+9 Forecast and MPG’s five year forecast in November 2024.

41. [103]

    By email dated 28 November 2024 (Ex J1, 8B/6309.60.1), Mr Smolenski, who worked in Cosette’s Business Development team, advised McKinsey that Cosette’s bid had been premised on Cosette’s “Base Case” (described in relevant documents as the “Crown Base Case”) and, after referring to the Seller Case and the Cosette Case, observed that:

42. [104]

    Mr Gray also referred (Gray 24.8.25 [220]) to participating in conference calls with Mr Casten and Mr Saraf in December 2024. In one call he spoke about his experience with MPG’s forecasts and said words to the effect that:

43. [105]

    Mr Gray’s evidence, which I accept, is that it is his practice to say words to this effect when discussing MPG’s forecasts with a person who is not familiar with them. That practice is plainly sensible and consistent with the commercial probabilities. He also referred (Gray 24.8.25 [220]) to his practice of explaining “the volatility in forecasting by referring to demand fluctuations, doctors’ prescribing habits, deductible resetting, changes to insurance coverage, introduction of competitors and seasonality influences for dermatology products” and that he also referred (Gray 24.8.25 [222]) to returns on Annovera having negatively affected budgeting and forecasting accuracy.

44. [106]

    Mr Casten accepted in cross-examination (Casten XX, T259–260) that, in discussions in December 2024 concerning MPG’s forecast, Mr Gray made clear that MPG was doing its best with forecasts but they were “just forecasts” and that there were departures in results from its forecasts, and that Mr Gray may also have said that MPG had experienced volatility in the relationship between forecasts and results and that Annovera returns had negatively affected the budgeting and forecasting accuracy, although Mr Casten did not specifically recall those words being said. I accept that Mr Gray made the observations set out in his evidence in these conversations.

45. [107]

    Mr Gray also referred (Gray 24.8.25 [214]–[215]) to another (and possibly earlier) meeting when Mr Casten asked him:

46. [108]

    McKinsey provided three successive analyses to Cosette in respect of the proposed transaction on 2 December 2024, 6 December 2024 and 12 December 2024 and Mr Casten reviewed the relevant presentations and the relevant documents (Casten 22.7.25 [50]). On 6 December 2024, McKinsey emailed Mr Saraf, Mr Casten and others materials for a discussion based on MPG’s disintermediation strategy and McKinsey’s preliminary view on its forecasts. McKinsey there provided a general market overview and noted MPG’s “innovative channel/disintermediation strategy” relying on retail pharmacies, independent pharmacies and its own distributing chemist. It provided a detailed overview of developments in the US contraceptive market, noted that Nextstellis was positioned as the “only OCP to contain low-dose, plant-sourced estrogen” using estetrol (E4) and also assessed the position as to Annovera and MPG’s women’s health and dermatology products. McKinsey there set out (Ex J1, 9/6692) forecasts for the relevant products which were, on both downside and upside scenarios, significantly less than Cosette’s forecasts and drew attention to their forecast of “[m]ore moderate commercial uplift vs management” in respect of four product areas. Mr Casten responded (Ex J1, 9/6615) that McKinsey’s comments “goes back to my comments from October [2024] on our modelling VS Sell Side Modelling Assumptions”. Mr Saraf and Mr Casten were both cross-examined as to these forecasts (Saraf XX, T173; Casten XX, T271ff).

47. [109]

    By email dated 6 December 2024, MPG’s adviser, Jefferies, advised Mr O’Brien and Mr Gray of the views expressed by McKinsey as to the projected forecast for MPG’s key women’s health products, as follows (O’Brien 24.8.25 [89]):

48. [110]

    Mr O’Brien responded on the same day (O’Brien 24.8.25 [90]) observing that:

49. [111]

    Mr O’Brien’s evidence (O’Brien 24.8.25 [91]) is that his reference to a “fictitious SIM” was to a confidential information memorandum produced by a company to provide to potential acquirers. He also noted that MPG’s forecasts provided to Cosette in the VDR were prepared for MPG’s internal purposes and were not disclosed to the market. That evidence is consistent with common practice, where a company’s internal forecast will ordinarily fall within an exception to continuous disclosure requirements. Mr O’Brien was cross-examined as to this evidence, but it was not undermined by that cross-examination.

50. [112]

    By email dated 9 December 2024 (Ex J1, 6939; Saraf XX T170–171), Mr Saraf referred to McKinsey’s work and noted his then concern about “the lack of backup from [MPG] on their growth projections other than to cite tail winds and recent pick-up in pace”. A conference call also took place between Cosette and MPG on 10 December 2024, when MPG’s promotional claims about Nextstellis were discussed, and a subsequent internal call took place within Cosette, including Mr Saraf, after that call.

51. [113]

    On 11 December 2024, Mr Bidwell of Santander sent Mr Burgstaher, Mr Saraf, Mr Casten, Mr Ilind-Schneider and others an email (Ex J1, 9/6967) attaching the “latest valuation materials”, being Santander’s “Project Monarch Updated Valuation Materials” dated 10 December 2024 (Ex J1, 9/6969). That document took a similar format to the earlier Santander valuation materials and again contained a table setting our “key drivers” for changes in its valuation of MPG, now by reference to prior Cosette forecasts and the forecasts for MPG provided by McKinsey, which recorded reductions in the modelled revenues for Nextstellis and Annovera and an increase in modelled revenues for Imvexxy and modest increases in model revenues for Bijuva and Rhofade. The result (Ex J1, 9/6971) indicated a reduction in MPG’s modelled equity value of US$67 million and negative impacts per share of US$0.67 or A$1.00 and a current discounted cash flow mid-point of US$449 million, reflecting a value per share of US$4.96 or A$7.40. This valuation set out forecast assumptions for “sell-side”, Cosette and McKinsey “cases” and a further “updated base case” which indicated a synergised EBITDA for FY25 of US$47 million. The equity value per share on the Cosette base case was between A$7.65 and A$9.40; on McKinsey’s base case between A$6.70 and A$8.25; on McKinsey’s “upside case” between A$7.15 and A$8.60; and on McKinsey’s downside case between A$4.70 and A$5.20 (Ex J1, 8/6977). An annexure included updated revenue forecasts by segment, a key product forecast update and key product volume forecasts. I will address the development of Cosette’s modelling at the point of its entry into the SID below.

52. [114]

    Also on 18 December 2024, Mr Saraf advised Mr O’Brien (O’Brien 24.8.25 [95]) that the deal was on hold. Mr O’Brien’s evidence is that Mr Saraf said that the financier could not get comfortable with an investigation in the US involving MPG and that, without the financier, Cosette did not have funding to do the deal. The evidence which I note below indicates that this was a partial explanation for Cosette’s then funding difficulties, which also reflected the lender’s then assessment of Cosette’s position.

53. [115]

    By email dated 19 December 2024, Mr Moran of Avista advised Mr Casten, with copies to others including Mr Ellison of Avista and Mr Saraf, that:

54. [116]

    On 21 December 2024, MPG’s chair and Mr Burgstahler had a discussion (O’Brien 24.8.25 [101]) which covered some of the matters that had been discussed between Mr O’Brien and Mr Saraf on 18 December and indicated Cosette’s continued interest in a transaction, reflecting “strategic synergies for putting the two companies together”.

55. [117]

    Communications between the parties concerning due diligence recommenced in early January 2025.

56. [118]

    On 14 January 2025, Mr Gray sent an email (Ex J1, 11A/8667.2) to members of MPG’s board referring to work which had been done as to MPG’s long range forecast models for some weeks in preparation for its mid-year review, impairment testing and capitalised earn-out valuation. That email also attached a document that described the method used to arrive at unit forecasts for women’s health and dermatology; the different models adopted; major assumptions made; and the major risks and opportunities

57. [119]

    In late January 2025, Mr Casten and PwC reviewed MPG’s December CFO Report (Casten 22.7.25 [51]–[52]).

58. [120]

    On 27 January 2025, Mr Gray attended (Gray 24.8.25 [146]ff; Gray XX, T439) a management review of MPG’s gross margin and was provided information as to preliminary gross margin forecasts for MPG’s dermatology and women’s health businesses. Mr Gray’s evidence is that Ms Claire Hying, who is MPG’s director, Financial Planning & Analysis and reports to Mr Gray, there observed that actual unit volumes for January 2025 would be available before the FY25 6+6 Forecast was finalised and suggested using the January actuals in the forecast and adjusting the “out-periods” after January 2025 so the full fiscal year forecast would not be affected by that approach. Mr Gray noted (Gray 24.8.25 [148], [151], [158]; Gray XX, T501ff) that MPG’s forecasts were based on continuing “trends” and that, while “one month may be above or below”, nothing suggested that the “slope of the line” had changed and he did not want to suggest to the board that any deviation in January 2025 indicated a difference in the total fiscal year. Mr Gray subsequently consulted with the business leaders of women’s health and dermatology who did not object to that approach.

59. [121]

    Mr Gray was cross-examined, at length, as to the basis of that approach, and (Gray XX, T472ff) as to the process by which, at 27 January 2025, an extra week was added to the forecast for Nextstellis for June 2025 to reflect an anticipated catch up in sales over that period. Mr Gray was also cross-examined (Gray XX, T475ff) as to the discussion about January unit volumes at the meeting on 27 January and referred to the testing of the forecast against the statistical model with the commercial leadership of the business, which was referred to in MPG as “grounding” the forecast. Importantly, Mr Gray pointed out (Gray XX, T476) that a statistical model seeks a fit across multiple data points over a period and seeks to achieve accuracy over the entire period, rather than for a given data point; I understand that evidence to indicate that that model seeks to achieve an accurate forecast of sales over the relevant six month period, rather than for each month in that period, although it is structured in a manner that projects sales for each month in that period. That evidence supports the approach taken by MPG, and challenged by the Cosette Parties, in maintaining the total forecast for 2H FY25, although sales in one month in the forecast period in January 2025 had fallen short of the forecast. In opening, the Cosette Parties treated that approach as having concealed a decline in MPG’s January 2025 EBITDA from Cosette. That characterisation is inconsistent with the fact that MPG had disclosed that decline in by the “Cash flow by month F25” (Ex M4) placed in the VDR, albeit only shortly before the SID was executed, to which Cosette’s advisers and Avista took access and which MPG could reasonably assume that Cosette would review and understand.

60. [122]

    By email dated 28 January 2025, Jefferies forwarded (Ex J1, 10/7529) an update that it had received from Cosette’s advisers to Mr O’Brien, which noted that Cosette’s lender had been “constructively reviewing the information provided by [MPG] over the last two days” and requested, inter alia, the 6+6 forecast for FY25, if available. Mr O’Brien advised Jefferies that the 6+6 forecast was then “still very much in process”.

61. [123]

    On 30 January 2025, Mr Goyani sent an email to Ms Hying and Ms Mateer (Ex J1, 10/7546.101) in respect of the January 2025 unit expectations and attaching a spreadsheet entitled “Est. GM – Based on Actual Gross Sales – MTD”. Mr Goyani wrote:

62. [124]

    On 30 January 2025, Mr Hying advised Mr Gray (Ex J1, 10A/7573; Gray XX, T486) that:

63. [125]

    Mr Gray was cross-examined as to this email and his evidence is that the reference to the “wrong direction” in that email reflected the fact that employees had an incentive target, set by reference to the FY25 3+9 Forecast, although incentives would be adjusted throughout the year based on expected performance and were ultimately reduced to zero in determining MPG’s FY25 result (T570). The Cosette Parties seek to give this email a sinister, and indeed conspiratorial, reading which seems to me to be unjustified. That sinister reading turns on the premise that it was not legitimate, if a shortfall in deliveries occurred in January 2025, to investigate whether that shortfall would be caught up in total deliveries in February-July 2025 and adjust forecast deliveries for that month if that was thought likely. There was not sufficient evidentiary basis for that premise.

64. [126]

    Also on 4 February 2025, Ms Hying, Mr Mateer and Mr Goyani exchanged text messages (Ex J1, 10A/7602) concerning the preparation of the FY25 6+6 Forecast and Ms Hying observed that:

65. [127]

    On 31 January 2025, Mr Gray attended (Gray 24.8.25 [156]ff; Gray XX, T498ff) a final management review, at which the group US profit and loss forecast spreadsheets for the FY25 6+6 Forecast were confirmed and then instructed Ms Hying to “lock” the US FY25 6+6 Forecast, which she confirmed had been done on 1 February 2025, although the forecast was later re-opened and adjusted in early February to address an issue as to cost of goods sold for a product that does not otherwise appear to be in issue in the proceedings. Mr O’Brien and Ms Hying also exchanged emails concerning MPG’s “half on half” financial performance, compared to actual performance over successive half year periods, in late January 2025 (O’Brien 24.8.25 [120]ff).

66. [128]

    By 4 February 2025, Cosette had reaffirmed an indicative offer price for MPG of A$7.40 per share, subject to completion of a limited number of confirmatory due diligence items (O’Brien 24.8.25 [124]). On 5 February 2025, Cosette’s lender, Hayfin, provided Cosette with an executed debt commitment letter committing to provide US$300 million for the purposes of funding part of the scheme consideration for Cosette’s acquisition of MPG.

67. [129]

    On 12 February 2025, Ms Hying provided a link to Mr O’Brien to MPG’s US January 2025 financial results (O’Brien 24.8.25 [129]) under cover of an email which observed that:

68. [130]

    Mr O’Brien’s evidence (O’Brien 24.8.25 [130]; see also O’Brien XX, T322), which I accept, is that:

69. [131]

    Mr O’Brien also addressed (O’Brien 24.8.25 [131]ff) the preparation of the FY25 6+6 Forecast (Ex J1, 10A/7807).

70. [132]

    Mr Gray outlined (Gray 24.8.25 [140]ff) the steps that were taken, commencing at the end of October 2024, to prepare the FY25 6+6 Forecast and the circumstances in which an adjustment was made, in preparing that forecast, to reflect a decline in actual sales in January 2025 in that forecast and to increase the estimates for the remaining sales in February-June 2025, so as to preserve the existing total forecast. Mr Gray also explained, at length, the work done by members of his team in preparation for the FY25 6+6 Forecast and his work on that forecast between 12 and 14 February 2025, including writing the executive summary for that forecast. His evidence (Gray 24.8.25 [172]–[174]) was that he first received an email containing the January monthly financial results of MPG on 13 February 2025; he finished preparing the FY25 6+6 Forecast on 14 February 2025; that forecast was included in board papers circulated to the board of MPG on 22 February 2025; and Mr O’Brien and Mr Gray presented that forecast to MPG’s board on 25 February 2025. Mr Gray also referred (Gray 24.8.25 [175]) to the comparison between the FY25 3+9 Forecast and FY25 6+6 Forecast, included in a section headed “EBITDA Bridge FY25 3+9 to 6+6 Forecast in AUD” in that board paper. Mr Gray also addressed (Gray 24.8.25 [177]ff) subsequent developments, including the identification of an error in the treatment of inventory and the co-pay pipeline in respect of a dermatology product, Doryx (“Doryx Co-Pay Adjustment”) and subsequent developments in respect of MPG’s financial results through to July and August 2025.

71. [133]

    Mr Gray was cross-examined at length as to the proposition that the decline in MPG’s sales in January 2025 undermined the forecast for the remaining five months in H2 FY25 in the FY25 6+6 Forecast. Mr Gray did not accept that proposition where his evidence was that the process that had been adopted for that forecast was robust; the forecast then appeared to be supported by the apparent product demand, so that it appeared that unmet demand from January 2025 would be reflected in increased sales for the balance of the period; the slope of the line used by MPG’s models in forecasting demand had not changed, at least in January 2025; and issues as to the underlying demand, arising from changes made to MPG’s sales teams, only subsequently emerged. I accept Mr Gray’s evidence as to these matters, having regard to the documentary evidence and his cross-examination as a whole.

72. [134]

    On 13 February 2025, Ms Hying advised Mr O’Brien, Mr Gray and others (Ex J1, 10A/7670) that:

73. [135]

    There was considerable emphasis, in the Cosette Parties’ case, on the negative EBITDA for MPG of A$5.1 million for January 2025, but less focus on recognising that that negative figure was a lesser decline of $800,000 against the previous forecast and, second, that information concerning that negative EBITDA was provided to Cosette by the “Cash flow by month F25” (Ex M4) placed in the VDR, albeit shortly before the SID was executed, and accessed by Cosette’s advisers and Avista’s employees.

74. [136]

    On 14 February 2025, Jefferies advised MPG that:

75. [137]

    Later on 14 February 2025, Jefferies advised MPG that:

76. [138]

    On 15 February 2025, Mr Gray advised Jefferies (Ex J1, 10A/7721) that the FY25 6+6 Forecast was final and that an attached paper would be distributed to the Board. He observed that “I do not call this board-approved however it is completed bottom-up”.

77. [139]

    On 17 February 2025, Ms Amberiadis, a Vice President of Avista, emailed Mr Casten and others (Ex C12, Tab 45; Ex J1, 10A/7727.11.2) identifying “a few questions for our team” in advance of a proposed virtual meeting with MPG to discuss MPG’s FY25 6+6 Forecast as follows:

78. [140]

    By email dated 17 February 2025 (Ex C12, Tab 45; Ex J1, 7727.11.1), in preparation for the virtual meeting, Mr Casten then advised Mr Moran and others at Avista, an employee of Cosette and several representatives of PwC that:

79. [141]

    Mr Moran responded:

80. [142]

    Ms Amberiadis’ and Mr Moran’s focus on MPG’s cash forecast as one of the issues for inquiry is inconsistent with the position taken by Mr Burgstahler in cross-examination (T226) that he did not recall screenshots in relation to the cash position being shown to him, because he was focused on the EBITDA and further that:

81. [143]

    By email dated 18 February 2025, (Ex C12, Tab 51; Ex J1, 10A/7836.0.9), Ms Amberiadis advised representatives of PwC that:

82. [144]

    On 17 February 2025, the FY25 6+6 Forecast was discussed at a virtual meeting attended by many representatives of Cosette and Avista and their advisers. A note made by an employee of Jefferies of the discussion concerning the FY25 6+6 Forecast at that virtual meeting recorded that Mr Gray there screen shared that forecast, although Mr Gray’s evidence is that he did not have a recollection of doing so. That note recorded a discussion of slide 8, referable to the OPEX bridge, and slide 12, relating to women’s health, as follows:

83. [145]

    In opening, Ms Collins draws particular attention to the exchange as to minimal changes in the units sold from the prior projections to the back half of the year. She submits, plausibly, that the “prior projections” referred to were likely the FY25 3+9 Forecast. She then submits that:

84. [146]

    This is a significant aspect of Cosette’s case and it is plainly not correct. MPG had disclosed, by the “Cash flow by month F25” (Ex M4) placed in the VDR and accessed by Cosette’s advisers and Avista’s employees, the fact of that decline in EBITDA in January 2025, although it appears that Mr Saraf and Mr Casten of Cosette and Mr Burgstahler of Avista did not become aware of that information. The proposition that the FY25 6+6 Forecast reflected a decision to move missing units to later months is correct, but there is not sufficient evidentiary basis for a finding that that decision was not then reasonably made. The additional proposition that any adverse change in the “trajectory” of the business, arising from the decline in EBITDA in January, does not recognise either that the decline was not material, by reference to a previously forecast negative EBITDA for January, or the fact that that information was, in any event, disclosed by the “Cash flow by month F25” in the VDR (Ex M4).

85. [147]

    Returning now to the evidence as to the 17 February virtual meeting, Mr O’Brien attended that meeting and gives evidence (O’Brien 24.8.25 [134]) of that meeting. He takes issue with aspects of Mr Casten’s evidence of that meeting, which I address below, but it is not necessary to resolve the differences to determine the proceedings. Mr Gray also addressed the discussion at the 17 February 2025 virtual meeting (Gray 24.8.25 [226]ff), and he accepts (in a good example of his willingness to make concessions that might have been appeared to be against MPG’s interests) that he then said he saw “no reason why we would not achieve the [A$]69.8” figure contained in that forecast (Gray 24.8.25 [228]), but denies that he said that was confident that MPG would meet that forecast, having regard to the volatility in MPG’s business. His evidence of that discussion is consistent with the probabilities and I accept it. I also bear in mind his cross-examination as to that meeting.

86. [148]

    Mr Gray’s evidence in cross-examination (Gray XX, T573) was also that, as at 15 February 2025, he understood that the board should approve the FY25 6+6 Forecast before it was communicated to Cosette, although MPG’s chair ultimately approved the provision of that forecast to Cosette. Mr Gray was cross-examined (Gray XX, T574ff) as to his lack of recollection, in his affidavit, of sharing his screen represent the FY25 6+6 Forecast at the 17 February meeting and was taken to the notes of that meeting which recorded that forecast being discussed at that meeting. Mr Gray denied that, when he said at that meeting that he saw no reason why MPG would not achieve the $69.8 million forecast, he was aware of reasons that forecast might not be achieved, including the fact that the EBITDA result for January 2015 was negative $5.1 million, although he fairly accepted that, as at that time, that negative EBITDA of $5.1 million was “significantly” less than what had been forecast for the EBITDA for that month in the FY25 3+9 Forecast. I understand his evidence as to that matter to accept that the reduction of $800,000 of actual against forecast in that month is significant in that month, but to maintain the position, which I also accept, that the reduction in that month was not significant for the six months of the FY25 6+6 Forecast, where he then had reasonable grounds to think the shortfall in sales would be recovered. Mr Gray also denied (Gray XX, T582) that, contrary to what was said at that meeting, there was a significant change in units between earlier projections for H2 FY25 and MPG’s current projections and pointed out that:

87. [149]

    I also accept Mr Gray’s evidence as to that matter. I recognise that, obviously enough, Mr Gray’s comments at that meeting did not disclose the shortfall in sales in January 2025, putting aside the fact that the decline in January EBITDA was in fact been disclosed to Cosette disclosed by the “Cash flow by month F25” in the VDR (Ex M4), although it appears that only Cosette’s advisers and Avista reviewed that document. However, the proposition that it was false to express that view again depends on the unproved premise that it was not then reasonable for MPG to form the view that demand that had not been met in January would be reflected in a catch up of sales in the balance of 2H FY25.

88. [150]

    Mr Saraf also addressed (Saraf 22.7.25 [144]ff) the discussion of the FY25 6+6 Forecast at that virtual meeting in his affidavit evidence.

89. [151]

    Mr Casten (Casten 22.7.25 [46]) also refers to conversations with Mr Gray of MPG including at the virtual meeting, and his evidence is that Mr Gray then repeated his statements about MPG’s financial reporting capabilities. Mr Casten also refers (Casten 22.7.25 [53]ff) to the discussion of MPG’s FY25 6+6 Forecast at that meeting. Mr Casten’s evidence is that, as is common ground, that forecast was (at least partly) presented on screen at that meeting and his recollection is there was a focus on presenting the Executive Summary (page 3), the results for the women’s health and dermatology portfolios (page 4) and the EBITDA “bridge” (page 6). Mr Casten’s evidence is that he asked MPG to explain why the underlying EBITDA for FY25 in the FY25 6+6 Forecast was lower than in the FY25 3+9 Forecast; that Mr Gray stepped through the differences (or bridge) between the two forecasts; and Mr Casten considered Mr Gray’s answers to have been reasonable. Mr Casten also addressed (Casten 22.7.25 [56]) his review of the FY25 6+6 Forecast as uploaded to the VDR on 17 February 2025 and also referred (Casten 22.7.25 [58]) to his having asked a question during the 17 February virtual meeting as to when MPG’s financials for the month of January 2025 would be available.

90. [152]

    Mr Saraf and Mr Casten were both cross-examined as to this meeting (Saraf XX, T187ff; Casten XX, T276ff). There is a dispute as to whether Mr Saraf or Mr Casten asked for any update as to MPG’s January performance at the virtual meeting on 17 February 2025 at which the FY25 6+6 Forecast was discussed and witnesses were also cross-examined as to that matter. Little turns on this dispute, where the Cossette parties were provided with information as to MPG’s January EBITDA by the “Cash flow by month F25” in the VDR (Ex M4), although Cosette’s advisers and Avista’s employees who reviewed that information did not give evidence and, it appears, did not raise any concern as to that information with Mr Saraf, Mr Casten or Mr Burgstahler.

91. [153]

    Mr Burgstahler’s evidence in his first affidavit (Burgstahler 21.7.25 [26(e)]) was that he did not recall attending the virtual meeting with representatives of MPG and Cosette to discuss the FY25 6+6 Forecast on 17 February 2025. He reversed that evidence in his second affidavit dated 21 February 2025. He there refers to having been shown an email chain produced by Avista, on subpoena, and his evidence is that he now recalls attending that meeting on a public holiday in the United States. Notwithstanding his previous lack of recollection whether he attended that meeting, he gives evidence in his second affidavit of viewing particular slides of the FY25 6+6 Forecast when it was placed on screen by Mr Gray at the conference and of Mr Gray pointing to the contents of those slides.

