Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd
[1994] FCA 636
•13 Sep 1994
6 3 6 9Y-
JUDGMENT No. ...., .,,, ,,J CATCHWORDS
PRIVATE - IhlTERNATEONAL --W - -procedure - appl-ictttion +o -&i.Ste out statement of claim alleging foreign element - test to be applied - practice - whether liberty to re-plead - discretion
-Act-1903, 879, 880
1 Court Rules, 011 r16, 011 r2
m Mutual Life & Citizens' Assurance CO Ltd v &&& (1970) 122 CLR 628, 631
United States Suraicaa v HosDital Products International Pty
[l9821 ACLD 350
Ucherbera. Ho~wood 5 Crew Ltd v [l9711 1 WLR 1128, 1130
v Z A I NEW ZE R
p P No. G523 of 1991 Beaumont J Sydney
13 September 1994
ERAL COURT OF AUSTRALIA ) )
WALES DIST RICT REGISTRY ) No. G523 of 1991
| -- . - | . - | - -- |
- - .- ---. ."
-
DIVISION ) BETWEEN: ALLSTATE LIFE INSURANCE CO. AND THE OTHER PARTIES LISTED IN ANNEXURE "A" TO THE REASONS FOR JUDGMENT
Applicants
AND : AUSTRALIA & NEW ZE- R P LIiI D --p--- ~- BANKING G OU TE AND THE OTHER PARTIES LISTED IN ANNEXURE "B" TO THE REASONS FOR JUDGMENT
Respondents
!x?ml: BEAUMONT J.
-8 13 SEPTEMBER 1994 MINUTES OF ORDEE
The Court Orders:
1. Direct that within fourteen (14) days, the applicants file and serve draft short minutes of the orders they contend are to be made on the Notices of Motion in accordance with
the Reasons for Judgment. 2. Stand the Notices of Motion over to a date to be fixed.
3. Make no order for the costs of the Notices of Motion.
Note : Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.
NEW SOUTH WALES DISTRICT REGISTRY ') No. G523 of 1991
.. -- - . . .. ---- L
) - -
- ) BETWEEN: ALLSTATE LIFE INSURANCE CO.
AND THE OTHER PARTIES LISTED
. - IN ANNEXURE "A" TO THE REASONS FOR JUDGMENT
Applicants
AND : AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED AND THE OTHER PARTIES LISTED IN ANNEXURE "B" TO THE REASONS FOR JUDGMENT
Respondents
ix!RAfd: BEAUMONT J. m: 13 SEPTEMBER 1994 REASONS FOR JUDGMENT
(ON APPLICATIONS TO STRIKE OUT PARTS OF
THE STATEMENT OF CLAIM)
Before the Court are several Notices of Motion
seeking to strike out parts of the applicants' statements of
claim in several proceedings. Although the applicants ' pleadings differ in certain respects, the argument on the Notices of Motion has proceeded on the footing that the amended statement of claim in this matter, No. G523 of 1991, filed on 24 June 1994 ("the statement of claim") is, in principle, fairly representative of the material claims made in the other pleadings. All of the claims are complex. It will be convenient to deal with the present applications, at this stage, by reference to that pleading.
- - 4 h e --&*c+we --d. --tk - st+&ement --ef- c & a h . .i&- .---.. --
| I.- | - |
relevantly, as follows: In the first place, a series of claims are made (paras. 1 to 49A), under the heading "All Claims", that is, it appears, allegations of fact intended to apply to all the claims made by the applicants. A series of allegations, of mixed fact and law (paras. 53 to 57), are made under the heading "Trade Practices Act 1974 (Cthl". A series of allegations, of mixed fact and law (paras. 58 to 61), are made under the heading "Section 11 Securities Act of 1932
m". A series of allegations, of mixed fact and law (paras.
62 to 67), are made under the heading "Section 12 Securitieq
Act of 1933 (USAL". A series of allegations, of mixed fact and law (paras. 68 to 72), are made under the heading "Section E Securities Act of 1933 IUSAL". A series of allegations, of mixed fact and law (paras. 73 to 78), are made under the
heading " m l e 10B - 5 II [i.e. proclaimed pursuant to 15 USC
78(j)(b)]. A series of allegations, of mixed fact and law (paraa. 79 to 83), are made under the heading "Deceit and
c o m o n Law Fraud (New South Wales and New York Law)". of allegationa, of mixed fact and law (paras. 90 to loo), are A series made under the heading "Intentional Interference with Contractual Relations". The statement of claim also sought relief specified in the application. By their amended application also filed on 24 June 1994, damages and other relief were claimed by the application under the laws of Australia, of New South Wales and of New York respectively.
| - . | . , | - - - - --I-= | - - t e - - d e ~ ~ m | --*---&B | i ~ - .&. - . . | .-- - |
the notices of motion, it will be necessary to refer, in some detail, to the claims made in the statement of claim and in the application.
TI
&I?PLICATION [i.e. APPLICABLE TO "ALL CLAIMS"1
The following allegations are made in the statement of claim (using the abbreviations in annexures "A" and "B" to these reasons):
(1) Between October 1988 and October 1989, the Linter
officers were directors of Linter Group, of Linter Textiles (a eubeidiary of Linter Group) and of each of its subsidiaries (parae. 4, 5, 6 and 7).
(2) By a prospectus ("the prospectus") registered with the United States Securities and Exchange Commission ("SEC") on
debentures") to be paid for on 13 October 1988 at the New York 7 October 1988, Linter Textiles offered to issue US$200,000,000 13.75% senior subordinated debentures due 1 October 2000 ("the offices of the underwriter (para. 8). (3) The debentures were to be issued and were, in fact, issued by Linter Textiles pursuant to an Indenture dated 1 October 1988 between Linter Textiles and USTC ("the Indenture") (para. 9). By the Indenture, it was provided that the debentures were issued subject to the provisions of a
| -.. . - | S | - - ~ r b ~ i - ~ - | - M | - | 1 -0136- W, --and .. | -- . --.- |
debenture was subordinated to the "Senior Indebtedness", which was defined as any indebtedness of Linter Textiles other than on the debentures and certain other specified indebtedness (paras. 10 and 11). Clause 2.l(b) of the Priority Deed provided that the Deed, for so long as any "Bank Senior Debt" is outstanding, "shall constitute a continuing offer to all persons who, in reliance upon such provision, become holders
of, or continue to hold, Senior Debt.. . . " "Bank Senior Debt"
was defined as "all moneys owing by Linter Textiles ... payable to ... the initial participant banks and any other banks or financial institutions which executed an accession deed," as the subsequent participant banks did (paras. 12 and 13).
