Federal Court of Australia

Bain v International Capital Markets Pty Ltd (No 3) [2025] FCA 599

ORDERS

THE COURT ORDERS THAT:

1.    By 9 July 2025, and in accordance with order 4, the first respondent give discovery of documents within category 25 (Board Documents) of the categories of documents specified in Annexure A to these orders.

2.    By 6 October 2025, and in accordance with order 4, the first respondent give discovery of documents within a first tranche of documents that fall within the balance of the categories of documents specified in Annexure A to these orders.

3.    By 8 December 2025, and in accordance with order 4, the first respondent give discovery of documents within a second (and final) tranche of documents that fall within the balance of the categories of documents specified in Annexure A to these orders.

4.    The first respondent is to give discovery of documents:

(a)    of which, after a reasonable search, the first respondent is aware; and

(b)    that are, or have been, in the first respondent’s control within the meaning of Sch 1 to the Federal Court Rules 2011 (Cth) (FCR).

5.    By 6 October 2025, the second respondent is to give standard discovery of documents.

6.    Each of the first and second respondents is to give discovery of documents by:

(a)    serving a list of documents verified in accordance with r 20.17 of the FCR; and

(b)    producing the documents, identified in the verified list of documents, in electronic format (excluding the documents subject to a claim of privilege).

7.    Costs of the applicants’ interlocutory application dated 4 April 2025 be costs in the cause.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Annexure A

categories of documents to be discovered by the First Respondent

Defined terms used in the discovery categories have the meaning given in the consolidated statement of claim.

For the avoidance of doubt, a reference to ‘documents’ includes emails and their attachments.

REASONS FOR JUDGMENT

O’BRYAN J:

Introduction

1    By interlocutory application dated 4 April 2025, the applicants sought the following discovery orders:

(a)    that the first respondent, International Capital Markets Pty Ltd (ICM), give non-standard discovery of documents in accordance with rr 20.13 and 20.15 of the Federal Court Rules 2011 (Cth) (FCR), pursuant to the categories set out in Annexure A to the application, alternatively standard discovery; and

(b)    that the second respondent, Andrew Budzinski, give standard discovery in accordance with r 20.14 of the FCR.

2    The application was supported by two affidavits of Mathew Chuk, a legal practitioner and director of the firm Echo Law who are the solicitors for the applicants, affirmed on 4 April 2025 and 24 April 2025. The applicants also relied on written submissions dated 24 April 2025.

3    In representative proceedings such as the present, there is usually a significant information disparity between the applicants and the respondents. Discovery by the respondents is a necessary procedural step. Nevertheless, discovery can be extremely burdensome and expensive and, if misdirected, can impose unnecessary costs on a respondent. In making discovery orders, the Court is acutely conscious of the overarching purpose of civil practice and procedure which is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: s 37M of the Federal Court of Australia Act 1976 (Cth).

4    The categories of discovery set out in Annexure A to the applicants’ discovery application were lengthy. They comprised 27 categories, many of which had subsidiary categories. The length and complexity of the categories raised questions about the necessity for discovery in each of the categories and whether an order for standard discovery would enable relevant documents to be produced by ICM in a more efficient manner.

5    ICM responded to the discovery application with outline submissions dated 12 May 2025 supported by an affidavit of Elan Sasson, a lawyer and partner of Quinn Emanuel Urquhart & Sullivan, the solicitors for ICM, affirmed on 12 May 2025.

6    The parties’ submissions and evidence indicated that the parties had engaged in a lengthy and productive process of conferral with respect to the discovery categories and that the areas of dispute with respect to the categories were relatively narrow (at least, compared with the breadth of the discovery categories). Neither the applicants nor ICM sought an order that standard discovery be given by ICM; rather, they sought the Court’s determination of the areas in dispute.

7    Mr Budzinski did not contest the making of an order that he give standard discovery.

8    A hearing with respect to the disputed categories of discovery was conducted on 21 May 2025. At that hearing, I made rulings with respect to many of the disputed categories, with reasons given during the hearing. Those rulings are not repeated in these reasons and are recorded in the transcript of the hearing. However, in respect of a limited number of categories, I invited the parties to confer further in light of guidance given during the hearing, and to provide the Court within 7 days with a further version of the categories (revised categories) showing:

(a)    categories that were agreed or resolved (including categories that had previously been agreed between the parties, categories that were the subject of rulings during the hearing, and categories agreed between the parties through further conferral in light of the guidance given by the Court); and

(b)    categories that remained in dispute between the parties.