92. [154]

    By email dated 17 February 2025 (Ex J1, 10A/7965.2), Mr Burgstahler advised others within Avista in the course of the 17 February virtual meeting that:

93. [155]

    Mr Burgstahler’s evidence is that his reference to 69.8 was a reference to the underlying EBITDA forecast in the FY25 6+6 Forecast and his reference to “10X forward actual” was a reference to the multiple of total enterprise value assuming an A$7.40 share price to the forecast EBITDA in the FY25 6+6 Forecast. It does not follow from that reference that Mr Burgstahler misunderstood a forecast of future earnings as a fact, and his obvious sophistication had the consequence that it would not have been necessary for him to read the description of forecasting methodology in that document, or the identification of risks and opportunities and the extent to which they could affect actual future results in that document, to recognise the inherent uncertainty in such a forecast. Mr Burgstahler then refers to having received an email from Mr Bidwell of Santander which attached the FY25 6+6 Forecast and to having reviewed that document after he received it.

94. [156]

    Mr Burgstahler’s change of position as to his recollection of the 17 February 2025 meeting was the subject of vigorous cross-examination. Mr Burgstahler’s evidence on cross-examination was that he did not recall whether he had accessed the VDR, although he may have done so, but it would not be normal for him to do so (T220). He maintained in cross-examination that he now had an actual recollection of attending the virtual meeting on 17 February 2025 (T220) although he had not recalled whether he did so when he provided his first affidavit. His evidence (T221) was that, notwithstanding that he had not previously recalled whether he had attended that meeting, it was a “very” important meeting to him, which he had forgotten because it was “confirmatory and it was positive”. That proposition resulted in the following exchange between Mr Burgstahler and Counsel:

95. [157]

    Mr Burgstahler’s evidence in cross-examination was that he did not recall whether he had been shown any notes of the meeting in preparing his second affidavit (T223), although he had sworn his second affidavit only two days before he was cross-examined and he then shifted that evidence to deny that he had been shown any document recording what occurred at that virtual meeting (T225). Mr Burgstahler referred in cross-examination to the significance of MPG’s EBITDA position in January 2025 (T226) and then volunteered that, at the 17 February virtual meeting:

96. [158]

    Mr Burgstahler’s evidence in cross-examination was also that he did not have regard to information concerning MPG’s group cashflow statement which he accepted was projected on the screen at the 17 February virtual meeting (T228–229) because he was “focused on the EBITDA 6+6 forecast” and he went so far as to assert that he looked at the $68.9 million EBITDA forecast and nothing else at that conference. I am not persuaded by that evidence. Mr Burgstahler’s evidence was also that he also told Mr Ellison, an employee of Avista, that he was “really interested” in MPG’s EBITDA on “many” occasions over the six months before the SID was executed (T229–230); but he did not recall whether Mr Ellison had told him in January 2025 that MPG had suffered a $5.1 million EBITDA loss in January 2025, implicitly after obtaining access to that information by the “Cash flow by month F25” (Ex M4) in the VDR. Again, I do not accept that evidence; it is inconceivable that, given the focus that Mr Burgstahler (and Cosette) put on the question of MPG’s EBITDA for January 2025, he would not remember if he had been told adverse information as to that matter. For completeness, Mr Burgstahler’s evidence was also that he did not recall having been provided with information as to the EBITDA for MPG in January or February 2025 (T231).

97. [159]

    In closing submissions, Cosette submits that there is nothing surprising in Mr Burgstahler having forgotten the 17 February 2025 meeting, when the email evidencing his attendance at that meeting was only produced by his own company, Avista, after the service of his first affidavit. That submission does not address the inconsistency between the importance that Mr Burgstahler now attributes to that meeting and his lack of recollection of it, or the implausibility of his claimed focus on only one matter at that meeting. I am unable to give any significant weight to Mr Burgstahler’s evidence as to the 17 February 2025 virtual meeting. It sems to me inconceivable that a senior executive of Avista, with substantial financial expertise, would make the effort to attend a meeting on a US public holiday, where MPG disclosed its FY25 6+6 Forecast to which Cosette had been requesting access, and then pay no attention to any aspect of that meeting other than to a single figure in the EBITDA forecast, despite the obvious uncertainties of forecasting and would then forget whether he had done so before later recalling matters of detail in respect of that meeting.

98. [160]

    After the virtual meeting on 17 February 2025, Ms Amberiadis of Avista sent an email to Mr Moran and Mr Ellison of Avista (Ex J1, 10A/7735.1) referring to that meeting and setting out very detailed notes of that meeting. Those notes apparently include screenshots of the screens shared by Mr Gray in the course of the meeting, including the list of risk and opportunities disclosed in the FY25 6+6 Forecast; the forecast EBITDA figures for women’s health, dermatology, MPG’s international business and other items; a reference to MPG’s forecast EBITDA of $69.8 million for FY25; forecast group operating expenditure; and a comparison between the FY25 3+9 and FY25 6+6 Forecasts for women’s health, dermatology and international, all at a level of detail, after which Ms Amberiadis noted that:

99. [161]

    That email also set out MPG’s actual cash flow for January 2025 and a cash flow estimate for the following months. Mr Casten properly accepted in cross-examination that the availability of a cash flow statement for January 2025 indicated that EBITDA may also be available for January 2025; but it is not necessary to speculate as to that matter, where MPG then placed the EBITDA calculation for January 2025 in the VDR as part of the “Cash flow by Month F 25 6+6 v Final” (Ex M4). On 18 February 2025, MPG caused the FY25 6+6 Forecast to be uploaded to the VDR. Cosette contends (CCS [36]–[39]) that that forecast projected underlying EBITDA for FY25 of A$69.8 million. That claim oversimplifies that document, which recorded, inter alia (CCSR [38]) that “overall risks exceed opportunities at present”, quantified risks in a significantly higher figure than opportunities. The FY25 6+6 Forecast also included, in Appendix E, that a breakdown of the FY25 forecast by quarter (Q1 and Q2 being actual results and Q3 and Q4 being forecast results) and forecast, for Q3 FY25, Total Gross Sales of $316.9 million; Total Net Sales of $104.9 million; Total Gross Margin of $67.0 million; and Underlying EBITDA of $8.2 million (CCS [39]; CCSR [39]).

100. [162]

     Ms Collins submits, in opening, that:

101. [163]

     This is a significant aspect of MPG’s case, and it is also not correct for reasons that I address below. This proposition seeks to isolate one aspect of the information conveyed in the FY25 6+6 Forecast from the document as a whole, including its disclosure of risks and opportunities, and from the discussions which I have found took place between Mr Gray and Mr Casten as to the unsurprising fact that the forecasting process undertaken by MPG involved complexities, uncertainties and an inevitable risk that future reality would not correspond to the result forecast at a point in time.

102. [164]

     In closing submissions, Cosette also addressed the FY25 6+6 Forecast at length, commencing with the question:

103. [165]

     Plainly, that is a legitimate question. However, I must bear in mind that, here, I must address more specific questions, namely, whether Cosette has established its contractual right to terminate the SID by reason of a decline in MPG’s Maintainable EBITDA that meets the specified quantitative threshold and whether the pleaded FY25 EBITDA Representation was made by the FY25 6+6 Forecast, and, if it was made, whether there were reasonable grounds for it at the time that it was made, rather than whether it was falsified by subsequent events. I also bear in mind, although it is likely not relevant to addressing those questions, that Mr Gray’s evidence has identified the likely, but not certain, answer to that question, developed after excluding alternative hypotheses, which relates to changes made in MPG’s sales team at that time.

104. [166]

     Cosette also submits that MPG:

105. [167]

     In closing submissions, Cosette also submitted that Mr Gray’s evidence as to how the FY 6+6 Forecast was prepared was unsatisfactory and that having regard to that evidence, the documentary record, Mr Meyers’ evidence, and inferences that may more safely be drawn as a result of MPG’s decision not to call others involved in the preparation of the forecast, there were no reasonable grounds for the EBITDA forecast in the FY25 6+6 Forecast. As I have noted above, Cosette’s cross-claim was pleaded in more specific terms. Even if this general claim were open, I would not accept that submission, given the views I have formed as to the logic of Mr Gray’s evidence, following its comprehensive testing in cross-examination; the forecasting process which is established by that evidence; and the fact that little weight can be given to Mr Meyers’ evidence for the reasons noted above.

106. [168]

     Returning now to the chronology of events, Cosette accepts in closing submission that on 18 February 2025 (US time) MPG placed a document headed “Cash flow by month F25” (Ex M4) in the VDR and Mr Casten was sent an email notification of the lodgement of that and other documents on the VDR (Ex M6). That may or may not have been before a Cosette board meeting which also occurred on that day and was the occasion that Cosette’s board decided to execute the SID but plainly that lodgement occurred before Cosette’s execution of the SID on 20 February 2025. There is evidence (Ex M3, Tab C) that Cosette’s advisers and employees of Avista reviewed this document, although there is no evidence that any employee of Cosette did so. That document disclosed, admittedly in a line item in a larger financial spreadsheet, MPG’s EBITDA of negative $5.112 million for January 2025.

107. [169]

     Mr Saraf initially denied in cross-examination that he was told of that matter and then said that he has no recollection of anyone telling him of that matter (Saraf XX, T193-194). He accepted in cross-examination (Saraf XX, T196-197) that he would have expected members of Cosette’s deal team and its advisers to have accessed that document, to have read it carefully and to have brought to his attention anything that was material to Cosette’s and Avista’s consideration of the proposed transaction and that he does not recall anyone having brought that document to his attention (Saraf XX, T197). He also accepted that a failure to identify the matters in that document would be a “miss” in the Cosette’s due diligence; he did not accept that it was a “fundamental failure” but he did accept that it was a “very serious miss” in due diligence, on the basis that the January EBITDA figures were important to Cosette (T198). Mr Casten’s evidence in cross-examination (Casten XX, T263) was that he would also have expected someone on behalf of Cosette to inspect this document, whether someone from Cosette who had requested the information from MPG or someone in Cosette’s business development team or one of Cosette’s consultants (T263).

108. [170]

     I recognise that no question of any error or fault on the part of Cosette arises in this respect, where relevant provisions in the SID turn upon the disclosure of this matter in due diligence and not upon whether Cosette had regard to the information that was made available to it in the VDR, albeit only shortly before execution of the SID. It is also not apparent that the decline in EBITDA was material, despite Cosette’s present emphasis on it, where it was (as I noted above) a decline of A$800,000 in a previously negative forecast EBITDA for that month. I nonetheless proceed on the basis, consistent with Mr Saraf’s and Mr Casten’s evidence, that it was reasonable to expect that a sophisticated acquirer and its advisers in a large transaction would review the financial information provided to them, including at least month-to-month EBITDA information where, on Cosette’s case, that information was important to Cosette’s decisions.

109. [171]

     Also on 18 February 2025 (US time), Cosette and Cosette Holdings resolved to enter into the SID and acquire MPG at the A$7.40 price per share at a joint meeting of the Cosette and Cosette Holdings boards (Saraf 22.7.25 [148]ff). Mr Saraf’s evidence (Saraf 22.7.25 [152]–[153]) is that:

110. [172]

     Mr Saraf’s evidence (Saraf 22.7.25 [154]) is also that, at that date, Cosette had not been provided information by MPG concerning actual results for January 2025 or February 2025 and (Saraf 22.7.25 [155]) that:

111. [173]

     Mr Saraf’s evidence in his second affidavit (Saraf 22.7.25 7.9.25) is similarly that:

112. [174]

     The obvious difficulties for Cosette here is that, accepting that Mr Saraf personally had not seen MPG’s EBITDA for January 2025, Cosette had access to that information in the VDR and its advisers (and Avista) later reviewed it without raising any concern about it or escalating it to Mr Saraf, and the conclusion that there was “no real chance” for MPG to meet the FY25 6+6 Forecast did not, at least at that time, follow from that information or the then available information as to MPG’s sales performance up to mid-February 2025. I return to these matters below.

113. [175]

     Mr Casten also gave evidence (Casten 22.7.25 [61]) as to matters that he assumed or understood at the time of the Cosette’s entry into the SID on 20 February 2025. It seems to me that Mr Casten there understated the level of scepticism that he applied to these matters, consistent with his approach in understating that matter in cross-examination. Mr Casten’s evidence is (Casten 22.7.25 [103]–[105]) is also that:

114. [176]

     Mr Burgstahler also gave evidence (Burgstahler 21.7.25 [21]) of the board meeting on 18 February 2025 and he refers to material provided by MPG which he had reviewed prior to that meeting, including MPG’s five year forecast, MPG’s ASX announcement dated 21 November 2024, the FY25 3+9 Forecast, MPG’s ASX announcement dated 10 February 2025 and the FY25 6+6 Forecast. He does not there identify the nature of any material provided by Cosette’s management or its advisers, or any internal work undertaken by Avista, to which he had regard in reaching that decision. His evidence (Burgstahler 21.7.25 [27]) is that:

115. [177]

     Mr Burgstahler’s evidence (Burgstahler 21.7.25 [35]) is also that:

116. [178]

     Mr Burgstahler also indicates (Burgstahler 21.7.25 [36]) that, in that situation, he would not have signed an “Action by Written Consent” that authorised entry into the SID and would have directed an Avista employee not to give the Avista parties’ consent to the transaction. His evidence is that he would have requested Cosette’s management to make further investigations and offer a recommendation as to whether Cosette should proceed with the transaction. He further states (Burgstahler 21.7.25 [37]) that he would not have supported Cosette’s entry into the SID at the offer price of $7.40 per share. That evidence also depends on its premises.

117. [179]

     Mr Saraf’s, Mr Casten’s and Mr Burgstahler’s evidence turns on its premises, including the false premise that Cosette and Avista had not been provided with MPG’s EBITDA for January 2025 in the VDR, at least prior to the execution of the SID. I recognise this occurred on the same day as the Cosette board meetings to authorise the entry into the SID, and two days before the SID was executed; but little turns on the timing when none of Cosette’s advisers or Avista’s employees who accessed that information appear to have raised any concern about it. I accept that Mr Saraf, Mr Casten and Mr Burgstahler likely did not personally know of that information, either at the point of authorising or executing the SID or later. Where none of the persons who accessed that information were called by the Cosette Parties, it is not possible to know whether they missed that information or, perhaps more likely, they reviewed it and did not then consider it had the significance that Cosette now seeks to attribute to it, and therefore did not escalate it to Cosette’s management or, in the case of Avista, to Mr Burgstahler.

118. [180]

     On 20 February 2025, Mr Goyani of MPG emailed Ms Hying and others (Ex J1, 10A/7958) that:

119. [181]

     In its closing submissions, Cosette also submits that:

120. [182]

     On 20 February 2025, Avista and Hamilton Lane provided Cosette with an executed equity commitment letter and, by a Joint Action by Written Consent, Cosette Holdings and Cosette resolved to enter into the SID and Avista and Hamilton Lane provided their consent to it doing so. Also on 20 February 2025, Mr Burgstahler advised others within Avista that he was now focused on another transaction and asked, “how much of the 70mm left in F1 did we commit to [MPG] deal?” and how much was left that Avista could commit to a lender that it would contribute to fund that other transaction. After a further exchange with an employee of Avista, Mr Burgstahler in turn advised others within Avista on 20 February 2025 (Ex C1) that:

121. [183]

     The SID, dated 20 February 2025, (CS [5]–[17], RCS [5]–[17], CCS [41], CCSR [41]; Ex J1, 11/7988) between MPG and Cosette (subsequently amended on 1 April 2025) provided for a subsidiary of Cosette to acquire all of the ordinary shares in MPG for $7.40 per share by a scheme of arrangement, subject to various terms and conditions (CS [7], RCS [7]). The terms of the scheme of arrangement appear at Annexure A of the SID (Ex J1, 11/8082). I will address below the provisions of the SID that are relevant to Cosette’s claim that a Mayne Material Adverse Change (“MMAC”) occurred and its further claims concerning breach of representations and warranties. Clause 20.6 of the SID in turn provided that:

122. [184]

     It is common ground (CS [19]–[21], RCS [19]–[21]) that the scheme was conditional upon the satisfaction of various conditions precedent, including the satisfaction or waiver, as at 8.00am on the second Court date, of the conditions precedent in cl 3.1 of the SID and the Court approving the scheme under s 411(6) of the Act. Clause 5.2 of the scheme provides:

123. [185]

     On or around 20 February 2025, after the SID was executed, Cosette and MPG established a committee to act as a forum of discussion and planning in respect of the implementation of the scheme and other matters agreed upon under the SID (“Integration Process”).

124. [186]

     Mr Gray’s evidence (Gray 24.8.25 [233]ff) is that:

125. [187]

     Mr Gray’s evidence (Gray 24.8.25 [235]) is that he then described the statistical methods used to prepare that forecast and said words to the effect that:

126. [188]

     Mr Gray maintained his evidence as to this matter in cross-examination (Gray XX, T608). Mr Casten denied that he had that conversation with Mr Gray in his affidavit evidence (Casten 8.9.25 [17]) and also denied having asked that question in cross-examination (T256). Mr Casten’s having done so would have been wholly consistent with the wider scepticism as to forecasts shown throughout the transaction. Having regard to that matter, and the view which I have formed as to Mr Gray’s credit generally, I accept that that conversation occurred in substantially the form set out in Mr Gray’s affidavit.

127. [189]

     It is common ground (CCS [43], CCSR [43]) that, on 26 February 2025, MPG published an announcement to the ASX titled “Media release for the half year ended 31 December 2024” (“26 February 2025 ASX Announcement”) and an announcement to the ASX titled “1H FY25 Results Presentation” (“1H Results Presentation”), which disclosed actual underlying EBITDA for the half year ended 31 December 2024 of $31 million, again subject to a disclaimer as to forward looking information contained in that announcement. The 26 February 2025 ASX announcement contained a statement attributed to Mr O’Brien that:

128. [190]

     The 1H Results Presentation also contained a statement that MPG “expects to grow underlying EBITDA in 2H FY25 via revenue growth and cost leverage, with all three segments contributing positive direct contribution” (CCS [46]). Cosette contends (CCS [47]) that these statements had the effect that MPG was forecasting underlying EBITDA for the second half of FY25 of more than $31 million; MPG denies that allegation (CCSR [47]), again pointing to the relevant disclaimer as to forward-looking information.

129. [191]

     Mr Saraf also refers (Saraf 22.7.25 [158]) to MPG’s announcement to ASX on 26 February 2025 concerning its results for the half year ended 31 December 2024.

130. [192]

     Also after the SID was executed, by email dated 27 February 2025 (Ex J1, 11/8488.1), Mr Casten asked Mr Rajan (who was Cosette’s single point of contact for its advisers in questions and answers in due diligence):

131. [193]

     Mr Rajan responded by email dated 28 February 2025 (Ex J1, 11/8488.1) attaching the final versions of Cosette’s models as at the date of signing the SID (Ex J1, 11/8488.3–8488.4) and observing that:

132. [194]

     In closing submissions, Mr Hutley points out, and I accept, that this correspondence and the relevant models (through which I was taken in detail in submissions) indicate several matters, which I pause to note only have relevance in the limited areas where reliance arises in this case. First, by the time that Cosette executed the SID, Cosette’s advisers (rather than MPG) had developed the so-called “Seller’s Model”, with reference to MPG’s 5-year forecast and “a PDF that Jefferies created for [MPG] that they shared early on” and that model was not based on or updated with reference to the FY25 3+9 Forecast or the FY25 6+6 Forecast. As Mr Hutley points out, the so-called “Monarch Sell-Side Case” shows 2025 EBITDA of US$38 million, corresponding to the “Updated Monarch Sell-Side Case” in the “Updated Valuation Materials” prepared by Santander on 11 November 2024, shortly after MPG had provided its 5-year Forecast and before the FY25 3+9 Forecast was provided. It appears that Cosette’s “sell-side” case was not modified after the revisions between the 5-year Forecast and the FY25 3+9 Forecast, or after the FY25 6+6 Forecast was received, likely because Cosette did not consider those forecasts to be particularly relevant to the sophisticated and longer term assessment that it was making of MPG’s value.

133. [195]

     Second, Cosette’s further “final BD [business development] model” was prepared by Santander and was based on projections derived from McKinsey’s work. As Mr Hutley points out, the revenue figures in that model are drawn from McKinsey’s presentations to Cosette in December 2024, which were not based on MPG’s forecasts, but on information such as US Census Bureau data, expert interviews, IQVIA data, industry benchmarks, McKinsey’s “desktop research” and data in the VDR. Mr Hutley also points out, and the models indicate, that Cosette modelled three alternative “cases” in its final BD model, an Upside Case, Base Case and Downside Case. Before synergies, the forecast FY25 EBITDA in these cases were US$29 million, US$28 million and US$19 million, respectively, substantially less than the US$38 million EBITDA in the “Sell-Side Model” also developed by Cosette as noted above. On a calendar year basis, the “Crown Base Case” predicted US$40.6 million EBITDA for CY2025. Mr Rajan’s email also refers to a “final Hayfin model”, presumably provided to Hayfin as the debt financier for Cosette’s acquisition of MPG, which is attached to Mr Rajan’s email. That model adopted the “Crown Base Case” for MPG’s CY25 EBITDA, which was forecast as US$40.6 million. For completeness, Mr Hutley also points out that a later slide deck sent by Mr Casten to Mr Saraf on 4 May 2025 (Ex J1, 13/10368.1) in preparation for Mr Saraf’s “discussions with David [Burgstahler] on Monday” also describes the “Crown Base Case” as the “Deal Model”.

134. [196]

     An exchange of emails on 4 and 6 March 2025 (Ex J1, 11/8575–8576) between Mr Moore (Executive Vice President, Speciality Products and Patient Solutions with MPG) and Mr Kalaf (Manager, Gross to Net Accounting with MPG) indicates the basis of the Doryx Co-Pay Adjustment which is addressed in the accounting evidence to which I refer below. On 4 March, Mr Moore advised Mr Kalaf that:

135. [197]

     Mr Moore responded that:

136. [198]

     Mr Moore then advised that:

137. [199]

     On the face of it, this exchange indicates a one-off error was made by Mr Moore, a matter to which I return in addressing the expert accounting evidence below.

138. [200]

     On 7 March 2025, Mr McConnell of MPG advised Mr Gray (Ex C12, Tab 16) that:

139. [201]

     Mr Gray was cross-examined as to that email (Gray XX, T596) and he maintained his evidence, which I accept, that he first became aware that February was not going to achieve its forecast when the results for February closed (T595). He pointed to the complexities of converting gross sales to profit and his evidence, which I also accept, was that gross sales alone would not allow a conclusion as to a changed EBITDA result.

140. [202]

     On 10 March 2025, a meeting took place between MPG and Cosette to discuss integration planning. Mr Saraf attended and gives evidence of this meeting. Mr O’Brien also attended the meeting (O’Brien 24.8.25 [141]ff) and he takes issue with aspects of Mr Saraf’s evidence concerning the meeting. His evidence (O’Brien 24.8.25 [142]–[143]) is that he did not discuss MPG’s February performance results with Mr Saraf at that meeting because he did not then know them; that neither he nor Mr Gray said that January or February were tracking well against budget; and that he told Mr Saraf that “January was soft against plan but prescription levels are tracking”, “the script data for January 2025 is telling me that there is no issue” and:

141. [203]

     Mr Gray also outlined the discussions that took place at the meeting on 10 March 2025 (Gray 24.8.25 [247]ff) and his evidence is that he did not recall discussions on the FY25 6+6 Forecast during general or group discussions at that meeting and did not recall discussions about the February results for MPG, which he did not receive until 12 March 2025. Mr Casten also attended the meetings and also addressed them in his evidence (Casten 22.7.25 [65]ff). He referred to statements made by Mr Gray and Ms Hying at that meeting in respect of MPG’s budgeted EBITDA and the past EBITDA contained in the FY25 6+6 Forecast to the effect that MPG was “on track” to deliver the budgeted and forecast EBITDA (Casten 22.7.25 [67]). It is otherwise not necessary to resolve any differences in the accounts of that meeting to determine these proceedings,

142. [204]

     A document headed “Key Updates” prepared on or about 12 March 2025 by MPG (Ex J1, 11A/8634) recorded that:

143. [205]

     A slide headed Group P&L in AUD (Ex J1, 11A/8635) referred to actual underlying EBITDA for February 2025 of negative A$6.542 million by contrast with forecast underlying EBITDA for February of A$4.745 million and underlying EBITDA for February year to date of A$20.336 million compared with forecast year to date at that point of A$32.468 million, showing a negative variation against the forecast of A$12.132m. The commentary noted that:

144. [206]

     The document in turn addressed the profit and loss by business unit and, in respect of women’s health, observed that (Ex J1, 11A/8636):

145. [207]

     I interpolate that, in cross-examination (T516–517), Mr Gray confirmed, and I accept, that MPG did not then consider that it had lost market share, rather than incorrectly forecasting the total market; but it now believes that it had lost market share at that time, by reason of the change to its sales team which has subsequently been recognised as the likely source of adverse sales result at that time.

146. [208]

     In his CEO Update to MPG’s March 2025 board meeting (Ex J1, 11A/8670), Mr O’Brien observed in a summary of February performance that:

147. [209]

     It is common ground that, from 11 March 2025 to 13 March 2025, the TGA conducted a surveillance inspection of MPG’s manufacturing site in South Australia and the TGA then issued the TGA Letter (CCS [98]–[100], CCSR [98]–[100]). As I noted above, Cosette abandoned reliance on that matter in its cross-claim in the course of the hearing and I only briefly refer to that matter below.

