Ingot v Macquarie [No.3]

[2005] NSWSC 255

CITATION:	Ingot v Macquarie [No 3] [2005] NSWSC 255
HEARING DATE(S):	10 March 2005
JUDGMENT DATE :	4 April 2005
JUDGMENT OF:	McDougall J at 1
DECISION:	See paras [71]-[73] of judgment

CATCHWORDS:	PRACTICE AND PROCEDURE - application for leave further to amend summons - whether appropriate to grant leave to amend outside limitation period - whether general power of amendment in Pt 20 r 1 is limited by Pt 20 r 4 - whether leave should be refused because of insufficient particulars - whether leave should be refused because amendment would result in vacation of hearing date - whether leave should be refused because proposed amendments amount to "bargaining" with the Court - whether costs orders on indemnity basis sufficient to compensate defendants for costs thrown away by amendment - whether defendants prejudiced by amendments alleging actual breaches of the law - whether refusal of leave to amend likely to occasion any significant prejudice to plaintiffs
LEGISLATION CITED:	Legal Profession Act 1987 Limitation Act 1969 Partnership Act 1892 Supreme Court Act 1970
CASES CITED:	Air Link Pty Ltd v Paterson [No 2] (2003) 58 NSWLR 388 Australia and New Zealand Banking Group Ltd v Larcos (1987) 13 NSWLR 286 Baldry v Jackson [1976] 2 NSWLR 415 Bebonis v Angelos (2003) 56 NSWLR 127 Clutha Ltd v Millar (No 2) [2002] NSWSC 523 Digi-Tech (Aust) Ltd v Brand [2004] NSWCA 58 Fernance v Nominal Defendant (1989) 17 NSWLR 710 McGee v Yeomans [1977] 1 NSWLR 273 New Cap Reinsurance Corporation v Reaseguros Alianza SA [2004] NSWSC 787 Proctor v Jetway Aviation Pty Ltd (1984) 1 NSWLR 166 Weldon v Neal (1887) 19 QBD 394
PARTIES:	Ingot Capital Investments Pty Ltd & Ors (Plaintiffs) Macquarie Equity Capital Markets Ltd & Ors (Defendants)
FILE NUMBER(S):	SC 50169/01
COUNSEL:	F M Douglas QC/B F Katekar (Plaintiffs) A S Bell (for the Macquarie parties) N Smith (12th Defendant) T F Bathurst QC/S M Nixon (13th Defendant) R Dick/J Watson (14th Defendant) L McCallum for NCRA
SOLICITORS:	Deacons (plaintiffs) Mallesons Stephen Jaques (Macquarie parties) Atanaskovic Hartnell (4th defendant) Colin Biggers & Paisley (5th, 7th and 8th defendants and mention for the 9th defendant) M D Nikolaidis & Co (11th defendant) Minter Ellison (12th defendant) Blake Dawson Waldron (13th defendant) Henry Davis York (NCRA) TressCox (Guy Carpenter)

LOWER COURT JURISDICTION:

INGOT & ORS v MACQUARIE & ORS [No 3] [2005] NSWSC 255

50169/01

INDEX

Para
The Court’s power to amend	3
Authorities on amendment and Part 20	7
The nature of the amendments	34
Analysis	38
Discretionary and other considerations	42
Pleading issues	43
Alleged lack of adequate explanation	48
Personal prejudice	51
Costs	52
Phillips Fox’ “third party” argument	56
Vacation of the hearing date	57
The Digi-Tech point	59
“Bargaining”	60
Discovery	68
Cumulative effect of discretionary submissions	69
The remaining amendments	70
Conclusion and order	71

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McDOUGALL J

Monday 4 April 2005

MACQUARIE EQUITY CAPITAL MARKETS LTD & ORS
[No 3]

JUDGMENT

1 HIS HONOUR: This is yet another application by the plaintiffs for leave further to amend their summons. The background, and the procedural history, are sufficiently set out in my judgment on the previous application for leave to amend: [2004 NSWSC 1219], in which I gave reasons for dismissing that application.

2 The plaintiffs’ reaction to my decision encompassed three elements:

(1) They filed a summons for leave to appeal from my decision.

(2) They filed (but have not served) a statement of claim in the Common Law Division of this Court, substantially in the form of the statement of their contentions in the revised draft 6th further amended summons that I dealt with in my previous judgment.

(3) They brought this further application for leave to amend, based substantially (so they said) on allegations made by a defendant, Mr Peck, in his 12th and 29th cross-claims.

The Court’s power to amend

3 SCR Pt 20 r 1 provides, relevantly, as follows:

“(1) The Court may, at any stage of any proceedings, on application by any party or of its own motion, order that any document in the proceedings be amended, or that any party have leave to amend any document in the proceedings, in either case in such manner as the Court thinks fit.

(2) All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, or of correcting any defect or error in any proceedings, or of avoiding multiplicity of proceedings.

…
(3A) An order may be made, or leave may be granted, under subrule (1) notwithstanding that the effect of the amendment is, or would be, to add or substitute a cause of action arising after the commencement of the proceedings, but in such a case the date of commencement of the proceedings, so far as concerns that cause of action, shall, subject to rule 4, be the date on which the amendment is made.
…”

4 Sub rule (3A) was inserted into Part 20 r 1 on 24 November 1995 and amended on 25 October 1996.

5 Part 20 r 4 makes specific provision for the amendments of statements of claims and summonses where there are what may be called, neutrally, limitation issues. It provides, relevantly, as follows:

“(1) Where any relevant period of limitation expires after the date of filing of a statement of claim and after that expiry an application is made under rule 1 for leave to amend the statement of claim by making the amendment mentioned in any of subrules (3), (4) and (5), the Court may in the circumstances mentioned in that subrule make an order giving leave accordingly, notwithstanding that that period has expired.