9    The parties complied with that request and filed the revised categories on 28 May 2025. These reasons concern only the categories that remained in dispute between the parties. The parties also provided proposed orders, which differed only in respect of the dates by which the respondents are to give discovery. These reasons also address that matter.

Applicable principles

10    The applicable principles governing discovery can be stated briefly.

11    Rule 20.11 of the FCR stipulates that a party must not apply for an order for discovery unless the making of the order will “facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible”. That rule reflects the overarching purpose of civil practice and procedure as stated in s 37M. The two touchstones for discovery are the tests of relevance and proportionality, as framed by r 20.11 and the overarching purpose stated in s 37M. An order for standard or non-standard discovery will not be made unless it is necessary for the just resolution of the proceeding and is proportionate in scope to the issues raised in the proceeding.

12    An order for standard discovery under r 20.14 requires the discovery of documents that are “directly relevant” to the issues raised in the proceeding. If non-standard discovery is sought under r 20.15 (as in the current case), the application will usually be assessed according to the same test of direct relevance: Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy [2020] FCAFC 5; 379 ALR 593 at [172]-[173]; Ford, in the matter of Careers Australia Group Ltd (in liq) v Mansfield (No 2) [2022] FCA 1565 at [8]-[9]. The notion of “direct relevance” requires that the documents in question be directly on point, in that they tend to prove or disprove the allegation in issue: Adelaide Brighton Cement Ltd v Concrete Supply Pty Ltd (subject to deed of company arrangement) (No 3) [2018] FCA 1058 at [8]-[11].

13    Proportionality involves a number of considerations. The documents sought must be proportionate to the nature, size and complexity of the case. Further, it includes the need, in commercial litigation, for the cost involved in making discovery to be kept in proportion to the commercial subject matter, taking account of any broader significance that may be attached to the litigation: Fuji Xerox Australia Pty Ltd v Whittaker (No 2) [2021] FCA 696 at [9]; Pleash (Liquidator), in the matter of SFG Relocations Pty Ltd v Fourie [2022] FCA 552 at [15]-[17]; Reiche v Neometals Ltd [2024] FCA 1202 at [8]-[9].

Issues in dispute on the pleadings

14    The applicants’ pleading is contained in a consolidated statement of claim dated 23 August 2024 (which was prepared following the consolidation of two representative proceedings commenced in this Court: see Bain v International Capital Markets Pty Ltd (No 2) [2024] FCA 847).

15    The consolidated statement of claim is lengthy. It has been answered by a reasonably detailed defence from ICM and a less detailed defence from Mr Budzinski. In the case of ICM, significant admissions have been made by ICM with respect to allegations concerning the nature of ICM’s business. However, all of the allegations of contraventions of statute law and breaches of the common law are denied. This part of the reasons provides an overview of the principal allegations made and issues in dispute, for the purpose of resolving the discovery application.

Allegations concerning ICM’s business

16    There is limited dispute between the parties with respect to the allegations concerning the business conducted by ICM during the relevant period (20 December 2017 until 23 August 2024).

17    It is common ground that, throughout the relevant period, ICM carried on a business in Australia that included issuing contracts for difference (CFDs) to retail and wholesale investors and providing online trading services in relation to the CFDs issued by it. ICM issued product disclosure statements which described the CFDs offered by ICM. ICM offered the CFDs through a number of online trading platforms which were accessible by retail investors on a wide variety of devices, including mobile phones, tablets and desktop computers. ICM was the counterparty to CFD transactions entered into by retail clients on the trading platforms.

18    Section B of the consolidated statement of claim is titled “Financial Products” and contains allegations concerning CFDs. The allegations are made in abstract terms and are not directed specifically to the CFDs issued by ICM. The relevance of such abstract allegations is questionable because each CFD is a contract governed by its terms of issue. The proceeding concerns CFDs issued by ICM, and it would be expected that the applicants would direct the allegations to the terms on which ICM’s CFDs were issued. Nevertheless, ICM has responded to the allegations in its defence. ICM has also included as schedules to its defence lengthy extracts from its product disclosure statements (and other publications) which describe the contractual terms of its CFDs. The following matters can be seen to be relatively uncontroversial between the parties, despite the difficulties with the manner in which the consolidated statement of claim has framed the allegations.