148. [210]

     On or about 19 March 2025, MPG established a VDR titled “Project Crocodile (Integration Planning)” (“Integration VDR”) and thereafter MPG and its advisers caused documents to be uploaded to the Integration VDR. It is common ground that, on 25 or 26 March 2025 (CCS [48]–[49], CCSR [48]–[49]), MPG caused to be uploaded to the Integration VDR a document titled “CFO Report Feb FY25” (“February CFO Report”) which recorded:

149. [211]

     Mr Gray was cross-examined (Gray XX, T514–515) as to that report. Mr Saraf also refers to that report, which he understood to indicate that MPG had fallen significantly short of forecast in February 2025; that there was “likely to be a negative impact” compared to the FY25 6+6 Forecast; and that there was a reduction in total gross sales, total net sales and underlying EBITDA for February 2025, with the performance of women’s health driven primarily by softness in demand for several products.

150. [212]

     Mr Saraf also refers (Saraf 22.7.25 [166]) to a discussion of that matter with Mr O’Brien, on the first day of a two day visit to MPG’s Adelaide facility on 26 and 27 March 2025, and to his then advising Mr O’Brien, on the next day, that:

151. [213]

     Mr O’Brien also gives evidence of Mr Saraf’s visit to MPG’s Adelaide facility on 26 and 27 March 2025; he refers to Mr Saraf’s anger on that occasion; and indicates that Mr Saraf raised, in aggressive terms, the position as to MPG’s February results (O’Brien 24.8.25 [148]). He denies Mr Saraf’s evidence as to aspects of that conversation. Mr O’Brien accepts (O’Brien 24.8.25 [150]) that Mr Saraf referred to the possibility of a “MAC” in that conversation and that Mr O’Brien responded “that’s not how a MAC works”. In his second affidavit, Mr Saraf takes issue with Mr O’Brien’s evidence as to aspects of that visit (Saraf 7.9.25 [16]). Little turns on the differences between the witnesses as to that matter; if it were necessary to decide them and given the view that I have formed as to the credit of the witnesses, I would prefer Mr O’Brien’s to Mr Saraf’s evidence of the conversations.

152. [214]

     Mr Casten also refers to his review of MPG’s February 2025 CFO Report (Casten 22.7.25 [74]ff) and explains that he considered that document to record significant declines in the financial performance of MPG, especially when compared with MPG’s FY25 3+9 Forecast and its FY25 6+6 Forecast. His evidence (Casten 22.7.25 [78]) is that:

153. [215]

     Mr Casten rightly recognised that several matters disclosed by the February CFO Report were adverse, by comparison with MPG’s earlier forecasts, as he observed in his email sent to Mr Burgstahler, Mr Saraf and other persons within Avista on 26 March 2025, which stated that the February financial results for MPG were:

154. [216]

     It is also important to recognise that Cosette, at least through Mr Saraf and Mr Casten, had formed these views by late March 2025, prior to the entry into the SID Amendment Deed on 1 April 2025. By entry into that Amendment Deed, Cosette agreed that the SID (as amended) was and continued to be in full force and effect.

155. [217]

     On 27 March 2025, Mr Casten and Mr Gray met to discuss MPG’s February 2025 results (Casten 22.7.25 [82]) and, on 28 March 2025, Mr Casten emailed (Ex J1, 11A/8761) Mr Burgstahler, others within Avista, and Mr Saraf summarising that conversation as follows:

156. [218]

     On 1 April 2025, MPG and Cosette entered the Amendment Deed, altering the details of the corporate structure of the acquiring entities under the SID, making consequential amendments, and confirming that the SID (as amended) “is and continues to be in full force and effect”.

157. [219]

     On 4 April 2025, MPG brought its application for orders in relation to the convening and conduct of the scheme meetings.

158. [220]

     It is common ground that, on 16 April 2025, MPG caused to be uploaded to the Integration VDR a document titled “CFO Report Mar FY25”, recording MPG’s sales performance for March 2025 (“March CFO Report”) (CCS [70]–[71], CCSR [70]–[71]).

159. [221]

     It is common ground (CCS [50]–[51], CCSR [50]–[51]) that, on 17 April 2025, Mr O’Brien sent an email to Mr Saraf which attached a spreadsheet titled “Confidential Mayne Pharma 9+3 forecast April 17 2025” (based on 9 months of actual results and 3 months of forecast results for FY25) which projected that MPG’s “AIFRS EBITDA (Operating) before F[oreign] [e]x[change] Effect” would be $44.999 million, although MPG again relies on disclaimers in respect of these documents. That email recognised that:

160. [222]

     On 17 April 2025, Mr Saraf emailed that document to Mr Casten who responded that:

161. [223]

     It is also common ground (CCS [52]), CCSR [52]) that, on 18 April 2025, MPG caused that document to be uploaded to the Integration VDR and MPG again relies on the relevant disclaimers.

162. [224]

     On 22 April 2025, MPG caused the FY25 9+3 Forecast (Ex J1, 13/9698) to be uploaded to the Integration VDR (CCS [53]–[54]). Cosette contends that this document projected that MPG’s underlying EBITDA for FY25 would be $45 million (“FY25 9+3 EBITDA Forecast”); however, that document also pointed to risks and opportunities, leaving open a wider range of underlying EBITDA for FY25. Cosette also contends (CCS [55]) and MPG denies (CCSR [55]) that the FY25 9+3 EBITDA Forecast is $24,800,000 (or approximately 26%) less than the FY25 6+6 Forecast.

163. [225]

     Mr Saraf refers (Saraf 22.7.25 [173], [175]) to the CFO Report for March 2025 and to his receipt of the email attaching the 9+3 Forecast spreadsheet on 17 April 2025 and his evidence (Saraf 22.7.25 [177]) is that he then recognised a reduction of A$24.8 million as between the FY25 9+3 EBITDA Forecast and the FY25 6+6 Forecast. He also refers to an email dated 18 April 2025 from Mr Casten recognising the same matter. In his first affidavit (Casten 22.7.25 [88]–[89]), Mr Casten also refers to a reduction of $24.8 million in the FY25 9+3 Forecast from the FY25 6+6 Forecast of $69.8 million. I recognise, of course, that a comparison of forecast earnings at different times does not establish a decline in a company’s actual financial performance, since a forecast ordinarily reflects expectations as to that performance, which may or may not ultimately correspond to those expectations. Mr Casten also refers to further correspondence with Mr Gray concerning the change in the forecast (Casten 22.7.25 [92]–[94]) and to MPG’s uploading the FY25 9+3 EBITDA Forecast to the Integration VDR on 21 April 2025.

164. [226]

     Mr Burgstahler also refers to his receipt of a copy of the 9+3 Forecast around mid-April 2025 and to his sending an email dated 21 April 2025 to Mr Saraf expressing his view that:

165. [227]

     It is also common ground (CCS [57], CCSR [57]) that, on 22 April 2025, MPG published an ASX announcement titled “Mayne Pharma Provides Business Update, Details of New Licensing Agreement & Updated Scheme Timetable” which anticipated “underlying EBITDA in the range of $47 million to $51 million” for FY25 (CCS [57]). Cosette pleads the content of that announcement in some detail (CCS [58]–[60]). Mr Saraf also refers to that announcement and indicates (Saraf 22.7.25 [179]) that represented a reduction in underlying EBITDA between A$18.8 million and A$22.8 million as against the FY25 6+6 Forecast.

166. [228]

     Cosette contends (CCS [61]) and CCSR denies (CCSR [61]) that, on or about 28 April 2025, MPG’s board of directors approved the FY25 9+3 Forecast. Cosette pleads aspects of that forecast (CCS [62]–[68]) and MPG takes issue with aspects of that description (CCSR [62]–[68]). Cosette also pleads and MPG denies (CCS [69], CCSR [69]) that:

167. [229]

     On 28 April 2025, the OPDP issued the FDA Letter (Ex J1, 13/9969) to MPG and, on 29 April 2025, Ms Nataline of MPG circulated a copy of the FDA Letter to Mr O’Brien and others at MPG. Mr O’Brien addresses (O’Brien 24.8.25 [154]ff) the circumstances in which the FDA Letter was received, on the day of a meeting of the MPG board, and he refers to a presentation that was then made to the MPG board as to that letter and to the discussion by MPG’s board about that matter. Mr O’Brien’s evidence is that he considered that that matter would not have a material financial effect on MPG’s business or Nextstellis (O’Brien 24.8.25 [163], [168]); he outlines the basis on which he held that view, by reference to several apparently relevant factors; and his evidence, which I accept, is that MPG’s board collectively formed the view that the FDA Letter would not have a material effect on MPG’s business or Nextstellis. Mr O’Brien was also cross-examined as to his knowledge of continuous disclosure requirements applicable to MPG (O’Brien XX, T345ff); the circumstances in which he became aware of MPG’s receipt of the FDA Letter (O’Brien XX, T350ff); discussions at MPG’s board as to which a consensus was formed that that letter was not material to MPG’s business; and the basis on which that view was formed (O’Brien XX, T366ff). I return to that matter below.

168. [230]

     On 30 April 2025, MPG circulated a document containing material affected or potentially affected by the FDA Letter, titled “Nextstellis Promotional Material”. Also on 30 April 2025, Mr O’Brien disclosed the receipt of the FDA Letter to Mr Saraf (O’Brien 24.8.25 [169]). On 5 May 2025, MPG provided Cosette a copy of that letter.

169. [231]

     Mr Dury’s immediate impression, after the receipt of the FDA Letter, was that it had a significant adverse impact upon MPG’s marketing strategy for Nextstellis. By an email dated 6 May 2025 to others within Cosette (Ex J1, 14/10442), under a heading referring to the FDA Letter and MPG’s “speaker program deck”, he observed that:

170. [232]

     Mr Smolenski, of Cosette, responded on the next day:

171. [233]

     By a further email dated 8 May 2025, Mr Dury emailed Ms Beltrani and others of Cosette with a draft list of information that should be sought from MPG as to the FDA Letter (Ex J1, 14/10479). I do not doubt that Mr Dury and other employees of Cosette then regarded the FDA Letter as a significant adverse development for the marketing of Nextstellis, although it appears they did not then know of or take sufficient account of the steps that had already been taken by MPG to reposition its marketing of Nextstellis, which would subsequently assist its response to the FDA Letter.

172. [234]

     On 9 May 2025, after all of these matters had arisen, the Cosette Parties entered a Deed Poll in favour of each scheme shareholder. It is common ground (CS [22]–[24], RCS [22]–[24]) that that Deed Poll provides, in cl 3.1, that the obligations of Cosette and Cosette Sub under the Deed Poll are subject to the scheme becoming effective and, by cl 4.1, Cosette and Cosette Sub each covenanted in favour of each scheme shareholder that it will observe and perform all obligations contemplated of Cosette, or Cosette Sub (as applicable) under the scheme. Also on 9 May 2025, MPG’s US attorneys gave a notice to Cosette of the issue of the FDA Letter under cl 7.1(d)(vii) of the SID.

173. [235]

     On 12 May 2025 (US time), the FDA published the FDA Letter on its website. On 13 May 2025 (US time), an internet publication titled Fierce Pharma published an article (Ex J1, 14/10561) titled “Mayne hit by ‘misleading’ drug safety claims from FDA ahead of $430M buyout” (“Fierce Pharma Article”) (emphasis added) which referred to MPG’s receipt of the “untitled” FDA Letter. On 14 May 2025, two days after the publication of the FDA Letter, the day after the publication of the Fierce Pharma article, and on the same day as an Australian broker recommended its clients short sell MPG shares and the Australian media reported a US proposal for tariffs on Australian-made pharmaceutical products, MPG’s share price started to decline. ASX then issued a price query to MPG (Ex J1, 14/10575) and, on 14 May 2025 (Ex J1, 14/10578.1), MPG, by its solicitors, offered Cosette’s solicitors the opportunity to comment on the form of announcement that MPG then proposed to make to ASX. MPG then made two ASX announcements (Ex J1, 14/10652, 10656). I return to these matters in dealing with Cosette’s continuous disclosure claim and its attack on the accuracy of one of those ASX announcements below.

174. [236]

     In his affidavit evidence, Mr O’Brien addresses (O’Brien 24.8.25 [172]ff) the publication of the Fierce Pharma article and his communications with MPG’s chair and company secretary concerning that article, his communications with Mr Saraf in respect of that article, the subsequent price decline in MPG’s shares on the ASX, subsequent ASX announcements made by MPG and (O’Brien 24.8.25 [196]ff) the development and content of the MPG’s response of the 16 May 2024 to the FDA Letter (“FDA Letter Response”). Mr O’Brien was also cross-examined as to the decline in MPG’s share price after the Fierce Pharma article (O’Brien XX, T369ff), the preparation and content of MPG’s ASX announcement made on 14 May 2025 (O’Brien XX, T378ff) and the steps which were subsequently taken by MPG in response to the FDA Letter (T389ff).

175. [237]

     After the close of trading on 14 May 2025, a research analyst at Canaccord Genuity published a “Flash Update” on MPG (Ex J1, 14/10669.1) which referred to MPG’s receipt of the FDA Letter and I will address that report in dealing with Cosette’s continuous disclosure claim below. Also on 14 May 2025, MPG “[p]aused the ordering and shipping of all affected printed promotional materials” and “removed digital material from Sales Reps’ iPads”. On the same date, Ms Nataline circulated a draft response to the FDA Letter, inter alia, to Mr O’Brien.

176. [238]

     At the first Court hearing in respect of the proposed scheme on 15 May 2025, MPG read an affidavit dated 12 May 2025 of Dr Ilin-Schneider of Cosette. I address the content and significance of that affidavit, the conduct of that hearing and the matters then disclosed (and not disclosed) by Cosette to the Court in dealing with MPG’s election defence below. The Court then made orders under s 411 of the Act convening a meeting of MPG’s shareholders to be held on 18 June 2025 to consider the scheme and associated orders (CS [25], RCS [25]). After the first Court hearing, also on 15 May 2025, MPG released an ASX announcement titled “ASIC Registration of Mayne Pharma Scheme Booklet” which attached the scheme booklet (Ex J1, 14/10674) which included an independent expert report of the same date prepared by Deloitte.

177. [239]

     Also on 15 May 2025, MPG circulated an internal list of adjustments to the advertising materials concerning Nextstellis as a result of the FDA Letter. On 16 May 2025, MPG provided the FDA Letter Response to the FDA (CCS [95]–[96], CCSR [95]–[96]).

178. [240]

     On 17 May 2025, two days after the first Court hearing at which the Cosette Parties supported the scheme, Cosette’s board decided to terminate the SID. Mr Saraf’s evidence (admitted with a limiting order under s 136 of the Evidence Act) (Saraf 22.7.25 [180]) explains that decision on the basis that, after Cosette entered into the SID on 20 February 2025:

179. [241]

     First, Mr Saraf contends that MPG had “drastically reduced” its underlying EBITDA forecast for FY25 compared to the FY25 3+9 Forecast and the FY25 6+6 Forecast; second, he refers to disclosure of the TGA letter, on which Cosette no longer relies in these proceedings; third, he refers to the FDA Letter; and, fourth, to a claim by a third party in litigation, on which Cosette also no longer relies. His evidence is that (Saraf 22.7.25 [185]):

180. [242]

     Also on 17 May 2025, Cosette issued the First MAC Notice under cll 3.5(c) and 3.7(a) of the SID (Ex J1, 14/11023) which contended that an MMAC had occurred, or was reasonably expected to occur, in the 12-month period from 1 July 2024 to 30 June 2025 (FY25) by reason of revisions made to internal forecasts within MPG concerning the financial year ending 30 June 2025 (First MAC Notice at [9]–[20]); the TGA inspection and the TGA Letter (First MAC Notice at [21]–[26]), on which Cosette no longer relies; the third party claim noted above, on which Cosette also no longer relies; and the FDA Letter and MPG’s proposed response to that letter (First MAC Notice at [32]–[44]). Cosette also there contended (CS [31]) that an MMAC was reasonably expected to occur in the 12-month period from 28 April 2025 (being the date of the FDA Letter) by reason of, inter alia, the FDA Letter, although it has now also abandoned that claim.

181. [243]

     About 24 May 2025, MPG’s Nextstellis website went live with revisions omitting claims which formed the subject of complaints from the FDA Letter.

182. [244]

     At a board meeting of MPG on 26 May 2025 (Ex J1, 15/11297), MPG provided an update to MPG’s board as to the FDA Letter, noting that MPG had reviewed and identified all affected promotional materials that were currently in dissemination between 28 April and 14 May. On 14 May, MPG had paused the ordering and shipping of all affected printed promotional materials and removed digital material from sales representatives iPads and cancelled email communications and paid searches. On 16 May, MPG had sent the FDA Letter Response “providing context for the claims made in the speaker deck and identifying actions taken to address OPDP’s concerns”, including the discontinuation of all affected material discontinued as of 14 May, other than the Nextstellis website. That update also referred to a call between MPG and the OPDP on 22 May, where OPDP requested that the website revision be accelerated and advised that “there were no other concerns” so that, once the OPDP received confirmation that all affected materials were discontinued and the website revised, it would initiate its close-out process. That update also recorded that, on 23 May, the Nextstellis website for health care professionals (“HCPs”) was taken down, internet traffic was redirected to a revised patient website with limited content; the revised patient website was formally submitted to the OPDP and, over the next two weeks, sales representative refresher training would take place on the Nextstellis prescribing information and a revised core visual aid (“CVA”) was under expedited review. Importantly, that update noted additional marketing costs to date as US$12,000 and quantified additional total spend including additional marketing and training costs as approximately US$60,000.

183. [245]

     It is common ground (CCS [72]–[73], CCSR [72]–[73]) that, on 27 May 2025, MPG caused to be uploaded to the Integration VDR a document titled “FINAL CFO report Apr FY25_26 May2025”, recording MPG’s sales performance for April 2025 which recorded actual underlying EBITDA of the Mayne Group for the 10 months ended April 2025 of $33.524 million, comprising $31.99 million for the 6 months to December 2024 and $1.534 million for the 4 months to 30 April 2025.

184. [246]

     On 3 June 2025, the FDA issued a close-out letter to MPG in respect of the issues subject of the FDA Letter.

185. [247]

     On 4 June 2025, MPG made an ASX announcement (Ex J1, 15/11515) which indicated that MPG had not at that point received a notice of termination of the SID and advised that:

186. [248]

     Later on 4 June 2025, Cosette delivered the First Termination Notice to MPG, relying on the MAC Notice (Ex J1, 15/11519). MPG denies that Cosette has validly terminated the SID on that basis.

187. [249]

     On 4 June 2025, Cosette issued a second notice of intention to terminate the SID under cll 3.5(c) and 3.7(a) of the SID and MPG commenced these proceedings. On 13 June 2025, without prejudice to the termination that it claimed to have effected by the First Termination Notice or the second notice of intention to terminate, Cosette delivered a further notice to MPG (“Second Termination Notice”) by which, if the SID had not already been terminated, it terminated the SID for MPG’s alleged breach of the Due Diligence Material Representation, as defined in the CCS (RCS [34(a)(iv)]).

188. [250]

     On 5 August 2025, Cosette issued a further notice of intention to terminate the SID under cll 7.1(b) and 15.1(a)(i) of the SID (“CY25 Notice”). On 13 August 2025, Cosette delivered a notice to terminate the SID under cll 3.7(b) and 15.1(a)(ii), without prejudice to the termination effected by the First and Second Notices of Termination (“Third Notice of Termination”).

189. [251]

     On 20 August 2025, Cosette delivered a notice to terminate the SID under cll 3.7(b) and 15.1(a)(ii) in respect of the CY25 Notice, without prejudice to the termination effected by the First, Second and Third Notices of Termination (“Fourth Notice of Termination”).

190. [252]

     On 29 August 2025 (Ex J1, 18/13486.44), MPG released its FY25 results presentation, which disclosed underlying EBITDA of A$47 million, being more than double its FY24 EBITDA of A$22.9 million but less, of course, than the EBITDA forecast in the FY25 6+6 Forecast. The FY25 operating highlights recorded, in respect of women’s health:

191. [253]

     That page also recorded:

192. [254]

     Mr Gray was in turn cross-examined as to that results presentation (Gray XX, T517ff).

Cosette’s claim that an MMAC resulted from MPG’s Q3 FY25 Sales Performance

1. [255]

   Cosette here relies (CCS [74]–[75]) on the condition precedent in cl 3.1(g) of the SID that no MMAC had occurred between the date of the SID and the second Court date, and contends that an MMAC in respect of FY25 resulted from MPG’s Q3 FY25 Sales Performance. MPG responds that that condition precedent was subject to cl 3.2(d), which I note below; that the definition of MMAC excludes the specified events, matters and circumstances; and that (CCSR [75(c)]):

2. [256]

   MPG also contends (CCSR [76]) that, on the proper construction of the definition of MMAC, the applicable 12-month period may not commence before the last, or alternatively, the earliest, of the events, occurrences, changes, circumstances and/or matters relied on to engage the definition; and otherwise denies that claim.

3. [257]

   I should now address the applicable provisions in the SID. Clause 3.1 of the SID provides that the scheme will not become effective unless certain conditions precedent are satisfied or waived. Relevantly, the condition precedent in cl 3.1(g) of the SID requires that:

4. [258]

   The term “Mayne Material Adverse Change” is defined in the SID as follows:

5. [259]

   The term “Maintainable EBITDA” is defined in the SID as follows:

6. [260]

   The term “EBITDA” is defined in the SID as:

7. [261]

   Clause 3.2(d) of the SID relevantly provides:

8. [262]

   Clause 3.5 of the SID relevantly provides:

9. [263]

   Clause 3.7 of the SID relevantly provides:

10. [264]

    Ms Collins submits, in opening, that the Court “should not limit” the phrase “event, occurrence, change, circumstance or matter” or read in words of limitation or construe the words used in a way narrower than is warranted by their natural and ordinary meaning. That proposition is, perhaps, self-evident when expressed in general terms, but the Court must nonetheless construe those terms, to which I return below. Ms Collins also submits that:

11. [265]

    It seems to me that a change in forecast is not itself an “event, occurrence, change, circumstance or matter”, but the reflection of a range of other events, occurrences, changes, circumstances or matters which give rise to the range of earnings that are the subject of that forecast. I prefer the approach taken in Akorn, that a failure to meet a financial projection is not itself an adverse change, but rather evidence of such a change. Mr Hutley points out, and I accept, that the clause in issue in Minumbra was very different from the clause in issue here and, in any event, Robb J’s observation that it is necessary to have regard to the underlying reasons for the occurrence of a budget shortfall requires analysis of the actual events that may be reflected in a change to a forecast.

12. [266]

    Mr Hutley also points out that the observations of Blair J in Ipsos S.A. v Dentsu Aegis Network Ltd (formerly Aegis Group Plc) [2015] EWHC 1726 (Comm) (“Ipsos”) do not support any contention that a difference between forecasts can, in itself, give rise to a material adverse change. That decision was concerned with a strike-out application, in a case where the relevant clause referred to “an act or omission, or the occurrence of a fact, matter, event or circumstance” giving rise to a “material adverse effect” on, inter alia, the business of a group of companies involved in an acquisition. The acquirer claimed that, first, revisions to forecasts and, second, actual performance fell within that clause. Blair J held (at [54]ff) that the claim based on revisions to the forecasts was “unarguable” on the basis that:

13. [267]

    In any event, and in accord with the approach taken in Ipsos, it seems to me that a change in MPG’s forecast does not, in itself, have any diminishing effect on MPG’s EBITDA for the purposes of the definition of MMAC and the operative clauses in the SID, but only indicates an estimate, at a point of time, of the impact of other matters that may affect MPG’s actual Maintainable EBITDA. I also recognise that little turns on this matter here, where Cosette’s pleaded cross-claim identifies the specific factual matters which are alleged to have affected MPG’s actual (rather than merely its forecast) Maintainable EBITDA.

14. [268]

    Ms Collins also submits, and I accept, that the phrase “reasonably expected” in the definition of an MMAC can extend to an event, occurrence, change, circumstance or matter that has occurred although the effect on MPG’s business has not yet been felt. She also submits, and I also accept, that the test of reasonable expectation is “an objective one” that calls for an “evaluative judgment” by the Court and does “not depend on what either party subjectively thought at the time”, although a contemporaneous assessment made by a party of whether an occurrence was reasonably expected to have the relevant effect, if made carefully and in good faith, “might carry considerable weight”: BM Brazil 1 Fundo De Investimento Em Participacoes Multistrategia & Ors v Sibanye BM Brazil (Pty) Ltd & Anor [2024] EWHC 2566 (Comm) at [225], [242]–[243] (“Sibanye”).