…


(3) Where there has been a mistake in the name of a party and the Court is satisfied that the mistake was not misleading or such as to cause reasonable doubt as to the identity of the person intended to be made a party, the Court may make an order for leave to make an amendment to correct the mistake, whether or not the effect of the amendment is to substitute a new party.

(4) Where, on or after the date of filing a statement of claim, the plaintiff is or becomes entitled to sue in any capacity, the Court may order that the plaintiff have leave to make an amendment having the effect that he sues in that capacity.

(5) Where a plaintiff, in his statement of claim, makes a claim for relief on a cause of action arising out of any facts, the Court may order that he have leave to make an amendment having the effect of adding or substituting a new cause of action arising out of the same or substantially the same facts and a claim for relief on that new cause of action.

(5A) An amendment made pursuant to an order made under this rule shall, unless the Court otherwise orders, relate back to the date of filing the statement of claim.

(6) This rule has effect in relation to a summons as it has effect in relation to a statement of claim.

(7) This rule does not limit the powers of the Court under rule 1.”

6 Sub r (5A) was inserted into Pt 20 r 4 on 20 October 1989.

Authorities on amendment and Part 20

7 The general principle is that an amendment to a pleading takes effect from the date of the original pleading, to the extent that there is no provision of the Rules (or any other statute) or order to the contrary: Baldry v Jackson [1976] 2 NSWLR 415.

8 It is for that reason that the “settled rule of practice” (the expression is taken from the judgment of Glass JA in McGee v Yeomans [1977] 1 NSWLR 273 at 280) was that an amendment should not be allowed where the effect would be to permit the party making the amendment to rely upon a cause of action that had become statute-barred since its original pleading was filed: see Weldon v Neal (1887) 19 QBD 394.

9 In McGee, the Court of Appeal held that Pt 20 r 4 did not abrogate the settled rule of practice only in the situations described in sub r (3)-(5), but generally. Glass JA, who gave the leading judgment, disagreed with that proposition, saying at 280 that the effect of r 4(3)-(5) was totally to destroy the old rule; and that it did not continue to operate outside the terms of the sub rules:

“By providing in r.4 (3)-(5) that an amendment may be authorised which allows the substitution of a new party, pursuing by the plaintiff in a new capacity and the substitution of a new cause of action, the rule was, in those circumstances, totally destroyed. I am unable to accept that it continued, nonetheless, to operate in circumstances outside their terms with undiminished vigour. When it is further provided that the abrogation of the settled rule of practice in certain defined situations shall not in any way abridge the width of the general power to amend, there is in my view an implication that other amendments might in the exercise of discretion be properly allowed in situations not expressly dealt with by the rule, notwithstanding that they introduce causes of action then barred by the expiry of a period of limitation.
I am driven to the conclusion that the Supreme Court Rules , upon their proper construction, displace the settled rule of practice laid down in Weldon v Neal … and all the finespun distinctions which it engendered. In its place there has been substituted a general discretion to allow an amendment, notwithstanding that it raises a barred cause of action, whenever justice so requires.”

10 Moffitt P agreed with Glass JA. Mahoney JA, who was the third member of the Court, based his decision on Pt 20 r 4.

11 The decision in McGee excited some controversy. Nonetheless, the Court of Appeal has confirmed it in a number of cases including Proctor v Jetway Aviation Pty Ltd (1984) 1 NSWLR 166 and again, more recently (in relation to the equivalent provisions in the District Court Rules), in Bebonis v Angelos (2003) 56 NSWLR 127 and in Air Link Pty Ltd v Paterson [No 2] (2003) 58 NSWLR 388.

12 The terms of rr 1 and 4 now differ from their terms when McGee was decided. Specifically, r 1 did not include sub r (3A), and r 4 did not include sub r (5A). However, I do not think that the amendments detract from the analysis of Glass JA in McGee.

13 In Proctor, Moffitt P at 171 stated the effect of the decision in McGee as follows:

“It was decided in this Court in McGee that Pt 20, r 4(1), applies to a period of limitation under the Limitation Act 1969, which has expired, with the result that, in the circumstances referred to in the various subrules of r 4, the power given by it is exercisable notwithstanding the expiry of the period of limitation, That was the precise decision and binding precedent. It also, however, created a binding precedent on a wider basis, in that it decided that Pt 20, r 4, operated to confer a like power of amendment in respect of an expired period of limitation provided in any other earlier Act. The applicability of this more general precedent would be dependent upon the limitation provision in the other Act not having some quality different to that in the Limitation Act 1969, which made distinguishable the decision in McGee. The decision necessarily carried with it that Pt 20, r 4, confers the power to amend in the circumstances there prescribed, notwithstanding the terms of the relevant statute as to the expiry of the limitation period including the consequence of the expiry.”

14 It will be seen that his Honour did not in terms advert to what Glass JA had said was the wider effect of the rules: namely, to displace the principle in Weldon v Neal not only in the particular circumstances referred to in Pt 20 r 4(3)-(5) but generally in relation to amendments: as his Honour put it, in relation to “the general power to amend”.

15 Moffitt P at 172 analysed Pt 20 r 4 as having the effect of a statute later than the Limitation Act 1969 (by reason of the operation of s 6 of the Supreme Court Act 1970). At 173, his Honour pointed out that “the plain words of r 4 … inescapably apply and were intended to apply to at least the Limitation Act … “. Thus, his Honour said on the next page:

“It is beyond argument that the very purpose of the remedial statutory provision made by r 4 was to give in the special field where proceedings are on foot … an effective power to enable to be litigated an otherwise expired cause of action such as one covered by the Limitation Act 1969 and so remedy injustices of the class referred to by Glass JA in McGee”.

