KTC v David & Ors

[2022] HCATrans 183

[2022] HCATrans 183

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S70 of 2022

B e t w e e n -

KTC

Applicant

and

RODRIC DAVID

First Respondent

NAVEEN DAVID SINGH

Second Respondent

XALT PTY LTD ACN 147 571 033

Third Respondent

D.T GILBERT & W.R SPAIN & C.G CONDOLEON & ORS TRADING AS GILBERT + TOBIN ABN 88 775 098 848

Fourth Respondent

ANDREW BULLOCK

Fifth Respondent

Application for special leave to appeal

KIEFEL CJ
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA AND BY VIDEO CONNECTION

ON FRIDAY, 21 OCTOBER 2022, AT 10.30 AM

Copyright in the High Court of Australia

____________________

KIEFEL CJ:   In accordance with the protocol for remote hearings, I will announce the appearances of the parties.

MR C.O.H. PARKINSON, KC appears with MR A.G. WILLOUGHBY for the applicant.  (instructed by HWL Ebsworth)

MR A.G.L. BANNON, SC appears with MR G.E.S. NG, and MS C. ERNST for the fourth and fifth respondents.  (instructed by YPOL Lawyers)

KIEFEL CJ:   There are submitting appearances for the first, second and third respondents.  Mr Parkinson, I see that an extension of time is required.  Is there any objection, Mr Bannon?

MR BANNON:   No, your Honour.

KIEFEL CJ:   You have that extension.  Yes, Mr Parkinson.

MR PARKINSON:   Thank you, your Honour.  The first special leave question raises the proper legal . . . . . as to the character of the breach of fiduciary duty required for the purposes of establishing third party liability for knowing assistance.  That is, what does dishonest and fraudulent mean in a second‑limb Barnes v Addy claim.  The error of the Full Court was to follow the formulation of Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609, that the fiduciary’s breach of fiduciary duty had to transgress ordinary standards of honest behaviour to be dishonest and fraudulent, and that the assister had to have the . . . . . elements of that dishonest and fraudulent design.

In Hasler, Justice of Appeal Leeming stated that in Lord Selborne’s formulation that there be a fraudulent, dishonest design on the part of fiduciary, the second limb Barnes v Addy liability, Lord Selborne should be understood as saying that, quote:

Dishonesty amounts to a transgression of ordinary standards of honest behaviour.

We say special leave should be granted for two reasons on the first question.  The first reason is that there is presently a divergence of use between intermediate appellate courts and thus, this important area of law requires clarification.  The first point ‑ ‑ ‑

KIEFEL CJ:   Mr Parkinson, would you accept that relevant principles are stated in Farah v Say‑Dee?

MR PARKINSON:   Yes, your Honour.  We say in that regard that Farah v Say‑Dee affirms the approach adopted in Consul Developments, and a proper reading of Consul Developments, in particular the reasons of Justice Stephen, support a lower test than that identified by Justice of Appeal Leeming in Hasler.  One would then say ‑ ‑ ‑

KIEFEL CJ:   Well, insofar as you then say that how Farah is to be understood involves some difference of opinion between appellate courts, to what extent was that difference of opinion dispositive in this matter in the Full Court?  I cannot see much reference in the reasons of the Full Court to this issue.

MR PARKINSON:   Your Honour, in the Full Court the issue arose; it was submitted that the Full Court should recognise the difference in opinions between intermediate appellate courts, and in determining the question of the pleading application and that it should apply the lower standard with respect of it.  Going to the heart of your Honour’s question, which I suppose is a where the rubber hits the road point, with respect to the issue, is we would say that if the Full Court applied the wrong legal threshold test, then their discretion miscarried, and it would need to be re‑exercised.

At a more granular level, we would say that the requisite knowledge required by the third party is . . . . . circumstances which would indicate the fact of the fraudulent and dishonest design to an honest and reasonable person.  If the lower threshold of the meaning of fraudulent and dishonest design is applied, then the inquiry as to the requisite knowledge is of circumstances which would indicate the fact of something less than dishonesty on the part of the fiduciary.  Then we would say, whether one adopts the Bell formulation, or – and we would say that on a proper reading of Justice Stephen’s reasons in Consul Development, one should understand him as adopting where Lord Selborne describes the potential scope of dishonest and fraudulent as including an improper breach of fiduciary duty.  There are two key transactions ‑ ‑ ‑ 

GORDON J:   Can I raise one other aspect of that?  Is it right to read Justice Jackson as saying that you had a further problem in any event?  That is, that it was:

still necessary to plead a reasonable case that the firm knowingly participated in the design.