( 4 ) In the prospectus, Linter Textiles made the
following representations [except where otherwise indicated, viz. by omission from the prospectus, the particulars given in the pleading refer to pages in the prospectus in these
respects, i.e. the representations are alleged to be express]: (i) that it had adopted, and would implement, a plan, the first stage being "the Re-organisation", pursuant to which, of a total indebtedness owing by Linter Textiles and its subsidiaries to Linter Group o f approximately $A606,000,000: (a) $A353,000,000 would be converted into equity; (b) $A239,000,OOO would be repaid from the proceeds of the offering of the debentures; and
- ----m - + p p ~ d & d + y - $A-U-&8o#Jo - UQU&~ -mamain - - outstanding as Senior Indebtedness as defined by the Indenture and the Priority Deed (paras. 14.1 and 14.6).
(ii) that it had adopted, and would implement, a plan, the first stage being "the Re-organisation", pursuant to which as of 30 June 1988, after notionally giving effect to the Re-organisation, Linter Textiles would have had no Senior Indebtedness as defined by the Indenture and the Priority Deed (paras. 14.2 and 14.7).
(iii) that it had adopted, and would implement, a plan, the first stage being "the Re-organisation", pursuant to which, after issuing the debentures and receiving the proceeds thereof, Linter Textiles would have no Senior Indebtedness as defined by the Indenture and the Priority Deed (paras. 14.3 and 14.8).
(iv) that it had adopted, and would implement, a plan, the first stage being "the Re-organisation", pursuant to which Linter Textiles might subsequently incur Senior Indebtedness [as defined by the Indenture and the Priority Deed] by way of bank facilities limited to the amount of $A50,000,000 to cover working capital needs and
| If- | . . .- | --$A7Si-080+@0 | -80 | --be | tleed +%K --a1 | .8xpe&-iar- --- . - A |
on a stand-by basis (paras. 14.4 and 14.9).
(V)
that it had adopted, and would implement, a plan, the first stage being "the Re-organisation", pursuant to which Linter Textiles would not have any contingent liabilities to meet the debts of Linter Group (paras. 14.5 and 14.10).
[The particulars in the pleading state that the representation is made by the omission from the prospectus of any reference to any contingent liability or proposed contingent liability in respect of guarantees by Linter Textiles regarding the liabilities of Linter Group or guarantees by the subsidiaries regarding the liabilities of Linter Textiles (including liabilities arising by way of guarantees in respect of Linter Group), and the reference in the prospectus to the restrictions contained in the Indenture.]
(vi)
that Linter Textiles did not have any, or alternatively any substantial, contingent liability to meet the debts of Linter Group (para. 14.11).
[The particulars in the pleading state that the representation is made by the omission from the
-- --gee* -ef- --&BY --erme -be -any --ai-t -- ----.I liability or proposed contingent liability in respect of guarantees by Linter Textiles regarding the liabilities of Linter Group or guarantees by the subsidiaries regarding the liabilities of Linter Textiles (including liabilities arising by way of guarantees in respect of Linter Group), and the reference in the prospectus to the restrictions contained in the Indenture.]
(vii) that Linter Textiles would not incur or assume any contingent liability to meet the debts of Linter Group [other than in circumstances where pending the arrangement of senior bank facilities of $A50,000,000 to cover working capital needs and up to $A75,000,000 to be used for capital expenditures on a stand-by basis], and Linter Group provided Linter Textiles with funds for working capital and capital expenditure where
party lenders (para. 14.12). Linter Group had borrowed those funds from third
(viii) that Linter Textiles had no plans or intentions to incur, and would not incur, Senior Indebtedness as defined by the Indenture to banking or other financial institutions, other than an amount of $A50,000,000 to cover working capital needs and a facility of up to $A75,000,000 to be used for
--efi*l--exgend-i+--+~d-+her ----h -a . -- - .- --. stand-by basis (paras. 14.13 and 14.14).
(ix) that the subsidiaries did not have, and would not incur, any, or alternatively any substantial, contingent liabilities to meet the debts of Linter Group (paras. 14.15 and 14.16).
[The particulars in the pleading state that the representation is made by the omission from the prospectus of any reference to any contingent liability or proposed contingent liability in respect of guarantees by Linter Textiles regarding the liabilities of Linter Group or guarantees by the subsidiaries regarding the liabilities of Linter Textiles (including liabilities arising by way of guarantees in respect of Linter Group), and the reference in the prospectus to the
restrictions contained in the Indenture.]
( 5 ) Prior to 12 October 1988, each of the initial
participant banks had entered into an agreement with Linter Group and the subsidiaries pursuant to which the subsidiaries guaranteed repayment to each bank of all money actually or contingently due to that bank by Linter Group (para. 15).
(6) On 12 October 1988, the initial participant banks releaeed the subsidiaries from the guarantees in consideration
| ---- 4-0 | f | 'LNte - t m & r & a k ~ - ' ~ j | --give~-by-bi&xn---~t-iles | .- |
and the subsidiaries [paras. 16 and 171.
(7) On 13 October 1988, the debentures were issued and
paid for as contemplated by the prospectus [para. 181. Shortly thereafter, Linter Textiles and the subsidiaries guaranteed to the initial participant banks the liabilities of Linter Textiles and Linter Group pursuant to the undertakings [paras. 19, 20, 21 and 221. Pursuant to the provisions of the Indenture, the subsidiaries entered into subordinated indebtedness guarantees with USTC [paras. 23 and 241.