16 Then, referring to “the particular problem regarding amendments which under current practice were refused because they would introduce barred causes of action”, his Honour said that the general provisions contained in ss 59(4)(b), 60, 61 and 73 of the Limitation Act dealt generally with extensions of the bar, but left to special procedural legislation, in fact enacted by the Supreme Court Act a year later, to provide for the particular problem regarding amendments which were refused because they would introduce barred causes of action: “It left such a matter to be dealt with, as it was, by r 4 on a wider basis to apply to statutes of limitation generally”.

17 There is some tension between the width of the language used by Glass JA in McGee and the analysis by Moffitt P, both of the decision in McGee and of the relevant provisions of Pt 20, in Proctor. However, the analysis of Priestley JA in the latter case recognised that in McGee, Glass JA had proceeded on the basis that the applicable rule was Pt 20 r 1. Priestley JA contrasted this approach with that of Mahoney JA (the third member of the Court in McGee), who had decided the case on the basis of Pt 20 r 4. Perhaps somewhat strangely, Glass JA, who was the third member of the Court in Proctor, agree with both Moffitt P and Priestley JA.

18 In Fernance v Nominal Defendant (1989) 17 NSWLR 710, Gleeson CJ (with whom Clarke JA agreed) did not appear to regard the decision in McGee as limited to Pt 20 r 4. At 719, his Honour analysed the decision as relating to Pt 20 r 1. He said (emphasis supplied):

“In McGee v Yeomans [1977] 1 NSWLR 273, this Court held that the provisions of Pt 20, r 4, on their true construction, and by necessary implication, displaced the previous settled rule of practice that an amendment would not be allowed if in consequence a party would be deprived of the benefit of a limitation period. That decision related to the power of amendment contained in Pt 20, r 1, which confers upon a court a general power, at any stage of any proceedings, to give a party leave to amend any document in the proceedings. McGee v Yeomans was a case in which the plaintiff, who had already, within the relevant limitation period, sued the defendant in one capacity, sought to amend the statement of claim so as to add a further cause of action against the same defendant being sued in a different capacity at a time when the relevant limitation period had expired. The case did not fall precisely within the provisions of r 4(3), 4(4) or 4(5). However, the court held that, because of r 4(7), the amendment could be made. Glass JA pointed out (at 277) that under the old rule of practice it would have been necessary for the court to look closely at the question whether the plaintiff was seeking to introduce a new cause of action, or merely to formulate in a different way the old cause of action, and whether the amendment involved no more than the correction of a misnomer or misdescription of the defendant. However, he concluded (at 280) that the Supreme Court Rules, upon their proper construction, were such as to “displace the settled rule of practice laid down in Weldon v Neal (1887) 19 QBD 394 and all the finespun distinctions which it engendered”. Instead there was now a general discretion to allow an amendment, notwithstanding that it might raise a barred cause of action, wherever justice so requires.”

19 Later again, in Bebonis, Handley JA (with whom Beazley and Heydon JJA agreed) referred at 138-139 [69] to the relevant passage of the reasons of Glass JA in McGee as constituting, in effect, the settled construction of the rules. His Honour did not appear to regard Proctor as standing for any different or narrower principle than that stated by Glass JA in McGee.

20 In Air Link, Mason P (with whom Beazley JA agreed) said at 404 [69] that McGee and Proctor were correct, and that “[t]hey represent the settled law in this State as to the scope of the power conferred by [Pt 20] rule 4”. His Honour said at [70] that those cases “confirmed that the Supreme Court Rules conferred power to allow a statute-barred cause of action to be added by amendment. The rule in Weldon v Neal was displaced and replaced by a discretion to allow an amendment to be made if the rule’s requirements were met and the justice of the case required it …”. Proctor confirmed that “Pt 20 r 4 … applied according to its terms in relation to the addition of new causes of action … “.

21 Proctor and Air Link assert the proposition that the ratio decidendi in McGee was limited to r 4. It would follow that what Glass JA said, as to the rules on their proper construction abolishing the rule in Weldon v Neal not only as to the circumstances mentioned in r 4(3)-(5) but generally (ie, in relation to r 1) was obiter. Nonetheless, given the repeated approval of his Honour’s reasoning - in particular, the endorsement of it in its wider form by Gleeson CJ in Fernance - I think that I should follow it unless there is a compelling reason to do otherwise.

22 In Clutha Ltd v Millar (No 2) [2002] NSWSC 523, Austin J considered, among other things, whether Pt 20 r 4, read in conjunction with Pt 8, “is an exclusive code setting out the circumstances in which an amendment can be permitted to overcome a limitation period” (at [19]). His Honour noted at [20] that “the expansive observations of Glass JA in McGee”, taken “in isolation and literally”, might suggest the existence of “a general power to permit amendments to overcome a limitation period outside the circumstances of r 4.”

23 However, Austin J concluded at [21] that where an amendment to a statement of claim to overcome a limitation defence was sought, that could only be done where one of the categories of r 4 is applicable. This, his Honour thought, was “the proper inference to draw from Proctor v Jetway”. His Honour drew that inference because, as he explained at [20], he thought it likely that the Court in Proctor would have referred to a more general power (than that given by Pt 20 r 4) to permit amendments to overcome limitation periods, had they thought that such a power existed. This was so particularly where, his Honour said, the nature of the argument in Proctor required close attention to be paid to the reasoning of Glass JA in McGee.