19    A CFD can be described as a derivative the value of which is determined, derived from, or varies, by reference to, the change in the value of a reference (or underlying) asset (such as a security, rate, index or commodity) in the time period between the acquisition (opening) and disposal (closing) of the CFD. Typically, the holder of a CFD does not obtain any legal interest in the reference asset. The party that issues a CFD is typically known as the issuer, while the party who holds the CFD is typically known as the holder or the investor. During the relevant period, most CFD trading in Australia was completed “over the counter” (OTC), which means it was between two counterparties and not through an exchange or market.

20    A CFD is categorised as either a “long” or “short” position. A long position is a contract entered into with the expectation that the reference asset will increase in value. A long position is ‘bought’ at the quoted buying (or ask) price on a given date and is ‘sold’ (and thereby closed out) at the quoted selling (or bid) price on a later date. A short position is a contract entered into with the expectation that the reference asset will decrease in value. A short position is ‘sold’ at the quoted selling (or bid) price on a given date and is ‘bought’ (and thereby closed out) at the quoted buying (or ask) price on a later date. Typically, a CFD does not have a fixed term, but is ‘closed out’ by the holder as explained above. It may also be closed out by the issuer in certain circumstances (such as a default on a margin call).

21    Although not the subject of clear or precise allegations in the consolidated statement of claim, ICM admits that it set the buy and sell prices for the CFDs issued by it, and the buy and sell prices were determined by the market price of the underlying asset, as passed through from a liquidity provider. The buy and sell prices quoted by ICM had a ‘spread’; in other words, there was a difference between the buy and sell prices, with the buy (or ask) price being higher than the sell (or bid) price.

22    The CFDs offered by ICM allowed an investor to take a financial position based on the predicted future value of an underlying reference asset such as an equity, a foreign currency, an index, a commodity, or a bond, where the value of the position was intended to fluctuate with the movement in the price of the reference asset. An investor could open a CFD position by either buying or selling the CFD and could close the CFD position by selling the CFD (in the case of a buy order) or buying the CFD (in the case of a sell order). Upon closing the position, the investor’s profit or loss was calculated by reference to the difference between the opening price and the closing price of the CFD, less fees and charges.

23    ICM offered retail investors facilities to acquire CFDs on a leveraged basis. This meant that retail investors only had to provide a proportion of the value of the investment, referred to as a margin, calculated by reference to the leverage ratio (expressed as a percentage). The use of leverage magnified the potential profits from an investment transaction, but also magnified the potential losses. ICM required investors to maintain sufficient funds in their account with ICM to cover the required margin on their trading positions. If the value of the CFDs held by an investor decreased such that the funds in the investor’s account with ICM ceased to cover the required margin on their trading positions, ICM was entitled to make a margin call, requiring the investor to deposit more funds to maintain the required margin. If the investor failed to do so, ICM was entitled to close out the investor’s CFDs.

The claims made against ICM

24    Each proceeding has been brought on behalf of persons (other than institutional investors) who entered into or acquired an interest in one or more CFDs issued by ICM and suffered loss or damage as a result of the alleged contraventions of law or breaches of duty.

25    The claims made against ICM can be divided into four categories and relate to four separate time periods.

Primary claims

26    The first time period is from 20 December 2017 until 28 March 2021 (primary claim period). In respect of that period, it is alleged that ICM operated a system, or engaged in a pattern of behaviour, which had elements that included:

(a)    offering CFDs to investors on reference assets that experience volatility;

(b)    setting the buy and sell price for its CFDs in a way that was not transparent to investors;

(c)    selling highly leveraged CFDs to investors that were complex, highly risky and unsuitable for those investors;

(d)    providing a website and operating a trading platform that facilitated poor decision-making and encouraged continuous trading, notwithstanding significant or repeated losses;

(e)    failing to adequately assess applicants’ suitability for trading, and continued trading, in highly leveraged CFDs;

(f)    charging significant and non-transparent fees and costs;

(g)    allowing investors to fund all trading using a credit card, which meant there was a significantly higher probability of their trading leading to indebtedness and financial difficulty;

(h)    using methods to encourage high-volume and continuous trading; and

(i)    making various misrepresentations about the nature and risks of CFDs offered by ICM, including that they were an appropriate or suitable investment for investors and a reasonable and attractive alternative to ordinary investment strategies or products for investors aiming to generate an investment return, and failing to disclose the extent of the risks of those products.

27    It is alleged that ICM knew or ought to have known of the above matters, as the Australian Securities and Investments Commission (ASIC) had for many years published reports in respect of the risks to investors of trading in CFDs, which reports were known to ICM.