( 8 ) The banks maintain that they are entitled to
payment under the guarantees in priority to payments under the
Indenture and the subordinated guarantees [para. 251.( 9 The representations pleaded in para. 14 were false [para. 26 to 311, and Linter Textiles did not believe, or have
reasonable grounds for making, the representations [paras. 32 to 351.
(l01 The subsidiaries [para. 361, the Linter officers
[para. 371 and the initial participant banks [para. 381 knew
that the representations were not true.
(11) The subsidiaries, the Linter officers and the
initial participant banks knew of the matters alleged in
| ----- | - . - | - | .--6 ta -H--& | -26 +O -35 | - ~ d | -+- | --t€~--kiwe-knew~ | tket | - - - - |
representations were false [paras. 39, 40 and 411.
(12) The subsidiaries, the Linter officers and the initial participant banks neglected to warn persons contemplating the purchase of debentures of the matters alleged in paras. 6 to 22 and 26 to 35, notwithstanding that they knew or ought to have known that those contemplating the purchase of the debentures would not purchase if so warned ["the failure to speak"] [paras. 42 to 451.
(13) The initial participant banks stood to gain financially from the issue of the debentures, in that Linter was insolvent, and the proceeds of the debenture issue were used to repay the banks, and, pursuant to the Indenture, the obligation to repay the debentures was subordinated to the liability to the banks [para. 461.
purchasing debentures [paras. 47, 48 and 491, and if the ( 1 4 ) The applicants relied on the representations in failure to speak had not occurred, they would not have
purchaeed [paras. 47A, 48A and 49Al.Relevantly, the following claims for relief were made on the causes of action then pleaded:
Under the heading "Trade Practices Act 1974" the following allegations are made:
(1) In making the representations, Linter engaged in conduct
likely to mislead or deceive, contrary to s.52 of the
Practices Act [para. 531, and the subsidiaries, theLinter officers and the initial participant banks were
parties to that contravention [para. 541.
(2) By the failure to speak, the subsidiaries, the Linter officers and the initial participant banks engaged in conduct likely to mislead or deceive, contrary to 8.52 [para. 551.
(3) As a result of these contraventions, the applicants suffered loss and damage [para. 561.
(4) Further, and alternatively, the applicants sought relief under 6.87 of this Act declaring void certain provisions of the documentation pleaded, together with an order that the initial participant banks indemnify the subsequent participant banks for any loss they may suffer as a result of these orders [para. 571.
The following is alleged in this connection:
(1) By s l l it is provided that where any part of a registration statement is materially untrue or omits a material fact or is misleading by reason of some omission, any acquirer of such a security [including a debenture] may recover from the issuer, and every director, the amount being the difference between the amount paid for the security and the value of the security at the date of the action, plus costs [paras. 58 and 591.
(2) The registration statement was untrue or omitted a
material fact or was misleading by reason of some omission
[para. 601.
(3) In consequence, the applicants suffered loss and damage and are entitled to recover from Linter Textiles and the
Linter officers the amount being the said difference, plus
costs [para. 611.
THE CLAIM UNDER S.12 SECURITIES ACT 1933 IUSa]
The following is alleged:
(1) By 13.12, it is provided that where any security [including a debenture] is sold by means of instruments of communication in interstate commerce by a prospectus which includes a statement which is materially untrue, or omits
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omission, any acquirer of such a security may tender the security and recover from every offeror or seller the amount paid for the security plus interest and costs [paras. 62 and 631.
(2) Linter Textiles and its officers (a) employed means of interstate commerce within the United States in preparing and registering the registration statement and in selling the debentures [para. 641, and (b) offered and sold the debentures by means of a prospectus [para. 651.
(3) The prospectus was untrue or omitted a material fact or was misleading by reason of some omission [para. 661.
( 4 ) The applicants, upon tendering their debentures to Linter Textiles, demand that Linter Textiles repay the amount paid therefor, plus interest pursuant to the U.S.
Securities Act [para. 671.
The following is pleaded:
(1) By 6.15, every person who controls any person liable under 6.11 or 8.12 shall be jointly and severally liable with that person [para. 681.
| -A--.-d | . e -Beea t tsc - - W-- | - G ~ e t t p -een*~dAed | ---Lh%er- | -Text&-Lab----and | - . - | - |
because the latter was liable under s.11 and/or 6.12, Linter Group is also liable for any award under 6.11 and/or 6.12 [paras. 69 to 721.
The following claims are made:
(1) Pursuant to rule lob-5, it is unlawful, by the use of any means of interstate commerce or the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security [including a debenture]: (a) to employ any device to defraud; (b) to make any untrue statement or omit to state a material fact necessary to make the statement not misleading; or (c) to defraud or deceive any person [para. 731.
(2) Pursuant to the law of the State of New York, a person who breach of rule lob-5, may recover the loss from the person suffers loss relying upon conduct which is knowingly in primarily engaged in such conduct and from those who
knowingly assisted [para. 741.(3) Linter Group and Textiles, the subsidiaries and the initial participant banks have contravened rule lob-5 as
primary violators or have aided and abetted the contraventions [para. 761 in conduct which made use of the
-- ~ -- -3f ~ -& - - -Me ~ - -an$.. ,-&h . - ---..+- . facilities of a national securities exchange [para. 771; and they are accordingly liable to the applicants for their loss [para. 781.
F
NEW Y RK LAW
The following claims are made:
(1) Linter Textiles made the representations fraudulently, with the intent to induce the applicants to purchase the debentures [para. 791, and the initial participant banks (a) aided and abetted Linter Textiles by granting the releases in consideration of the undertakings [para. 801, and (b) knowingly concealed the facts in paras. 6 to 22 and 26 to 35 with the intent that persons would purchase the debentures [para. 811.
(2) Consequently (a) Linter Textiles and the initial participant banks are liable to pay damages to the
applicants for fraud [para. 83(a)], and (b) Linter and the
banks hold the proceeds of the debenture issue on
constructive trust for the applicants [para 83(b)].The following claims are pleaded:
| - | . . | .- .- - j | -W .+he | -W | --New ---Yerk, --a | --peEeen -wke --iRt8~thaal-l-lp | - -- | -- -.. |
interferes with the contractual rights of another, with intent to harm, without legal justification, is liable for the loss suffered [para. 901.