24 I do not think that it is open to me to read down the reasons of Glass JA in McGee in the manner suggested by Austin J in Clutha; nor do I think that the reasoning of Moffitt P in Proctor authorises this course (particularly where, as I have indicated, the decisions in Fernance and Bebonis have affirmed the language of Glass JA in McGee). It is I think significant that the particular passage in the judgment of Glass JA on which attention must be focussed (at 280) commences as follows:

“Counsel for the respondent indicated that these different provisions [subrules (3)-(5) and (7) of rule 4] furnished an undeniable indication that the situations described in r. 4(3)-(5) did not exhaust the categories of amendments which might be made after the expiry of periods of limitation. But he submitted that, in the exercise of the general power of amendment, the discretion of a court was still bound by the settled rule of practice. I cannot agree.”

25 It is apparent that his Honour thought that amendments might be permitted after the expiry of periods of limitation other than in the circumstances described in r 4(3)-(5) and that, where they were, the rule in Weldon v Neal would not apply. As I have indicated in para [18] above, that appears also to have been the view of Gleeson CJ in Fernance.

26 In my respectful opinion, the words to which I have referred make it clear that when Glass JA said a little later at 280 that in place of the rule in Weldon v Neal there was “substituted a general discretion to allow an amendment, notwithstanding that it raises a barred cause of action, whenever justice so requires”, he was referring not only to the specific power set out in r 4, limited to the circumstances there described, but also to the general power set out in r 1.

27 That appears to have been the view of Priestley JA in Proctor who said at 183 that:

“The central part of Glass JA’s judgment on this point was that the coming into operation of Pt 20 had changed the position until then existing and had (at 280):
‘ … substituted a general discretion to allow an amendment, notwithstanding that it raises a barred cause of action, whenever justice so requires’.”

28 In New Cap Reinsurance Corporation v Reaseguros Alianza SA [2004] NSWSC 787, White J, although obiter, came to a conclusion different to Austin J. White J referred to the decision of Gleeson CJ in Fernance, and concluded that, although what Gleeson CJ had said was obiter, it was “plainly right” (at [101]). At [102], White J concluded that Proctor was not authority for the proposition that an amendment to raise a cause of action that had expired after the filing of the statement of claim could only be made where one of the categories in Pt 20 r 4(3)-(5) applied.

29 Austin J does not appear to have been referred to the decision in Fernance; and, of course, did not have the benefit of the decision in Bebonis. White J did not have the benefit of the decision in Air Link.

30 In my view, there is nothing in the reasoning in Proctor that justifies a reading down of the analysis of Glass JA in McGee. What was said in Proctor must be confined to the facts and issues in that case: being one where Pt 20 r 4 was applicable. It was no doubt for that reason that Moffitt P focussed on the decision in McGee in so far as it dealt with Pt 20 r 4; and no doubt for that reason that Glass JA agreed with Moffitt P notwithstanding that what Moffitt P had said did not deal with the entirety of the reasoning of Glass JA in McGee. But regardless of these considerations, the analysis of Gleeson CJ in Fernance makes it clear, in my respectful opinion, that the language of Glass JA in McGee is not to be read down; nor do the later decisions to which I have referred so require.

31 It follows, in my judgment, that even if the amendments sought cannot be supported under Pt 20 r 4, they may be supported under Pt 20 r 1.

32 There is, I think, another basis upon which this conclusion can be supported. Glass JA in McGee and Priestley JA in Proctor made it plain that the rule in Weldon v Neal was a rule of practice. It followed, as Priestley JA emphasised in Proctor at 183, that the Court had always had, and retained, power to permit an amendment to introduce a statute-barred cause of action. The rule in Weldon v Neal suggested that, ordinarily, and in the absence of “peculiar circumstances”, the power should be exercised against the applicant; and the rules, in the words of Priestley JA “brought about a change of practice in the exercise of a power the courts had always had”. It would be quite extraordinary if that change of practice were limited to the precise situations described in sub r (3)-(5) of Pt 20 r 4: particularly where, as Glass JA accepted in McGee at 280 was the case, those sub rules “did not exhaust the categories of amendments which might be made after the expiry of periods of limitation”. I do not think that it can be said, in the face of Priestley JA’s analysis in Proctor, that the Court has no power apart from Pt 20 r 4 to permit an amendment to an originating process to introduce a statute-barred cause of action, even if the consequence of permitting that amendment is, absent some order to the contrary, that it relates back to the date of filing of the originating process. The analysis of Priestley JA in Proctor was explicitly confirmed by Mason P in Air Link at 403 [63]-[64].

33 One peculiarity that is thus exposed is that Pt 20 r 4 expressly empowers the Court to order that an amendment made under the Rule should relate back to a date other than the date of filing of the statement of claim. There is no equivalent express power under Pt 20 r 1. However, as Rogers J observed in Australia and New Zealand Banking Group Ltd v Larcos (1987) 13 NSWLR 286, 296, there is ample power under Pt 20 r 1 to grant relief on conditions. In the present case, as will be seen from what follows, I have concluded that the other considerations advanced by the defendants in opposition to this application for leave to amend should not be upheld. However, I would only grant leave to amend on the basis that (among other things) the question of the date from which the amendments take effect is reserved to the trial Judge, in the same way as was done with the last successful amendment. The plaintiffs accepted that it was open to me to grant relief on this condition.