28    In respect of the primary claim period, it is alleged that, in connection with offering and issuing CFDs, ICM:

(a)    contravened the prohibitions against false, misleading or deceptive conduct in ss 1041E and 1041H of the Corporations Act 2001 (Cth) (Corporations Act) and ss 12DA and 12DF of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act);

(b)    contravened the prohibitions against unconscionable conduct in s 12CB of the ASIC Act and s 991A of the Corporations Act;

(c)    breached its duty of care to investor clients to warn them of the material risks inherent in the highly leveraged CFDs issued by ICM; and

(d)    made negligent misstatements on which investors relied,

in each case causing investors to suffer loss.

PIO (product intervention order) claims

29    The second time period is from not later than 29 March 2021 until 23 August 2024 (inclusive) (PIO claim period). The claims in respect of the PIO claim period relate to conduct allegedly engaged in by ICM in connection with the issue of Product Intervention Order 2020/986 by ASIC on or about 22 October 2020 (the PIO). The PIO had been preceded by Consultation Paper CP 322 released by ASIC on or about 22 August 2019 proposing the issue of a Product Intervention Order restricting the supply of CFDs to retail clients.

30    The PIO had the following effects from 29 March 2021 in respect of retail clients:

(a)    limiting the maximum leverage that could be offered on CFDs;

(b)    implementing standard margin close-out arrangements;

(c)    limiting a platform operator’s recourse to money held in the client’s account; and

(d)    prohibiting the giving of gifts, discounts and other benefits to open a CFD account or acquire CFDs.

31    It is alleged that, with an awareness of the forthcoming PIO and in order to avoid the restrictions that would be imposed by the PIO, from on or around July 2020, ICM recommended that existing retail clients:

(a)    apply for a professional trading account which offered higher leverage than a standard account and, where a client was approved, re-categorized the client as a wholesale investor;

(b)    apply for a trading account with ICM Seychelles which offered higher leverage than a standard account.

32    It is alleged that, in doing so, ICM took no or no adequate steps to assess the client’s suitability for the higher leverage. It is also alleged that ICM made false or misleading statements to clients in connection with that process.

33    In respect of the PIO claim period, it is alleged that, in connection with offering and issuing CFDs, ICM:

(a)    contravened the prohibitions against false, misleading or deceptive conduct in ss 1041E and 1041H of the Corporations Act and ss 12DA and 12DF of the ASIC Act; and

(b)    contravened the prohibitions against unconscionable conduct in s 12CB of the ASIC Act and s 991A of the Corporations Act.

TMD (target market determination) claims

34    The third period is from 5 October 2021 until 23 August 2024 (TMD claim period). It is alleged that, during the TMD claim period, ICM was obliged to publish a “Target Market Determination” (TMD) pursuant to s 994B of the Corporations Act, and ICM complied with that obligation. It is further alleged that ICM contravened s 994E of the Corporations Act because it failed to take reasonable steps that would result in retail product distribution conduct in relation to CFDs that was consistent with its TMD.

Conflicted remuneration

35    The fourth time period is from 20 December 2017 until 23 August 2024 (defined in the consolidated statement of claim as the relevant period). It is alleged that ICM gave conflicted remuneration, within the meaning of s 963A of the Corporations Act, to certain third parties (partners) who entered into marketing partnerships or similar programs with ICM, pursuant to which the partners would recommend to their clients or others to invest in CFDs with ICM and, if the clients did so, ICM provided benefits to the partners. It is alleged that by its arrangements with such partners, ICM contravened ss 963E, 963F and 963K of the Corporations Act. It is further alleged that, as a result of the contraventions, investors who received and acted on the recommendations suffered loss.

Claims made against Mr Budzinski

36    It is alleged that Mr Budzinski was the founder of ICM, was a director of ICM at all relevant times, was the Managing Director of ICM from 2009 to 2015 or was the Chief Executive Officer of ICM from 2015 to 2023, and at all relevant times was a director and the sole shareholder of the ultimate holding company of ICM, Bud Corporation.

37    It is further alleged that, during the relevant period, Mr Budzinski:

(a)    was responsible for, and on a day-to-day basis personally exercised close and extensive control and management over, ICM’s operations and business;

(b)    knew of the regulatory obligations and regulatory materials which applied to ICM’s operations in Australia, which are alleged in Parts D and E of the consolidated statement of claim;

(c)    knew of, and authorised the implementation of, the matters alleged against ICM (with respect to the primary claims and the TMD claims) for the purposes of his generating for himself substantial profits therefrom;

(d)    was knowingly concerned in ICM’s misleading and unconscionable conduct alleged in the primary claims;

(e)    was a joint tortfeasor with ICM in relation to the claims in negligence and negligent misstatement; and

(f)    was knowingly concerned in ICM’s contravention of s 994E of the Corporations Act (the TMD claims).

