Equititrust Limited (In Liq) (Receiver Appointed) (Receivers and Managers Appointed) (Responsible Entity) v Equititrust Limited (In Liq) (Receiver Appointed) (Receivers and Managers Appointed)

In the case of Equititrust Limited (In Liq) (Receiver Appointed) (Receivers and Managers Appointed) (Responsible Entity) v Equititrust Limited (In Liq) (Receiver Appointed) (Receivers and Managers Appointed), the Federal Court was tasked with determining whether the plaintiff, Equititrust, should be granted leave to amend its Statement of Claim to include a cause of action based on section 1041E of the Corporations Act 2001 (Cth) against the auditors of a managed investment scheme. The primary issue before the Court was whether such an amendment could be made two years after the commencement of the proceeding, and whether the proposed pleading sufficiently addressed the auditors' criticisms, particularly regarding the knowledge requirement for the section 1041E claim.

The Court examined the proposed pleading of the cause of action under section 1041E and addressed the auditors' arguments that the proposed pleading was flawed in law due to reliance on constructive knowledge, which they contended was inadequate under the section. The Court rejected the argument that the proposed pleading was entirely bad in law, noting that it included some elements of actual knowledge. However, it accepted the auditors' criticisms regarding the manner in which Equititrust intended to plead the requisite knowledge. The Court also rejected the argument that the current iteration of the Further Amended Statement of Claim did not adequately address the question of inducement and dismissed all discretionary arguments for refusal of leave to amend.

The Court decided to grant Equititrust leave to amend its pleading but required it to improve the proposed pleading in respect of the auditors' knowledge to conform with the requirements of rule 16.43 of the Federal Court Rules and general law. It allowed a short time frame for Equititrust to formulate its final attempt at pleading the knowledge in the required manner and relisted the proceeding for further case management. The Court proposed to treat the costs of Equititrust's Amended Interlocutory Application as costs in the proceeding but reserved the final determination of costs pending the final disposition of the application.

Ultimately, the Court ordered that by a specified date, Equititrust must serve and lodge a further iteration of its proposed Further Amended Statement of Claim, incorporating agreed amendments and introducing the section 1041E claim. The Court reserved further consideration of the final disposition of the Amended Interlocutory Application and the costs associated with it, pending the next iteration of Equititrust's pleading.