(2) Pursuant to the Indenture, Linter Textiles owed USTC and the other applicants a contractual duty (a) not to incur funded debt exceeding the ratio in clause 4.21; and (b) not to allow the subsidiaries to guarantee the obligations of Linter Group [para. 911.
(3) Linter Group, its officers, its subsidiaries and the initial participant banks directed Linter Textiles to breach its contractual obligations by, inter alia, giving guarantees ["the replacement guarantees"] to the initial participant banks in a sum exceeding $323 million [paras. 92 to 941.
(4) The replacement guarantees were issued without consideration and without justification [para. 951. (5) Linter Group, its officers, its subsidiaries and the banks knew, or ought to have known, that, but for their conduct, Linter Textiles would have been able to meet its financial obligations to the applicants [paras. 96 and 971.
(6) The said conduct was malicious in that it was principally
for the benefit of Linter Group and the banks [para. 981
| LI. | - . - --- | -- |
-end i r a s --+me -*ri-kb -&keRt . -&a A j u m ---the -a@4ea&o -- ---- [para. 991.
( 7 )
Linter Group, its officers, its subsidiaries and the banks are liable to pay damages, including exemplary damages, to the applicants [para. 1001.
F CLAIMED IN THE AMENDED APPLICATION
The following relief is claimed:
(a ) Trade Practices Act Damages are claimed against certain respondents pursuant to 8.82 of this Act [para. l]. Further, or alternatively, against certain respondents, orders are sought under 8.87 of this Act [as was claimed in para. 57 of the statement of claim] declaring void some of the provisions of the Indenture and of the Priority Deed, together with an order that the subsequent banks indemnify the initial banks
[para. 21. (b) Section 11. Securities Act of 1933 [USA1 Damages, including punitive damages, are claimed under
this provision against certain respondents [para. 31.An order for rescission and repayment of the debentures is
claimed under this provision against Linter Textiles
[para. 41.(d) Section 15. Securities Act of 1933 TUSAI A declaration is sought that Linter Group is liable, under
this provision, for any amounts which the applicants may recover from Linter Textiles under s.11 and S. 12 of this Act [para. 51.
(e) Pule lob-5 Damages are claimed under this provision against certain respondents [para. 61.
(f) Deceit and Fraud lNew South Wales and New York1
The applicants claim, against certain respondents, (a) damages for common law fraud under New South Wales and New York law; and (b) a declaration as to the constructive trust alleged [para. 71.
(g) utentional Interference with Contractual Relations INew Xnr;lrl
| L. - - . | . - | - - - - +er | -+M--eetwe-ef -act-km, -damagee-and--pun-i-t-iue -hagea. - . | - | -- |
are sought against certain respondents pursuant to the
common law of New York [para. 9 1 .
Apart from interest, or its equivalent, and costs,
the following is claimed:
(1) A declaration that any damages awarded are not
eubordinated in order of payment to the payment of any
Senior Indebtedness [para. 111.
(2) Exemplary damages [para. 141.
In their notices of motion, for the reasons they
developed in argument, the respondents seek to strike out parts
of the statement of claim and of the application on thegrounds, in essence, that the claims made disclose no reasonable cause of action, are frivolous and vexatious and an abuse of process and cause prejudice or embarrassment in
pleading a defence.[ME GENERAL PRINCIPLES TO BE APPLIED IN THE PRESENT APPLICATIONS The general principles to be applied in applic- ations of the present kind are well known and are as follows:
| c | - - . - - | - . |
3 *j- *-*--W -ef -fke--%p@htie~ 8 f 4- , -by -S ~ 7 9 of the Judiciarv Act, it is relevantly provided that the laws of each State, including the laws relating to procedure and evidence, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all courts exercising federal jurisdiction in that State in all cases to which they are applicable. By s.80 of the Judiciary
, it is relevantly provided that so far as the
laws of the Commonwealth are not applicable or so far as their provisions are insufficient to carry them into effect, the common law in Australia as modified by the Constitution and by the statute law in force in the State in which the Court in which the jurisdiction is exercised is held shall, so far as it is applicable and not inconsistent with the Constitution and the laws of the Commonwealth, govern all Courts exercising federal jurisdiction.
procedure and evidence of the State of New South It follows that, in these proceedings, the laws of Wales apply for all practical purposes, except so far as modified by Commonwealth legislation; and that, subject to any such modification, e.g. the Trade practices Act, the common law of Australia also applies.
| - - -- -3-2)--The -t5remn&ttnees--Sn -A$& | -a+&-rtg | -may- -be | 4-k | - | - | -I .... |
out are prescribed by the Rules of Court. Relevantly, by l l where a pleading (a) discloses no reasonable cause of action; (b) has a tendency to cause prejudice, embarrassment or delay in the proceeding; or (c) is otherwise an abuse of process of the Court, the Court may order that the whole or part of the pleading be struck out. It is well established that this discretionary power is primarily intended to ensure compliance with the rules of pleading. In practical terms, the relevant inquiry is confined to the pleading itself, that is, extraneous material is, generally, inadmissible for this purpose.
(3) By 0.11 r.2 a pleading shall contain, and contain
only, a statement in a summary form of the materialfacts on which the party relies, but not the evidence
pleaded with a degree of specificity which is by which those facts are to be proved. It is well established that material facts must be sufficient to convey to the opposite party the case that party has to meet. Thus, a bare conclusion is ordinarily not a proper allegation [see Trade practices Commission v David Jones (Australia) Pty
(1985) 7 FCR 109; charlie Carter Ptv Ltd v The
| d - .- | - -- -- |
&&&on -et Western Australia (1987) 13 FCR 4131.
Ordinarily, pure assertions of law should not be pleaded, except by way of clarification of a case already pleaded by reference to material facts.
However, foreign law stands in a special position for this purpose. [See Sykes & Pryles, Australian private International Law (3rd ed) 1991 at 267; Lawrence Collins (ed), Dicev & Morris on the Conflict pf Laws (12th ed) 1993 at 226, 2321.