15. [269]

    Ms Collins also submits that:

16. [270]

    I am inclined to think this submission understates what is required for a reasonable expectation of the requisite effect, particularly where a specified monetary threshold must be met to establish an MMAC. To that extent, I would prefer the view expressed in Sibanye that “the assessment is whether a reasonable person would have considered it more likely than not that the matter would turn out to be material”, rather than the lower threshold that has arguably been adopted in some US case law. However, it is sufficient for present purposes to recognise that, as is common ground between the parties, a mere risk of an MMAC is not enough. I also accept that, as Butcher J recognised in Sibanye and Ms Collins emphasises, subsequent events are not necessarily irrelevant and when making that assessment whether an MMAC has occurred, since such events “may shed some light on what was, as at the relevant date, reasonably to be expected”, although “this exercise must be treated with some caution so that regard to what actually occurred does not overwhelm and subvert what is intended to be an assessment of what would have been said looking forward”.

17. [271]

    Turning now to the matters on which Cosette relies for this claim, they contend and MPG largely denies (CCS [77]–[79], CCSR [77]–[79]) that:

18. [272]

    Cosette in turn deploys (CCS Reply [5]) the limitation to the exception in the SID for general economic conditions that have a disproportionate impact on MPG.

19. [273]

    On one reading of this claim, as Mr Hutley points out in opening for MPG, the allegation in CCS [77] is, in effect, that MPG’s actual results reflecting demand were “weak”, the suggested co-pay increased and actual sales were “poor” by comparison with the levels forecast for the FY25 6+6 Forecast. Mr Hutley submits, in opening, that such a claim:

20. [274]

    There is, in my view, a fundamental conceptual difficulty with a claim by reference to changes in MPG’s forecasts, namely that the material adverse change in EBITDA contemplated by the SID is a change in MPG’s actual position, between two points in time in a 12 month period, not a change between a forecast and an actual position. As Mr Hutley points out, an attempt to establish an MMAC by comparing forecast results with actual results would defeat the disclaimer in respect of the forecast, in a manner that is not available on the proper construction of the SID or in such provisions generally: Hexion Speciality Chemicals Inc v Huntsman Corp (2008) 965 A.2d 715 at 741.

21. [275]

    On another, and tenable, reading of the claim, its gravamen is an allegation of adverse factual developments in MPG’s business in respect of the relevant product demand, co-pay increases and poor actual sales, reflected in actual earnings in the relevant period which are alleged to have the claimed financial consequences. Ms Collins appears to put Cosette’s claim in this way in opening submissions.

22. [276]

    There is a further dispute between the parties as to whether (as MPG contends) it is an essential element of Cosette’s claim in CCS [77] that, not only did the Q3 FY25 Sales Performance Matters (as defined in CCS [77]) occur, but they had the specified consequences pleaded in CCS [77(d)] and [77(e)], by reference to the forecast EBITDA contained in the FY25 6+6 EBITDA forecast. In closing submissions, Cosette responds to that submission and contends, with substantial force, that:

23. [277]

    It is not necessary to determine this pleading dispute where I find below that, in any case, Cosette has not established that the Q3 FY25 Sales Performance Matters, alone or together with matters arising from the FDA Letter, meet the quantitative threshold for an MMAC contained in the SID.

24. [278]

    Turning now to more substantive matters, Ms Collins points to the fact that MPG’s FY25 9+3 Forecast, in its EBITDA bridge which identifies variances between the FY25 6+6 EBITDA Forecast and the FY25 9+3 Forecast, identified, in women’s health products, an A$11.5 million reduction from the FY25 6+6 EBITDA Forecast “driven by a unit reduction across all brands, but mainly Annovera”, with $4.1 million of that drop occurring in Q3 FY25; and an A$3.8 million reduction from the FY25 6+6 EBITDA Forecast associated with Nextstellis, “driven by a unit reduction”, more than half of which had already occurred in Q3 FY25. Consistent with the case law to which I referred above, and Cosette’s pleaded claims of weak underlying demand and poor actual sales and earnings in Q3 FY25, I here have regard to the actual decline in sales rather than the change between forecasts of sales made at different times. Ms Collins also points, in MPG’s dermatology products, to several declines in forecast earnings, including those associated with unit declines, but it is there more difficult to identify the actual decline in sales.

25. [279]

    Ms Collins submits, and I broadly accept, that:

26. [280]

    Ms Collins also rightly points to observations in MPG’s February 2025 board paper which recognised the fact of lower unit sales in all four major brands in MPG’s women’s health business in Q3 FY25 and also projected reduced sales in Q4 FY25, and also noted declines in unit sales in major dermatology products, including Rhofade and Doryx. She also points to observations in the February 2025 CEO report, to which I referred above, that:

27. [281]

    Ms Collins also points to MPG’s March 2025 CFO Report, to which I also referred above, which was made available to Cosette on 16 April 2025, and observed that:

28. [282]

    Ms Collins also relies on a comparison of MPG’s quarterly forecasts through FY25 to submit that what occurred in Q3 was a collapse in sales that was a significant departure from the trend of the business. Consistent with the case law to which I have referred, I accept that the change in forecast earnings is evidence of the fact of a decline in product sales in the underlying business, although the comparison of forecasts does not allow the quantification of that decline.

29. [283]

    There is, in any event, no real dispute as to the fact of that significant decline in that period, which was frankly and properly accepted by Mr Gray in his cross-examination. In closing submissions, Cosette rightly points to the concessions made by Mr Gray in cross-examination as to a decline in demand for MPG’s products in Q3 FY25, by contrast with the previous trend in demand, to which I have referred above. I also noted the explanation that has now been identified by MPG for that adverse development. Cosette also points to Mr Gray’s evidence as to other changes in MPG’s dermatology sales channel, including the launch of competitive products which altered the persons who were buying MPG’s products and reduced MPG’s overall selling price for those products, adversely affecting gross sales and EBITDA and the loss of coverage for Rhofade which had the same effect. I accept Cosette’s submission that these matters, confirmed by Mr Gray’s evidence, rise beyond a variance between forecast and actual results to establish an actual decline in demand for MPG’s health and dermatology products in Q3 FY25, which supports Cosette’s first contention of “weak” underlying demand for those products in that period, although not as a result of a shift to generic products in respect of women’s health (as distinct from dermatology) products.

30. [284]

    I accept that an occurrence, change, circumstance or matter had arisen by March 2025 in respect of weak underlying demand for MPG’s women’s health and dermatology products in Q3 FY25. It is apparent from MPG’s FY25 annual report and Mr Gray’s evidence that the cause of that development in that period cannot be established with certainty, but it most likely relates to the changes in MPG’s sales team to which I have referred above. I accept that at least a circumstance as to poor actual sales and earnings in Q3 FY25 has been established, for the same reasons that weak underlying demand was established.

31. [285]

    MPG relies in response (CCSR [79]), so far as the alleged Q3 FY25 Sales Performance Matters are concerned, on disclosure in Due Diligence Material and further, or alternatively, on the claim that the matters arose from general economic or political conditions or changes in those conditions (including market fluctuations, changes in interest rates, commodity prices or foreign currency exchange rates) on or after the date of the SID, within the meaning of subparagraph (f) of the definition of an MMAC. I accept that the decline in EBITDA in January 2025, arising from these matters, was fairly disclosed in Due Diligence Material and is not available to establish an MMAC. I do not accept that these matters arose from general economic or political conditions or changes in those conditions, where they appear to have been the consequence of the changes to MPG’s sales team to which Mr Gray referred.

32. [286]

    Cosette then contends that the Q3 FY25 Sales Performance Matters could be reasonably expected to diminish MPG’s maintainable earnings in FY25 by more than $10.76 million, so as to satisfy the quantitative threshold for an MMAC and a right of termination under the SID. I will assume, without deciding, that Cosette is entitled to choose FY25 as the relevant basis for that calculation, as distinct from the 12 months period from the date of the asserted diminution in sales, where that is a 12 month period for the purposes of the definition and hardly an unreasonable choice of period. However, Cosette has not established its claim to establishing an MMAC arising from the identified Q3 FY25 Sales Performance Matters, for several reasons.

33. [287]

    The first is that, as Mr Hodge fairly acknowledged in oral closing submissions, Cosette does not seek to establish a starting point to determine whether an MMAC occurred, by reference to MPG’s actual earnings as they would have been achieved by MPG but for the Q3 FY25 Sales Performance Matters and its actual earning after those matters. That plainly could have been established by expert evidence adjusting MPG’s actual results over a relevant period for the impact of the identified matters but was not. Instead, Cosette takes the FY25 6+6 Forecast as the basis for an inference as to what actual results would have been but for the Q3 FY25 Sales Performance Matters. I accept that, as the case law has indicated, such an inference may in principle be drawn from a forecast. However, the comparison of forecast and actual earnings which Cosette undertakes here does not isolate the impact of the alleged Q3 FY25 Sales Performance Matters, because the lesser actual result will necessarily reflect all adverse changes in the economy and in MPG’s business and not only any impact of the pleaded FY25 Sales Performance Matters. The failure to isolate the effect of the pleaded Q3 FY25 Sales Performance Matters fatally undermines that approach, where Cosette must establish an evidentiary basis for a finding that the quantitative threshold for an MMAC was met by reason of those matters, and general economic matters are excluded by the relevant exceptions.

34. [288]

    Second, that approach raises the same difficulties as arise in Cosette’s representational case based on the FY25 6+6 Forecast, which I address below. It is difficult to see that the FY25 6+6 Forecast created a basis for any finding, on the balance of probabilities, that (but for the Q3 FY25 Sales Performance Matters) MPG’s actual result would have been the amount of A$69.8 million adopted in the FY25 6+6 Forecast, rather than a higher or lower result, given the nature of a forecast and the identified risks and opportunities set out in the FY25 6+6 Forecast. It is therefore unclear how Cosette has established, on the balance of probabilities, that the starting point for determining whether an MMAC arose should be the amount of A$69.8 million identified in that forecast, and the application of the quantitative materiality standard necessarily requires that its starting point be established on the balance of probabilities.

35. [289]

    Third, it was apparent, from Mr Hodge’s oral closing submissions for Cosette, that the expert accounting evidence now has an uncertain relationship with the question whether the quantitative threshold for an MMAC was met, and the result of that expert accounting evidence is also now indeterminate. The latter difficulty arises because of the uncertainty that has now enveloped the issue as to the Doryx Co-Pay Adjustment and how the expert accountants have treated it. I will now address that expert accounting evidence.

36. [290]

    The Cossette Parties tender, without objection, three expert reports of an accounting expert, Ms Friend, dated 30 July 2025 (Ex C8), 1 August 2025 (Ex C9) and 4 August 2025 (Ex C10). MPG in turn tenders the report 1 September 2025 of Ms Wright in response (Ex M2), and the Cosette Parties then tender a reply report dated 8 September 2025 of Ms Friend (Ex C11). Ms Friend has forensic accounting and valuation expertise and, in her first report, was asked to identify the actual sales performance of Nextstellis from June 2021 to June 2025, on a monthly and financial year basis by reference to specific matters, and then identify gross sales, net sales and gross profit for Nextstellis on a monthly basis for specified periods. Ms Friend set out the conclusions which she reached as to that matter in that report. By her second report dated 1 August 2025, Ms Friend was asked to review the actual net sales and gross sales performance of Nextstellis for June 2025, by reference to MPG’s management accounts, its June 2025 CFO Report and daily units shipped for Nextstellis for the period to 30 June 2025, and to provide a further response to a question asked in her earlier letter of instruction by reference to that matter and addressed those questions in that further report. Whereas Ms Friend’s first report had relied on the June 2025 forecast sales from MPG’s 9+3 Forecast, her second report calculated projected financial performance for Nextstellis based on a different approach. By her third report dated 4 August 2025, Ms Friend addresses further questions including the extent to which a change in gross margins would be expected to affect EBITDA; the extent to which MPG’s EBITDA for Q3 FY25 was reduced by a shortfall in gross margins for any products in MPG’s women’s health and dermatology business; and the effect of those matters on MPG’s EBITDA. Initially, Ms Friend calculated a reduction in MPG’s Maintainable EBITDA of at least A$10.76 million for FY25, meeting the quantitative threshold for an MMAC, but it is now common ground that her calculation did not apply the USD/AUD exchange rate that is required for that calculation under the SID and it also depended on how the Doryx Co-Pay Adjustment is properly treated.

37. [291]

    MPG in turn tendered the report dated 1 September 2025 of Ms Wright (Ex M2), who also has forensic accounting and valuation experience, in response to Ms Friend’s first three reports. Ms Wright was there instructed to assess the methodology for calculating the EBITDA relating to Nextstellis adopted in Ms Friend’s first and second reports; comment on Ms Friend’s conclusion that gross sales for Nextstellis in June 2025 were US$7,676,365 and the gross sales for Nextstellis for May and June 2025; and address the Doryx Co-Pay Adjustment and the application of the exchange rates specified in the SID. Ms Wright there took issue with Ms Friend’s calculation of the EBITDA relating to Nextstellis in her second report and expressed the view that it had the effect of materially overstating the EBITDA relating to Nextstellis and the Nextstellis proportion of total underlying EBITDA, because the numerator and denominator adopted in Ms Friend’s calculation were not on a consistent basis. I accept that criticism of Ms Friend’s calculation, although little turns on it where Ms Friend has now recalculated the relevant figures. Ms Wright there recalculated the EBITDA related to Nextstellis by reference to MPG’s actual results for FY25, her preferred method, and, for comparative purposes, based on the method adopted in Ms Friend’s first report.

38. [292]

    Ms Wright also referred to correspondence which identified the nature of the Doryx Co-Pay Adjustment and to Mr Gray’s evidence that the correction of that error related to a period earlier than January 2025. On that basis, her evidence was that that correction was properly treated as a one-off adjustment, which would have been required regardless of gross sales achieved by MPG in February 2025 or Q3 FY25 and should be excluded in determining whether an MMAC was established a result of the Q3 FY25 Sales Performance Matters. After correcting Ms Friend’s analysis to adopt the exchange rate required in the definition of “Maintainable EBITDA” in the SID and excluding the impact of the Doryx Co-Pay Adjustment as a one-off correction, Ms Wright expressed the view that the variance in MPG’s underlying EBITDA for Q3 FY25 as calculated by Ms Friend was overstated by in excess of A$3 million. Ms Wright concludes that, once the adjustments are made, the variance in Maintainable EBITDA is A$8.618 million, which falls below the quantitative threshold for an MMAC.

39. [293]

    Mr Hodge, in cross-examination of Ms Wright, challenged the basis on which Ms Wright had formed her view as to the Doryx Co-pay Adjustment and put the proposition that that correction resulted from changes in inventory and a reduction in sales. Plainly, Ms Wright, as an expert witness, had no personal knowledge of whether that suggestion was correct and she maintained her evidence, consistent with the correspondence to which I have referred above and Mr Grey’s evidence, that the Doryx Co-Pay Adjustment was a correction of a one-off error reflecting a change in methodology and should be excluded from the calculation of the variance in MPG’s Maintainable EBITDA. It seems to me that her evidence that that adjustment should not be included in determining whether there was a decline in Maintainable EBITDA, while vigorously challenged, was not falsified by that cross-examination.

40. [294]

    By her report dated 8 September 2025 in reply (Ex C11), Ms Friend noted that, after adjusting for MPG’s FY25 actual results, which were not available at the time she had prepared her first and second reports, she and Ms Wright now agreed as to the calculation of gross sales, net sales, cost of goods sold, gross profit, and gross margin as to Nextstellis. She and Ms Wright disagreed as to how the costs of operational expenditure should be allocated to Nextstellis in determining MPG’s underlying EBITDA and the contribution of Nextstellis to that underlying EBITDA. Ms Friend maintained her preference to allocate only operating expenses that were directly linked to Nextstellis to that product, and considered that it was not appropriate, as Ms Wright had done, to allocate a portion of all operating expenses (except for four items) to Nextstellis. However, Ms Friend also acknowledged that the allocation of operating expenditure to Nextstellis was a factual matter, where MPG’s underlying EBITDA was not reported at a product level, although she criticised the approach adopted by Ms Friend as arbitrary. While I consider that both Ms Friend’s and Ms Wright’s approaches are both arguable, if forced to a choice, I would adopt Ms Wright’s approach to avoid the risk of under-allocation of those expenses arising in Ms Friend’s approach. It is likely not necessary to make that choice given the wider difficulties with Cosette’s calculation of the amount of its asserted MMAC.

41. [295]

    It appears that Ms Wright, in reply, accepts the need to recalculate amounts set out in her third report to apply the exchange rate required by the SID. Ms Friend did not there directly challenge the view expressed by Ms Wright as to the Doryx Co-Pay Adjustment but treated that matter as one as to which she had insufficient information as to the relevant facts. Her reply report therefore did not support the inclusion of the Doryx Co-Pay Adjustment in calculating the amount of a decline in MPG’s Maintainable EBITDA, by reference to any identifiable assumptions that Cosette sought to establish as a matter of fact. In the result, on the most favourable view for Cosette, there is no evidentiary basis for a conclusion that, on the balance of probabilities, on proved facts and on a proper accounting treatment, the Doryx Co-Pay Adjustment should be included in calculating a decline in MPG’s Maintainable EBITDA arising from the Q3 FY25 Sales Performance Matters.

42. [296]

    After correcting for the exchange rate error in Ms Friend’s first report, and excluding Doryx Co-Pay Adjustment , it is common ground between the accounting experts that Cosette does not meet the quantitative threshold for an MMAC. It is not necessary to address MPG’s further submission that the change in the Doryx Co-Pay Adjustment was also within other carve-outs the definition of an MMAC.

43. [297]

    I recognise that, in closing submissions, Cosette sought to depart from the matters addressed by the expert evidence, which I have addressed above, to establish an adverse expected effect on MPG’s Maintainable EBITDA arising from these matters by comparing several forecasts made by MPG at different times. Cosette there submits that:

44. [298]

    I do not accept that approach. At the risk of repetition, first, that approach depends on taking a single point in the forecast as establishing the likely actual result on the balance of probabilities. There is no reason to treat the several forecasts in that manner, given their nature. Second, the assessment of the decline that occurred, or was reasonably expected to occur, in Maintainable EBITDA as a result of the Q3 FY25 Sales Performance Matters requires that the impacts of those matters be isolated from other economic developments, particularly given the exceptions to Cosette’s right to terminate for an MMAC and Cosette’s comparison of forecasts does not provide any basis to do so.

45. [299]

    Cosette then contended, in a manner that was unsupported by Ms Friend’s accounting evidence and was rejected by Ms Wright’s accounting evidence, for the adjustments that should be made to operational expenditure so as to reach the result that the amount of the decline in Maintainable EBITDA would exceed the quantitative threshold in the SID. I reject that approach, where that is a matter that could only properly be determined by an adequate analysis in expert evidence directed to assumed facts that were then established by evidence. Cosette in turn addresses the Doryx Co-Pay Adjustment, addressed in the expert evidence to which I have referred above, at some length, but I also consider that matter is properly addressed by reference to its factual basis and the expert evidence, which I have addressed above.

46. [300]

    Cosette then contends and MPG denies (CCS [80], CCSR [80]) that, by reason of these matters, an MMAC occurred by 17 May 2025, the date of the first MAC Notice. That matter has not been established for the reasons noted above. I will address MPG’s election defence below.

Cosette’s claim that an MMAC resulted from other events

1. [301]

   Cosette initially relied on two further matters, the FDA Letter relating to Nextstellis and matters raised by the TGA in an inspection of MPG’s Adelaide facility in March 2025 to establish an MMAC. As I noted above, they abandoned reliance on the TGA Letter in the course of the hearing and I need only address their claim relating to the FDA Letter here.

2. [302]

   Cosette pleads (CCS [81]–[95]) matters relating to Nextstellis and refers to the reference to that product in the independent expert’s report in respect of the scheme, the receipt of the FDA Letter, the publication of that letter on the FDA’s website, a subsequent internet publication and a fall in MPG’s share price, MPG’s ASX announcements in respect of that matter and the FDA Letter Response (Ex J1, 14/10945). Cosette then pleads, and MPG denies, (CCS [86], CCSR [86]) that:

3. [303]

   Cosette Parties plead, and MPG partly admits and partly denies (CCS [96A]–[96B], CCSR [96A]–[96B]) the content and effect of promotional material that MPG was using to market Nextstellis in the United States and the parties are in dispute as the effect of modifying those materials. Cosette then pleads and MPG denies (CCS [97], CCSR [97], CCS Reply [6]):

4. [304]

   I should first address a preliminary issue as to the FDA Letter, which arises in this claim and in Cosette’s continuous disclosure claim based on the FDA Letter. In closing submissions, Mr Hutley submits that, to put it neutrally, Cosette does not seek to establish that the views expressed in the FDA Letter were correct, and MPG conversely does not seek to establish that, as it had previously contended, those views were incorrect at least in significant part. Neither party called their respective expert witnesses who were to address any dispute as to that issue. I recognise that Cosette sought to qualify that apparent position in closing submissions, although it was not apparent what they would put in its place where they had only pleaded the fact and content of the FDA Letter and had not pleaded or led evidence that was capable of establishing the facts and opinions expressed by the FDA in that letter or the correctness of the FDA’s view.

5. [305]

   I have no doubt that the position is as Mr Hutley summarised it. That matter was plainly exposed in the course of the hearing, where I had squarely raised, and Counsel had plainly understood, from the point of opening submissions, the real difference between a contention that a regulatory communication (which may or may not may not be correct) was sent and received and a contention as to the underlying facts and matters asserted by that communication. This simply recognises the straightforward propositions that communications often do not prove the trust of their contents and (as Ms Collins fairly recognised in opening) there is no presumption of infallibility in favour of regulatory bodies.

6. [306]

   In an aide memoire provided in the course of its closing submissions, Cosette drew attention to the many references to this matter in the course of the hearing but one (T42–43) is likely sufficient to identify the basis on which the case was opened and conducted by Cosette, to which MPG ultimately acceded, although it had originally placed the correctness of the FDA’s views in issue:

7. [307]

   As I noted above, the parties then decided not to lead their expert evidence as to, inter alia, whether the FDA’s views were correct. I proceeded on the basis that this approach was common ground in dealing with objections to evidence (T963–964), as follows:

8. [308]

   I therefore proceed, in this aspect of the case (and also in Cosette’s continuous disclosure claim relying on the FDA Letter, which I address below) on the basis that it is common ground that the FDA Letter had been received by MPG from the FDA, which is plainly an important regulator for its business; the FDA had expressed views in it which may or may not have been correct; MPG has responded to the FDA Letter by the FDA Letter Response; and MPG has now made changes to its marketing approach for Nextstellis as addressed in Mr Turner’s affidavit and cross-examination and the documentary evidence. Notwithstanding the position put by Ms Collins in closing submissions, neither party made any real attempt to prove the correctness or otherwise of the views expressed in the FDA Letter and that matter cannot be either assumed or determined in this judgment.

9. [309]

   Cosette Parties led expert evidence and MPG led both lay and expert evidence relating to the marketing of Nextstellis which is relevant to the impact of the FDA Letter and to this claim. The Cosette Parties relied on a lengthy expert report dated 3 August 2025 of Mr John Hosier (Ex C4). Mr Hosier is a marketing consultant in the pharmaceutical industry in the United States. It was apparent from his cross-examination that he has significant experience in pharmaceutical marketing generally but limited experience in respect of the marketing of oral contraceptives. Mr Hutley made detailed criticisms of Mr Hosier’s evidence in closing submissions, and I address the difficulties with Mr Hosier’s evidence below. Mr Hutley submitted, and I accept, that Mr Hosier’s methodology depended upon the assumption that an oral contraceptive product would or should be marketed by way of a single “differentiating” feature that is unique and clinically meaningful and that Nextstellis would in fact be marketed by the “differentiating feature” that he attributed to it, namely that its estrogen ingredient was plant-based. As I note below, that premise was, at best, not established.

10. [310]

    Mr Hosier was asked to evaluate the commercial impact of the FDA Letter on the gross sales of Nextstellis for FY25, CY25, a 12 month period from the date of the letter to 27 April 2026, and for a further 12 month period from the date of publication of the FDA Letter to 11 May 2026. It is not necessary to address whether it is open to Cosette to rely on any of those multiple periods, where Mr Hosier’s evidence did not establish a material impact of the FDA Letter in any of those periods for the reasons noted below. Mr Hosier adopted several complex methodologies to do so, none of which had any significant regard to the fact of MPG’s current or intended marketing strategy for Nextstellis, as distinct from as marketing approach which Mr Hosier attributes to MPG but which it is not in fact adopting, for good reason. Mr Hosier’s report indicated that he had complied with the Expert Witness Code of Conduct in Sch 7 of the UCPR and made the inquiries which he believed were necessary and appropriate. It seems to me that those inquiries should at least have included making a genuine attempt to test Mr Hosier’s hypothesis as to how MPG would market Nextstellis after the FDA Letter against how it did market Nextstellis after the FDA Letter. That makes Mr Hosier’s lack of engagement with the actual marketing approach adopted by MPG since the FDA Letter all the more unfortunate.