MR PARKINSON:   No.  We say that Justice Jackson agreed with Justice Anastassiou that there was relevant assistance.  Justice Jackson considered it with respect to the second transaction, which related to giving legal advice to the second transaction – sorry, giving legal advice to the effect that the second transaction was lawful and, also, in drafting the documents.  So, Justice Jackson found at the second transaction there was relevant assistance for that purpose.

We would say, also, that below his Honour Justice Jackson did not need to determine the point; it necessarily would follow that the same conclusion arises for the first transaction.  The assistance there given was that legal advice was given with the first transaction, which was the emergent share issue was lawful, and, also, the documents giving effect to it were allegedly prepared by G+T in that circumstance.  So, to answer your Honour’s question, the answer is no.  The only issue that arises with respect to the reasons below is really in relation to the knowledge question.

So, if I can return then to, Chief Justice, your question with respect to, does it matter?  Well, we say at a conceptual level it does matter because the discretion needs to be exercised, which I think then takes one to largely ground 2 that a wrong approach was adopted.  But even if one simply looks at this at a more specific level, and one looks at the first transaction by way of example, the Court may recall that the first transaction arises in this case by reason that there was a joint venture between two parties and they used a company called Emergent as a joint venture vehicle.  It was controlled a Mr David who controlled one of the two joint venturers, a company called RAAL.

Emergent, which was a joint venture vehicle, invested with Mr Singh on an 80/20 split in a waste facility through a company called Global Renewables.  In essence, this waste facility needed funding which was occurring by KTC and RAAL lending money to Emergent to provide it.  There was a dispute between KTC and RAAL about lending $5.8 million to Emergent, whether or not RAAL did or did not.  Mr David’s response – who is the fiduciary for the purposes of the allegation – was to get RAAL, his company, and Emergent to enter into a loan agreement, recording loans of $5.8 million, then to get RAAL to issue a demand to Emergent to repay $49,000 in seven days, failing which it would accept an issue of shares – 49,000 shares.

Now, on day seven, without informing the Kazals of his intention, Mr David procured the Emergent board to issue 49,000 shares to RAAL in satisfaction of that demand, and the element we focus on here is the effect of this transaction was to reduce KTC’s interest in Emergent, which was a joint venture vehicle, from 50 per cent to 0.1 per cent.  It increased RAAL’s interest in Emergent from 50 per cent to 99 per cent and it reduced RAAL’s debt to Emergent by less than one per cent.  So, in effect, what occurred with the transaction was that RAAL took control of the joint venture vehicle and it retained its debt.

Now, with respect to how this matters, if the Court could turn to application book 156 . . . . . Justice Jackson – at paragraph 422, at application book 156 we see the conclusion of Justice Jackson who agrees with Justice Anastassiou to the effect as to why it was that this transaction was dishonest and fraudulent, applying a Hasler standard, and your Honour will see approximately four lines from the bottom the thing that Justice Jackson focused upon was Mr David’s concealment:

from the Kazals and KTC the fact that the board of Emergent was going to vote on the resolution –

and he sees that element – he says, amongst others, but as being critical to the conclusion of dishonesty with respect to the issue of shares.  We would say if one adopts the lower standard, whether it be a Bell reformulation – and again, we say the word improper is another appropriate way which was adopted – we would say it is largely adopted by Justice Stephen from the language of Lord Selborne in Barnes v Addy and Consul.

But the transaction was, we would say, fraudulent and dishonest within that meaning regardless of the concealment from the Kazals and KTC of the fact the board of Emergent was going to vote on a resolution for the share issue.  That is, we would say that the breach of fiduciary obligation as described was, we would say obviously improper exercise, and something to which an equity court would respond.  And we note, obviously, Justice Perram, I think there he has described this transaction as “highhanded”, “brutal”, something to “raise eyebrows”.

So, we say, if the question is where the rubber hits the road, that follows if the Bell test or adopting the wording proper from Consul is used as to the meaning of fraudulent and dishonest design, Gilbert + Tobin, who gave legal advice the transaction was . . . . . and prepared a documentation to effect it, did not have to have knowledge specifically of concealment by Mr David from the Kazals to have the requisite knowledge that satisfies the descriptor fraudulent and dishonest design as properly understood.

So, Chief Justice, that is the answer as we would – is an example where we say that the rubber hits the road, so that if one does apply the lower test, the reasoning of Justice Jackson cannot stand.  If it would assist the Court, I can then identify how it is, or what we say the proper test is by reference to Justice Stephen.  That is what we say that Justice of Appeal Leeming in was incorrect to ‑ ‑ ‑ 

GORDON J:   I think for my part, Mr Parkinson, the proper test is what you say is the issue.  The question is whether this is the appropriate vehicle, and whether or not this is a vehicle to be able to test, assuming you are right that there is a dispute about the relevant test, and I, for my part, would be very grateful if you could address that issue.

