Brydi Pty Ltd atf the Brydi Super Fund v Southern Cross Payments Ltd [2026] FCA 543

This case sits in the middle of a larger shareholder dispute. It was not the final hearing of the class action. Instead, O'Callaghan J was asked to decide whether the applicant should be allowed to amend its pleadings in a Part IVA proceeding on behalf of investors who acquired ISX shares on the ASX.

The company at the centre of the case was Southern Cross Payments Ltd, formerly iSignthis Ltd or ISX. The judgment says ISX carried on business as a provider of online payment and identity and verification services. The background included a backdoor listing and a milestone share arrangement under which some directors, including CEO Mr Karantzis, could earn Milestone Shares if specified revenue hurdles were met within a set period.

That commercial structure mattered because the applicant's case was that revenue in ISX's FY18 accounts should not have been recognised under the applicable accounting standards. The allegation, in substance, was that the relevant revenue came from activity that was not a core service. If that were right, the applicant said, the Milestone Shares vested when they should not have vested and the FY18 accounts were inaccurate.

ISX had released audited financial accounts for FY18 and for the period to 31 December 2018. Those accounts included directors' declarations that the revenue hurdle for the Milestone Shares had been met and that the financial statements complied with the Corporations Act and the relevant accounting standards. Grant Thornton audited those accounts and gave an audit opinion that they were in accordance with the Corporations Act and gave a true and fair view of ISX's financial position.

The amendment application was therefore commercially significant. If allowed, it would broaden the investor case about what was said to the market, how revenue was recognised, how the milestone structure operated, and what role the audit work played.

The proposed amendments were not just tidy-up changes. The court summarised them as adding further and uncontroversial facts about Grant Thornton's conduct in auditing the financial statements, including additional alleged contraventions of discrete auditing standards. The applicant also wanted to add further facts and allegations about ISX's conduct in making representations to investors who purchased shares on the ASX.

The judgment says those additions came from a recent review of documents already referred to in the pleadings, from reasons of the Company Auditors Disciplinary Board published after the proceeding began, and from documents that the applicant did not have until after the respondents served their defences and produced documents.

A major feature of the amendments was a new set of alleged governance and control representations. In summary, the applicant proposed to allege that ISX represented to investors that its directors and audit committee members were required to act, and did act, with integrity, that ISX had sufficient systems and controls to recognise revenue appropriately, and that it had disclosed all key risks to the business and there was nothing known to ISX or its directors that threatened the company's continued listing, trading or governance.

The applicant then sought to connect those alleged representations to further claims under ss 1041H and 1041E of the Corporations Act. It also sought to plead additional facts about the Authenticate Contracts and Outsourcing Agreements, and to allege that certain officers caused ISX to enter those arrangements for the actuating purpose of generating enough revenue to achieve the Milestone Shares.

Grant Thornton did not oppose the amendments directed to it. The real fight on the application came from ISX's objection to some of the new governance and control allegations.

The main legal obstacle raised by ISX was abuse of process. ISX argued that some of the proposed amendments should not be allowed because ASIC had already brought a separate civil penalty proceeding against ISX and Mr Karantzis based on a substantially similar factual substratum.

The judgment records that ASIC commenced that proceeding on 7 December 2020. On 21 June 2024, McEvoy J delivered judgment and made a number of declarations of contravention against iSignthis Ltd and Mr Karantzis, including findings involving ss 180(1), 1309(2), 1309(12) and 674(2A) by reason of involvement in a contravention of s 674(2). But, importantly for this amendment fight, McEvoy J dismissed ASIC's case that Mr Karantzis had contravened ss 181(1) and 182(1)(a) in relation to various integration agreements.

The judgment also records that on 8 August 2025 penalties were imposed, including a $10 million pecuniary penalty on the company and a $1 million penalty on Mr Karantzis, together with a six-year disqualification from managing corporations. An appeal was lodged on 5 September 2025 and had been heard in the March 2026 sittings, but had not yet been determined when this amendment application was decided. Counsel informed the court that ASIC had not appealed the dismissal of the ss 181 and 182 claims against Mr Karantzis.

ISX's point was that the class action amendments relied on substantially the same transactions and factual matrix as the ASIC case. The applicant accepted that overlap and accepted there was some risk of inconsistent findings if the proposed ss 1041H and 1041E claims succeeded. But the applicant argued that this was still a different proceeding brought by different parties, against different respondents, and under different statutory provisions.

That set up the balancing exercise the court had to perform. On one side was the concern that courts should avoid abusive relitigation and inconsistent findings. On the other side was the principle that people should not lightly be prevented from bringing their own claims, especially where they were not parties to the earlier case.

O'Callaghan J allowed the amendment application. The court ordered that the applicant have leave to file and serve an amended originating application and amended statement of claim substantially in the form annexed to the interlocutory application dated 16 January 2026.

The court also made costs orders. The first respondent, Southern Cross Payments Ltd, was ordered to pay the applicant's costs of the application. The applicant was ordered to pay the respondents' costs thrown away by reason of the amendments.

