Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 3)
[2011] FCA 515
•13 May 2011
FEDERAL COURT OF AUSTRALIA
Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 3) [2011] FCA 515
Citation: Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 3) [2011] FCA 515 Parties: BATHURST REGIONAL COUNCIL v LOCAL GOVERNMENT FINANCIAL SERVICES PTY LTD ACN 001 681 741, ABN AMRO BANK NV ARBN 079 478 612 and MCGRAW-HILL INTERNATIONAL (UK) LIMITED; AMERICAN HOME ASSURANCE COMPANY ABN 67 007 483 267
COOMA MONARO SHIRE COUNCIL ABN 19 204 741 100, COROWA SHIRE COUNCIL ABN 43 874 223 315, DENILIQUIN COUNCIL ABN 41 992 919 200, EUROBODALLA SHIRE COUNCIL ABN 47 504 455 945, MOREE PLAINS SHIRE COUNCIL ABN 46 566 790 582, MURRAY SHIRE COUNCIL ABN 77 334 235 304, NARRANDERA SHIRE COUNCIL ABN 96 547 765 569, NARROMINE SHIRE COUNCIL ABN 99 352 328 405, OBERON COUNCIL ABN 13 632 416 736, ORANGE CITY COUNCIL ABN 85 985 402 386, PARKES SHIRE COUNCIL ABN 96 299 629 630 and CITY OF RYDE ABN 81 627 292 610 v LOCAL GOVERNMENT FINANCIAL SERVICES PTY LTD ACN 001 681 741, ABN AMRO BANK NV ARBN 84 079 478 612 and MCGRAW-HILL INTERNATIONAL (UK) LIMITED; AMERICAN HOME ASSURANCE COMPANY ABN 67 007 483 267
STATECOVER MUTUAL LIMITED v LOCAL GOVERNMENT FINANCIAL SERVICES PTY LTD ACN 001 681 741, ABN AMRO BANK NV ARBN 84 079 478 612 and MCGRAW-HILL INTERNATIONAL (UK) LIMITED; AMERICAN HOME ASSURANCE COMPANY ABN 67 007 483 267
File number(s): NSD 936 of 2009
NSD 1073 of 2009
NSD 1268 of 2010Judge: JAGOT J Date of judgment: 13 May 2011 Catchwords: PRACTICE AND PROCEDURE – motion for further discovery – ambit of discovery obligations under Federal Court Rules O 15 r 2 – circumstances under which discovery will be considered speculative Legislation: Federal Court Rules O 15 r 2 Date of hearing: 13 May 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 9 In NSD 936 of 2009: Counsel for the Applicant: Counsel for the applicant in NSD 1073 of 2009 mentioned the appearance of the applicant Solicitor for the Applicant: McIntosh McPhillamy & Co, Solicitors Counsel for the First Respondent: Mr J C Giles Solicitor for the First Respondent: Norton Rose Counsel for the Second Respondent: Mr P Durack SC Solicitor for the Second Respondent: Allens Arthur Robinson Counsel for the Third Respondent: Ms K Barrett Solicitor for the Third Respondent: Clayton Utz Counsel for the Cross-Respondent to the Third Cross-Claim: Mr G A F Connolly Solicitor for the Cross-Respondent to the Third Cross-Claim: Wotton and Kearney Lawyers In NSD 1073 of 2009: Counsel for the Applicants: Mr C Withers Solicitor for the Applicants: Piper Alderman Counsel for the First Respondent: Mr J C Giles Solicitor for the First Respondent: Norton Rose Counsel for the Second Respondent: Mr P Durack SC Solicitor for the Second Respondent: Allens Arthur Robinson Counsel for the Third Respondent: Ms K Barrett Solicitor for the Third Respondent: Clayton Utz Counsel for the Cross- Respondent to the Third Cross-Claim: Mr G A F Connolly Solicitor for the Cross-Respondent to the Third Cross-Claim: Wotton and Kearney Lawyers In NSD 1268 of 2010: Counsel for the Applicant: Counsel for the applicant in NSD 1073 of 2009 mentioned the appearance of the applicant Solicitor for the Applicants: DLA Phillips Fox Counsel for the First Respondent: Mr J C Giles Solicitor for the First Respondent: Norton Rose Counsel for the Second Respondent: Mr P Durack SC Solicitor for the Second Respondent: Allens Arthur Robinson Counsel for the Third Respondent: Ms K Barrett Solicitor for the Third Respondent: Clayton Utz Counsel for the Cross- Respondent to the Third Cross-Claim: Mr G A F Connolly