MR PARKINSON:   With respect, so, we say that there is on that first instance a significant difference that would occur . . . . . if the lower test were applied, that is, with respect to the question of fraudulent and dishonest design.  If the lower test is applied, we would say, following from Justice Jackson’s reasoning, that the pleading should stand as it is.  So, we say that as a vehicle it is appropriate to test the legal question because if we are right the discretion would need to be re-exercised by the Court with respect to whether the pleading satisfies.

The second ground which we say arises follows regardless of whether or not the Hasler test is found to be correct by the Court.  The second ground indicates – the second ground is to the effect that the majority erred in viewing the pleading as an appropriate forum to resolve complex factual questions about Gilbert + Tobin’s deemed knowledge of the dishonest and fraudulent scheme.

Deemed knowledge, for these purposes, are categories three and four of the Baden test, and they involve “fact-intensive” inquiries that involve “determinations” of fine:

distinctions between degrees of knowledge and notice

We say this is reflected by Justice Edelman in Nicholson v Morgan (No 3) [2013] WASC 110 at paragraph 78, and we have extracted that in our submissions, paragraph 25, which is at application book page 175, which is to the effect that disposition at the strike out or pleading stage is not generally appropriate to resolve complex factual issues about degrees of knowledge, which turns upon a different characterisation ‑ ‑ ‑

KIEFEL CJ:   It is also generally not an appropriate vehicle to determine questions of principle.  In a case such as this which really seeks a review of a decision concerning the adequacy of the pleading, you really need to be able to point to a very clear path that shows the error of the Full Court in relation to the pleading itself.

MR PARKINSON:   We say one of the errors – or I have identified the first error.  The second error which I will take the Court to with respect to this point, which largely goes to the erroneous approach of Justice Wigney, which was to the effect that he sought to atomise each of the particulars to reach a conclusion.

If the Court then goes – so one of the . . . . . approach of the over‑atomisation of the particulars to analyse them comes from the reasons of Justice Jackson.  The key issue in the second transaction, it has been called the GRL share issue, was that the shares were issued to Mr Singh for no consideration.  Justice Jackson’s error in relation to the GRL share issue, we would say, follows clearly from his finding, and we say it is the correct finding which Justice Anastassiou agreed with, that the pleaded facts – from the pleaded facts the inference was open that Gilbert + Tobin’s advice included advice to the effect that that share issue was lawful.

So, if the Court goes to application book 159 at paragraph 432 the Court will see at the bottom of the paragraph his finding where he says:

It is open to infer from those facts and the usual scope of a lawyer’s retainer –

That is, he accepts that share issue – that Gilbert + Tobin advised the share issue was lawful, and he also accepted at paragraph 433 that by preparing – that Gilbert + Tobin – these are relevant for assistance . . . . . knowledge:

assisted in preparing the documentation to effect the making of ‘the GRL Share Issue’.

That is, having reached those two conclusions that Gilbert + Tobin gave legal advice that the share issue was lawful and that they assisted in preparing documents with respect to the share issue, his Honour Justice Jackson then agreed with Justice Wigney recourse had found that there was no assistance, in fact, he found no dishonest scheme, to the effect that the plea was inadequate as to why Gilbert + Tobin knew that the shares were for no consideration, and his agreement is at 419, application book 156.

But we would say that having accepted that Gilbert + Tobin gave advice that the share issue was lawful and preparing documents in relation to the relationship between the GRL shareholders, we would say it necessarily follows that there is an error sitting there, that Justice Jackson should have found a sustainable factual basis to plead knowledge on the part of Gilbert + Tobin as to the absence of consideration to be paid for the issue of the shares in GRL.

That is:  the inference is certainly open, we would say, that an experienced lawyer – who clearly we have involved here – advising on the lawfulness of . . . . . transaction documents over a long period of time, whether or not there was consideration paid such that the inference is plainly open on a knowledge question that there was no consideration paid.  That is on the second element of it, we would identify that as a clear error in respect to reasoning at a granular level.

Though we also . . . . . one looks at the approach broadly of Justice Wigney.  Justice Wigney seeks to atomise every particular, rather than standing back and looking generally at the nature of the transaction, the fact that the lawyer had given legal advice with respect to all aspects, was advising on it, and in those circumstances, we would say, had the requisite knowledge for the purposes of Baden three and Baden four that – sufficient to satisfy the descriptor of fraudulent and dishonest design.  If that assists the Court, with respect to where we identify a specific error.