On the abuse of process issue, the judge accepted two important points. First, the factual substratum of the allegations in the class action was substantially similar to that in the ASIC proceeding. Secondly, there was some risk that findings in the new proceeding might be inconsistent with certain findings made in the ASIC case.

Even so, the court did not treat that as enough to refuse the amendments. The judge emphasised that this was a different proceeding brought by a different applicant, on behalf of group members, against ISX and an additional defendant, Grant Thornton, and relying on different legislative provisions. The court referred to authority recognising the importance of distinguishing between controlling abuse of the court's processes and improperly impeding a person's access to the courts.

A significant factor in favour of allowing the amendments was that the class action could not realistically have been brought or heard at the same time as the ASIC proceeding. The judge considered it would be unfair to shut out class members from pursuing their causes of action because ASIC had chosen to bring its proceeding when it did, against the parties it named, on different grounds.

So the result was clear: the amendments were allowed. But it is equally important to be clear about what the result was not. The court did not finally determine whether ISX or Grant Thornton contravened ss 1041H or 1041E, whether the governance and control representations were in fact made, or whether the pleaded revenue allegations are ultimately correct. Those issues remain for the substantive case.

For business owners, directors, CFOs and in-house legal teams, this case is a reminder that one set of commercial events can generate multiple proceedings over time. A company may face exchange action, regulator action, disciplinary findings about audit work, and then private investor claims. The fact that one case has already been heard does not necessarily mean the legal exposure is over.

The judgment also shows how different parts of a business can become linked in later litigation. Here, the pleaded issues connected revenue recognition, milestone-based equity, board and officer interests, governance statements, risk disclosure, internal controls and audit opinions. That is a common pattern in shareholder litigation. A statement that looks broad or aspirational when published can later become a pleaded representation tested against internal documents and conduct.

If your company says that directors act with integrity, that controls are sufficient, or that all key risks have been disclosed, those statements should be supportable in practice. The risk is not limited to deliberate misconduct. Litigation often focuses on whether systems were actually adequate, whether incentives distorted decision-making, whether unusual transactions were properly assessed, and whether public statements matched internal knowledge.

The case is also a reminder that performance-based equity structures deserve careful governance. If share vesting depends on revenue or other financial metrics, the accounting treatment behind those metrics may later be scrutinised very closely. Where there are personal interests, dilution consequences or unusual contracts near a trigger point, the board process and documentation become especially important.

Finally, businesses should note the procedural lesson. New material can emerge after proceedings start. Here, the applicant relied in part on later CADB reasons and on documents obtained after defences were served. That means a case can widen as more information becomes available, even if the original pleading was narrower.

The judgment gives a useful example of how amendment applications are often driven by later information. The applicant said some of the new allegations arose from CADB reasons published after the proceeding began. The court also noted that the respondents' defences referred to documents the applicant did not have until after those defences were served and the documents were produced.

That matters because businesses sometimes assume the issues in a case are fixed once the first statement of claim is filed. In reality, pleadings can evolve as documents are produced, related proceedings conclude, or disciplinary findings become public. If your business is already in litigation, later developments in parallel matters may affect the scope of the claims.

The judgment also records a broader timeline. ISX shares were suspended from trading by the ASX on 2 October 2019, with the ASX publishing a statement of reasons explaining the suspension and governance concerns. ISX then commenced proceedings against the ASX, which it later discontinued after two years. Various regulatory and criminal proceedings followed. ASIC commenced its civil penalty case in December 2020. The CADB issued reasons in June 2025. The class action amendment application was filed in January 2026 and heard in April 2026.

For businesses, the practical point is that disputes about financial reporting and governance can unfold over years, not months. The legal and commercial consequences may continue well after the original market event.

Is this a final judgment on liability? No. It is an interlocutory ruling allowing amendments to the pleadings.

Did the court say there was no risk of inconsistent findings? No. The court accepted there was some risk, but held that this did not justify shutting out the amendments in the circumstances.

Did Grant Thornton oppose the amendments? The judgment says Grant Thornton did not oppose the amendments directed to it.

Does an ASIC case prevent later investor claims? Not necessarily. This decision shows that later private claims may still proceed where they involve different parties, different defendants or different statutory causes of action.

What is the main business lesson from the pleaded issues? Revenue recognition, incentive structures, governance statements and audit work should be considered together, because they may later be examined as part of the same factual story.

This page is based on the Federal Court judgment in Brydi Pty Ltd atf the Brydi Super Fund v Southern Cross Payments Ltd [2026] FCA 543, dated 5 May 2026. The judgment identifies the matter as an application to amend pleadings in a Part IVA proceeding and records that the application was allowed.

The available reasons end before the final paragraphs. That means there may be additional discussion in the full judgment about particularisation or other aspects of the court's reasoning. The explanation above therefore focuses on the points clearly stated in the available reasons and the formal orders.