Solicitor for the Cross-Respondent to the Third Cross-Claim: Wotton and Kearney Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 936 of 2009
BETWEEN: BATHURST REGIONAL COUNCIL
ApplicantAND: LOCAL GOVERNMENT FINANCIAL SERVICES PTY LTD ACN 001 681 741
First RespondentABN AMRO BANK NV ARBN 079 478 612
Second RespondentMCGRAW-HILL INTERNATIONAL (UK) LIMITED
Third RespondentAMERICAN HOME ASSURANCE COMPANY ABN 67 007 483 267
Cross-Respondent to the Third Cross-Claim
JUDGE:
JAGOT J
DATE OF ORDER:
13 MAY 2011
WHERE MADE:
SYDNEY
BY CONSENT, THE COURT ORDERS THAT:
1.The evidence in each of proceedings NSD 1268 of 2010 (the StateCover proceeding), NSD 936 of 2009 (the Bathurst proceeding), and NSD 1073 of 2009 (the Corowa proceeding) be taken to be evidence in all of those proceedings.
2.LGFS circulate to the parties in each proceeding by 29 May 2011 a proposed draft of the following:
(a)Amended Defence in the Bathurst proceeding;
(b)Further Amended Cross-Claim in the Bathurst proceeding;
(c)Amended Defence to the Second Further Amended Statement of Claim in the Corowa proceeding;
(d)Amended Cross-Claim in the Corowa proceeding;
(e)Amended Defence in the StateCover proceeding; and
(f)Amended Cross-Claim in the StateCover proceeding.
3.The parties indicate by 10 June 2011 whether they consent to the proposed amended pleadings referred to in order 2.
4.McGraw-Hill provide supplementary discovery and serve a verified supplementary list of documents by 10 June 2011.
5.Order 11 of the Orders made on 4 March 2011 in each proceeding be varied such that the time for the parties to confer with a view to agreeing to pre-trial directions and associated issues be amended to 25 August 2011.
AND FURTHER ORDERS THAT:
6.LGFS’s notice of motion dated 10 March 2011 for further discovery against ABN AMRO in each proceeding be dismissed.
7.Subject to order 8, LGFS and the applicants in the Corowa proceeding pay ABN AMRO’s costs of and incidental to the hearing today in the proportions of two thirds and one third respectively.
8.The balance of the costs of the notice of motion in each proceeding be reserved.
9.Exhibit JAC1 be returned to ABN AMRO.
10.The expert report of James Wood be returned to the applicants in the Corowa proceeding.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1073 of 2009
BETWEEN: COOMA MONARO SHIRE COUNCIL ABN 19 204 741 100
First ApplicantCOROWA SHIRE COUNCIL ABN 43 874 223 315
Second ApplicantDENILIQUIN COUNCIL ABN 41 992 919 200
Third ApplicantEUROBODALLA SHIRE COUNCIL ABN 47 504 455 945
Fourth ApplicantMOREE PLAINS SHIRE COUNCIL ABN 46 566 790 582
Fifth ApplicantMURRAY SHIRE COUNCIL ABN 77 334 235 304
Sixth ApplicantNARRANDERA SHIRE COUNCIL ABN 96 547 765 569
Seventh ApplicantNARROMINE SHIRE COUNCIL ABN 99 352 328 405
Eighth ApplicantOBERON COUNCIL ABN 13 632 416 736
Ninth ApplicantORANGE CITY COUNCIL ABN 85 985 402 386
Tenth ApplicantPARKES SHIRE COUNCIL ABN 96 299 629 630
Eleventh ApplicantCITY OF RYDE ABN 81 627 292 610
Twelfth ApplicantAND: LOCAL GOVERNMENT FINANCIAL SERVICES PTY LTD ACN 001 681 741
First RespondentABN AMRO BANK NV ARBN 079 478 612
Second RespondentMCGRAW-HILL INTERNATIONAL (UK) LIMITED
Third RespondentAMERICAN HOME ASSURANCE COMPANY ABN 67 007 483 267
Cross-Respondent to the Third Cross-ClaimJUDGE:
JAGOT J
DATE OF ORDER:
13 MAY 2011
WHERE MADE:
SYDNEY
BY CONSENT, THE COURT ORDERS THAT:
1.The evidence in each of proceedings NSD 1268 of 2010 (the StateCover proceeding), NSD 936 of 2009 (the Bathurst proceeding), and NSD 1073 of 2009 (the Corowa proceeding) be taken to be evidence in all of those proceedings.