KIEFEL CJ:   Yes, thank you, Mr Parkinson.  Yes, Mr Bannon.

MR BANNON:   Your Honours, the third special leave question does not arise.  Any difference between intermediate appellate courts as to the appropriate test of what constitutes a dishonest and fraudulent design was not dispositive of the question before the Full Court.  As to the second question, there is no dispute as to the principles to be applied in relation to pleadings.  In relation to those principles, four judges applied them.  Justice Perram at first instance, and Justice Wigney and Justice Jackson all found that these specific allegations of knowledge which were pleaded as central to the allegations of knowing assistance in a dishonest and fraudulent scheme were not properly pleaded or adequately particularised or supportable.

Those allegations of knowledge were not characterised by reference to any difference of approach in determining what did or did not constitute a dishonest or fraudulent design.  In other words, they were agnostic, those allegations, as to the characterisation.  The two members of the Full Court who agreed treated them in that way.

GORDON J:   Mr Bannon, could I ask you a question?  Just, in effect, to go to the heart of it, please.  If I go to application book 160, where Justice Jackson brings together, in a sense, the summary of where the Full Court gets to.

MR BANNON:   Yes.

GORDON J:   Paragraph 436, we have the positives, at 437 we have the negatives.  As I understand Mr Parkinson’s complaint, it really is directed at what is necessary for the purposes of 437(1) and (2) in circumstances where G+T, in effect, so the inference is said, gave advice that the arrangements – I will use in neutral terms for both transactions – were lawful, they prepared the transaction documents and had done so over a significant period.  In relation to the second transaction, it should be taken to know that it was a transaction for no consideration, just as one example.  What is wrong with that analysis, as raised by Dr Parkinson?  In other words, why is it that 437 is not sufficient?

MR BANNON:   Because, your Honours, one has to go back and see the way in which the matter was, in fact, pleaded, and that appears most clearly from Justice Wigney’s decision.  Perhaps I could start at page 73 of the application book and refer, at paragraph 158, where his Honour addresses his concern as to the adequacy of the pleading as dishonest and fraudulent design, but towards the end of that paragraph, his Honour says:

In my opinion, those other deficiencies provided a much sounder basis for the refusal of leave.

And paragraph 159, the last sentence:

Even if there was, it would not, in the particular circumstances of this case, justify the grand of leave to file the proposed amended pleadings, particularly given the other fundamental problems –

That is where his Honour there addresses knowledge – sorry, at paragraph 168, after saying at paragraph 167, and perhaps I should have noted at the bottom of paragraph 159, the bottom of page 73, his Honour is indicating regardless of Hasler or not, any dispute, it does not affect the outcome. So then one goes to 75 of the application book, at paragraph 167, the concluding lines, his Honour says:

The more serious deficiencies, however, are in respect of the allegations of knowledge –

And there his Honour addresses the precise matters which are pleaded.  This is paragraph 168, and what – this is in relation to the first part of the transaction – I will come back to the second one – but the first part, the pleadings detailed what Mr Bullock is alleged to have known.  Now, these were not – this is the way in which the case was pleaded.  It was not suggested that any of these were not necessary to be proved, depending on the Hasler test.

In other words, to the extent my learned friend may now be saying, that some of these things they pleaded, they are unnecessary, that was not an argument put before Justice Perram, and it was not an argument put before the Full Court.  The pleading alleged that these things were known, and these were the things which were relied upon for the various levels of knowledge of assistance in the dishonest scheme.  They were:

first, that the G+T Legal Advice was not disclosed to the Kazals; second, the Kazals did not know about the Emergent share issue at any time prior to 28 January 2010 and did not consent to it; third, Mr David did not inform the Kazals that the resolution to issue Emergent shares to RAAL was to be considered at the board meeting on 28 January 2010; fourth, the Kazals were not told that Mr David had “procured [Mr Mavromanolakis’] support” for the resolution; and fifth, no valuation of Emergent shares had been obtained –

His Honour then addresses that they are:

bereft of meaningful particulars.

Those allegations are addressed specifically right through to paragraph 174, and there is no criticism alleged or addressed in our learned friend’s submissions of any of that reasoning.

Then, at paragraph 170, in the last line, couple of lines of paragraphs 174 and 177, those conclusions are not dependent on how one frames the dishonest and fraudulent design, and your Honours will note that it does not record any suggestion, well, what if one or other of these things is lacking, does that matter?  And that is because that was not a submission put below.