In united States Suraical Cor~oration v Hos~ital product^ aternational Ptv Ltd [l9821 A.C.L.D. 350, McLelland J. explained the relevant principles in this way:
"In general it seems to me that the content of the foreign law, i.e. the existence and the nature and scope of any relevant rules and principles of foreign law in question, is to be treated in this Court
receivable. On the other hand the effect of as an issue of fact upon which evidence is the application of those rules and principles of the relevant foreign law, as so ascertained, to the particular facts and circumstances of the instant case is a question of law for this Court upon which evidence is not receivable."
[See also National Mutual Holdinas Ptv Ltd v Sentry Cor~oration (1989) 87 ALR 539 per Gummow J. at 556; see also the discussion in Nygh, Conflict of Laws in Australia (5th ed) 1991 at 236.1
foreign law is discussed in Bullen & Leake & Jacob'q precedents of Pleadinas (13th ed) 1990, Part 2, s.41, at 1169. Although, in the absence of proof to the contrary, foreign law is presumed to be the same as the municipal law, strictly speaking, foreign law is, in our courts, a matter of fact to be decided by the
judge [at 11701. The authors say this [at 11701: "Where a party relies on foreign law to support his claim . . . ., he must specially plead the foreign law relied on in his statement of claim
. . . . and he should give full particulars of the
precise statute, code, rule, regulation, ordinance or case law relied on, with the material sections, clauses or provisions thereof."
The authors go on to refer to Ascherbera. Ho~wood
D e w Ltd v Gasa Musicale Sonzoano [l9711 1 WLR 1128
where, in a copyright action, reliance was sought to
be placed upon a special meaning to be attributed byItalian law to an agreement made in Italy,
notwithstanding that evidence of Italian law had not
been pleaded. An appeal from an order that amendedpleadings should include full particulars of the statements, propositions and rules of construction of Italian Law relied on [at 11301 was dismissed.
(4) Under the modern system of pleading, on an application to strike out a statement of claim as disclosing no cause of action, the question is
| L.-- | . | . .- | --- | '%it | -%d-&ogert | -+t, -&he - M - i 8 % ~ b S - ] | t l p R |
the pleadings to prove facts at the trial which would
constitute a cause of action" [see The Mutual Life &
. .
u z e n s ' Assurance CO Ltd v Evatt (1970) 122 CLR 628 at 6311. The main general principles in strike out applications have been summarised as follows:
"(1) A 'reasonable cause of action' means one with some chance of success if regard be had only to the allegations in the pleadings relied upon by the claimant; in such a case, the claim cannot be struck out (Davey v Bentinck ([l8931 1 Q B
185) ) .
( 2 )
The mere fact that the case appears to be a weak one is not of itself sufficient to justify the striking out of the action (c£ Wenlock v Moloney ([l9651 1 WLR 1238)).
(3
Normally, the power to strike out should be exercised only in plain and obvious cases, where no reasonable amendment could cure the alleged defect (cf Hodson v Pare ([l8991 1 QB 455)).
(4) It goes without saying that if a
claim, the power to strike out
cannot be exercised.substantial case is involved in the
(5) Where a point of law has to be that this can be done by him appropriately, thereby avoiding the necessity of, and expense in going to trial, he is entitled to determine the point (cf Williams v Humbert ([l9861 AC 368))."
decided, and the judge is satisfied
[See Lonrho PLC v Tebbitt, "The Times", 24 September
1991, discussed [l9921 66 A.L.J. 47.1
Although there was some common ground between the eubmissions made on behalf of the respondents, there were significant differences as well. In order to reduce these applications to manageable proportions, it will be convenient to deal with the notices of motion together by addressing these questions: (1) Should any part of the statement of claim be struck out? (2) If so, should the applicants have leave to re-plead?
(1) PPAT OF THE STATEMENT OF CLAIM BE STRUCK OUT? As has been said, the principal proceedings are, plainly, litigation of a complex character. The case is made even more complicated by the foreign element. In order that the respondents might properly file a defence to the claims made, they were, in my opinion, entitled to know at least the following in respect of each cause of action pleaded:
(a) In what way is it said that the Court is invested with jurisdiction to entertain this claim?
(b) In respect of that aspect of a claim which involves a foreign element - (i) How is it said that the claim is justiciable in
this Court?
j , iR .~tfbewee , 4s '&W= - aat .-er ~ ~ -- ---- -- L ~ R complained of said to have occurred? If this is a question of mixed fact and law, identify the facts relied on, together with any law, domestic or foreign, relied on. In the case of foreign law, here and elsewhere in the pleading, refer to the provisions of any foreign statute and any decisions interpreting those provisions, together with any relevant exposition of the general law of the foreign country by decided cases or other authority.
(iii) If a New South Wales or Commonwealth statute is said to have an extraterritorial operation in the present matter, what facts and what provisions of the statute are relied upon?
(iv)
If the conflicts of laws rules of the common law of Australia are relied upon, what are those
rules, and what are the facts that attract those
rules? If any claims are made in the alternative,
here and elsewhere in the pleading, state this. For instance, if a foreign claim should be characterised, for P.I.L. purposes, as a claim in tort or deceit, but it is further contended, in the alternative, that the claim may be characterised as restitution, or as a constructive trust, this should be explicitly stated.
- - - ~ 4-f - i-t 4 .-eh-- ~ ~ -Lht , - -t3eFl$ttoa - - -- constituted fraud under Australian law and also under New York law in the alternative, this should be made explicit by separating, rather than merging, what are, in truth, distinct allegations.
(v) If a claim is made that a remedy or relief provided for by a foreign statute can be sued for in this Court, state whether or not the foreign statute vests that jurisdiction exclusively in a foreign court or tribunal, and in any event, state the facts and the legal rules relied on to claim that this Court has the power to grant that relief.