2.LGFS circulate to the parties in each proceeding by 29 May 2011 a proposed draft of the following:
(a)Amended Defence in the Bathurst proceeding;
(b)Further Amended Cross-Claim in the Bathurst proceeding;
(c)Amended Defence to the Second Further Amended Statement of Claim in the Corowa proceeding;
(d)Amended Cross-Claim in the Corowa proceeding;
(e)Amended Defence in the StateCover proceeding; and
(f)Amended Cross-Claim in the StateCover proceeding.
3.The parties indicate by 10 June 2011 whether they consent to the proposed amended pleadings referred to in order 2.
4.McGraw-Hill provide supplementary discovery and serve a verified supplementary list of documents by 10 June 2011.
5.Order 11 of the Orders made on 4 March 2011 in each proceeding be varied such that the time for the parties to confer with a view to agreeing to pre-trial directions and associated issues be amended to 25 August 2011.
AND FURTHER ORDERS THAT:
6.LGFS’s notice of motion dated 10 March 2011 for further discovery against ABN AMRO in each proceeding be dismissed.
7.Subject to order 8, LGFS and the applicants in the Corowa proceeding pay ABN AMRO’s costs of and incidental to the hearing today in the proportions of two thirds and one third respectively.
8.The balance of the costs of the notice of motion in each proceeding be reserved.
9.Exhibit JAC1 be returned to ABN AMRO.
10.The expert report of James Wood be returned to the applicants in the Corowa proceeding.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1268 of 2010
BETWEEN: STATECOVER MUTUAL LIMITED
ApplicantAND: LOCAL GOVERNMENT FINANCIAL SERVICES PTY LTD ACN 001 681 741
First RespondentABN AMRO BANK NV ARBN 079 478 612
Second RespondentMCGRAW-HILL INTERNATIONAL (UK) LIMITED
Third RespondentAMERICAN HOME ASSURANCE COMPANY ABN 67 007 483 267
Cross-Respondent to the Third Cross-ClaimJUDGE:
JAGOT J
DATE OF ORDER:
13 MAY 2011
WHERE MADE:
SYDNEY
BY CONSENT, THE COURT ORDERS THAT:
1.The evidence in each of proceedings NSD 1268 of 2010 (the StateCover proceeding), NSD 936 of 2009 (the Bathurst proceeding), and NSD 1073 of 2009 (the Corowa proceeding) be taken to be evidence in all of those proceedings.
2.LGFS circulate to the parties in each proceeding by 29 May 2011 a proposed draft of the following:
(a)Amended Defence in the Bathurst proceeding;
(b)Further Amended Cross-Claim in the Bathurst proceeding;
(c)Amended Defence to the Second Further Amended Statement of Claim in the Corowa proceeding;
(d)Amended Cross-Claim in the Corowa proceeding;
(e)Amended Defence in the StateCover proceeding; and
(f)Amended Cross-Claim in the StateCover proceeding.
3.The parties indicate by 10 June 2011 whether they consent to the proposed amended pleadings referred to in order 2.
4.McGraw-Hill provide supplementary discovery and serve a verified supplementary list of documents by 10 June 2011.
5.Order 11 of the Orders made on 4 March 2011 in each proceeding be varied such that the time for the parties to confer with a view to agreeing to pre-trial directions and associated issues be amended to 25 August 2011.
AND FURTHER ORDERS THAT:
6.LGFS’s notice of motion dated 10 March 2011 for further discovery against ABN AMRO in each proceeding be dismissed.