The nature of the amendments

34 Broadly speaking, the amendments fall into two categories. The first, and that which was the principal subject of dispute, is the group of amendments that purport to pick up allegations made by Mr Peck in his 12th cross-claim (against the Macquarie parties and PwC) and 29th cross-claim (against Phillips Fox). It is convenient to refer to those as the cross-claim amendments. They are those alleged in the following paragraphs:

(1) Against the Macquarie parties: paras 42A, 43A-M, 49A, 67A-C, 81A-G and 81K.

(2) Against PwC: paras 220A, 221A, 223-223D, 225A-H, 255A-D, 264A-I, 265G-I (I note that para 265 J was not pressed) and 270A-H.

(3) Against Phillips Fox: paras 178A-AK.

35 The remaining amendments, although in some cases they were the subject of criticism as to their want of particularity, in essence seek to allege further material facts in support of causes of action already pleaded.

36 Again broadly speaking, the cross-claim amendments introduce new causes of action. That is, perhaps, clearest in the amendments propounded against Phillips Fox. Those amendments would introduce an entirely new case. The previous case was that the partners in Phillips Fox were liable under s 10 of the Partnership Act 1892 for the matters alleged against Mr Peck. The case sought to be introduced by the amendments raises entirely new allegations, based not on the wrongdoing alleged against Mr Peck but wrongdoing alleged against another partner in Phillips Fox, Mr Andrew Mutton.

37 But, I think, the position is equally so in respect of the Macquarie parties and PwC. The effect of the cross-claim amendments was characterised as alleging an “indirect causation” cause of action. This label was given for forensic purposes: namely, to attract the principle said to have been expounded in Digi-Tech (Aust) Ltd v Brand [2004] NSWCA 58 at [147] and following. In substance, what the plaintiffs seek to allege is that certain wrongful acts alleged by them against the Macquarie parties and against PwC caused others to act in such a way that, in turn, the plaintiffs acted as they did to their detriment.

Analysis

38 In each case, the cause of action proposed by the cross-claim amendments is based not upon facts already asserted in the statement of contentions, but upon facts specifically asserted for the purpose of making out the cause of action. Thus in no case does the amendment fall within Pt 20 r 4(5). Although the plaintiffs submitted to the contrary (ie, that the cross-claim amendments did fall within Pt 20 r 4(5)), I do not accept that submission. In relation to the indirect causation case, the cause of action proposed could not be sustained on the basis of the existing statement of contentions, because the relevant indirect reliance is not alleged. A fortiori, in the case of the cross-claim amendments directed against Phillips Fox, the statement of contentions as it stands at present alleges no case based on the alleged wrongdoing of Mr Mutton.

39 There is some difficulty in accommodating the language of Pt 20 r 4(5), where it talks of “adding or substituting a new cause of action arising out of the same or substantially the same facts”, to a Judicature Act system of pleading where the obligation is, subject to specific requirements of the Rules, to plead only material facts (see Pt 15 r 7). Handley JA adverted to this difficulty in Bebonis at 136 [49]-[50], and White J adverted to the problems raised by the reference to “substantially the same facts” in New Cap at [89]-[93]. Because of the conclusion to which I have come as to the extent of the power under Pt 20 r 1, it is not necessary for me to accommodate the difficulties adverted to by their Honours. I will observe only that the difficulties are not diminished where (as here) the “pleading” is no such thing, but a statement of contentions required, by para 6(1) of Practice Note 100, to be a summary statement of the nature of the dispute, the issues and the plaintiffs’ contentions; and where, by para 6(2), it is required to avoid formality, state the facts and adequate particulars, and identify the legal grounds for relief.

40 If follows that, if Pt 20 r 4 is the exclusive code for dealing with amendments where the effect would be to introduce a cause of action barred by a statute of limitation, there would be no power to permit the plaintiffs to make the cross-claim amendments. If, however, Pt 20 r 1 remains available as an alternative source of power, then leave may be granted. For the reasons that I have indicated, I think that I am required by the reasoning of Glass JA in McGee, and subsequent judicial exposition of that reasoning, to conclude that Pt 20 r 1 is an available source of power to permit the cross-claim amendments; and that the power existed under the general law (or the inherent power of the Court to control its own process) in any event.

41 I do not think that there is any problem, as to power, with the amendments otherwise propounded; as I have said, they do not seek to introduce new causes of action, but to allege further material facts in support of existing alleged causes of action. On any view, I think, the power conferred by Pt 20 r 1 is available for those amendments. It was not suggested that the amendments could fall within Pt 20 r 4(3) or (4). Plainly, they do not.

Discretionary and other considerations

42 The Macquarie parties, PwC and Phillips Fox raised many other objections to the proposed amendments. These included complaints as to the precise formulation of some of the allegations; complaints as to want of particularity; complaints as to the alleged lack of explanation given by the plaintiffs for their desire further to amend at this time; and arguments based on my earlier decision, particularly in so far as I referred to irremediable personal prejudice (at paras [66] to [76]) and prejudice relating to costs (at paras [49] to [64]).

Pleading issues

43 The pleading difficulties and want of particularity relied upon do not seem to me of themselves to justify refusal of leave to amend. The allegations are complex; but then, the whole litigation is complex. In some cases, minor revisions are required (for example, as I indicated in the course of argument, in relation to the use of the descriptor “NCRH” to refer not only to the holding company but also, in some circumstance, to the group; the plaintiffs have indicated that they propose to do so). It may also be that further particulars may be required; to the extent that this is so, they can be sought and given. The plaintiffs will be required to produce an updated schedule relating the particulars already given to the amendments; to the extent that the schedule will show that the existing particulars do not apply, then the usual course of request and answer would follow.