As has been noted, this list is not meant to be
exhaustive. It is no part of the Court's function to tender
advice to a party as to how the party should frame a pleading.But even if attention is confined to the items in the above list, it is apparent from the foregoing summary of the allegations in the pleading that several of the requisite items have not been adequately dealt with in the statement of claim and application. They are not there explicitly stated and even if [contrary to my impression] it were arguable that it is possible to infer some of these ingredients from the pleading, this will not assist the applicants for present purposes. Given the complicated nature of the litigation, it is not fair
| -.- .- -- -tb-& #e-reepmder?%+-488pe€&a%e--ah1& -eueh -fnaLber+. | - | -- | - |
should be stated with reasonable particularity and clarity. In my opinion, this standard has not been achieved in respect of all the specific claims pleaded, that is, commencing from the claim under the Trade Practices Act and following.
It is now accepted by the applicants that a foreign, extraterritorial element is central to each of these claims. Yet, as has been said, the pleading deals with this Fmportant aspect in a general way at best and, in some instances, not at all. Moreover, at no point is there an attempt in the pleading to spell out the precise legal context in which the foreign element is set, for instance by stating in the pleading the matters specified in the list above. In the absence of such information, the pleading is, in my opinion, embarrassing and should, to that extent, be struck out.
Other reasons for striking out parts of the not depend upon the foreign aspects of the claims. However, in statement of claim and application were also advanced which did
the circumstances, it is not necessary that I deal with these
additional arguments. I propose to order that paras. 53 to 83 and paras. 90 to 100 of the statement of claim be struck out.
It must further follow that those parts of the
application which refer to, and depend upon, these sections of
| - | - - - |
.--- -enm&-ef - e - h i m ~ t e t + l d ,-+.E -a-w~eqtte~e+, h- h a --U& -:.l out, that is, paras. 1 to 7, 9, 11 and 14 of the application.
(2) MOULD THE APPLICANTS HAVE LEAVE TO RE-PLEAD?
Ordinarily, when a pleading is struck out as embarrassing then, unless the Court's process is being abused by a futile attempt to plead an arguable cause of action properly, it is appropriate that leave be given, at least on the first such occasion, to formulate a fresh claim in accordance with the proper rules and practice of pleading. However, it was contended on behalf of some of the respondents that liberty to plead again should be denied here because any attempt to re-plead would be doomed to fail, as a matter of substance, so that it would be futile, and thus wrong, to give the applicants the chance to plead properly. An elaborate submission was sought to be developed by reference to the substantive rules of P.I.L.
In my view, the respondents' submissions must be rejected. This is not a case, for example, where, on agreed facte, a point of law emerges which may be conveniently disposed of by an order for the determination of a separate legal question. The fundamental vice in the submission is that, by virtue of the obscurity of the statement of claim in the present form, it is not yet possible to identify with any precision the material facts and points of a legal kind to be relied on by the applicants. Certainly the material facts are
| c | - - - - ~ - & y - ~ a + & e a . | --M | e | - | t | - | -ef | -a-chax - p b t u s e - | - | - ..--c |
[yet] of the character, both factually and legally, of the
applicants' claim, it is, to say the least, both premature and inappropriate to attempt to embark upon an inquiry whether the
applicants' pleading is, in substance, demurrable. In short,
we do not yet know enough about these unquestionably complex
claims to say whether any of them might be demurrable. Obecurely expressed they may be, but, with one possible exception, the respondents have not satisfied me [and they have thie onus] that the claims made by the applicants are, as a matter of substance, vexatious or frivolous or an abuse of process. As a matter of form, those claims are badly expressed and should be struck out. But it is another thing, and a serious one, to say that the proceedings should now, in effect, be pennanently stayed summarily, before the applicants have had another opportunity to express their claims in a way that is divorced from their present obscurity [see Lonrho PLC v Faved [l9921 1 AC 448 at 4691.
The possible exception referred to concerns the impact of a recent decision of the U.S. Supreme Court upon the claims under rule lob-5. However, I have concluded that is would be premature to express a view on the point at this stage given the introduction of a Bill into the U.S. Congress which would, in effect, reverse the outcome of the Supreme Court decision. There is, in my view, no warrant for taking such an extreme step, at least at this early stage of the proceeding.
- - - .. . . - I -re- --t+-gMnt -&he--ap#&wmtia &save to re-. - - . ., plead, in the ordinary way, including further amending their application, as the applicants may be advised, provided that any amended documents are filed and served within 28 days of this date.
!um
In the circumstances, since each of the parties has enjoyed a measure of success in terms of the outcome of the Notices of Motion, it is appropriate that no order be made in respect of the costs of the Notices of Motion. However, the respondents should have their costs, if any, thrown away by reason of any amendments made hereafter to the statement of claim.
-
As has been noted, the argument on the Notices of
Motion proceeded upon the footing that the issues forresolution were identified sufficiently in the amended
necessary that orders be made in the other proceedings (No. 622 statement of claim in No. G523 of 1991. It will, however, be of 1991; No. 635 of 1991; and No. 381 of 1994) to reflect these reasons. I propose to direct that, in all proceedings, the applicants file short minutes of the orders to be made in accordance with these reasons.
j+Eeeedi*q d
- - - I - ~ t i ~ -*t --bkis -snd ---the thirty-one (31) pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Beaumont.