11. [311]

    In his first report, Mr Hosier refers to the FDA Letter and the FDA Letter Response at some length, he outlines the oral contraceptive markets, and he refers to strategies and methods which are used for pharmaceutical marketing. Broadly, Mr Hosier then identifies the position adopted in MPG’s marketing of Nextstellis before the FDA Letter, including the emphasis MPG then placed on its side effect profile, its safety and the benefits of its estrogen ingredient, estetrol (E4); notes the commitments made by MPG in the FDA Letter Response; and assumes that MPG’s promotional material after 28 April 2025 had removed or modified marketing claims which it committed to remove or modify in the FDA Letter Response. That assumption was reasonable enough. However, Mr Hosier’s approach thereafter failed to make any real attempt to engage with what MPG was likely to put in place, and in fact put in place, in the marketing approach adopted since the FDA Letter, although that matter was addressed at length in Mr Turner’s lay evidence led by MPG which I address below.

12. [312]

    Mr Hosier explains why he considers that MPG will “no longer be able to promote Nextstellis as a highly differentiated product” [1] following the FDA Letter. That view is undermined by the evidence that, as MPG’s advertisements since the FDA Letter (which are addressed in other evidence and were put to Mr Hosier in cross-examination) indicate, MPG it is in fact still promoting Nextstellis as a highly differentiated product, by reference to the fact that estetrol (E4), although synthetic, parallels a natural hormone found in a woman’s body during pregnancy, and by reference to the combination of elements in Nextstellis. Mr Hosier then concludes, based on a lengthy analysis, that “removal of the prior claims and the revised promotional claims for Nextstellis”, implemented in response to the FDA Letter, are likely to result in “substantial sale losses” to MPG; again the “revised promotional claims” are those which Mr Hosier attributes to MPG, rather than those which MPG is in fact making. Mr Hosier then explains, at length, why differentiated products perform better than undifferentiated products, in terms of prescriptions or sales; that proposition is plausible, but turns on the unestablished premise that Nextstellis, after the FDA Letter, become an undifferentiated product.

13. [313]

    The difficulty with Mr Hosier’s approach is clear enough here. Mr Hosier has engaged in an exercise of choosing for himself an approach that could be adopted by MPG to “differentiate” (in his term) Nextstellis in the oral contraceptive marketplace, which he assumed would focus on the fact that estetrol (E4) was “plant based”. It was apparent, from the consumer survey evidence on which Mr Hosier relied to attribute that particular marketing approach to MPG, that it was unlikely to be particularly effective, because that matter was not in itself of particular significance to HCPs or consumers; and Mr Hosier then reached the unsurprising conclusion that a not particularly effective approach that he chose to attribute to MPG would not be particularly effective. An obvious and fundamental difficulty with that approach, never adequately addressed by Mr Hosier, was the fact that that approach was not likely to be particularly effective meant that it was also not likely that MPG (as distinct from Mr Hosier) would choose to adopt it, and the evidence made clear, as a matter of fact, that MPG had not adopted it. That difficulty may well be enough basis, without more, to give little weight to Mr Hosier’s evidence.

14. [314]

    Based on this approach, Mr Hosier concludes that (Ex C4) that:

15. [315]

    Mr Hosier then notes that “undifferentiated” pharmaceutical products particularly those which are more expensive than other products, are unlikely to perform as well as “differentiated” pharmaceutical products and that, as a result, Nextstellis is likely to lose prescriptions or sales, or both, due to the revised marketing claims. His conclusion that a marketing strategy that emphasised that estetrol (E4) was “unique and plant based” would leave Nextstellis as an undifferentiated product again depended on the new marketing strategy which Mr Hosier attributed to MPG, as distinct from the new marketing strategy which MPG has adopted, and I have addressed the difficulty in that approach above.

16. [316]

    On the basis that MPG intends to market Nextstellis as “unique and plant-based”, Mr Hosier determined, by reference to MPG’s earlier market research, that a portion of HCPs will likely stop prescribing Nextstellis. He concludes that MPG will then lose 35% of sales from HCPs that thought Nextstellis differentiated for a reason other than its ingredient estetrol, plus 21% of sales for HCPs that thought Nextstellis was differentiated because of estetrol, but who do not believe that it is important that estetrol is plant-based. These conclusions are again derivative of the assumptions which underly them, and critically the choice of marketing claims which Mr Hosier attributes to MPG, rather than marketing claims which MPG is making. At this point, one might also have expected an expert to question his or her underlying assumptions, since it seems obvious enough that, if a marketing strategy would have that consequence, then a company would likely adopt a different and more effective one, as MPG in fact appears to have done. Mr Hosier did not, however, then pause to re-evaluate his assumptions on that basis.

17. [317]

    Mr Hosier’s lengthy cross-examination demonstrated that there were also likely significant errors in the detail of his approach, including that he misread the results of marketing studies as to the extent to which HCPs value estetrol (E4) as an ingredient in Nextstellis; and, as a result, even if his methodology was otherwise correct, adopted excessive percentages reductions to the likely prescriptions and failed to exclude overlap between the two asserted categories of lost prescriptions. However, at the risk of repetition, the more fundamental difficulty with that approach was that it depended on his view that Nextstellis would become undifferentiated, on the basis of the marketing approach that he attributed to it, rather than the marketing approach that it has adopted.

18. [318]

    Having reached that unsustainable conclusion, Mr Hosier in turn concluded that:

19. [319]

    In an alternative analysis, Mr Hosier then considered how “similar oral contraceptive products” have performed over the same period of time since launch. However, his cross-examination demonstrated, beyond doubt, that his choice of two “similar” products was at best unjustified and at worst perverse, because one of those “similar products” had an uncommon dosage structure and was promoted to a relatively specialist market and the other was a product that was largely not distinguishable from many other contraceptive products. Mr Hosier saw a decline in prescriptions for those products over the relevant time period and, on that basis, forecast a decrease in gross sales of Nextstellis for $37.5 million one year after the FDA Letter and $40.7 million one year after the FDA Letter became public. Those conclusions also cannot rise higher than their underlying assumptions and, in particular, Mr Hosier’s choice of the comparator products, which I do not accept.

20. [320]

    By a second expert report dated 8 September 2025 (Ex C5), Mr Hosier responded to Mr Turner’s affidavit evidence and an expert report of Ms Selman on which MPG relied, which I address below. Mr Hosier expressed the view that Mr Turner’s affidavit and Ms Selman’s report did not change any of his opinions and that, despite the features of Nextstellis to which Ms Selman and Mr Turner pointed, Nextstellis was “largely undifferentiated” following the FDA Letter and that, other than the use of estetrol, none of its features is distinct to Nextstellis. Mr Hosier there accepts that estetrol is distinct to Nextstellis; but contends that, where MPG will not market it in a manner that implies that that results in superior safety or efficacy, estetrol would not offer a “differentiating” advantage to Nextstellis. That proposition depends on Mr Hosier’s perception as to what would be a “differentiating advantage” to Nextstellis and the distinction between what is a “difference” and what is a “differentiating advantage” became elusive in his cross-examination.

21. [321]

    Mr Hosier there responds to the “differentiating features” of Nextstellis identified by Ms Selman and Mr Turner and suggests that each of the separate differentiating features may be found in another product or products in the market for oral contraceptives. While that proposition may be true, a combination of features does appear to distinguish Nextstellis from other products, for the reasons pointed out by Ms Selman and Mr Turner, and it is not apparent that Mr Hosier has a proper basis on which to dismiss the significance of that combination of features to HCPs or consumers, or to exclude MPG’s ability to capitalise on any attraction of that combination, in the face of the evidence that it is in fact continuing to do so. Mr Hosier, in reply, also repeats aspects of his evidence in chief, but that repetition does not address the difficulties with that evidence which I have noted above.

22. [322]

    Mr Hosier was cross-examined at length, although the deficiencies in his approach emerged early in that cross-examination and were only reinforced as it continued. He was, in my view, an unimpressive witness, who typically did not engage with questions in a responsive way and, to the extent that he did so, defended his position without any real analytical engagement with the matters that falsify it which were put to him in cross-examination. Mr Hosier’s evidence in cross-examination reinforces my conclusion that his views are of no assistance to the Court.

23. [323]

    Turning now to the evidence led by MPG as to the impact of the FDA Letter, MPG reads the affidavit dated 25 August 2025 of Mr Turner, its Vice President of Marketing, also based in the United States, and two further affidavits of Mr Turner dated 24 September 2025. Mr Turner’s first affidavit is lengthy but may be summarised more briefly for the purposes of this judgment. Mr Turner addressed the process of marketing and sale of oral contraceptives in the United States; the nature of Nextstellis and identified its competitors; and the marketing methods adopted by MPG for Nextstellis in the United States. He outlined marketing materials that had been used for Nextstellis for some time and referred to his view (which preceded the FDA Letter) that MPG’s marketing materials had focussed too heavily on one ingredient of Nextstellis, estetrol, at the expense of its other active ingredient, drospirenone. Mr Turner also referred to the steps which he then considered should be taken to simplify MPG’s marketing of Nextstellis, which included substantially simplifying a “12 box table” in CVAs made available by MPG to its sales representatives for Nextstellis.

24. [324]

    Mr Turner also referred to the steps which had been taken to advance a marketing refresh process in respect of Nextstellis to address these matters, prior to MPG’s receipt of the FDA Letter. He also referred to the receipt of the FDA Letter, and he was cross-examined at some length as to the basis of his evidence that, because the FDA Letter was an “untitled letter”, it was not as serious as a “warning letter” and that he was “not concerned” when Ms Nataline of MPG initially told him of the receipt of that letter. I accept that Mr Turner had limited experience of dealings with the FDA to support that view and his evidence in cross-examination was ultimately not consistent with a lack of concern with that letter, where he rightly there treated the receipt of any letter from the FDA as a serious matter, irrespective of the correctness or otherwise of the views which that letter expressed. Mr Turner addressed the concerns raised in the FDA Letter and their effect on MPG’s marketing materials and outlined the steps that were taken to adapt MPG’s marketing materials and repurpose or cancel marketing presentations for Nextstellis immediately following the receipt of the FDA letter. He also addressed the current status of MPG’s marketing refresh as to Nextstellis, which has advanced since the receipt of the FDA Letter.

25. [325]

    By his second affidavit dated 24 September 2025, Mr Turner corrected the date and times of correspondence referred to in his first affidavit and provided further information as to speaker programs which were affected by the receipt of the FDA Letter, which were largely combined programs for Annovera and Nextstellis which were then repurposed as Annovera only speaker programs, and four speaker programs which had related only to Nextstellis. By his third affidavit also dated 24 September 2025, Mr Turner addressed further information relating to the level of prescriptions issued for Nextstellis. He was cross-examined at some length as to the trends disclosed by that information, which appears to show a trend of modest but steady growth in prescriptions for Nextstellis. He was also cross-examined as to whether it was too soon to draw a conclusion from that data as to the effect of the new Nextstellis marketing strategy. He did not wholly accept that proposition, where his evidence was that the new marketing strategy had been substantially in place for some time, and by reason of his confidence in the improvements made to the marketing strategy for Nextstellis which, as I have noted above, he had been seeking to implement before the receipt of the FDA Letter.

26. [326]

    Mr Turner was cross-examined as to the changes which MPG implemented “following” the FDA letter, and I accept those changes were made after that letter as a matter of timing. It is plain enough, however, that Mr Turner welcomed the implementation of those changes, irrespective of the fact that their implementation was advanced by the receipt of the FDA Letter, since they implemented the changed marketing strategy which he had been developing and seeking to implement for some time. Mr Turner plainly had significant experience in marketing and he was, in my view, an honest witness who gave direct answers and seemed to me to be doing his best to assist the Court. I am comfortably satisfied that Mr Turner genuinely believes, and has reasonable grounds to believe, that the implementation of the new marketing strategy for Nextstellis is an advantage to MPG rather than the contrary.

27. [327]

    MPG in turn tenders the expert report dated 29 August 2025 of Ms Selman (Ex M1) who also has substantial experience in pharmaceutical marketing in the United States. She also addressed the market for combined oral contraceptives in the United States and expresses the view that that market is highly competitive, saturated and “genericized”. She nonetheless expressed the view that Nextstellis continues to have a differentiated brand as the only combined oral contraceptive that contains the unique combination of estetrol and drospirenone, and has additional key marketable attributes including good safety and efficacy results in Phase III clinical trials, good tolerability and several other positive features, and that this combination of “differentiating features and marketable attributes” together add up to a compelling, unique addition to HCPs or patients seeking a combined oral contraceptive.

28. [328]

    Ms Selman also addressed the process of pharmaceutical marketing in the United States, and points both to the structural features of MPG’s marketing, including its use of a sales force and sampling methodology and to the “new and improved message” contained in a new CVA and new speaker deck following the FDA Letter which, in her view, will resonate better with HCPs than MPG’s previous marketing. I give substantially greater weight to Ms Selman’s approach than to Mr Hosier’s approach where, critically, it addresses the nature of the marketing that is in fact being undertaken by MPG, by contrast with Mr Hosier’s approach of his attributing a different marketing approach to MPG to seek to demonstrate that that approach (if adopted, which it was not) would likely result in lost sales for MPG. Ms Selman also explains the focus of the FDA Letter upon implied assertions of superiority in MPG’s previous marketing, and the unlikelihood, based on her experience, that an “untitled letter” issued by the FDA would have an adverse impact in the market for pharmaceutical products. Ms Selman also addresses differentiating factors and marketable attributes of Nextstellis which she notes are still being marketed by MPG following receipt of the FDA Letter.

29. [329]

    Ms Selman also advances several criticisms of the methodology of Mr Hosier’s report including, importantly, pointing out that the assumptions made by Mr Hosier as to MPG’s marketing plan are inconsistent with the marketing strategy which MPG has in fact adopted. She also takes issue with Mr Hosier’s view that Nextstellis has ceased to be differentiated in the combined oral contraceptives market, where she has expressed the contrary view. Importantly, she points out that the prescribing information approved by the FDA for Nextstellis identifies estetrol as a “synthetic analogue of a native estrogen present during pregnancy” and that, on that basis, she expresses the view that it is permissible for MPG to market Nextstellis as containing a “natural estrogen” and, where Nextstellis is the only oral contraceptive that contains estetrol, “it is still permissible to market Nextstellis as being unique and the only oral contraceptive that contains a natural estrogen”. She also points out that it is also permissible to market Nextstellis, after the FDA Letter, as the only oral contraceptive to combine both a natural estrogen and drospirenone; she expresses the view that the receipt of the FDA Letter will have no detrimental effect on sales of Nextstellis in that respect. She notes that a “natural estrogen” marketing claim has in fact been incorporated into the interim CVA published by MPG between May 2025 and August 2025 and in the new CVA which was to be launched by MPG in August 2025; that the new CVA on the front cover describes Nextstellis as “a natural choice” and, on its second page, as a “natural estrogen” and later as “[t]he only [product] to contain the natural estrogen, estetrol, and drospirenone”. Ms Selman concludes, and I accept, that these matters are key differentiators of Nextstellis, contrary to Mr Hosier’s view to the contrary.

30. [330]

    Ms Selman also points to several difficulties with Mr Hosier’s forecasting methodology. She rightly takes issue with Mr Hosier’s assumption that Nextstellis will only be marketed as being “unique and plant-based” following the FDA Letter, where the evidence is to the contrary. She also points to methodological difficulties with Mr Hosier’s methodology, including the use of “forced ranking exercises” in market research to support a forecast of sales. It is not necessary to address those criticisms, as to which Mr Hosier was also challenged in cross-examination, given the more fundamental difficulties with his approach to which I have referred above.

31. [331]

    Ms Selman was cross-examined, although more briefly than Mr Hosier. It is plain that she has extensive pharmaceutical industry and women’s health marketing experience, although only part of it has been in respect of oral contraceptive products, and she had no direct personal experience of the receipt of an untitled letter from the FDA. She was plainly a knowledgeable witness, who gave direct and helpful answers and I generally accept her evidence in cross-examination. I have no hesitation in preferring her evidence to Mr Hosier’s evidence as to relevant matters, not least because it engaged with the reality of MPG’s marketing process since the FDA Letter, and because of the difficulties with Mr Hosier’s approach that I have addressed above.

32. [332]

    Turning now from the evidence to the case put by Cosette as to the FDA Letter, I accept that the FDA Letter, separately or together with the FDA Letter Response, are an event, occurrence, change, circumstance or matter within the meaning of the definition of an MMAC in cl 1.1 of the SID. The receipt of that letter and MPG’s response to it are properly characterised as at least an event or circumstance, irrespective of whether the views expressed by the FDA were or were not well-founded. Ms Collins in turn submits, in opening, that:

33. [333]

    I have no doubt that Nextstellis is a significant product for MPG, and MPG does not suggest the contrary. However, where neither party seeks to establish whether the FDA was right or wrong in the views that it expressed, the materiality of the letter turns on the fact that it was a communication from a regulator that expressed certain views which may or may not have been correct and, more fundamentally, on its impact upon continuing sales of Nextstellis and upon MPG’s business, earnings and profitability.

34. [334]

    Ms Collins in turn submits in opening, plausibly, that MPG’s earnings generated from sales of Nextstellis are influenced by its ability to market the product in a way that differentiates the drug and promotes its efficacy and safety profile. She points to statements included in previous advertising for Nextstellis, including in speaker programs and CVAs, which were addressed in Mr Turner’s evidence to which I referred above and to the manner in which those statements differentiated Nextstellis and, at least potentially, contributed to sales of Nextstellis. She points to the views expressed by the FDA Letter, the truth of which neither party seeks to establish, and relies on MPG’s immediate response to the FDA Letter and share price movements to establish its materiality. I do not accept the former establishes materiality in a relevant sense, where MPG’s immediate response plainly reflected the need for immediate action in response to the FDA’s concerns, and concerns raised by a regulatory in a highly regulated industry are properly treated as significant in any event. I do not accept the latter establishes materiality in a relevant sense, for the reasons that I address in dealing with Cosette’s allegation of a breach of MPG’s continuous disclosure obligations below. Ms Collins also refers to the FDA Letter Response and the steps which MPG has taken in response to that letter, as they emerge from Mr Turner’s evidence and documents tendered by the parties.

35. [335]

    Cosette pleads that direct marketing-related costs and loss of gross sales consequent upon MPG’s changes to its Nextstellis promotional materials and strategy have or are reasonably expected to have the effect of diminishing consolidated Maintainable EBITDA by at least $10.76 million, either by itself or in combination with other pleaded matters. It relies on Mr Hosier’s evidence, which I have addressed above, for that proposition, although it somewhat withdrew from that reliance in closing submissions . As I have noted above, it seems to me that Mr Hosier’s evidence is based on a fundamental false premise. He assesses the outcome of MPG discontinuing aspects of its former marketing of Nextstellis, which were likely significant to that marketing, but disregards the marketing approach which MPG will now take for Nextstellis which, as Mr Turner’s evidence had made clear, MPG was already moving towards prior to the FDA Letter. Mr Hosier’s evidence assumes a position which does not and will not exist, by assuming that an earlier marketing strategy is abandoned and nothing is put in its place, and begs the question whether, as Mr Turner plainly believes, the new marketing strategy that he had been promoting before the FDA Letter will improve MPG’s sales results for and earnings from Nextstellis. In short, Mr Hosier’s report is of no assistance in determining the questions that I need to decide, and I would comfortably prefer Mr Turner’s evidence of the benefits of MPG’s new marketing strategy for Nextstellis to Mr Hosier’s assessment, which fails to address that critical question.

36. [336]

    Ms Collins also submits that a review of the forecasts made by MPG for the period May to August 2025, as against the actual results it claims in its evidence to have recorded, shows that Nextstellis sales have dropped, starting in June 2025, with a more material diminution in sales becoming evident over July and August 2025. The material facts that support this claim are not pleaded by Cosette, either in respect of the FDA Letter or generally, and I do not have regard to them on that basis. Even if I were to do so, the proposition that they are connected with the FDA Letter or the marketing of Nextstellis, rather than with developments in the US economy generally, is no more than speculation.

37. [337]

    Mr Hutley points out that the direct marketing-related costs have already been incurred and quantified at US$72,862 falling far short of the relevant quantitative threshold, whether alone or combined with other matters. For the reasons noted above, Mr Hosier’s evidence does not assist in establishing a loss of gross sales consequent upon MPG’s changes to its promotional materials, where he ignores MPG’s new marketing strategy, with the consequence that his report is prepared on a false basis. As I have noted above, MPG in turn led very detailed evidence as to its historical marketing strategies, the nature of the relevant market in oral contraceptives, the content of the FDA Letter and the changes that MPG has will make which both address the planned change in its marketing strategy for Nextstellis and the concerns raised in the FDA Letter.

38. [338]

    Cosette then pleads (CCS [110]–[111]) the financial effect of the FDA Letter, which is denied by MPG (CCSR [110]–[111]); that claim was abandoned, at least in part, in Cosette’s closing submissions (T1071). Cosette then pleads alternative 12 month periods for the purposes of cl 1.1 of the SID (one of which was abandoned in closing submissions: T1072) (CCS [112], [114], denied CCSR [112], [114]) that:

39. [339]

    These allegations are not established where the claim on which they rely is not established.

40. [340]

    In closing submissions, although Cosette did not press its earlier contention that the FDA Letter had or was reasonably expected to have the effect of diminishing the consolidated Maintainable EBITDA of MPG over the 12 month period from 28 April 2025, it pressed a claim that the FDA Letter, in combination with the Q3 FY25 Sales Performance matters had or was reasonably expected to have the effect of diminishing MPG’s consolidated Maintainable EBITDA over the 12 month period for FY25 or CY25, and made detailed submissions as to the calculation of the financial loss said to have arisen from the FDA Letter. Cosette now submits that the Court should find that the FDA Letter was reasonably expected to have the effect of diminishing the consolidated maintainable EBITDA by amounts of $A471,708 for FY25 and $A2.83 million for CY25. It is not necessary to address the complex calculations undertaken in those submissions to support that conclusion, which depend in part on Mr Hosier’s evidence which I have not accepted. I have found above, as a matter of fact, that it has not been established that the changes made by MPG to its marketing strategy, in response to the FDA Letter, were adverse rather than positive, and the evidence does not establish that those changes have had, or are reasonably expected to have a material adverse impact on MPG’s sales of Nextstellis. The calculations made by Cosette in submissions, however elaborate and ingenious, cannot raise above their lack of factual basis.

41. [341]

    I have dealt with the position in respect of the Q3 FY25 Sales Performance matters above, and Cosette has not established any material additional reduction in its Maintainable EBITDA over either period resulting from the FDA Letter or the FDA Letter Response.

42. [342]

    MPG relies (CCSR [97(c)]), by way of defence, on disclosure of this matter in due diligence materials. MPG had frankly and properly drawn the receipt of the FDA Letter to Cosette’s attention in the due diligence process. It is not necessary to address this defence given the conclusions that I have reached on other grounds.

Cosette’s claim for breach of Mayne Representation and Warranty

1. [343]

   Third, Cosette relies on an alleged breach of a representation and warranty given by MPG under the SID. The warranty claim is that the “Mayne Representation and Warranty” about “Due Diligence Material” in Sch 2 cl 15 was not true and correct and that breach was “material in the context of the Transaction as a whole”, giving Cosette a right to terminate under cl 15.1(a)(i) of the SID.

2. [344]

   Cosette relevantly pleads (CCS [115]–[116]) the Mayne Representation and Warranty under cll 9.2 and 9.3 of the SID and that the FY25 6+6 Forecast formed part of the “Due Diligence Materials” within the meaning of the SID. MPG responds (CCSR [115], disputed CCS Reply [8]) that:

3. [345]

   I now turn to the applicable provision of the SID. By cl 9.2 of the SID, MPG made the representations and warranties contained in Sch 2 of the SID. Clause 15 of Sch 2 relevantly provides:

4. [346]

   The phrase “Due Diligence Material” is defined to mean the “Data Room Materials”, the “Disclosure Letter” and any other information made available by MPG to Cosette prior to execution of the SID which is agreed in writing. Clause 15(c) of Schedule 2 to the SID in turn provides that, in respect of the Due Diligence Materials provided to Cosette:

5. [347]

   Cosette contends that this clause does not qualify the representation and warranty that the Due Diligence Material has been collated and prepared in good faith and with reasonable care and does not qualify the representation and warranty that MPG has not withheld any information within the specified character. The Cosette Parties also contend that this clause operates in respect of the future financial position of MPG and does not qualify a representation as to historical or current information.

6. [348]

   Clause 15(d) of the SID relevantly provides:

7. [349]

   Cosette contends that this clause only operates in respect of the representations and warranties in cl 15(b) and the effect of the clause is that the representation and warranty in cl 15(b) is not to be construed as imposing on MPG any obligation to educate Cosette as to the materiality and relevance of information it has disclosed. Cosette submits that it does not diminish the scope of MPG’s representation that it has not knowingly withheld or omitted information of the kind covered by cl 15(b).

8. [350]

   Returning to the body of the SID, Cosette also relies on cl 9.6(a) of the SID which requires MPG to notify Cosette if it becomes aware of any fact, matter or circumstance that has resulted in, or might reasonably be expected to result in, a breach of a Mayne Representation and Warranty. Clause 9.7 of the SID in turn provides:

9. [351]

   Clause 15.1(a)(i) of the SID relevantly provides that Cosette may terminate the SID if a Mayne Representation and Warranty is not true and correct where that breach of representation and warranty is material in the context of the Transaction as a whole; or is reasonably expected to result in an MMAC. Clause 15.2 of the SID relevantly provided that on termination by a party under cl 3.7(b), the SID will be of no force or effect except for several exceptions.