Claims that are not made

38    In its outline submissions made in support of its application for discovery, the applicants stated:

A significant issue in the proceedings is the probability of group members incurring losses when trading the products offered by ICM. A key question for determination will be the effect of ICM’s conduct in setting the pricing of its CFD products, developing the margin rates and tiers and leverage ratios, and the effect of this conduct on group members and their losses.

39    It can be accepted that a relevant issue in the proceedings is the likelihood of group members incurring losses when trading CFDs offered by ICM. The consolidated statement of claim alleges that, during the primary claim period, retail investors trading CFDs with ICM experienced loss rates in the range of up to 80%. However, it cannot be accepted that an issue for determination in the proceeding is the “effect of ICM’s conduct in setting the pricing of its CFD products” on group members and their losses.

40    As summarised above, the primary claims made against ICM fall into two categories. The first category of allegations is to the effect that ICM misled retail investors with respect to the risks of trading in the CFDs issued by ICM, including by failing to warn investors of the risks. That allegation requires an assessment of all relevant disclosures made by ICM to retail investors. The second category of allegations is to the effect that ICM acted unconscionably by aggressively marketing its CFDs to retail investors knowing that the products were unsuitable for such investors and likely to cause them large losses. An element of the allegations is that the financial structure of the CFDs, including the leverage offered to investors and the effect of ICM’s fees and charges on the required margin and therefore margin calls, was known by ICM to cause investors to suffer losses. That allegation requires an assessment of the information known by ICM as to the impact of the financial structure of the CFDs on the likelihood of retail investors incurring losses.

41    There is only one allegation concerning the manner in which ICM set the buy and sell prices of its CFD products. It is alleged that ICM set the buy and sell prices in a manner which was not “transparent to or disclosed to retail investors” and in a manner which could differ from the market price of the reference assets (para 75 of the consolidated statement of claim). Both of those allegations raise matters of objective fact. The first allegation requires an assessment of whether and to what extent ICM disclosed to investors the manner in which it set the buy and sell prices. The significance of the allegation in the proceeding is far from clear, because it is not alleged that ICM made false or misleading representations with respect to the manner in which it set the buy and sell prices, or otherwise contravened the law determining the buy and sell prices. The second allegation, if pursued, requires a comparison between the buy and sell prices quoted by ICM for its CFDs (in respect of each reference asset for which CFDs were offered) and the contemporaneous ‘market’ prices of the reference assets. The allegation begs the question of which market price to use as a comparator. Again, the significance of the allegation in the proceeding is unclear.

42    As the pleadings currently stand, I consider that there is no proper basis for the applicants to contend that an issue for determination in the proceeding is the “effect of ICM’s conduct in setting the pricing of its CFD products” on group members and their losses, and there is no justification for the applicants to seek discovery with respect to that topic.

Rulings on disputed categories

Reports, summaries and analyses

43    A number of the categories require ICM to give discovery of reports, summaries or analyses of certain matters, being:

(a)    in respect of category 2, trading analytics;

(b)    in respect of category 3, client demographics;

(c)    in respect of category 4(3), persons who applied to open a CFD trading account with ICM;

(d)    in respect of category 4(4), the average period of time between a client applying to open an account and approval being given;

(e)    in respect of category 11(2), margin call or variation margin requirements, close outs and related matters;

(f)    in respect of category 11(3), negative balance accounts and related matters;

(g)    in respect of category 13(3), the effect of paying inducements, rebates and credits to ICM’s retail clients;

(h)    in respect of category 20(1), complaints received by ICM about specified matters;

(i)    in respect of category 23(1), the risks of CFDs for retail investors and related matters;

(j)    in respect of category 24(1), internal and external compliance reviews and reports.

44    The dispute between the parties with respect to the above categories is confined. The applicant seeks discovery of any report, summary or analysis of the enumerated matters, together with documents created in the preparation of any such report, summary or analysis. ICM seeks a limitation that the categories be confined to final versions of any report, summary or analysis, and that the categories not include documents created in the preparation of any such report, summary or analysis.

45    A proportionate approach is to confine the categories to any such report, summary or analysis, including draft versions, but not to require ICM to produce all documents created in the preparation of any such report, summary or analysis. The latter requirement would impose a significant burden and is not justified at this point of the proceeding.