44 At a relatively late stage in the hearing for application for leave further to amend, the plaintiffs produced a schedule that purported to demonstrate the relationship between the amendments propounded and allegations already made in their statement of contentions in the 5th further amended summons (5 FAS). As I understood it, the intention was to show that the amendments – specifically, the cross-claim amendments – did not represent a radical change to the case propounded by 5 FAS. PwC, in particular, attacked this characterisation of the proposed amendments. Mr Bathurst QC, who appeared with Mr Nixon of counsel for PwC, submitted that in a number of cases the allegations sought to be made by the cross-claim amendments could not be traced back to any allegation of material fact stated in 5 FAS; and that, in other cases where there was some relationship, the context and effect were so different that it was not legitimate to regard the allegations as merely an extension of those already made. I accept the submission put by PwC.

45 It is unfortunate that the plaintiffs seek to understate the effect of the amendments. I have observed on other occasions that the approach taken by the plaintiffs in relation to amendments proposed by and the effect of those amendments has, by understating the nature and effect of the proposal, hardened the attitude of the defendants. See [2004] NSWSC 1219 at [46]; [2003] NSWSC 1102 at [22]. However, the circumstance that the cross-claim amendments propounded against PwC seek to allege in substance a new cause of action does not of itself determine the matter. Mr Bathurst characterised the case now sought to be made as “a full blown auditors’ negligence case”. That may be so. Nonetheless, as I have already indicated, the case that is sought to be made is based substantially on that propounded by Mr Peck in (in this case) the 12th cross-claim. Although it may go beyond that case, it is not radically different. I therefore do not regard the fact that the amendments propound a new and different case as, of itself, a sufficient reason to refuse leave.

46 The Macquarie parties submitted that the 12th cross-claim was itself inadequately particularised. They pointed to the history of requests, and orders, for Mr Peck to provide further particulars; and to Mr Peck’s failure to provide those particulars. They submitted that, given that Mr Peck was now effectively representing himself, it was unlikely that those particulars would be supplied. That may be so. However, it may be assumed that the plaintiffs or their legal advisers have formed an independent view of the cross-claim amendments. If those amendments, either as alleged or as properly particularised, do not make out a cause of action, or if the plaintiffs cannot properly particularise them, then the defendants against whom those amendments are pleaded will have a remedy. I do not think, particularly bearing in mind the provisions of Div 5C of Pt 11 of the Legal Profession Act 1987, that it is sufficient for the plaintiffs to say that they are doing no more than repeating allegations made by a defendant in his cross-claim, and that they are unable to particularise those allegations any more than the defendant, as cross-claimant, has done. In those circumstances, I do not think that leave to amend should be refused on the basis that Mr Peck has not provided adequate particulars: particularly where, as the Macquarie parties (and others) have complained, the cross-claim amendments sought to be made by the plaintiffs go beyond the allegations made by Mr Peck in the relevant cross-claim, and where any necessary particulars can be requested of the plaintiffs.

47 Further, Phillips Fox argued that the new case sought to be made against it was based upon representations of opinion said to have been made by Mr Mutton, and that it was not asserted that those opinions were unreasonably held. It may be correct to say that this allegation is not made in terms; but I think it is fair to say, reading the allegations as a whole, that it is a necessary inference. In any event, if Phillips Fox feel that there is any real doubt about the basis upon which the claim is sought to be made, or as to the lack of reasonable basis for the opinions attributed to Mr Mutton, this is something that can be addressed and clarified between them and the plaintiffs. It is not a ground for refusing leave to amend.

Alleged lack of adequate explanation

48 The plaintiffs filed no affidavit in support of the present application. They relied upon the affidavit of their solicitor, Mr Grant Bonner, sworn 5 November 2004, in support of the previous application.

49 If this application were to be regarded as being made in substitution for the previous (refused) application, then Mr Bonner’s affidavit, taken in conjunction with the submissions put by Mr Douglas QC, who appeared with Mr Katekar of counsel for the plaintiffs, would provide some explanation. On that basis, I would not be inclined to refuse leave to amend because the explanation was insufficient. It is troubling that the plaintiffs have not abandoned the previous application for leave to amend: see para [2] above and paras [60] and following below. In those circumstances, it may not be legitimate to regard this application as being made in substitution for the previous application.

50 Nonetheless, where the balance of discretion otherwise favours (as I think it does) the granting of leave to amend on terms, I do not think that the paucity of the explanation offered, or the somewhat equivocal basis upon which such explanation as is given is offered, should of itself tip the balance the other way.

Personal prejudice

51 Nor, on analysis, does the “personal” prejudice to which I have referred provide a sufficient reason for refusing leave. It is correct to say that the amendments make serious allegations against the competence of those against whom they are directed. It may also be that the amendments make serious allegations against the probity of at least some individuals. But in substance those matters are in issue anyway, because in substance the relevant amendments follow those already made by Mr Peck in his 12th and 29th cross-claims. I have not overlooked the submission for the relevant defendants that the allegations that the plaintiffs sought to make go further than those made by Mr Peck; indeed, I accept that submission. But in this case the point is not whether the allegations reflect precisely those made by Mr Peck, but whether, to the extent they go beyond them, there is an increase in the relevant prejudice. I do not think that there is.

Costs

52 As to costs: the amendments were not as radical as those hitherto proposed. They did not (unlike the previous proposed amendments) subvert the entire structure of the summons. Thus, whilst the defences will require to be amended, and this will have had a flow on effect into the cross-claims (for the reasons expressed in my earlier reasons at para [58]), those costs will be relatively isolated and discrete.