10. [352]

    I approach the question of construction of these clauses with regard to the High Court’s observations as to the objective approach to construction in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; (2004) 211 ALR 342; [2004] HCA 52 at [40]; Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd (2014) 251 CLR 640; (2004) 306 ALR 25; [2014] HCA 7 at [35] and Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; (2015) 325 ALR 188; [2015] HCA 37 at [46]–[52], [59] and I proceed on the basis that construction should commence with the language used by the parties, although the Court may also have regard to objective surrounding circumstances. In Price (as executor of the estate of Price (dec’d)) v Spoor (as trustee) (2021) 391 ALR 532; [2021] HCA 20 at [27] , the High Court again observed that an objective approach is applied in determining the rights and liabilities of a party to a commercial contract, by reference to its text, context and purpose, and “[t]he meaning to be given to its terms is determined by reference to what a reasonable business person would have understood those terms to mean”. I accept that it is necessary to construe the language of these clauses in the SID according to their natural and ordinary meaning, having regard to the circumstances which the document addresses, and the objects which it is intended to secure; and the inquiry will start, and usually finish, by asking what is the ordinary meaning of the words used: Charter Reinsurance Co Ltd v Fagan [1997] AC 313 at 384; Australian Pipeline Ltd v Hastings Funds Management Ltd (2014) 103 ACSR 343 at 348; [2014] NSWCA 398; HDI Global Specialty SE v Wonkana No 3 Pty Ltd (2020) 104 NSWLR 634; [2020] NSWCA 296 at [22]; SIF Holdings Pty Ltd v CRC Gosford Pty Ltd (2021) 391 ALR 697; [2021] NSWCA 174 at [73]; Ali v Insurance Australia Ltd [2022] NSWCA 174 at [29] .

11. [353]

    As I noted above, Cosette seeks to read the representation and warranty as to the collation and preparation of the “Due Diligence Material” as extending to the preparation of, and by extension the content of, each document contained in the VDR. Mr Hutley responds that this representation and warranty is limited only to the collation and preparation of that material for the purposes of due diligence, at a point after it is brought into existence, likely for other purposes, and does not extend to the content of each document made available for due diligence. Mr Hutley also submits that the relevant warranty is directed to the “Due Diligence Material” as a whole, being the body of material produced in due diligence, and not to single documents included in that material. I recognise that the definition of “Due Diligence Material” and the definition of “Data Room Materials” are themselves directed to the totality of the documents falling within those definitions, read as a whole, and not to each individual document falling within those definitions. That reading of the provision operates consistently with the fact that other warranties deal with the accuracy of particular items including, relevantly, the disclaimer of any warranty as to the accuracy, adequacy or achievability of a Mayne Group forecast.

12. [354]

    I accept the construction arguments put by MPG as to why the initial obligation this representation and warranty should read as directed to the collation and preparation of the body of Due Diligence Material placed in the VDR, as a whole, rather than as to each document contained in that material read individually. The length and complexity of the index to the VDR (MFI 26) and its organisation by topic indicates the need for such an obligation. Second, this reading allows the clause to operate sensibly as a whole, with paragraphs (a) and (b) directed to the body of documents within the Due Diligence Material as a whole and preserving, rather than defeating, the qualification in cl 15(c). Third, in any event, it seems to me plain that this clause is directed to the body of Due Diligence Material collectively, and not to each document contained in it read in isolation from all other documents contained in it. It cannot support an attack on the basis that a single document, here the FY25 6+6 Forecast, read without regard to all other documents comprising the Due Diligence Material as a whole, was not prepared with reasonable care. Although this finding is sufficient for this claim to fail, I will, address its other aspects below.

13. [355]

    Cosette then pleads (CCS [117]–[118], denied CCSR [117]–[118]) that MPG knew or should have known certain matters as follows.

14. [356]

    The first pleaded matter (CCS [118]) is MPG’s actual underlying EBITDA for the month of negative $5.112 million against a forecast of negative $4.267 million. As I have noted above, Mr Gray received those results on 13 February 2025 and, as Cosette pleads, they showed a reduction of $845,000 from its budgeted EBITDA for January 2025 from (A$4.267 million) to (A$5.112 million). MPG plainly knew that matter from that date, as I have noted above, and that information was also made available to Cosette and its advisers and Avista by the “Cash flow by month F25” placed in the VDR (Ex M4) on 18 February 2025.

15. [357]

    The second pleaded matter (CCS [118(b)]) is that MPG then knew or ought to have known the reasons for the variation against EBITDA forecast in January 2025, although Cosette does not there allege the content of those reasons. MPG’s January CFO report (Ex J1, 11A/8110, noted above) referred, in addressing the variance in the January 2025 EBITDA, to a shortfall in the January 2025 gross margin of A$1.5 million “driven entirely by Dermatology – specifically the co-pay pipeline calculation”, which “should normalize across the half.” It is apparent that MPG then knew the basis for the Doryx Co-Pay Adjustment which I have addressed above in dealing with the expert accounting evidence. It is not apparent that MPG then knew or should or could have known the cause of any EBITDA decline arising in its women’s health products arising from changes in its sales team, as evidenced in Mr Gray’s cross-examination to which I have referred above.

16. [358]

    The third pleaded matter (CCS [118(c)]) is that MPG then knew or ought to have known MPG’s February sales performance, including four elements of that performance. It is not apparent that all these matters have been established, still less that MPG knew or ought to have known that information at that time, where some sales information was available daily but other information was not. Mr Gray did not know “daily sales volumes across all products” up to 17 February 2025. His evidence (T422, 510), which I accept, was that he generally looked at the number of units shipped in the second, third and fourth week of the month and he “had access to up-to-date units shipped to 14 February” and “would have looked at it”. There is no basis in expert or other evidence for a finding that he should have reviewed such evidence more frequently than he did. I have addressed the second element of this matter, whether there were “overall volume declines across [MPG’s] Women’s Health portfolio in February 2025 against forecast” above. The third element of this matter is “weakness in underlying demand”. That was not known, and there is no basis to find that it should have been known, as at 17 February 2025, when Mr Gray only had access to consolidated demand data up to the end of January 2025, or as at 20 February 2025. The information then available did not indicate a change in the level of demand, as distinct from a decline in units shipped, and I have addressed Mr Gray’s and Mr Meyers’ evidence as to that matter above. The fourth element of this matter is that “gross sales performance in M[PG’s] Dermatology portfolio” was “poor”, and I have addressed the issue of the decline in sales performance above.

17. [359]

    The fourth pleaded matter (CCS [118(d)]) is that MPG then knew or ought to have known the reasons for the suggested shortfall in gross sales in January and February 2025, which are alleged to have included market trends such as the shift to generic products, There is no evidence to suggest that any shift to generic products affected MPG’s women’s health products including Nextstellis, although it appears there was increased generic competition in respect of its dermatology products. The evidence does not establish that MPG knew or could have or should have known the reasons for the shortfall in sales at that time, where there is no suggestion that the explanation that MPG has now identified, arising from changes to its sales team, was identifiable at that time.

18. [360]

    The fifth pleaded matter (CCS [118(e)]) is that MPG knew or ought to have known the implications of those matters, although Cosette does not there identify what those implications are alleged to be. It is plain enough, from Mr Gray’s evidence which I have accepted, that MPG did not know, and could not then have known, the first implication of this matter, not identified by Cosette and only later identified by MPG, that changes to its sales team had had a significant and unanticipated adverse impact. For all the reasons I have addressed above, it has not been established that the wider implications of that matter for MPG’s Q3 FY25 or 2H FY25 financial performance were or could or should have been known at that time.

19. [361]

    Cosette next contends (CCS [118(f)]), by reference to several particularised matters, that MPG knew or ought to have known that “the FY25 6+6 EBITDA Forecast was likely not achievable given the actual sales performance in January and February 2025.” Mr Hutley submits that the particularised matters do not support this claim. As to the first of those matters, I accept that the information then MPG then knew or should have known as to its actual sales performance in January and February 2025 (CCS [118[a)-(b)] does not establish that proposition, alone or with other matters. As Mr Meyers ultimately accepted in cross-examination, MPG’s channel inventory was not then significantly higher than usual, relative to the demand for MPG’s products; a growth in channel inventory in late 2024 was not and should not then have been a matter of concern, where the three large US wholesalers typically increased purchases in December given anticipated price increases and holidays; and, as Mr Grey’s evidence demonstrated, MPG’s forecasting was, reasonably, focused on trends in demand rather than short-term fluctuations.

20. [362]

    Mr Hutley submits that the second of the particularised matters to CCS [118(f)] is not established, where there is no evidence that MPG assessed its forecasts generally or the FY25 6+6 specifically against an analysis of the daily “pace” of shipments. Mr Hutley also submits that such an analysis is not customary for good reason, where the units shipped on any given day is volatile, so the total up to a day midway through a month is not a reliable predictor of the total shipments for the month. I accept that submission and I have pointed to the difficulties with any such analysis in this judgment. Mr Hutley also submits and I also accept that:

21. [363]

    The claim as to the third particularised matter to CCS [118(f)] has the same difficulties.

22. [364]

    I accept that MPG, at the relevant time, knew its actual underlying EBITDA for January 2025, but that matter was fairly disclosed in the Due Diligence Materials by the “Cash flow by month F25” (Ex M4) placed in the VDR and does not support an allegation for breach of the Mayne Representation and Warranty. I also accept, having regard to Mr Gray’s evidence in cross-examination, that MPG did not then know and could not reasonably have known the reasons for the variation against EBITDA forecast for January 2025, now thought to be the changes to its sales team. I accept that it was the fact, and MPG knew that competition from generic products was affecting its dermatology business, although not to a level that would, at least in itself, materially impact its likely EBITDA result for FY25. The evidence does not establish that MPG knew or should have known the unidentified implications of the actual January 2025 results and gross sales performance in February 2025 for the likely EBITDA result for FY25, or that those implications were adverse since, on the information then known, demand that was not met by deliveries in January or February 2025 might well have resulted in increased sales in the balance of Q2 of FY25.

23. [365]

    Cosette contends (CCS [118(g)]), in consequence, MPG know or ought to have known that “the likely shortfall to the FY25 6+6 EBITDA Forecast would be material.” I do not accept this proposition is established, because its basis in previous paragraphs is largely not established. This claim also involves the implicit allegation that the then shortfall in MPG’s EBITDA was not recoverable and that the shortfall to forecast was material in a relevant sense and it has also not been established that MPG know or ought to have known those matters at that time. For completeness, Mr Gray’s evidence, which I accept, was that he first became aware of the “significant miss” to the February 2025 EBITDA forecast when he received the February 2025 results in March 2025.

24. [366]

    Cosette then pleads (CCS [119], denied CCSR [119]) that:

25. [367]

    The evidence also does not establish this matter, even if (contrary to the conclusion that I have reached) the relevant representation and warranty applied to a specific document within the Due Diligence Materials, namely the FY25 6+6 Forecast, rather than the body of the Due Diligence Material as a whole. Mr Gray’s evidence establishes that a structured and reasonable process was adopted by MPG to prepare the FY25 6+6 Forecast and the FY25 6+6 EBITDA Forecast and his lengthy cross-examination reinforced rather than impugned that process. An adjustment was made, and challenged at length in Mr Gray’s cross-examination, to reflect the decline in actual EBITDA in January 2025 in that forecast while maintaining the forecast number, on the basis that unmet demand in January 2025 would be reflected in increased sales in the subsequent period. It has not been established that that approach was not then a reasonable one.

26. [368]

    Cosette’s criticism of the FY25 6+6 Forecast also relies on Mr Meyers’ “pace” analysis. The difficulties with that analysis are, first, the wider difficulties with Mr Meyers’ evidence that I have addressed above. Second, in the course of cross-examination, Mr Meyers significantly changed his description of that analysis, to suggest that it is not a straightforward calculation of daily average shipment rate but has regard to a wide range of other materials including the level of inventory, in a manner that would render it both highly subjective and inconsistent with limited analysis that he performed in his report. Third, and importantly, it was not put to Mr Gray that, if a pace analysis was performed that took account of those wider factors, it would have been inconsistent with the approach that Mr Gray had adopted. Fourth, as Mr Meyers’ cross-examination demonstrated, the application of a “pace” analysis (at least in the simpler version applied in Mr Meyers’ report, as distinct from the more complex version articulated in his cross-examination) would have shown, at particular times, that MPG was “behind the pace” by reference to its budget, but there is no suggestion that it could not or did not then reach its budget or forecast, where that result simply reflected fluctuations of shipping rates at those times.

27. [369]

    Cosette also did not establish a critical premise of this claim, which I raised with Counsel in the course of Mr Gray’s cross-examination, namely that the exercise of reasonable care in the preparation of the FY25 6+6 Forecast at a point in time, or forecasts generally, would require that the forecast be updated by reference to subsequent information. The fact that MPG here chose to adjust its FY25 6+6 Forecast (which was, by definition, directed to forecast information in 2H FY25) for known EBITDA in January 2025 did not establish that it was obliged, in exercising reasonable care, to do so or to continue to do so by reference to even later information. That is plainly not self-evident, where it is in the nature of a forecast prepared at a point in time that subsequent actual events will likely depart from it. Absent an external obligation to undertake continuous forecasting, it is not apparent why a forecast prepared at a point in time should necessarily be updated because actual results depart from it.

28. [370]

    Cosette then pleads (CCS [120]–[121], denied CCSR [120]–[121]) that:

29. [371]

    This claim is also not established. First, I have not accepted the construction of the SID on which it depends. Second, it is not apparent that there is any lack of reasonable care in preparation of a forecast, particularly one that discloses risks and opportunities, by reason of the fact that the forecast might not be achieved or might be surpassed. Any contrary view would have the result that management could not provide its best estimate to a company’s directors or a sophisticated potential acquirer, recognising both the possibility of over-performance and under-performance, but would instead be required to provide a less useful and less informative estimate which was biased to conservatism. Third, even if the relevant representation and warranty applied to specific documents within the Due Diligence Materials, namely the FY25 6+6 Forecast and the FY25 6+6 EBITDA Forecast, the evidence to which I have referred above does not establish that they were not prepared with reasonable care.

30. [372]

    The evidence also does not establish that the FY25 6+6 Forecast and the FY25 6+6 EBITDA Forecast were misleading in a material respect (including by omission), where they represented no more than that they were a forecast for the relevant six month period and that they had a reasonable basis. There is no basis to find the contrary, particularly where the decline in MPG’s January 2025 EBITDA had itself been fairly disclosed in the Due Diligence Materials. I also do not find that the relevant forecasts omitted information which could reasonably be expected to be material to Cosette’s evaluation of the MPG and the merits of the transaction, where there is no basis to think that forecasts of that kind should been adjusted in the manner that Cosette contends and the decline in the January 2025 EBITDA had itself been fairly disclosed in the Due Diligence Materials.

31. [373]

    The allegation in CCS [121] fails for the same reasons. MPG also responds (CCSR [121]) that the fact that the underlying EBITDA forecast for FY25 in the FY25 6+6 Forecast was not prepared by reference to the “pace” of shipments in February 2025 up to 17 or 20 February 2025 was fairly disclosed in the Due Diligence Material; and/or within the knowledge, belief or awareness of Cosette’s deal team. It is not necessary to determine this matter given the conclusions that I have reached on other grounds.

32. [374]

    Cosette then pleads (CCS [122]–[124], denied CCSR [122]–[124]) that it is entitled to terminate the SID by reason of the alleged breach of the Due Diligence Material Representation, as follows (omitting particulars):

33. [375]

    Mr Hutley responds that Cosette has neither pleaded nor established the matters necessary to show that any contravention of the warranty as to Due Diligence Material arising from the FY25 6+6 Forecast was “material on the context of the transaction as a whole”, by way of any established impact on Cosette’s decision-making, to give rise to a right of termination within cl 15.1(1)(A)(2) of the SID. He submits that:

34. [376]

    I accept that submission, for the reasons that Mr Hutley there puts, in respect of channel inventory and the “pace” of sales and also in respect of the other factual bases of this claim that I have addressed above. In closing submissions, Mr Hutley also addresses the question of reliance and loss, in respect of the question whether any breach of the contractual due diligence material warranty was material for the purposes of cl 15.1(i)(A)(2) of the SID. I need not address that question further, where neither misleading or deceptive conduct nor the breach of that warranty has been established. This claim is not established for the reasons set out above, even apart from the question of election that I address below.

Cosette’s claim for breach of obligation to comply with applicable laws – continuous disclosure

1. [377]

   Fourth, Cosette pleads a breach of MPG’s continuous disclosure obligations and misleading and deceptive conduct to assert a breach of a warranty as to compliance with applicable laws. In their outline of the nature of dispute in the CCS, they contend (CCS [15A]) that:

2. [378]

   It is common ground (CCS [124A]–[124B], CCSR [124A]–[124B]) that cl 7.1(b) of the SID required MPG, broadly, to comply in all material respects with applicable laws, including Australian Consumer Law in Sch 2 of the Competition and Consumer Act 2010 (Cth) (“ACL”) s 18, Australian Securities and Investments Commission Act 2001 (Cth) (“ASIC Act”) s 12DA, ss 674A and 1041H of the Act and rule 3.1 of the ASX Listing Rules. Cosette had a right to terminate the SID (which it has purportedly exercised) if, for the purposes of cl 15.1(a)(i)(A)(1), there was a material breach of cl 7.1(b). In opening submissions, Ms Collins draws attention to case law as to the scope of a material breach, including Elders Ltd v E J Knight & Co Pty Ltd [2009] NSWSC 1462, where White J observed (at [48]) that, in respect of a “material breach” of a lease:

3. [379]

   Ms Collins also referred to Androvitsenas v Members First Broker Network [2013] VSCA 212 at [89] (“Androvitsenas”), where the Court held that the word “material” had the meaning of “important” and connoted “significance” and (at [92]) that a breach by the representative which could put in jeopardy the licensee’s credit licence, or expose it to criminal liability for breach of legislation, had “the potential of being of serious or substantial import to the intended benefits to the licensee of the deed.”

4. [380]

   Mr Hutley in turn submits, by reference to the case law including Androvitsenas, Thera Agri Capital No 2 Pty Ltd v BCC Trade Credit Pty Ltd t/as The Bond & Credit Co [2022] NSWSC 669 at [186] and Daynes v I-MED Central Queensland Pty Ltd [2025] NSWCA 150 at [132]–[133] that:

5. [381]

   Cosette in turn pleads and MPG partly admits (CCS [124C]–[124CC], CCSR [124C]–[124CC]) the application of continuous disclosure obligations to MPG and also plead MPG’s Market Disclosure and Communications Policy (Ex J1, 1A/609). Cosette then pleads (CCS [124D]) MPG’s receipt of the FDA Letter; that letter and its contents were information that a reasonable person would expect to have a material effect on the price or value of the scheme securities, a matter that is essential to the alleged breach of MPG’s continuous disclosure obligation; and that MPG did not disclose the FDA Letter until after it was published on the FDA’s website on 12 May 2025 and reported in an internet publication. This matter seeks to establish a breach of r 3.1 of the ASX LR in this regard. Initially, MPG put the correctness of the matters raised by the FDA in issue and pleaded (CCSR [124D]) that “some of the contents of the FDA Letter was [sic] incorrect” and that “to that extent, [MPG] denies that all of the contents of the FDA Letter was “information” within the meaning of [s] 674A(2) of the [Act] and ASX Listing Rule 3.1”. MPG did not press that matter, and Cosette did not contend to the contrary, in the circumstances that I noted above.

6. [382]

   Both parties provided comprehensive summaries of the applicable principles in respect of continuous disclosure, which I adopt with gratitude, and I have also drawn on Ms Collins’ very helpful review of recent appellate cases in oral submissions. I understand there to be little, if any, dispute as to these principles, although there is a vigorous dispute as to their application to the relevant facts. The purposes underlying the continuous disclosure regime established by r 3.1 of the ASX Listing Rules (“ASX LR”) and ss 674–674A of the Act are well-established and Ms Collins rightly refers to the recognition in Australian Securities and Investments Commission v Southcorp Ltd (No 2) (2003) 130 FCR 406 at [2]; [2003] FCA 1369 that they include enhancing the integrity and efficiency of Australian capital markets by ensuring that the market is fully informed of information that is properly disclosable under them. Ms Collins also points out, in opening, that rule 3.1 of the ASX LR requires that a listed entity must immediately notify ASX of any information concerning the entity of which it is or becomes aware if a reasonable person would expect the information to have a material effect on the price or value of the entity’s securities, subject to exceptions that are not relevant here. The term “aware” is defined in ASX LR 19.12 as follows:

7. [383]

   Ms Collins rightly recognises that the definition of “aware” is capable of extending the obligation in ASX LR 3.1 to information, and inferences from known facts, which a director or executive officer has, or ought reasonably to have, come into possession in the course of performing his or her duties: Crowley v Worley Ltd (2022) 293 FCR 438 at [171], [173], [178]; [2022] FCA 33; Zonia Holdings Pty Ltd v Commonwealth Bank of Australia Ltd [2025] FCAFC 63 at [266]–[269] (“Zonia”).

8. [384]

   Ms Collins also rightly refers to s 674A of the Act, introduced by the Treasury Laws Amendment (2021 Measures No 1) Act 2021 (Cth), which relevantly provides that, if the section applies to a listed disclosing entity; that entity has information that those provisions require the entity to notify to the market operator; the information is not generally available; and the entity knows, or is reckless or negligent with respect to whether, the information would, if it were generally available, have a material effect on the price or value of ED securities (as defined) of the entity, then the entity must notify the market operator of that information in accordance with those provisions. Sections 676(2) and (3) of the Act relevantly describe when information is taken to be generally available for the purposes of s 674A, although there is no contest as to that matter here.

9. [385]

   I proceed on the basis that the test for the materiality of information in ASX LR 3.1 is whether a reasonable person would expect the information to have a material effect on the price or value of the entity’s securities. That rule is to be interpreted in the context that s 677 of the Act provides, namely, that information is deemed to be material if the information would, or would be likely to, influence persons who commonly invest in securities in deciding whether to acquire or dispose of the securities: Jubilee Mines NL v Riley (2009) 40 WAR 299 at [62]; [2009] WASCA 62 (“Jubilee Mines”); Grant-Taylor v Babcock & Brown Ltd (in liq) (2016) 245 FCR 402; [2016] FCAFC 60 at [95] (“Grant-Taylor FC”). In determining the question of materiality, the pleaded information must be looked at “in context, rather than in isolation, against the backdrop of: (a) the circumstances affecting the entity at the time; (b) any external information that is publicly available at the time; and (c) any previous information the entity has provided to the market”: Australia and New Zealand Banking Group Limited v Australian Securities and Investments Commission (2024) 305 FCR 383; [2024] FCAFC 128 at [46]–[47], [56], [60] (“ANZ v ASIC”); Zonia at [445].

10. [386]

    I recognise that the test for materiality is objective, hypothetical and forward-looking and is to be determined ex ante: Grant-Taylor FC at [95], [116]. However, evidence of the market’s actual reaction to the subsequent disclosure of information can be used as a “cross-check” of the ex ante materiality of the information, but only as a means “for confirming the correctness of a conclusion already reached”: Grant-Taylor v Babcock and Brown Ltd (in liq) (2015) 322 ALR 723; [2015] FCA 149 at [64]; R&B Investments Pty Ltd (Trustee) v Blue Sky Alternative Investments Limited (in liq) (Separation of Issues) [2025] FCA 1097 at [47]. The class of hypothetical investors to which such a determination is directed includes both the sophisticated and the unsophisticated, but does not include the irrational or “speculators and day traders who seek to profit on the back of rumour or momentum”: Grant-Taylor FC at [115]; Australian Securities and Investments Commission v Vocation Limited (In Liquidation) (2019) 136 ACSR 339; [2019] FCA 807 at [552]–[553]; McFarlane as Trustee for the S McFarlane Superannuation Fund v Insignia Financial Ltd [2023] FCA 1628 at [147](13); ASIC v ANZ at [95], [216].

11. [387]

    I understand it to be common ground that, to satisfy the “materiality” requirement, the information must be “non-trivial” and rise beyond information which “may” or “might” influence a decision by investors and it must be shown that the information “would” or “would be likely” to influence a decision: Grant-Taylor FC at [95]; ASIC v ANZ at [50]. Information need not affect the fundamental value of a company’s shares, as opposed to its share price, to be material, but “inconsequential information, irrelevant to a company’s financial position, is unlikely to change investors’ collective valuation and is not information that a reasonable person would expect to have a material effect”: Parkin v Boral Limited (Materiality Evidence Ruling) [2025] FCA 70 at [9]; ANZ v ASIC at [94], [215]–[216]. The test of materiality involves both a value judgment as to what is reasonable and an embedded question of fact as to what would be likely to influence investors, which may depend on what they would understand or already be aware of: R v Fysh [2012] NSWSC 1266 at [25]–[31]; Fysh v The Queen [2013] NSWCCA 284 at [208]–[210], [213].