7.Subject to order 8, LGFS and the applicants in the Corowa proceeding pay ABN AMRO’s costs of and incidental to the hearing today in the proportions of two thirds and one third respectively.
8.The balance of the costs of the notice of motion in each proceeding be reserved.
9.Exhibit JAC1 be returned to ABN AMRO.
10.The expert report of James Wood be returned to the applicants in the Corowa proceeding.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
BETWEEN: BATHURST REGIONAL COUNCIL
ApplicantAND: LOCAL GOVERNMENT FINANCIAL SERVICES ACN 001 681 741
First RespondentABN AMRO BANK NV ARBN 079 478 612
Second RespondentMCGRAW-HILL INTERNATIONAL (UK) LIMITED
Third RespondentAMERICAN HOME ASSURANCE COMPANY ABN 67 007 483 267
Cross-Respondent to the Third Cross-ClaimIN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 936 of 2009
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1073 of 2009
BETWEEN: COOMA MONARO SHIRE COUNCIL ABN 19 204 741 100
First ApplicantCOROWA SHIRE COUNCIL ABN 43 874 223 315
Second ApplicantDENILIQUIN COUNCIL ABN 41 992 919 200
Third ApplicantEUROBODALLA SHIRE COUNCIL ABN 47 504 455 945
Fourth ApplicantMOREE PLAINS SHIRE COUNCIL ABN 46 566 790 582
Fifth ApplicantMURRAY SHIRE COUNCIL ABN 77 334 235 304
Sixth ApplicantNARRANDERA SHIRE COUNCIL ABN 96 547 765 569
Seventh ApplicantNARROMINE SHIRE COUNCIL ABN 99 352 328 405
Eighth ApplicantOBERON COUNCIL ABN 13 632 416 736
Ninth ApplicantORANGE CITY COUNCIL ABN 85 985 402 386
Tenth ApplicantPARKES SHIRE COUNCIL ABN 96 299 629 630
Eleventh ApplicantCITY OF RYDE ABN 81 627 292 610
Twelfth ApplicantAND: LOCAL GOVERNMENT FINANCIAL SERVICES PTY LTD ACN 001 681 741
First RespondentABN AMRO BANK NV ARBN 84 079 478 612
Second RespondentMCGRAW-HILL INTERNATIONAL (UK) LIMITED
Third RespondentAMERICAN HOME ASSURANCE COMPANY ABN 67 007 483 267
Cross-Respondent to the Third Cross-Claim
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1268 of 2010
BETWEEN: STATECOVER MUTUAL LIMITED
ApplicantAND: LOCAL GOVERNMENT FINANCIAL SERVICES PTY LTD ACN 001 681 741
First RespondentABN AMRO BANK NV ARBN 84 079 478 612
Second RespondentMCGRAW-HILL INTERNATIONAL (UK) LIMITED
Third RespondentAMERICAN HOME ASSURANCE COMPANY ABN 67 007 483 267
Cross-Respondent to the Third Cross-Claim
JUDGE:
JAGOT J
DATE:
13 MAY 2011
PLACE:
SYDNEY
REASONS FOR JUDGMENT
BACKGROUND
These are three notices of motion filed by Local Government Financial Services Pty Ltd (LGFS) in each of the proceedings and supported by the applicants in proceeding NSD 1073 of 2009 (the Corowa proceeding). The only issues in dispute are whether documents should be produced under paragraphs 1(c), (d) and (f) of each motion. All other documents mentioned in each motion have been produced, and it is unnecessary to say any more about them.
Paragraphs 1(c) and (d), in effect, seek from ABN AMRO Bank (ABN Amro) documents relating to modelling exercises carried out between 30 January 2007 and 20 June 2007 in relation to the Rembrandt notes (being the financial products at the heart of each of the proceedings). The relevance of these dates is that the latest act or conduct of ABN Amro which is specified in the pleadings took place on or about 9 January 2007; however, LGFS continued to sell the Rembrandt notes to local government clients beyond this date, and it claims it did so in reliance on representations made by ABN Amro. According to LGFS, its latest sale was to a local government body (not party to these proceedings) which occurred on or about 20 June 2007.