Inducements

46    Category 13 concerns inducements, rebates and credits to retail clients. The applicants contend that the category relates to the allegations that ICM used methods to encourage high-volume and continuous trading, including inducements to its clients to trade and inducements to third parties to refer new clients to ICM’s platforms (at paras 71(i) and 132 to 138 of the consolidated statement of claim).

47    At the hearing on 21 May 2025, ICM made no objection to category 13.

48    Category 14 concerns inducements to trade and referral programs with third parties. The applicants contend that it relates:

(a)    to the allegations that ICM used methods to encourage high-volume and continuous trading, including inducements to its clients to trade and inducements to third parties to refer new clients to ICM’s platforms (at paras 71(i) and 132 to 138 of the consolidated statement of claim);

(b)    to the allegations that ICM used unfair tactics such as inducements leading consumers to underestimate the high risks of CFDs (at paras 248(g) and 284(f) of the consolidated statement of claim); and

(c)    to the conflicted remuneration allegations (at paras 336 to 343 of the consolidated statement of claim).

49    At the hearing on 21 May 2025, ICM objected to category 14 on the basis that it related solely or predominantly to the conflicted remuneration allegations and the parties had agreed to defer discovery with respect to those allegations. The reason for that agreement is that the applicants accept that neither of them have a claim based on those allegations. The applicants are seeking to identify a group member who does have a claim based on those allegations and the applicants have agreed to defer discovery until any such person is identified.

50    Following the hearing, the parties agreed to defer category 14, but each of them seek amendments to category 13 (which was not previously in dispute). I accept, however, that the amendments proposed to be made to category 13 arise out of the deferral of category 14.

51    I do not regard the disagreements with respect to category 13(1) as material. ICM seeks to narrow its scope, but I consider that the formulation proposed by the applicants largely reflects the pleaded allegations and is proportionate. The applicants seek to include reference to “incentives” in addition to “inducements”. It can be doubted that there is any material difference in meaning between the two words. The word “incentive” is not, however, used in the pleaded allegations (there is only a passing use of the word within particulars). The applicants have not sought to use the word consistently in the categories. I have therefore excluded it.

52    With respect to category 13(2), the applicants’ proposed category is formulated in vague language, referring to “documents concerning ICM offering inducements”. Such vague language amplifies the burden of giving discovery. In contrast, ICM’s proposed category is clear in its terms. I have adopted an amalgamation of the competing proposals.

53    With respect to category 13(4), the applicants seek to add a new category of documents concerning the development of, implementation of, and/or decision to change or maintain any trading inducements (and incentives) to retail clients or prospective retail clients, including but not limited to concerning the ‘White Label’ program. I am satisfied that the category relates to the pleaded allegations concerning the purpose and effect of inducements offered by ICM (excluding the use of the word “incentives”).

ICM’s Marketing strategy

54    Category 15 concerns ICM’s marketing. Initially, the applicants sought a number of categories which would likely have imposed a disproportionate burden on ICM in giving discovery. Following the hearing on 21 May 2025, the parties disagree about the formulation of a single category directed to ICM’s marketing strategy. In general terms, the category requires production of documents sent, received or created by ICM’s marketing department (or other persons outside of the ICM marketing department with relevant authority and control) concerning ICM’s marketing strategy. I am satisfied that the category relates to the pleaded allegations.

55    Two matters are in dispute. The first matter concerns temporal limitations to be applied to the category. The limitation can either be attached to the period within which documents were sent, received or created, or to the period of ICM’s marketing strategy. The applicants propose the former; ICM proposes that the limitation should apply to both aspects. In my view, it is sufficient if the limitation is applied to the period within which documents were sent, received or created. The second matter concerns the description of documents sought by the category. ICM seeks to limit the category to documents recording ICM’s marketing strategy. I consider the category should be broadened to documents concerning ICM’s marketing strategy. ICM’s marketing strategy is a central allegation in the applicants’ case based on unconscionable conduct and documents concerning ICM’s marketing strategy are likely to be relevant.

Websites and platforms

56    Category 18 concerns webpages on the ICM website that concern CFD trading, and trading platforms on which ICM CFDs were traded.

57    As initially framed, the applicants sought three categories of documents which were framed in an excessively broad manner. The categories, as framed, were largely irrelevant to the real issues in dispute between the parties and sought documents concerning the development and implementation of changes to the website and platforms throughout the relevant period. ICM adduced evidence demonstrating the absurdity of such proposals, given the number of changes made to ICM’s website over time. Further, the categories applied to all changes regardless of whether the aspect of the website being changed had any bearing upon the applicants’ case, and applied to all communications even if they related to software coding. The applicants failed to limit the categories to relevant and proportionate information.