Associate:
Date: 13 September 1994
APPEARANCES
-counsel-for the Applicants: Mr T.Simos ($2-and Mr-W G-Muddie Solicitors for the Appllcanu: Sly & Weigall Counsel for lst, 7th. 8th, 9th and l lth Respondents: Mr M A Pembroke Solicitors for 1st. 7th. 8th. 9th and l lth Respondents: Allen Allen & Hemsley
Counsel for 2nd Respondent: Mr G A Palmer QC and Mr M R Speakman Solicitors for 2nd Respondent: Minter Ellison Morris Fletcher Counsel for 3rd Respondent: Mr J N West QC and Mr J W Durack Solicitors for 3rd Respondent: Clayton Utz Counsel for 4th Respondent: Mr M J Slattery QC Solicitors for 4th Respondent: Clayton Utz Counsel for 5th and 6th Respondents: Mr J H Karkar QC and Mr Anastasslou Solicitors for 5th and 6th Respondents: Mallesons Stephen Jacques Counsel for 10th Respondent: Mr S D Robb QC Solicitors for 10th Respondent: Middleton Moore & Bevlns Counsel for 12th to 21st, 23rd to 25th. 27th and 28th Respondents: Mr B R Hayes QC and Mr N C Hutley Solicitors for 12th to 21st, 23rd Blake Dawson Waldron, as agents to 25th. 27th and 28th Respondents: for Anhur Robinson & Heddenvicks Counsel for 22nd and 26th Respondents: Mr R B MacFarlan QC and Mr A J Bannon Solicitors for 22nd and 26th Respondents: Henry Davis York Counsel for 29th to 47th
Respondents:-Solicitorsfor 29th to-49th
Respondents: Baker & McKenzie Date of hearing: 29-31 August 1994
PUCE OF 1IIODRWRhTII)II
1. Allstate Llfe Insurance CO IlLinoir. USA 'ALIC' 2 Colonial Intermediate Hlph Income Fund Hassachussetts. USA 'CIHIF'
-
3. D & P CB0 Partners W
'DgP'
4 Executive Llfe Insurance CO California. USA 'ELIC'
5 L i f e Insurance CO of the South uest Texas. USA 'LICSU'
-
6 Mt Tavor Partners LP
'Rt T~VOP.
7 Prospect Street Hlgh Income Portfolio lnc Massa~h~ssetts. USA .Prospect Incm B Unlted Hlph Inctwe Fund Inc Maryland, USA 'UNIFI'
9 United Hlgh Income Fund I1 Inc Maryland, USA 'UNIFII' 10 Unltcd States Trust Company of Neu York New York, USA 'USTC'
F i r s t Respondent Au5tr lLla and NN Zealand Bankinp Group Limited A C N. 005 357 522 20 Martin Place Sydney Incorporated I n V ic to r ia Second Respondent
Bank o f NN Zealand & C N K O W 3 2 8 8
8 th F l m rBNZ House
333-339 Georpe Street
Sydney
Incorporated i n New ZealandThlrd Re rwden t Barclays Bank Austral ia Llmlted
A.C N W8 497 603
27th F L m r
25 B l i ph Street
Sydney
Incorporated i n Austral ian Capltal Terr l tary
Fourth Respondent
Chase W Bank L in l ted A c.n mi 531 586
L ~ e l 36 Mntaa Internat lonal Centre
Georpe Street
Sydney
Incorporl ted i n NN South UaLcr F i f t h Respondent Clt lbank Limited A C H 004 325 080 Level 8
Cttibank Centrel Rargaret Street Sydney
Incorporated i n V ic to r ia Srxth Respondent
Citlbank NA
399 Park Avenue
Incormrated i n New York. USA
Seventh Respondent
Cowanwealth Bank o f Aus t ra l i a A.C N 123 123 124
F i r s t F loo r 48 M a r t i n P lace
Sydney
| - | -incaprratsd,n-tkv4oatwatn | ||||
| Eigh th Respondent | |||||
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| A C N MB 508 030 | |||||
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| Sydney | |||||
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| Sydney | |||||
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| Tenth Respondent | |||||
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| A C N CC0 866 526 | |||||
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| M P i t f street | |||||
| Sydney | |||||
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| E leventh Respondent | |||||
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| A C N a08 347 591 | |||||
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| 60 M a r t i n P lace Sydney | |||||
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| Sydney | |||||
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| A C N W 8 564 841 | |||||
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| Sydney | |||||
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| Fourteenth Respondent | |||||
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| A C N WO 411 594 | |||||
| 16th Floor | |||||
| 15 Ca.clereagh Street | |||||
| Sydney |
I n c n r @ r u e d l n Neu South wales Fi f teenth Respondent
Bank o f Amenca Austral ia Llmited
A C N W 4 6 1 7 3 H
l a t h Floor
Bank of America Bui ld ing
135 King Street
SydneyIncorporated i n Victor ia
Sixteenth Rerpondent
Bank o f Tokyo Austral ia Llmited 'BTAL' A C N W8 606 273
Level 26Gatuay Bui ld ing 1 MaCqUarl~ Place Sydney
Incorporated i n Austral ian Capital Ter r i to ry seventeenth Respondent
Banque Nationale dc Pans
A C N W O M O 1 1 7
12 Cartlareagh Street
SydneyIncorporated i n N u South Uales
Eighteenth Respondent
Credit Lyonnair Austral ia Limited
A C N M 3 M 9 458
Level 18
9-13 Cartlereaph Street
SydneyIncorporated i n N w South Uslcr
Nineteenth Rerpondent
D ~ I Y I Finance Aur t ra l la Limited
A C N W3 054 564
National A ~ s t r a l l a Bank Bui lding 255 Georpc Street
Sydney
Incorporated i n NW South Usler
Twentieth Respondent
Kywa saitama Finance Austral ia L in i t cd A C N W3 038 926
(formerly Kywa Finance Austral ia Llmlted)
Level 6
Barclays Hours
25 BLiph Street
SydneyIncorpormted I" New South UaLes
~wenty F i r s t Respondent Mi tsubi rh i Bank of Austral ia Limited
