Gloucester Shire Council v Fitch Ratings, Inc (No 2)

The matter before the court was an application by Gloucester Shire Council against Fitch Ratings, Inc concerning the council’s claims for losses arising from the respondent’s rating of synthetic collateralised debt obligations (SCDOs). The primary issue was whether the court should grant leave to Gloucester to amend its pleadings, and if so, whether it should refuse summary dismissal of the proceeding sought by Fitch. Gloucester sought to amend its pleadings to better articulate its reliance on Fitch’s rating and causation of loss, while Fitch argued that the proposed amendment was futile and that the existing pleadings did not disclose a reasonable cause of action.

The court found that the proposed amended pleading raised a claim that was reasonably arguable and had reasonable prospects of success. It emphasised that the primary purpose of permitting amendments is to correct any deficiencies in the pleadings and to allow the real issues in the case to be properly argued. The court considered various factors, including the significance of the proposed amendments, the absence of prejudice to Fitch, and the overall importance of allowing the case to proceed to a final hearing on its merits. The court concluded that the proposed amendments should be allowed, as they would enable Gloucester to fully present its case concerning reliance and causation. The court also found that Fitch’s application for summary dismissal should be dismissed, as the existing pleadings, while perhaps deficient in certain respects, did disclose a reasonably arguable case.

In light of these findings, the court made several orders, including granting leave to Gloucester to file a further amended statement of claim, dismissing Fitch’s amended interlocutory application, and directing the parties to confer on costs. The court also ordered that the amendments to the pleadings take effect from the date of the original statement of claim, thereby avoiding any potential limitation issues.