58    At the hearing on 21 May 2025, the applicants submitted that the categories were relevant to the allegations that:

(a)    the ICM trading platforms were accessible to the general public (at paras 62 to 65 of the consolidated statement of claim);

(b)    ICM provided a website and trading platforms that facilitated poor decision-making and encouraged continuous trading notwithstanding significant losses (at paras 71(e) and 105 to 116 of the consolidated statement of claim); and

(c)    ICM made the ICM representations through material published on the ICM website (at para 251 of the consolidated statement of claim).

59    Contrary to the applicants’ submissions, the categories of discovery sought by the applicants were not directed to the allegations made in paragraphs (a) and (c) above. To the extent those allegations are disputed (and the extent of the dispute appears to be limited on the pleadings), it can be addressed in a far more cost-efficient means. For example, discovery could be given of the relevant webpages during the relevant period. If functionality is in issue, there are procedural methods for ascertaining such matters in a more confined manner.

60    In the course of argument at the hearing, it became apparent that the real purpose of the discovery sought by the applicants related to the allegations that ICM provided a website and trading platforms that facilitated poor decision-making and encouraged continuous trading notwithstanding significant losses. The central allegations are those contained in paras 115 and 116 of the consolidated statement of claim.

61    Paragraph 115 alleges, amongst other things, that the content and presentation of the ICM website:

(a)    was directed at retail investors and encouraged them to sign up and to continue CFD trading in circumstances where they were unlikely to have had the opportunity to adequately assess the risks of CFD trading; and

(b)    was focused on encouraging retail investors to sign up to and commence and continue trading rather than on ensuring that they were aware of the significant risks of trading and the high likelihood that they would sustain losses if they signed up and started trading.

62    Paragraph 116 alleged that the nature and presentation of the ICM trading platforms:

(a)    facilitated poor decision-making by retail investors; and/or

(b)    was likely to encourage and/or encouraged constant or increased trading by retail investors, notwithstanding repeated losses.

63    The applicants are entitled to seek discovery in categories that are relevant to those allegations and are proportionate.

64    As proposed by the applicants, category 18(1) requires discovery of documents sent, received or created during the relevant period by personnel responsible for the design of ICM’s website concerning the design of ICM’s website or platforms relevant to CFDs. ICM seeks a narrower category confined to documents emanating from ICM’s marketing department and recording ICM’s strategy with respect to designing the relevant webpages. I consider that an amalgam of the two approaches is appropriate. The category should be focused on documents that reveal ICM’s strategy with respect to the design of the relevant webpages and trading platform (to the extent one exists). In my view, the category should be framed as follows:

Documents sent, received or created during the Relevant Period by personnel responsible for the design of ICM’s website or by personnel within ICM’s marketing department, or other persons with relevant authority and control with respect to the design of ICM’s website, concerning ICM’s strategy with respect to the design of the webpages on the ICM website relevant to CFDs or the design of the ICM trading platforms.

65    As proposed by the applicants, category 18(2) requires discovery of the final user guides or similar types of instructional documents in effect during the relevant period regarding the ICM trading platforms and ICM demonstration (“demo”) account and demonstrating their functionality, and documents created in the preparation of any such user guides or similar types of documents. ICM opposed the category. In my view, the category has apparent relevance to the applicants’ allegations that the ICM trading platforms were accessible to the general public, which is not fully admitted by ICM. In so far as the category has been narrowed to final user guides, it should not impose an unnecessary burden on ICM. However, having regard to the nature of the allegations in dispute, which relate to functionality, I do not consider that discovery is required of documents created in the preparation of any such user guides or similar types of documents.

66    As proposed by the applicants, category 18(3) requires discovery of documents concerning or comprising briefs to external firms in connection with the development of the design of the ICM website, the ICM trading platforms and the ICM demo account. ICM opposes the category. In my view, the category is not sufficiently directed to the real issues in dispute. As framed, it will capture irrelevant documents. Further, it adds little, if anything, to category 18(1). For those reasons, I reject it.

Role, knowledge and involvement of Mr Budzinski

67    Category 27 concerns the role, knowledge and involvement of Mr Budzinski in the contraventions alleged against ICM.

68    As initially framed, the applicants sought discovery of documents recording communications or records of communications between ICM and Mr Budzinski concerning the topics described in each of the other categories of discovery. In my view, there is no difference between a document that records a communication and a document that records a record of a communication; the latter is included within the former and the phrase “or records of communications” is redundant.