A C H M 2 963 242
1st FLmr
Natlon.1 ~ u c t r a t I a eant House 255 Goorgo Street
SydnayIncorporated In New South Vales
Twenty Second Respondent
Partnership Pac i f i c L im ted A C N MO 673 076
25th FLmr
60 Harnn Place
Sydney
Incorporated i n Ncu South ValesTwenty T h ~ r d Respondent Sanua Austra l ia Limited A C N wa 8W 549
11th Floor
10 Spring StreetSydney
incorporated in Ncw South Vales
Twenty Fourth Respondent
S o c i ~ t e Gencrale Aur t ra l la Llmlted A C N M 2 W3 021
L0V.L 6 Societe GeneraLe House
350 GcOrpc Street
SydneyIncorporated i n New South UaLes
Twenty F i f t h Respondent
State Bank of Neu South Vales Limited
A C N W3 963 228
Level 35
Scare Bank Centre
52 Harnn Place
Sydney
Incorporated i n NW South Vales
TYenty S i x t h Respondent
Colnlnnucalth Bank of Au r t ra l3a
i n r i g h t o f the former s t a t e Bank
o f V l c t o r i a
9 Car t le reagh S t ree t Sydney
Incorpora ted i n New South Uales
Twenty Seventh Respondent
Sun i to r , T rus t Finance (Aus r ra l l a ) L im i ted A C N M 3 036 940
Sui t e 6103
Level 61 MLC Centre
19-29 M a r t i n P lace
Sydney
Incorpora ted i n New South Uales
Twenty E ioh th Respondent R P 1 Bank o f Yestern A u s t r a l i a
( fo rmer ly The Rura l and I n d u s t r i e s Bank o f Yestern A u s t r a l i a ) 'RPI' A C N 050 494 454)
115 P l t t S t r e e t
Sydney
Incorpora ted i n Yestern A u s t r a l i a
The address o f each o f the Tuenty N i n t h t o For ty Seventh Respondents Is- C/- L P Maxsted and J B Harkness
KPffi Peat MarwickMLC B u l l d l n p M a r t i n P lace SYDNEY Twenty N i n t h Respondent Appunpa
P t y L t d ( I n L iqu ida t i on ) A C.N M6 985 360 Incorpora ted i n V l c t a n a T h i r t i e t h Respondent
EXBT L i m i t e d ( In L i q u i d a n o n ) A.C N M 4 117 243
( f o rmer l y B radmi l l T e x t i l e s L td )
Incorpora ted i n V i c t o r i a
T h i r t y F i r s t Respondent
EXBY P t y L t d ( I n L i q u i d a t i o n ) 'EXBU' A C N MO 021 321
( f o rmer l y B r a d m i l l Uorkuear P ty L td ) lncorpora ted i n Neu South Uales
T h i r t y Second Respondent
EXHHC L t d ( In L i q u i d a t i o n ) 'EXHHC' A C N WP 638 215
( f o rmer l y H l l t o n Ho r le ry Company L imi ted)
Incorpora ted i n Northern T e r r i t o r y , , .
Th i r ty Third Respondent EXJFA L td ( I n Liquidanon) A C N W 9 638 779
( foraer ly Jacquardr Fabncr Austral ia Ltd) (formerly Jacquardr Fabncr Aurt ra l la Hald~npr Ltd) Incorporated i n Northern Terr i tory
Th i r ty Fourth Respondent EXKGCC L td ( I n Liquidanon) A C N 009 636 441
(formerly King Gee Clothing Company Ltd)
Incorporated i n Northern Ter r i to ry Th i r ty F i f t h Respondent EXUH L td ( I n Liquidation)
'EXKAH'
A C N 0 0 9 6 3 8 1 7 1 (formerly Kortox Austral ia (Holdings) Ltd)
Incorporated i n Northern Ter r i to ry
Th i r ty S ix th RerpMdent Kotars L td ( I n L iqu~dat ion) A C N m9 6x6 426
Incorporated i n Northern Ter r i to ry Th i r ty Seventh Respondent EXNT L td ( I n L lqu ida t~on)
A.C N W5 699 W 9
(formerly National Texti les Ltd)
Incorporated i n Victor la
Th i r ty Eiphth Respondent
EXPU L td ( In L lqu~dat lon)
A C N 0 0 9 6 3 8 1 8 0 (tormerly Polaco (Austra l ia) Holdings Ltd)
Incorporated i n NW South Ualer
Th i r ty Ninth Respondent
OYGEVAULT Group L td ( I n Liquidation)
A C N W 3 019 707 (formerly Speedo Group Ltd)
Incorporated i n NW South Uales
For t ie th Respondent
Speedo Intcrnat ianal BV ( I n Liquidation) A C N OS0 144 913 Incormrated i n Netherlands
Forty F i r s t Respondent
EXSCC L td ( I n Liquidation) A C N 0 0 9 6 3 9 6 1 1 (formerly the Stubbier Clothing Company Ltd)
Incorporated i n Northern Ter r i to ry Forty Second Respondent
EXTFH L td ( I n Liquidation) A C N W 9 638 224
(formerly Toronto Fashlo~ir (Holdings) Ltd) Incorporated I" Northern Territory
Forty Third Respondent
OYGEVAULT K n l t t ~ n g l i l l l s Pty Lrd ( I n Llqulddtlon) A C N OM1 071 209
(formerly Speedo Kn i t t ing n i l l s Pty Ltd) Incormrated i n new South Uales
Forty Fourth Respondent
EXFH Pty L td
~ c ~ c m o n s z s
(formerly Formfit Holdinps Ltd) Incorporated I n Nev South ualer
Forty F i f t h Respondent
L in te r Text i les Corporation L td ( I n Liquidation) A.C N W 3 013 189
Incorporated i n New South UaLeS
Forty S ix th Rcrpoodcnt
L i n t c r Group Limited ( I n Liquidation) 'Llnter Group' Incorporated i n NW South Uales
Forty Seventh Rcrpande~it
Linsay P h l l l i p naxsted and 'the Liquidators' John Bererford Harkness C/- KPnG Peat Marwck
80 Col l ln r Street Nelbourne V I C 3WO
Forty Eighth Respondent
Abraham Goldberg 'Goldberg' ) 'Linter
30 I r v i np Road ) Of f lcerr '
Tmrak V I C 3142 1 ) Forty Ninth Respondent )
John U l l l o n BLmd 150 Oxford Street
'BLmd'
)
) C0LL l~VQOd V I C 3056 )
1
F i f t i e t h Respondent )
Kathy R Boskovitz 'Barkav~tz' ) 6 Cambridge Avenue ) Vaucluse NSU 2030
) )
F l f t y F i r s t Rcrpondcnt ) Ronald M Deans 'Deans' ) 7 Uat t le s t ree t K i l l a r a NSU ) 2071 1
Fifty Second Respondent
S i r Max Di l lon 33 Church Street
Pymble NSU 2073
F i f t y Third Respondent Dsvid Robert Gale
Level S1
Qantas International Centre
Jamlson StreetSydney AurtraLla 2WO
29
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0