53 The defendants complained about delays in the assessment of costs ordered to be paid as the result of prior amendments. I accept that, even in the case of substantial defendants (in their own capacity or by reason of insurers standing behind them), that is some prejudice. However, there is no basis upon which I could conclude that the plaintiffs have acted improperly or unreasonably in relation to the assessment and payment of costs pursuant to earlier orders of the Court. In any event, to the extent that there is a significant delay between payment out and recoupment, that could be addressed through an application for the payment of interest on costs.

54 That cannot be said in all cases. The particular problem faced by the defendants affected by the purported avoidance of their D&O policies (see paras [63] and [64] of my earlier reasons) remains.

55 Mr Douglas made an offer that was intended to alleviate this problem. He said that the plaintiffs would, upon presentation of a bill of costs from the legal representatives of those defendants for drafting and filing defences to the 6th further amended summons (if leave further to amend were granted) pay the amount claimed, and dispute its quantum, through the ordinary processes of negotiation or assessment, later. That goes some way towards ameliorating the problem for those defendants. However, it does not address other items of costs that might be thrown away or wasted as a result of the amendments, if leave to amend were granted. It seems to me that that further prejudice could only be ameliorated if the plaintiffs extended a similar offer in respect of other costs said to have been thrown away or wasted. To the extent that this might create prejudice in the plaintiffs (because they might be required to pay first, and argue later, about costs that on analysis were not shown to have been thrown away or wasted), I think that the prejudice should lie with those who create the problem rather than with those who are affected by it. In any event, I think, the plaintiffs’ position could be protected to some extent by the reservation of liberty to apply if there were a real dispute as to a particular item of work claimed under this heading. I would not, however, impose this as a condition without giving the plaintiffs an opportunity to consider it.

Phillips Fox’ “third party” argument

56 Phillips Fox submitted that, by analogy with what it said was the effect of Pt 8 r 8, leave to amend against it should be refused. The basis of this submission was that the case alleged against Phillips Fox in the 5 FAS was based on s 10 of the Partnership Act. So much may be acknowledged; but the partners in Phillips Fox at the relevant times are defendants; and they are nonetheless defendants because their liability is vicarious (through s 10) rather than direct. The amendments propounded against Phillips Fox seek to allege a further case, again founded on s 10, against those who were partners at the relevant times and who are already defendants. No new defendants are sought to be added. The case is therefore within Pt 20 and I see no purpose in relying, by analogy, on another and inapplicable part of the Rules.

Vacation of the hearing date

57 Another matter relied upon by the defendants was the alleged likelihood that the hearing, fixed to commence on 29 August 2005, would be vacated. However, there was no evidence that would have enabled me to conclude that this was probable. Nor is it otherwise apparent that this would be an inevitable or probable result of the cross-claim amendments, if leave to make them were granted. Thus, whilst I accept that vacation of the hearing date might cause some prejudice to some defendants, the absence of any evidence to enable me to quantify the likelihood of occurrence of that prejudice means that I do not regard it as something that, of itself, should dissuade me from granting leave to amend.

58 I have not overlooked the particular submission put for the Macquarie parties: that they have already lost one senior counsel, and that they might lose another if the date is vacated. However, since I cannot conclude that the loss of the hearing date is likely (let alone that there would be a consequent loss in senior counsel), I do not think that this is a circumstance that should be given dispositive weight.

The Digi-Tech point

59 The Macquarie parties submitted that leave to amend should be refused, because the substance of the amendments was to introduce a cause of action – namely, the indirect causation case – that was doomed to fail. I do not think that, on a proper analysis, the decision in Digi-Tech shows that this is so. What the Court of Appeal said in Digi-Tech was, in substance, that causation in a representation case must be based on evidence. Reliance, and more generally causation, are questions of fact. The proposed amendments do allege reliance and causation. Whether the plaintiffs can make out a case sufficient to attract liability will depend on the facts that are proved. I do not think that it is possible to say that the cross-claim amendments, in this respect, disclose no cause of action; to put it another way, I do not regard the decision in Digi-Tech as indicating that this must necessarily be so.

“Bargaining”

60 Mr Bathurst submitted that the conduct of the plaintiffs, in relation to these proposed amendments, amounted to “bargaining” with the defendants and with the Court. He submitted that the plaintiffs were doing this to see what amendments they could in fact achieve. For this reason alone, he said, leave further to amend should be refused.

61 The matters upon which Mr Bathurst relied for this submission included: the continued revisions of the proposed amendments, with the width and effect of the amendments being pared back somewhat each time; the pending application for leave to appeal from my previous decision; and the filed but not served proceedings in the Common Law Division. Mr Bathurst submitted that these matters, taken together, demonstrated an oppressive approach to the conduct of the litigation.

62 Other defendants put related submissions, to the effect that, as a condition of leave (if I were otherwise minded to grant it), the plaintiffs should be required to discontinue their application for leave to appeal and the proceedings filed in the Common Law Division.

63 It is unfortunate (to put the matter neutrally) that the amendments that are the subject of the application are, in effect, a moving target. Whilst I do not think that the plaintiffs should be subjected to criticism for seeking to revise the amendments propounded by them to incorporate, so far as they are able and wish to do so, criticisms of the amendments made by particular defendants, I think it unfortunate that this is a process being undertaken whilst the application for leave to amend is current. It would have been far preferable for the plaintiffs to have circulated a draft of their proposed amendments in advance, and to have accommodated (so far as they were able and willing to do so) the criticisms and comments made by defendants in response to it. However, I do not regard that as of itself a reason for refusing leave.