69    At the hearing on 21 May 2025, the applicants submitted that category 27 is relevant to the allegations of Mr Budzinski’s accessorial liability in the consolidated statement of claim, which have been set out earlier. Mr Budzinski has made very limited admissions with respect to those allegations.

70    In respect of the allegation in para 344 (that Mr Budzinski was responsible for, and on a day-to-day basis personally exercised close and extensive control and management over, ICM’s operations and business), Mr Budzinski denies the allegation other than to admit (relevantly) that he was the founder of ICM and that he was a director of ICM from 2007.

71    In respect of the allegations in para 345 (that Mr Budzinski knew of the regulatory obligations and regulatory materials which applied to ICM’s operations in Australia), Mr Budzinski only admits that he was aware of the “existence” of the regulatory obligations and regulatory materials which applied to ICM’s operations in Australia. It is not entirely clear what is meant by that admission, but it appears to be a narrow admission which does not extend to awareness of the content of any of the regulatory obligations.

72    In respect of the allegations in para 346 (that Mr Budzinski knew of, and authorised the implementation of, the matters alleged against ICM – with respect to the primary claims and the TMD claims – for the purposes of his generating for himself substantial profits therefrom), Mr Budzinski admits little more than that the product disclosure statements issued by ICM were approved by its board.

73    ICM opposed category 27 on two bases: first, Mr Budzinski is a party to the proceeding, and has agreed to give standard discovery; second, the category is excessively broad.

74    I do not accept ICM’s first argument. It is unknown whether Mr Budzinski will have retained relevant documents. If relevant documents are in ICM’s possession, custody or control, they should be discovered by it.

75    As to ICM’s second argument, at the hearing on 21 May 2025 consideration was given to two alternative approaches to discovery on this topic. The first alternative approach is to defer discovery on this topic until ICM has completed discovery on the other categories. The applicants could then target their discovery request in respect of Mr Budzinski to significant documents. The second alternative approach is to frame category 27 by reference to the allegations made against Mr Budzinski as summarised above.

76    Following the hearing, ICM proposes the deferral of discovery on this topic (being the first alternative canvassed at the hearing) whereas the applicants propose a revised category reflecting the allegations made against Mr Budzinski (being the second alternative approach canvassed at the hearing).

77    I have given further consideration to this category in light of Mr Budzinski’s defence. As noted above, Mr Budzinski has put in issue almost the entirety of the accessorial liability allegations made against him. In those circumstances, I consider that the applicant is entitled to have discovery from ICM with respect to the accessorial liability allegations made against Mr Budzinski. I accept that such discovery will be burdensome, but the issues are a legitimate part of the case brought by the applicants and the allegations are contested. Indeed, I consider it appropriate to frame the category in broad terms by reference to the pleaded allegations against Mr Budzinski.

Timetable orders for giving discovery

78    The final matter in dispute between the parties concerns the timetable for giving discovery.

79    The applicant seeks orders that discovery be given by ICM as follows:

(a)    in respect of categories 25 (board documents) and 26 (financial statements), by 9 July 2025;

(b)    in respect of all other categories, a first tranche to be given by 6 October 2025 and a second tranche to be given by 8 December 2025.

80    The applicant also seeks orders that discovery be given by Mr Budzinski by 6 October 2025.

81    ICM seeks orders that discovery be given by ICM as follows:

(a)    in respect of category 25, by 9 July 2025;

(b)    in respect of all other categories, a first tranche to be given by 28 November 2025 and a second tranche to be given by 2 March 2026.

82    Mr Budzinski seeks orders that he give discovery by 2 March 2026.

83    The discovery task is likely to be very substantial. Nevertheless, it is not acceptable to have ICM’s discovery extend for more than 6 months. I will therefore make orders in accordance with the timetable proposed by the applicants, save that I will not require category 26 to be discovered by 9 July 2025. Contrary to the applicants’ submission, category 26 is not equivalent to category 25 because it extends beyond annual financial statements to include periodic statements or accounts reporting upon specific items. I also consider that Mr Budzinski should be able to complete his discovery by 6 October 2025. His discovery is not tied to ICM’s discovery and there is no reason for his discovery to be deferred pending the completion of ICM’s discovery.

Conclusion

84    In conclusion, I will make orders as set out in these reasons. Each party has had a measure of success on the discovery application. It is appropriate that the costs of the application be costs in the cause.

Associate:

Dated:    6 June 2025