12. [388]

    I also recognise that the question of materiality is often addressed by expert evidence in continuous disclosure cases although that evidence will not always be essential, and the assessment of materiality may in some cases be a matter of common sense: Australian Securities and Investments Commission v Big Star Energy Limited (No 3) [2020] FCA 1442 at [240]. However, as will emerge below, it may not be possible to find materiality on an ex ante basis without expert evidence, where the materiality of information, if fairly disclosed, would depend upon its status, possibly its correctness and also its likely or potential consequences, and it will likely not be possible to reach any ex post assessment by reference to price movements in respect of information which mixes the information that was allegedly not disclosed with other information, and particularly with other information that would not properly have been disclosable or disclosed.

13. [389]

    Ms Collins also draws attention to Lee J’s observations in ANZ v ASIC at [78]–[81] and [86] that:

14. [390]

    I bear these observations in mind. I also recognise that the continuous disclosure provisions include a materiality standard and the effective operation of those provisions would be undermined, rather than promoted, by interpreting them so as to require the disclosure of immaterial as well as material information, with the likely result that investors were submerged with a flood of announcements, dealing with the significant and the insignificant, without any real basis to distinguish the two.

15. [391]

    Ms Collins also drew attention to his Honour’s recognition at [89]–[91] of the purpose of the provisions, as there put by ASIC in submissions, and its implications as follows:

16. [392]

    Ms Collins also referred to the concept of “persons who commonly invest in securities”, as noted in ASIC v ANZ at [95] as follows:

17. [393]

    Ms Collins also drew attention to the observations of Button J in ASIC v ANZ at [215]–[216], where her Honour recognised that observations in Vocation at [553] did not “confine the target of the continuous disclosure regime to information that is material because it concerns ‘company fundamentals’ going to earnings, or the anticipated return on risk” and observed by reference to Grant-Taylor at [115] that “s 677 is not confined to sophisticated investors, but extends to small and infrequent — but not irrational — investors.”

18. [394]

    I also bear in mind the observations of the Full Court of the Federal Court, in Zonia at [333], that a party that wishes to contend that pleaded information was incomplete and/or misleading or not in a form that was appropriate for disclosure was required to plead those contentions, including pleading the additional information without which the pleaded information was said to be incomplete and/or misleading. That proposition does not assist here in any assessment of materiality of the relevant information, where that is plainly a matter asserted by Cosette, and it needs to establish the factual basis of that allegation. I also note that, as Ms Collins pointed out, the Full Court there observed that the question whether pleaded information was incomplete or misleading or not in a form appropriate for disclosure should be dealt with as part of an analysis of materiality. I adopt that approach here, where the primary issue here is the materiality of information in any event. The Court there observed at [366]:

19. [395]

    I recognise that, as Mr Hutley pointed out the Court distinguished the position at [368] where:

20. [396]

    Happily, I may pass by these subtle distinctions without further comment, since this issue does not squarely arise here. As I noted above, the parties conducted the case on the basis that neither seeks to prove that the views expressed by the FDA in the FDA Letter were well founded or not well founded.

21. [397]

    The Court also there observed at [371] that:

22. [398]

    I also recognise that the Court observed (at [498]) that:

23. [399]

    I should also note that, for the reasons I have set out above in dealing with Cosette’s claim relying on the FDA Letter in support of an MMAC, I proceed in this aspect of the case on the basis that it is common ground that the FDA Letter had been received by MPG from the FDA, which is plainly an important regulator for MPG’s business, and had expressed views which may or may not have been correct; MPG responded to the FDA Letter by the FDA Letter Response; and MPG has now made changes to its marketing approach for Nextstellis as addressed in Mr Turner’s affidavit and cross-examination and the documentary evidence. As I noted above, and despite the Cosette Parties’ position put in closing submissions and noted above, neither party made any real attempt to prove the correctness or otherwise of the views expressed in the FDA Letter and that matter cannot be assumed or determined in this judgment. This matter is potentially of some significance in Cosette’s continuous disclosure case relying on the FDA Letter. I recognise that information need not necessarily be true in order to be information, or material information, for the purposes of the insider trading prohibition, which adopts broadly similar concepts language to the continuous disclosure requirements: Mansfield v R (2012) 293 ALR 1; [2012] HCA 49. However, the Full Court recognised in Zonia, to which I have referred above, that the truth or falsity of information is potentially relevant to whether it is information within the scope of the continuous disclosure requirement, and it is plainly relevant to whether information is material in the relevant sense and disclosable under ASX LR 3.1 and s 674A of the Act.

24. [400]

    I now turn to the chronology of events in this regard. As I noted above, on 12 May 2025 (US time), the FDA published the FDA Letter on its website. It appears that MPG’s share price did not decline in response to the pleaded FDA Letter Information on the next trading day, 13 May 2025. I return to the complexities arising from that matter below.

25. [401]

    On 13 May 2025 (US time), an internet publication titled Fierce Pharma published a media article entitled “Mayne hit by ‘misleading’ drug safety claims from FDA ahead of $430M buyout” (“Fierce Pharma Article”) (emphasis added). The title of that article impliedly linked the FDA Letter and the prospects of Cosette’s proposed acquisition of MPG. The article went on to state:

26. [402]

    On 14 May 2025, a broker’s report (Ex J1, 20/13492.274.13) circulated to many advisers in the brokers’ firm and institutional clients (Ex J1, 20/13492.274.32) recommended that those clients short sell MPG shares, for reasons that appear to include the threat of US tariffs on Australian pharmaceutical products and risks as to the completion of Cosette’s acquisition of MPG. Those matters are not raised in Cosette’s continuous disclosure claim against MPG. That report advised, cryptically in parts, that:

27. [403]

    Also on 14 May 2025, the Australian media reported a US proposal for tariffs on Australian-made pharmaceutical products. MPG’s share price then started to decline and fell from $6.79 to $5.97 on that day.

28. [404]

    On 14 May 2025, ASX issued a price query to MPG (Ex J1, 14/10575) advising that MPG’s shares had been “placed in a pause pending release of the response to the market”. Subsequently, also on 14 May, MPG released two ASX announcements titled “Response to [ASX] Price Query” (Ex J1, 14/10652) and “Mayne Pharma Responds to Speculation on FDA Untitled Letter” (“Second May 2025 ASX Announcement”) (Ex J1, 14/10656).

29. [405]

    MPG’s second announcement stated that:

30. [406]

    As I noted above, after the close of trading on 14 May 2025, a research analyst at Canaccord Genuity published a “Flash Update” on MPG (Ex J1, 14/10669.1) which referred to MPG’s receipt of the FDA Letter. That report demonstrated an understanding of the FDA’s regulatory practices in observing that:

31. [407]

    Importantly, like Fierce Pharma, that analyst also recognised a possible link between the FDA Letter and the transaction between MPG and Cosette, which plainly had the potential adversely to impact MPG’s share price, in observing that:

32. [408]

    Turning now to the parties’ submissions, Ms Collins submits, in opening, that:

33. [409]

    Mr Hutley responds, in opening, that:

34. [410]

    Mr Hutley also contends in closing, first, that the open question whether the FDA’s views were correct has the consequence that the content of the FDA Letter is not “information” within the meaning of ASX LR 3.1. I do not accept that submission, although I recognise that that open question is relevant to whether there is an evidentiary basis for a finding of the content of the FDA Letter was material for the purposes of ASX LR 3.1 or s 674A of the Act. I understand this approach to be consistent with that taken by the Full Court of the Federal Court in Zonia at [368], [371], which treated the nature of the information that is contended to be continuously disclosable as linked with the question of its materiality. I recognise that the decision in Zonia (at [371]ff) also recognises that information that is simply incorrect is not “information” for the purpose of the continuous disclosure requirements and need not be disclosed, since there would be no utility in disclosing that information pointing to its falsity at the same time. It does not seem to me that that principle is applicable here, where the contents of the FDA Letter were not shown to be incorrect, although they were also not shown to be correct, and they are simply left as views expressed by a regulator that may be right or wrong. Mr Hutley also submits that Cosette does not plead a case that the receipt of the FDA Letter, irrespective of the truth of its contents, is continuously disclosable. I prefer not to decide that question as a matter of strict pleading, where the more fundamental question is whether there is any evidentiary basis to find the FDA Letter, irrespective of the truth or otherwise of its contents, was material in the relevant sense.

35. [411]

    The matters put by Ms Collins partly overlap with the matters put by Cosette in support of the submission that the receipt of the FDA Letter was a material development in the conduct of MPG’s business, which I have addressed above. Cosette also places substantial weight on the fact that MPG’s executives treated the receipt of the FDA Letter as a serious matter and, for example, promptly drew the receipt of that letter to the attention of MPG’s board which then discussed its implications. It seems to me that that matter does not advance Cosette’s claims in respect of continuous disclosure as to the FDA Letter. Plainly, MPG’s executives treated the receipt of the FDA Letter as a serious matter, because it was received from a regulator and MPG operated in a highly regulated industry, although they also identified questions as to whether the views expressed by the FDA were correct. The position was further complicated by the fact that, as Mr Turner’s evidence demonstrates, the changes that might be necessary to respond to the FDA’s views, whether correct or incorrect, substantially overlapped with changes to the marketing of Nextstellis, which Mr Turner had been advocating and which MPG was already proposing to make. The fact that MPG’s management, sensibly, treated the receipt of the FDA Letter seriously does not assist in determining its materiality for the purposes of continuous disclosure, which requires the more complex assessment which I undertake below. MPG’s notice of the FDA Letter to Cosette was plainly also prudently and properly given but that also does not establish materiality of that letter in any relevant sense.

36. [412]

    It seems to me that several matters undermine any ex ante inference that the FDA Letter was, irrespective of the truth of its contents, material in the relevant sense. First, the evidence establishes aspects of the FDA’s practice which are important to placing the FDA Letter in context. As a matter of FDA’s practice (Ex J1, 5/3977), an “untitled letter” is different to a “warning letter” and the latter is issued for “violations of regulatory significance”, which “may actually lead to an enforcement action if the documented violations are not promptly and adequately corrected”; by contrast, an untitled letter is issued for asserted violations “that do not meet the threshold of a Warning Letter”; and the FDA’s policy is that:

37. [413]

    These matters were recognised by Canaccord Genuity in its report dated 14 May 2025 (Ex J1, 14/10669.1) which, as I noted above, recorded that the FDA Letter was “an Untitled Letter from the FDA, not a Warning Letter” and left its price target of $7.40/share unchanged. Contrary to Ms Collins’ submissions, there is no reason to assume that investors in MPG would not know the broad outline of these matters, where they have invested in a company which largely operates a US pharmaceuticals business or that, before deciding whether to acquire or dispose of their MPG shares in response to the FDA’s “untitled” letter to MPG, they would not at least inform themselves of what such a latter was by a basic internet inquiry (for example, obviously enough, “what is an FDA untitled letter”?). Second, as Mr Hutley points out, Cosette does not plead or seek to establish any adverse regulatory consequence for MPG arising from the issue of the FDA Letter, although it relies on the steps taken by MPG in response to that letter.

38. [414]

    In summary, considering the materiality of the FDA Letter Information on an ex ante basis, it seems to me that, first, that information cannot be taken to be material in the relevant sense, as conveying the fact of regulatory breaches by MPG, where Cosette does not plead or seek to establish that fact and the views expressed by the FDA were not self-evidently correct. Second, that information was not material in the relevant sense because MPG could reasonably expect that (1) the issue could readily be resolved with the FDA, at least by addressing its views without taking issue as to their correctness, which was the approach that it ultimately took; (2) that resolution would involve only modest immediate costs of replacing CVAs and marketing material and largely repurposing existing speaking presentations, as ultimately occurred; and (3) that resolution would not significantly, adversely affect the marketing of Nextstellis in the next two years or into middle term, both because the steps that would be taken aligned with MPG’s already planned shift of its marketing strategy for Nextstellis and because that was the general experience of pharmaceutical companies that received untitled letters of a similar kind. That reasoning is consistent with the view then formed by Mr O’Brien and the consensus then formed by MPG’s board. Importantly, its essential elements were also reflected in Canaccord Genuity’s contemporaneous comments as to the issue, the substance of which was not undermined by its underestimate of the quantity of marketing materials involved. The absence of reason to think that there would be wider adverse impacts on MPG’s marketing strategy for Nextstellis is also supported by Ms Selman’s expert evidence which I have addressed above.

39. [415]

    I recognise that Cosette also emphasises the significance of Nextstellis for MPG and I accept that Nextstellis was plainly a significant product for MPG. I also recognise that, as Cosette points out, broker reports regarded Nextstellis as significant for an investment in MPG (for example, Ex C12, 3981.1). However, for the reasons noted above, the evidence does not establish that the receipt of the FDA Letter will have a real, still less a material, adverse impact on the promotion of Nextstellis or its sales or on MPG’s business or earnings and I could not conclude that a reasonable person would expect to have a material effect on the price or value of the entity’s securities on that basis. For completeness, I did not understand Ms Collins to submit and no Australian case has (so far as I am aware) held that any communication from a regulatory to a listed company, whether well-founded or not and whether likely to result in adverse action or not, was within the scope of the disclosure obligation under ASX LR 3.1.

40. [416]

    Turning to an ex post analysis, Ms Collins also submits that:

41. [417]

    Mr Hutley responds:

42. [418]

    Mr Hutley also points to the relevance of expert evidence concerning the cause of a price drop in continuous disclosure claims, often in the form of quantitative linear regression techniques involving event studies, to identify whether the alleged disclosure or non-disclosure caused any price drop rather than other matters: Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469; [2015] FCA 328 at [84]; Zonia at [591]–[593]. He also notes that.

43. [419]

    In closing submissions, Mr Hutley submits, and I accept, that it is not possible to reason from the price change in MPG’s shares to the materiality of the FDA Letter, where no attempt has been made by Cosette to seek to exclude the effect of the other “confounding” information contained in the Fierce Pharma article, including its headline that linked the FDA Letter to then prospects of Cosette’s acquisition of MPG; its assertion that MPG was “in trouble” with the FDA, which likely overstated the status of the letter; its treatment of the concerns raised by the FDA as established facts, where their truth has not been established; and its conclusion that again placed the FDA Letter in the context of the impending transaction with Cosette. The decline in MPG’s share price after that article appeared does not establish, on an ex post basis, the materiality of the FDA Letter Information, given the other matters which Fierce Pharma had mixed with that information. The position is further complicated by the other matters noted below and the possible impact of general market movements, which would ordinarily need to be addressed by expert evidence.

44. [420]

    Mr Hutley also points to further confounding information published on 14 May 2025 that emerges from the evidence. I recognise that MPG did not plead these matters, but the evidence of them was admitted without objection and their relevance here is not to establish any aspect of MPG’s case but instead to indicate matters that prevent any ex post inference, based on common sense rather than evidence, that the FDA Letter Information rather than (at least in part) those other matters brought about the decline in MPG’s share price on 14 May 2025. First, on 14 May 2025, a stockbroking firm sent an email to a large number of institutional clients that raised the speculation that the FDA Letter would have an adverse impact on Cosette’s acquisition of MPG and suggested that its clients “short” MPG’s stock, implicitly so as to profit from a future fall in that share price. Plainly, any clients who took up that advice would then sell MPG shares, leading to a likely fall in its share price. Second, there was media reporting on the morning of 14 May 2025 as to the threat of US tariffs on Australian-manufactured pharmaceutical protects, which was plainly capable of placing downward price pressure on MPG and other Australian pharmaceutical manufacturers that sold to the US. There is no evidence as to the impact of these matters on MPG’s share price, but that is the source of the difficulty in Cosette’s case at this point rather than a solution to it.

45. [421]

    It seems to me that an ex post analysis here does not confirm any ex ante view that the FDA Letter was material in the relevant sense, although it also would not falsify such a view, where the position is complex and the parties did not lead the expert evidence that would be necessary to address its complexities. First, the proposition for which Cosette contends, that the FDA Letter and its contents was itself material faces the significant difficulty that, if the pleaded information as to the FDA Letter was material in the relevant sense, then MPG’s share price should have declined promptly in response to the FDA’s publication of the FDA Letter on the internet. It did not do so, where the FDA placed that letter on its website on 12 May 2025 (US time) and a day’s trading then occurred (on 13 May 2025, Australian time) without any apparent share price response until the Fierce Pharma article appeared and the other information which I noted above emerged and then MPG’s share price fell on ASX on 14 May 2025. While it might be tempting to speculate that investors may not have accessed the FDA website and only reacted to the Fierce Pharma article, with or without other events, that speculation would be inconsistent with a market for MPG shares that was efficient even on the semi-strong basis, which would promptly reflect all publicly available information. [2] That speculation would also highlight the question as to whether the other information (and possible short selling) which emerged on 14 May 2025, Australian time, rather than the FDA Letter Information or indeed the Fierce Pharma letter prompted the then fall in MPG’s share price.

46. [422]

    I have not neglected that, at least on 14 May 2025, Mr O’Brien thought, and advised Mr Saraf, that MPG’s share price “is dropping because [of] the Fierce Pharma piece on the FDA untitled letter” (Ex J1, 14/10573). Plainly, Mr O’Brien assumed a matter which MPG now does not accept, where it now raises the question whether the broker’s recommendation to short sell MPG and media publicity as to tariffs prevent an inference that the FDA Letter Information caused the fall in its share price. However, even if Mr O’Brien was correct in assuming that the Fierce Pharma article had prompted the fall in the share price, that does not avoid the difficulty that that article itself linked the FDA Letter with the prospects of Cosette’s acquisition of MPG. I also recognise that MPG’s response to ASX’s price query (Ex J1, 14/10585) pointed to a potential link between the FDA Letter and the decline in its share price movement, although it also contested the materiality of the information contained in the FDA Letter as follows:

47. [423]

    For these reasons, MPG has not established that the information as to the FDA Letter was disclosable under ASX LR 3.1, at least in the period prior to its disclosure by MPG to ASX.

48. [424]

    Alternatively, Cosette alleges (CCS [124E]) that, on 28 April 2025 or shortly thereafter, at the time of receipt of the FDA Letter, to around 12 May 2025, the FDA Letter Information (as defined) was not generally available and MPG was negligent with respect to whether the FDA Letter Information would, if it were generally available, have a material effect on the price or value of scheme shares. This matter is relied on to support an alleged contravention of s 674A of the Act. It does not establish such a contravention, because that contravention cannot be established unless the relevant information is disclosable under ASX LR 3.1.

49. [425]

    In opening, Ms Collins submits that:

50. [426]

    In closing submissions, Mr Hutley responds to the question whether negligence is established for the purposes of s 674A(2) of the Act, at some length, but it is not necessary to address that question further, given the conclusions which I have reached on other grounds. This claim is also not established because its premise of the materiality of the relevant matters is not established.

51. [427]

    Cosette alleges in consequence (CCS [124F]) that:

52. [428]

    Cosette then advances (CCS [124F]–[124J]) a similarly structured allegation as to steps taken by MPG in response to the FDA Letter. The pleading is complex. Paragraph 124G pleads (omitting particulars) that:

53. [429]

    Cosette then contends (CCS [124H]) (again omitting very complex particulars) that:

54. [430]

    Cosette also contends that the identified matters were also materially price sensitive information and (CCS [124J]) that:

55. [431]

    In closing submissions, Mr Hutley rightly submits that there is a real lack of clarity in the Cosette Parties’ claim in respect of the FDA Letter Response Information, where it refers to the four alleged items of information and then contends that those four items individually or in any of the sixteen possible combinations were material. The difficulty which arises from that matter, not as a result of strict pleading principles but as a matter of procedural fairness, was exacerbated by the fact that, when I invited Ms Collins, in closing submissions, to seek to identify which of these matters was pressed as a combination, she did not provide any clear answer to that question, so as to allow MPG to know what it had to address in closing submissions, or allow the Court to know what it had to decide. It is not necessary to address Mr Hutley’s detailed submission in closing as to this matter further. This claim is not established because its premise, being the materiality of the relevant matters, is not established for the reasons I have noted above in dealing with Cosette’s claim that the FDA Letter and its consequences for MPG gave rise to a breach of the SID; in dealing with the alleged continuous disclosure contravention in respect of the FDA Letter; and in dealing with Mr Hosier’s evidence.

Cosette’s claim for breach of obligation to comply with applicable laws – misleading and deceptive conduct as to the Second May 2025 ASX Announcement

1. [432]

   Cosette then brings a misleading or deceptive conduct claim (CCS [124K]-[124U]) in respect of the Second May 2025 ASX Announcement (as defined). They relevantly plead (CCS [124O], denied CCSR [124O]) that:

2. [433]

   Cosette also plead (CCS [124R]–[124T], denied CCSR [124R]–[124T], in seeking to falsify these representations, that:

3. [434]

   The applicable principles in respect of a claim for misleading or deceptive conduct are well-established. Section 18 of the ACL provides that:

4. [435]

   The approach to be adopted in assessing whether conduct is misleading or deceptive was summarised by Gordon J in Australian Competition and Consumer Commission v Telstra Corporation Ltd (2007) 244 ALR 470; [2007] FCA 1904 at [14]–[15], in a passage which Griffiths J followed in Forty Two International Pty Ltd v Barnes (2014) 97 ACSR 450; [2014] FCA 85 at [446] and which I followed in Colorado at [86] as follows:

5. [436]

   In Re Atlas Advisors Australia Pty Ltd (2022) 162 ACSR 509; [2022] NSWSC 705 at [211], I accepted Counsel’s summary of the matters relevant to whether misleading or deceptive conduct is established as follows:

6. [437]

   I also recognise that, to the extent that a representation alleged to have been made by MPG was a representation as to future matters, whether it had reasonable grounds for making them must be assessed at the date of the representation. In a claim under s 18 of the ACL, s 4 provides that MPG bears an evidentiary burden to demonstrate some reasonable ground for making a representation and, if some evidence is led, Cosette then bears the onus of proving that MPG did not have reasonable grounds for making the representation.

7. [438]

   I also bear in mind the observation of Bell ACJ (as the Chief Justice then was) in Ireland v WG Riverview Pty Ltd (2019) 101 NSWLR 658; [2019] NSWCA 307 at [33]–[34] (“WG Riverview”) that:

8. [439]

   As Mr Hutley points out, Macfarlan JA (with whom Barrett AJA agreed) also there observed at [64]–[67] that:

9. [440]

   Ms Collins submits that:

10. [441]

    In response, Mr Hutley submits that:

11. [442]

    The first paragraph of MPG’s ASX announcement, which I set out above, seems to me to be no more than an accurate description of the FDA Letter, which in fact related to promotional claims used in a speaker presentation for Nextstellis. It does not seem to me that that description of the FDA Letter can fairly be read as a representation that similar claims had not been made in other documents; and, even if I am wrong in that view, the making of those representations in one document or several documents was not material, where MPG was already advanced in a process of amending its market materials, to change their focus and, on balance, those amendments seem more likely to be positive rather than negative for MPG’s marketing activities and the sale of Nextstellis. Second, that announcement appears to me to accurately reflect MPG’s approach to the FDA Letter, which was to address the concerns in a serious way, irrespective of whether it considered the FDA’s views were well-founded in whole or in part, and irrespective of whether they were in fact well-founded in whole or in part. That is hardly an unreasonable approach for a company in a highly regulated industry to take. Third, the evidence to which I have referred supports the statement that the FDA Letter does not impact MPG’s ability to continue to sell and distribute Nextstellis in the United States. That proposition was plainly true in the narrower sense that the FDA Letter did not raise any legal obstacle to the continued sale of Nextstellis in the United States. The evidence does not support a finding that it was either misleading or deceptive or likely to mislead or deceive if read in a wider sense, where changes to MPG’s marketing strategy were already under way and the immediate steps taken following the FDA Letter and those changes have not been shown to be adverse to ongoing sales of Nextstellis in any significant respect.

12. [443]

    Cosette’s consequential claim (CCS [124V]) that, by reason of these matters, MPG was in material breach of cl 7.1(b) of the SID is also not established, because the claim that the FDA Letter Representation is misleading or deceptive is not established and Cosette has also not established the materiality of these matters.

Cosette’s further claim for misleading and deceptive conduct as to the FY25 EBITDA Representation

1. [444]

   Cosette pleads (CCS [133]–[134], denied CCSR [133]–[134]) that, on 17 February 2025, MPG represented to Cosette that it expected that MPG’s underlying EBITDA for FY25 would be $69.8 million (“FY25 EBITDA Representation”) and, on 20 February 2025, being the date on which Cosette and MPG entered into the SID, MPG continued to make the FY25 EBITDA Representation. This is, of course, a reference to the FY25 6+6 Forecast.