64 Nor, I think, should I regard the existence of the application for leave to appeal as a reason for refusing leave to amend. The plaintiffs are entitled to seek to test my previous decision. It may be that they perceive the amendments then propounded by them as giving them some significant tactical or other advantage which the amendments now propounded do not. In any event, where the Supreme Court Act and Rules provide for appeals (whether by leave or otherwise), I do not think that it is appropriate to criticise a losing party for availing itself of this process. Whether or not the application for leave to appeal will be pressed if I grant leave to amend is a matter for the plaintiffs to decide; and if they decide to press it, then it would be open to the defendants, if they think it relevant, to rely on that decision and these reasons in opposition to this application.

65 The pendency of proceedings in the Common Law Division is another matter. However, the statement of claim has not been served. I do not regard it as appropriate for the plaintiffs to keep that hanging, as a threat, over the heads of the defendants whilst this application (and, it may be, the application for leave to appeal) are debated. If the statement of claim is served, then the defendants may take such course as they are advised is appropriate. But, whilst I do not wish to be seen as condoning the actions of the plaintiffs in this regard, I do not regard those actions as sufficient of themselves to justify the refusal of the present application for leave to amend.

66 Indeed, on one view, the pendency of those proceedings in the Common Law Division mitigates some of the prejudice alleged by the defendants in relation to limitation. That statement of claim was filed before what appears to be regarded as the final cut off date, for limitation purposes, namely 12 January 2005 (the convertible notes were issued on 12 January 1999). If these proceedings cannot be brought in a form that the defendants wish to advance, then it would be open to them to discontinue these proceedings and, upon payment of the defendants’ costs in respect of these proceedings and, perhaps, the provision of security for costs for the Common Law proceedings, to pursue the Common Law proceedings. In that sense, it cannot be put that the defendants suffer any real prejudice by the advancing of causes of action that are time-barred, at least to the extent that the same causes of action are advanced in the Common Law proceedings and are not there time-barred.

67 Having considered each of these matters individually, I should add only that I do not regard them in conjunction as providing a sufficient basis for refusal of leave to amend.

Discovery

68 The Macquarie parties relied on a specific issue: namely, the alleged need to reinspect the entirety of the plaintiffs’ discovery, and the associated need to reinspect documents produced (from Bermuda) by the liquidator of NCRH. If that reinspection were required as a result of the amendments, then the costs of it would be comprehended in an order for wasted costs. I do however note that the issue of reinspection was raised in particular in the context of allegations relating to the insolvency of NCRH, and that those allegations are now not pressed. I do not think that, as the proposed amendments presently stand, reinspection of documents is a significant discretionary issue. The Macquarie parties submitted also that reinspection of discovered documents would be required in relation to what was called the “free funds” crisis. That topic is introduced in para 73(e) of the revised draft of 6th FAS and is picked up in para 74(k), (l) and (n)-(r). It is factually and conceptually distinct from the now abandoned allegation of insolvency. I accept that it would be prudent for the Macquarie parties to reinspect the plaintiffs’ discovery on this issue. That is covered by what I have said already in relation to wasted costs. It is not, in my view, a sufficient basis for refusing leave to amend.

Cumulative effect of discretionary submissions

69 So far, I have considered the principal discretionary points individually. I accept that, in some cases at least, the cumulative effect of individual complaints may require that an application should be dismissed, where none of the complaints considered in isolation would do so. I do not think that this is such a case. The matters relied upon by the defendants are distinct in nature and effect. It is, I think, unlikely that, considered together, they would cause such hardship that the plaintiffs should be denied the amendments that they seek.

The remaining amendments

70 The other amendments that the plaintiffs seek to make do not allege a fresh cause of action. They allege further material facts in support of existing causes of action. Again, although complaint was made about the drafting and particularity of some of those amendments, neither those complaints nor the other general issues to which I have referred persuade me that the plaintiffs should be refused leave to make those amendments.

Conclusion and order

71 For the reasons that I have given, I would grant leave to amend on the following terms:

(1) The use of NCRH as a defined term to include the group be dropped, and that individual companies, or the group (where it is appropriate to make reference to the group) be identified by their existing nomenclature.

(2) The plaintiffs, within a time to be fixed, produce a schedule relating the existing particulars to the allegations in respect of which leave will be granted.

(3) Appropriate costs orders, relating both to the costs of the application for leave to amend and to the costs of and incidental to and thrown away by the amendments, and dealing in particular with the position of those defendants discussed in paras [54] and [55] above, be made.

(4) As with previous amendments, that the question of the operative date of the amendments be reserved to the trial judge.

72 As to costs: I note that it is the position of the plaintiffs’ solicitors, Deacons, that the costs order should be made against them. I am prepared to do so if that remains the position and if the defendants agree; otherwise the costs order should be against the plaintiffs. Further, I would not order specifically that the costs thrown away should (or should not) include the costs of any further inspection of discovered documents that may be undertaken, or of the mediation, or indeed of any other specific work. Whether any such costs are to be classified as costs thrown away by reason of the amendments is a matter for the parties to agree and, in default of agreement, for an assessor to determine.

73 Because the terms on which I would grant leave differ to some extent from those canvassed in submissions, it is appropriate to allow the parties some time to consider their positions. The plaintiffs may or may not accept the terms that I propose; and the defendants may wish to submit that there are other terms that should be imposed (apart from those that, expressly or by necessary implication, I have concluded should not be imposed). Accordingly, the only order that I make at this stage is to stand the proceedings over to Thursday 7 April 2005 at 9.30 am for the making of orders to give effect to these reasons. The proceedings will be listed thereafter in the Motions List on Friday 8 April 2005 at 9.15 am.

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