Subparagraph (f) of each motion seeks the production of documents recording or evidencing what became of the proceeds of the sale of the Rembrandt notes once those moneys were paid to ABN Amro. LGFS says these documents are relevant because of the case that is put against it, particularly by the applicants in the Corowa proceeding (the Corowa applicants). The Corowa applicants say that the fate of the proceeds of the sale of the Rembrandt notes, once in the hands of ABN Amro, is relevant to ABN Amro’s state of knowledge in respect of the risks associated with the notes. In both written and oral submissions it is apparent that the Corowa applicants are particularly interested in the question whether ABN Amro hedged its risks in respect of the Rembrandt notes. According to the Corowa applicants, this information would be directly (or, at least, indirectly) relevant to ABN Amro’s state of knowledge about the magnitude of those risks – a fact which is in issue in each of the proceedings.
DISCUSSION
In short, I am not persuaded that any of the additional documents which are sought pursuant to the notices of motion should be required to be produced having regard to ABN Amro’s obligation under O 15 r 2 of the Federal Court Rules to discover documents on which it relies, documents that adversely affect its case or another party’s case, and documents that support another party’s case.
Modelling documents
In respect of the documents referred to in subparagraphs (c) and (d) of each motion, it is not necessary that I determine whether the representations alleged to have been made by ABN Amro are best classified as “continuing”, “continuous”, or “continuing in effect”. The relevant point for the purpose of the disposition of the motions is that there is no suggestion on the pleadings that ABN Amro did or did not do something which it should or should not have done after 9 January 2007 (the latest date on which particular conduct on the part of ABN Amro is referred to in the pleadings). It follows that modelling documents from the period from 30 January 2007 to 20 June 2007 cannot be classified as falling within ABN Amro’s discovery obligation. It is pure speculation that something might have happened within that period to alter ABN Amro’s position from what it was up until 9 January 2007. On that basis, it cannot be said that ABN Amro has an obligation to discover the documents sought in subparagraphs (c) and (d).
It is also relevant in this respect that the affidavit of Ms Campbell, sworn on 20 April 2011, discloses that, to the best of her knowledge, there may be a vast number of documents which would have to be located and assessed if orders were made for further discovery by ABN Amro in the terms sought. It is therefore possible that ABN Amro could become involved in another significant discovery exercise which would ultimately be of little benefit in the resolution of the real issues in dispute in each proceeding. Accordingly, on this basis also, I am not minded to make orders for discovery of the documents sought in subparagraphs (c) and (d).
Proceeds/hedging documents
As regards the documents sought pursuant to paragraph (1)(f) of each motion, the short answer is that nothing that has been said persuades me that the production of these documents – either as they relate to what became of the proceeds of the sale of the Rembrandt notes once they were paid to ABN Amro, or as they relate to the question whether ABN Amro hedged its risk in regards to those notes – could of itself cast any meaningful light on ABN Amro’s state of knowledge. In fact, any inference drawn from such documents in relation to ABN Amro’s knowledge of the risks relating to the Rembrandt notes would be highly speculative, particularly if it were drawn in isolation from other evidence as to possible interpretations of the facts the documents disclosed. As ABN Amro submitted, nothing meaningful could be inferred from ABN Amro’s conduct (either in respect of the fate of the proceeds or the hedging of risk) because of the potentially vast number of different commercial pressures and objectives which ABN Amro might have been acting upon at any particular time. The result is that ordering discovery of the documents mentioned in subparagraph (f) would raise a real spectre of having a trial within a trial about a matter not really in issue.
In addition, as ABN Amro submitted, it has already produced documents which disclose its assessment of the likely performance of the Rembrandt notes. In light of this, for LGFS and the Corowa applicants to seek discovery of documents showing what ABN Amro might or might not have done with the proceeds of the sale of the notes, or what it might or might not have done about hedging its risk, is speculative and does not, in my view, fall within ABN Amro’s discovery obligations.
CONCLUSION
For these reasons, I dismiss the notice of motion in each proceeding insofar as it seeks the documents mentioned in paragraphs 1(c), (d) and (f). I otherwise make consent orders as sought.
I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. Associate:
Dated: 20 May 2011
0
0
1