2. [445]

   Ms Collins submits, in opening, that:

3. [446]

   First, I remind myself, as I from time to time attempted (generally without success) to remind Ms Collins and Mr Hodge, that Cosette does not bring a misleading and deceptive conduct claim as to the FY25 6+6 Forecast generally, which would have required that it engage with that document as a whole. It also does not bring a claim that the FY25 6+6 Forecast was misleading in the context of the whole of information disclosed by MPG, which would have required it to come to grips with the extensive information disclosed by MPG in the VDR. It brings a more specific claim, that the FY25 EBITDA Representation was made, namely that MPG represented to Cosette that it expected that MPG’s underlying EBITDA for FY25 would be $69.8 million. That understanding of Cosette’s claim is consistent with the evidence led by the key witnesses called by Cosette, particularly Mr Saraf and Mr Burgstahler, who led evidence to support that narrower claim and not a more widely framed claim. Second, Ms Collins’ submission here failed to recognise that MPG had in fact disclosed the decline in its “Cash flow by month F25” (Ex M4) placed in the VDR and Cosette’s advisers and Avista’s employees had repeatedly accessed that document.

4. [447]

   Ms Collins also submits that:

5. [448]

   Mr Hutley responds, in opening, that this claim:

6. [449]

   Mr Hutley also submits that, applying the approach described in WG Riverview at [33]–[34] (to which I referred above):

7. [450]

   Mr Hutley then asks, rhetorically:

8. [451]

   In closing submissions, Mr Hutley unsurprisingly also submits that:

9. [452]

   I accept that submission, which seems to me to be plainly correct. I have addressed the principles applicable to determining a claim for misleading or deceptive conduct above, and I am comfortably satisfied that the pleaded FY25 EBITDA Representation was not made by MPG. First, any representation was no more than that, subject to the detail of the FY25 6+6 Forecast, MPG had then forecast its EBITDA for FY25 as $69.8 million. There is no basis to read that as a representation that MPG “expected” that forecast to eventuate, where it was apparent that forecast differed from the FY25 3+9 Forecast, made on the basis of three months’ actual results; I have found that MPG, through Mr Gray, had made the complexities and uncertainties inherent in its forecasting process clear to Cosette, at least through Mr Casten, on several occasions; and it must have been plain to Cosette that the 6+6 Forecast would be (and was) superseded by the 9+3 Forecast, when actual results were available for a longer period. Even apart from the information provided by Mr Gray to Mr Casten as to the uncertainties in MPG’s forecasting process, the proposition that an entity of the sophistication of Cosette, or persons of the sophistication of Cosette’s executives and Mr Burgstahler, or any reasonable business person, or indeed any reasonable person, would have read a forecast of a complex business that disclosed risks and opportunities as indicating an expectation of a single figure result need only be stated to be rejected. Where the alleged representation was not made, the balance of this claim must fail.

10. [453]

    Cosette then pleads (CSS [136], denied CCSR [136]) that this was a representation as to a future matter and (CCS [137]ff, denied CCSR [137]ff) that MPG did not have reasonable grounds for the representation and engaged in misleading and deceptive conduct in contravention of s 1041H of the Act, s 12DA of the ASIC Act and/or s 18 of the ACL, and I noted Ms Collins’ submission to that effect above. The parties made detailed submissions as to the complexities in the case law in distinguishing statements of present expectation and representations as to the future. I also have regard to the discussion of whether a representation is a representation as to a future matter in Australian Competition and Consumer Commission v Woolworths Group Ltd (2020) 281 FCR 108; [2020] FCAFC 162 at [132], to which Counsel drew my attention. It is not necessary to address these matters further. Where the pleaded FY25 EBITDA Representation was not made, it is unnecessary and it would be highly artificial to determine whether MPG had reasonable grounds for it. The fact that neither MPG nor Cosette could rationally have “expected” (as pleaded by Cosette) that MPG’s underlying EBITDA for FY25 “would” be $69.8 million is plain enough, given the complexities and uncertainties in its forecasting process. However, that supports a finding that MPG did not make a representation to that effect, not a finding that it had any lack of reasonable basis for such a representation.

11. [454]

    Cosette then pleads (CCS [140], denied CCSR [140]) that:

12. [455]

    Cosette also pleads (CCS [141]–[142], denied CCSR [141]–[142]) that it has suffered loss and damage by reason of these matters. In closing submissions, Mr Hutley addresses the question of reliance and loss, in respect of MPG’s misleading and deceptive claim conduct. I need not address that question further, where neither misleading or deceptive conduct nor the breach of that warranty has been established. These claims cannot succeed where the pleaded representation was not made.

13. [456]

    MPG responds, in its identification of issues (CCSR [15]), that:

14. [457]

    I have referred to the principles applicable to a misleading and deceptive conduct claim above. This claim depends on isolating a single point forecast in the FY2025 from both its context in that document and from the surrounding discussions as to the nature of MPG’s forecast which I have addressed above and the factual context of those forecasts. This claim fails on the straightforward basis that the alleged representation does not exist in that isolated form and was not made in the terms for which Cosette contends.

MPG’s election defence

1. [458]

   In further answer to the Cosette Parties’ claim that they have properly terminates the SID, MPG pleads a defence which was headed “waiver” but Counsel accept that it raises issues as to election. It will be convenient first to deal with the applicable principles before turning to the several points at which an election is alleged to have occurred.

2. [459]

   In Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 642; [1970] HCA 40 (“Sargent”), Stephen J (with whom McTiernan J agreed) observed that, for the doctrine of election to operate, “there must be both an element of knowledge on the part of the elector and words or conduct sufficient to amount to the making of an election as between the two inconsistent rights which he possesses”. His Honour pointed to a variance in the authorities as to the nature of the knowledge which the elector must possess, and then observed that:

3. [460]

   His Honour noted that “full knowledge of the material facts” was required, although he also referred to Elder’s Trustee and Executor Co Ltd v Commonwealth Homes and Investment Co Ltd (1941) 65 CLR 603 at 617; [1941] HCA 31 as authority that knowledge of circumstances such as will provide information from which the decisive fact giving rise to the legal right is “a clear if not a necessary inference” would be sufficient. After a comprehensive review of the authorities, his Honour noted that an elector is deemed to know the terms of his or her own contract and the rights it confers, or at least cannot take advantage of his or her own ignorance, and summarised the knowledge requirement (at 645) as follows:

4. [461]

   Mason J in turn observed (at 658) that:

5. [462]

   Mr Hutley refers to the observation in Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622 at 633; [1984] HCA 55 that:

6. [463]

   In Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290; [2005] WASCA 106 at [35]–[39], Steytler P also referred to the elements of election, as requiring a choice between two inconsistent legal rights, and requiring “knowledge on the part of the elector and words or conduct sufficient to amount to the making of the election”, with that knowledge being “full knowledge of the material facts”, on the basis that a party to a contract is taken to know of the rights that it confers and that unequivocal conduct is required to establish an election that is not consciously made. I also summarised the applicable principles in Re Computer Room Solutions Pty Ltd (2021) 154 ACSR 672; [2021] NSWSC 845 at [61]ff, on which I have partly drawn for this summary.

7. [464]

   In Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 (2022) 277 CLR 445 at [51]; [2022] HCA 38, Kiefel CJ, Edelman, Steward and Gleeson JJ in turn observed that:

8. [465]

   Mr Hutley also recognises, in opening, that:

9. [466]

   Mr Hutley also refers, as an example of the nature of conduct which may give rise to an election, to Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd (2019) 99 NSWLR 397 at [66]–[69]; [2019] NSWCA 60 and submits, by reference to authority, that:

10. [467]

    Turning now to the pleaded case, MPG pleads (CCSR [144A]–[144B]) that:

11. [468]

    It is not necessary to address a further pleading of the Cosette Parties’ knowledge in respect of the TGA Letter here since, as I noted above, the Cosette Parties abandoned reliance on that matter in the course of the hearing. Cosette, in substance, admits its knowledge of all of the matters pleaded in CCSR [144A] (CCS Reply [8AA]), but adds that it otherwise denies the paragraph; and admits its knowledge of some but not all of the matters pleaded in CCSR [144B] (CCS Reply [8AB]).

12. [469]

    MPG in turn pleads (CCSR [144D]–[144E], admitted CCS Reply [8A]–[8B]) that, on 1 April 2025, MPG and Cosette entered into the Amendment Deed, by which they agreed to make various amendments to the SID and agreed that the SID as amended by the Amendment Deed “is and continues to be in full force and effect”. MPG then pleads (CCSR [144F], denied CCS Reply [9]) that:

13. [470]

    The Cosette Parties rely (CCS Reply [9]) on the terms of the SID to displace the waiver defence, pleading that:

14. [471]

    Mr Hutley in turn submits that:

15. [472]

    In closing submissions, Mr Hutley advances detailed submissions as to the question of election or affirmation of the SID by Cosette. There is now little dispute as to the matters known to Cosette, at the relevant time, by reason of the latest amendment to the Reply which I have noted above. However, Mr Hutley also emphasises the extent of Cosette’s knowledge of the relevant matters, as recorded in significant detail in its First MAC Notice delivered on 17 May 2025, two days after the first Court hearing at which it supported the application for approval of the scheme and shortly after Mr Ilin-Schneider had verified the “Cosette Information” in the scheme booklet by his affidavit dated 12 May 2025 which was led in evidence at the first Court hearing in respect of the scheme. Mr Hutley also emphasises Mr Saraf’s evidence that the matters subsequently relied on to terminate the SID had arisen “within approximately two months of signing the SID” (Saraf 22.7.25 [185]) and submits that the Court would infer that, by no later than 14 May 2025, before the first Court hearing, Cosette knew all of the matters on which it now relies to contend that it has rightfully terminated the SID. Mr Hutley also addressed, at some length, suggested inconsistencies between the Cosette Parties’ conduct in respect of the Deed Poll and the first Court hearing and the exercise of a right to terminate the SID. I return to that question below.

16. [473]

    It seems to me plain enough, given the chronology that I have set out above, that by 1 April 2025, that Cosette had knowledge of the material facts necessary to give rise to an election, in respect of matters as to the Q3 FY25 Sales Performance and the alleged Due Diligence Material Representation concerning the FY25 6+6 Forecast at the time of entry into the amended SID.

17. [474]

    Mr Hutley then submits that:

18. [475]

    In response, Ms Collins submits that:

19. [476]

    I accept that submission, as a matter of principle and authority, but it plainly does not exclude the prospect that a waiver or election can take place by a choice to take one rather than another course, although a party would prefer to leave its options open, since the contrary view would denude principles of election of operative effect.

20. [477]

    Ms Collins then submits that:

21. [478]

    I do not accept the latter part of this submission. The entry into a new agreement which confirmed the continuing effect of the SID, as amended, into the future, while an alleged right of termination was pending, was of its nature a choice between two inconsistent alternatives, whether to terminate the SID for the alleged subsisting breach of it or to commit to its continuation in an amended form. The course then taken by Cosette had real significance, where it had the result that MPG’s shareholders were not then alerted to any undisclosed right to terminate the SID and were deprived (without any fault on MPG’s part) of the opportunity to make decisions in respect of their shares in MPG and the scheme with knowledge of that matter.

22. [479]

    In Tele2 International Card Company SA v Post Office Ltd [2009] EWCA Civ 9 (“Tele2”), Aiken LJ (with whom Richards and Ward LJJ agreed) considered the application of an “anti-waiver” clause in a case of election and observed (at [55]–[56]) that the clause did not have the effect of overcoming election as a doctrine of law and likely could not do so, as follows:

23. [480]

    It also seems to me that, consistent with the approach taken in R v Paulson [1921] 1 AC 271 and Sargent, Cosette’s entry into the Amending Deed was a specific act by a party with knowledge of many of the matters on which it now relies as a breach of the SID, which act was inconsistent with its subsequent attempt to rely on that breach. The inconsistency between terminating the SID for breach and continuing it in amended form and reaffirming its effect is so stark that Cosette waived the requirement for writing at the same time that it waived the asserted breaches of the SID arising from the facts then know to it. Second, consistent with the approach taken in Tele2, cl 3.4(b) of the SID does not, and likely could not, exclude an election arising from Cosette’s choice to take one course, namely to amend and confirm the SID, rather than another inconsistent course, to terminate it.

24. [481]

    The Cosette Parties also rely on cl 20.11 of the SID, which also does not assist them, for the reason explained by the Court of Appeal in dealing with a corresponding clause in Pittmore Pty Ltd v Chan; Chan v Tan (2020) 104 NSWLR 62; [2020] NSWCA 344 at [130] as follows:

25. [482]

    I am reinforced in taking this view in the context of a scheme of arrangement, where an acquirer’s choices has significant public impacts, not only upon a target company and its shareholders, but also upon its employees and the communities in which it conducts business. Cosette’s choice, with admitted knowledge of relevant matters, to amend the SID and affirm its continued operation was necessarily inconsistent with a choice to terminate and amounted, at least, to an election not to terminate the SID by reason of the matters then known to it.

26. [483]

    Turning now to the second aspect of MPG’s election defence, MPG then pleads (CCSR [144G]–[144J], substantially admitted CCS Reply [9]), in respect of the entry into the Deed Poll that:

27. [484]

    MPG then pleads (CCSR [144K], denied CCS Reply [9]), in respect of the entry into the Deed Poll that:

28. [485]

    It also seems to me plain enough, from the chronology set out above, that the Cosette Parties had knowledge of the material facts necessary to give rise to an election, in respect of these matters at the time of entry into the Deed Poll.

29. [486]

    Mr Hutley here submits that:

30. [487]

    Ms Collins responds that:

31. [488]

    Ms Collins also submits that:

32. [489]

    I have reservations as to these submissions. The Deed Poll could only take effect if the SID was not terminated before the Effective Date; and, at the point of entry into the Deed Poll, Cosette did not reserve, or disclose to third parties who would rely on their execution of that document (including MPG’s shareholders, the Australian Securities & Investments Commission (“ASIC”) and the Court) any substantial undisclosed risk of termination of the SID that would defeat the operation of the Deed Poll. The position here is very different from one where any risk of termination would only arise in the future from events between the first and second Court hearings for the scheme. However, it is ultimately not necessary to decide whether the Cosette Parties’ entry into the Deed Poll also amounted to an election to continue the arrangements contemplated by the SID (as by then amended) rather than terminate them, where I find below that a further election plainly arose from Costete’s conduct at the first Court hearing for the scheme.

33. [490]

    Finally, MPG pleads (CCSR [145]–[155]) and the Cosette Parties admit (CCS Reply [9]) the steps taken by the parties in respect of the scheme booklet and the first Court hearing in respect of the scheme. MPG then pleads (CCSR 156, denied CCS Reply [9]) that:

34. [491]

    As I noted above, Dr Ilin-Schneider (who is the Senior Vice President, Corporate Development and General Counsel of Cosette) affirmed an affidavit dated 12 May 2025 (Ex J1, 14/10494.2) in the application to convene the scheme meeting brought in this Court, which was then read at the first Court hearing on 15 May 2025. Cosette’s Counsel and solicitors, who represented Cosette at that hearing, did not then disavow that affidavit or seek to qualify its contents. Dr Ilin-Schneider there recorded that:

35. [492]

    This observation is important, because the authority conferred on Dr Ilin-Schneider to make that affidavit on behalf of the Cosette Parties in that application extends, in my view, to making any consequential election that arises from permitting reliance on that affidavit at the first Court hearing. Ms Collins was at pains to emphasise, in closing submissions, that Cosette’s board did not make a decision to terminate the SID until shortly after the first Court hearing; but that is not to the point, where the Cosette Parties had conferred authority on Mr Ilin-Schneider, if the steps taken within that authority amounted to an election not to terminate the SID.

36. [493]

    Mr Ilin-Schneider went on to outline the process by which MPG and Cosette entered into the SID on 20 February 2025 and to describe the Cosette Group and its ownership by Avista and Hamilton Lane and outlined the position in respect of Cosette Sub. He referred to the entry by the Cosette Parties into the Deed Poll dated 9 May 2025, with no suggestion that the Cosette Parties’ obligations under the Deed Poll would not, in practice, be performed if, immediately after the first Court hearing, the SID was terminated. Mr Ilin-Schneider then outlined how the scheme consideration would be funded by the Cosette Parties, through an existing cash advance available to the Cosette Group, being approximately US$52.5 million as at 9 May 2025, equity financing and debt financing. He observed without further qualification that:

37. [494]

    Dr Ilin-Schneider there referred to section 8.2 of the scheme booklet which provided a summary of the sources of funding, including equity funding by a legally binding equity commitment letter with Avista and Hamilton Lane; debt financing under a credit agreement with Santander and Hayfin. He observed that “the provision of the Debt Financing is subject to certain customary conditions precedent, as set out in section 8.2 of the scheme booklet” and noted that that section was verified in accordance with the verification process to which he deposed. Notably, he did not disclose any further risk to debt funding which would arise from termination of the SID immediately after the first Court hearing.

38. [495]

    Dr Ilin-Schneider then outlined the process for the verification of the “Cosette Information” in the scheme booklet, which had importantly stated (Ex J1, 14/10740) that:

39. [496]

    The Cosette Information contained in the scheme booklet also referred to the ASX announcement made by MPG in respect of the FDA Letter but not to other material information which would plainly have included the risk of termination of the SID on other grounds as follows:

40. [497]

    Dr Ilin-Schneider there observed that he was personally involved in that verification process and that:

41. [498]

    Dr Ilin-Schneider then stated, in paragraph 32 of his affidavit, that by reason of the matters set out above in respect of the verification process:

42. [499]

    I have not neglected the fact that further adverse developments had occurred after 12 May 2025, the date that Dr Ilin-Schneider’s affidavit was affirmed, at least including the fall in MPG’s share price on 14 May 2025, and I have referred above to the evidence that Cosette knew of or was made aware of these developments as they occurred. However, it is not to the point that Dr Ilin-Schneider’s affidavit was affirmed before these developments when he and the Cosette Parties permitted it to be read in Court on 15 May 2025, without update or qualification, and necessarily as expressing Cosette’s then position as at the date of that hearing.

43. [500]

    In my view, the Cosette Parties’ actions (by themselves and by Dr Ilin-Schneider) in permitting that affidavit to be read without update or qualification at that hearing excluded the possibility of termination of the SID by reference to the several matters known to the Cosette Parties at that date and not disclosed in that affidavit, other than the FDA Letter which was disclosed at the first Court hearing. That result arises because Cosette’s reserving such a right of termination would render the Cosette Information contained in the scheme booklet incomplete, misleading and deceptive and likely to mislead and deceive in critical respects, contrary to the confirmation which was then given to the Court by the Cosette Parties and Dr Ilin-Schneider as their authorised officer by permitting his affidavit to be read. The Court was then entitled to take the Cosette Parties at their word when they indicated, by what Dr Ilin-Schnider said and did not say, that such a right of termination did not then exist.

44. [501]

    It is also broadly common ground (CS [26]–[27], RCS [26]–[27]) that, during that hearing, counsel for the Cosette Parties advised the Court that Cosette supported MPG’s application for orders convening the scheme meeting; drew attention (Ex J1, 14/10940.8–10940.9) to the fact that Cosette was considering the FDA Letter and its impact; and did not otherwise indicate that Cosette was considering any of the other matters later outlined in the First MAC Notice and subsequent notices.

45. [502]

    I also recorded what the Court was told about the Cosette Parties’ position, as at 15 May 2025 when the first Court hearing took place, in my judgment in Re Mayne Pharma Group Ltd [2025] NSWSC 513 as follows:

46. [503]

    Mr Hutley submits in opening that:

47. [504]

    It again seems to me plain that the Cosette Parties had full knowledge of the material facts necessary to give rise to an election, in respect of these matters at the time of the first Court hearing.

48. [505]

    Ms Collins here responds that:

49. [506]

    I also do not accept this submission. First, contrary to this submission, the Cosette Parties were not party to the scheme proceedings and had no “right” to appear at the first Court hearing. They instead chose to seek, and obtained, leave to appear under r 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW), which they may well not have obtained had they or their legal representatives then disclosed any reservation of a right to terminate the SID, at least by reason of any matter other than the FDA Letter, which had only just been received. That matter was not disclosed to the Court. Second, there would be a real inconsistency between appearing at the first Court hearing, apparently to support a scheme, and reserving an undisclosed right to terminate the SID. The Cosette Parties and their legal representatives taking the former position, without any further disclosure other than as to the FDA Letter, implied to the Court and to MPG’s shareholders that they were not taking the latter position. That inconsistency can only be resolved by treating that conduct as an election to affirm the SID

50. [507]

    I am satisfied that the Cosette Parties’ position taken at the first Court hearing (other than in respect of the FDA Letter, where they reserved their position) amounted to an election to continue the arrangements contemplated by the SID (as by then amended) rather than terminate them. The Cosette Parties again cannot avoid a waiver (or election) by reliance on cll 3.4(b) or 20.11 of the SID for the reasons noted above, and I am again reinforced in that view by the public impacts of the Cosette Parties’ choice to support the scheme at the first Court hearing rather than terminate the SID at that point.

51. [508]

    MPG also pleads, and makes submissions as to, a further defence relying on the proposition that the Cosette Parties cannot take advantage of their own wrong, in respect of matters that have arisen in the period since the scheme would likely have been implemented, immediately following the second Court date that was originally scheduled for 20 June 2025, but for the Cosette Parties purported termination of the SID. It is not necessary to address this defence given the conclusions that I have reached above and having regard to the urgency of the matter.

Orders

1. [509]

   First, Cosette claims (Cross-Summons [1], CCS [143(a)]) a declaration that it has validly terminated the SID pursuant to one or both of cll 15.1(a)(i) and 15.1(a)(ii) of the SID. This declaration cannot be made, first, because I have found that, although Cosette has established that aspects of MPG’s Q3 FY25 Sales Performance constituted an adverse change, the impact of that change of MPG’s Maintainable EBITDA fell short of the impact required to give rise to an MMAC. That declaration also cannot be made, second, because I have found that the Cosette Parties are bound by an election not to terminate the SID, made by their entry into the amended SID and the Deed Poll and their conduct at the first Court hearing.

2. [510]

   Second, Cosette claims (Cross-Summons [2], CSS [143(b)]) an order that MPG pay the “Mayne Break Fee” (as defined in cl 1.1 of the SID) by reason of Cosette’s termination of the SID for MPG’s alleged breach of the Mayne Representation and Warranty contained in cl 15 of Sch 2 to the SID (Due Diligence Material Representation), pursuant to cl 13.2(c) of the SID. Third and alternatively, Cosette claims (Cross-Summons [3], CSS [143(c)]) a declaration that MPG must indemnify it against, and must pay it on demand the amount of, any losses, liabilities, damages, costs, charges or expenses suffered or incurred by Cosette as a result of, or in connection with, MPG’s alleged breach of the Due Diligence Material Representation, up to the amount of the Mayne Break Fee, pursuant to cl 9.2(c) of the SID. These orders should not be made where they are consequential on the claim that Cosette has validly terminated the SID. Fourth, and further or alternatively, Cosette claims (Cross-Summons [4], CSS [143(d)]) a declaration that MPG engaged in misleading or deceptive conduct in contravention of s 18 of the ACL, s 1041H(1) of the Act and/or s 12DA(1) of the ASIC Act). A declaration could not be made in that form, where it makes no attempt to identify the conduct to which it refers, and should not be made on the merits since Cosette’s misleading and deceptive conduct claim has not been established

3. [511]

   In the further alternative, Cosette claims (Cross-Summons [5], CSS [143(e)]) an order under ss 237 and 243 of the ACL, s 1325(1), (2) and (5)(a) of the Act and/or section 12GM(1) and (7)(a) of the ASIC Act declaring the SID to be void ab initio or from the date of the order or from such other date as the Court deems fit and claims (Cross-Summons [6], CSS [143(f)]) an order for damages under s 236 of the ACL, s 1041I of the Act and/or s 12GF of the ASIC Act. In closing submissions, Mr Hutley submits that it is a statutory pre-condition to the grant of relief under ss 236 and 237 of the ACL that the party seeking relief has suffered loss or damage or, in the case of ACL s 237, is likely to suffer loss or damage because of contravening conduct. I will assume, without deciding, by reference to the case law to which Cosette refers, that such loss can include the entry into a contract, resulting from misleading or deceptive conduct, without establishing economic disadvantage from that contract: Demagogue Pty Ltd v Ramnesky (1992) 39 FCR 31 at [32]–[33], [44]; Harvard Nominees Pty Ltd v Tiller (2020) 282 FCR 530; [2020] FCAFC 229 at [77]. The proposition does not assist the Cosette Parties here, where the relevant breach has not been established. These orders should not be made since Cosette has not established their basis on the merits.

4. [512]

   For these reasons, Cosette’s Amended Cross-Claim should be dismissed in its entirety.

5. [513]

   As I noted above, MPG in turn seeks declarations that the First MAC Notice was not validly issued and that Cosette did not validly terminate the SID by the First Termination Notice. Consequential on the findings that I have reached above, those declarations should be made and the position as to the further MAC notices and termination notices issued by the Cosette Parties has been determined in respect of their Cross-Claim.

6. [514]

   MPG has been successful in the proceedings and the Cosette Parties have failed to establish their claims. Costs should follow the event in the ordinary way and, unless any application is made for costs on a special basis, by reason of any earlier offers exchanged between the parties, the Cosette Parties must pay MPG’s costs of the proceedings as agreed or as assessed. I direct the parties to bring in agreed short minutes to give effect to this judgment by 4pm on 16 October 2025.