That then results in the conclusion at paragraph 177, namely that the knowledge pleading is determinative, and that is in relation to the first transaction.  In relation to the second transaction, the matter is taken up again by Justice Wigney at page 83 of the application book, and this is in relation to the second allegation.  At paragraph 196 – again, his Honour identifies the matters which are said to have been known to Mr Bullock, and there are three matters there, and essentially reduces the lack of consideration.  Then his Honour addresses, at paragraphs 196 through to 206 why those allegations are not supportable, as a matter of inference.

This is after his Honour had set out all the principles going back to – I do not need to go back to 130 and . . . . .  but at an early stage of proceedings, one should be careful not to jump to conclusions or rule out a case.  So that there is no misapplication of principle there.  Then one then comes, against that background, to Justice Jackson’s reasons.  Justice Jackson equally sets out at page 154 of the book, at paragraph 417, his Honour says:

I will start with the transaction that is later in time.  I respectfully agree with Wigney J and the primary judge that, for the reasons their Honours each give, the plea that G+T knew that Singh Investments paid no or colourable consideration for the issue of shares in Global Renewables in April 2010 lacks particulars that are capable of supporting it.

His Honour then sets out at paragraph 418 important principles, including the rule that where a condition of mind is pleaded, that is rule 16.43, it must be pleaded with particulars of the facts on which reliance is placed.  Subparagraph (3) also refers to matters which critically must be identified and pleaded.  So that is the general principle. 

Then at paragraph 419 his Honour addresses the key in relation to the first transaction, namely the matters of knowledge.  At the top of page 156 his Honour adopts the reasons of Justice Wigney:

For the reasons given by Wigney J and the primary judge –

the statement of claim:

fails to put G+T on notice of either of those things in relation to the key allegation –

Sorry, this is in relation to the second transaction, I should say, your Honour.  So, he has agreed with his Honour’s reasons, which is the detailed reasoning, and that continues down to paragraph 421.

GORDON J:   Mr Bannon, do you accept the complaint that Justice Perram seemed to confuse transaction 1 and 2?

MR BANNON:   No.  Well, by the time we got to the Full Court, there were another three versions, the seventh version, so Justice Perram was dealing with a slightly different version, but his Honour did not confuse it.  The Full Court reasons, in particular, Justice Jackson, was content with the pleading going forward as allegations of a dishonest and fraudulent design and allegations of assistance.  Justice Wigney had doubts about that but, as we have seen, they were not determinative.  His Honour said the critical allegation was the pleading of knowledge.  So, in other words, one had three judges, effectively two absolutely clearly were saying that the pleading was good enough of a dishonest and fraudulent design on whatever test one applied.

Secondly, it was good enough in terms of acts of assistance.  The third, Justice Wigney had some doubts about that but, as I say, he did not regard that as dispositive.  As far as Justice Wigney was concerned, the dispositive allegation was – the dispositive issue was the inability to properly plead relevant facts in relation to knowledge.

It was with those reasons that Justice Jackson agreed, and paragraphs 426 to 427 relate to his Honour’s agreement with the first transaction, which was the one which required the proof or some sort of particulars to support the four matters which were alleged to be relevant, and the only matters alleged to be relevant to the knowledge element, they are the four matters back at paragraph 168 at page 75.  So, 426, 427 deal with the first transaction, four matters alleged to be relevant, for the reasoning of Justice Wigney, the details of which were not attacked by the applicants.  His Honour Justice Jackson agreed and he also agreed, as we have seen, with the reasons in relation to the second transaction.

GORDON J:   If you strip out – and it is probably an inappropriate way of looking at it, but just to cut through this, if one adds to the four matters identified in paragraph 168, for example, along the lines put by Dr Parkinson, does that alter the analysis in the sense that one does need all of them; one can choose some of them in respect of the knowledge along the lines that I have put to you earlier?

MR BANNON:   Well, one answer is as to what an appropriate vehicle for the Court is, when, had this ever been put like that before and, indeed, it is not even put like that in the special leave application, but addressing the question now, we say it does matter because if one looks at the detail of that transaction as it is pleaded, it is not at all apparent that one could discern from the mere fact that one gave advice in relation to the transaction that there was any element which could put a lawyer on notice of a dishonest and fraudulent design, regardless of the test that one applied.  There has to be some element which takes it above a breach of fiduciary duty, let us accept there is . . . . . limit, and let us be unclear or imprecise about what it is.

But nevertheless, the mere allegation that a solicitor was involved needs much more; it needs something more.  Indeed, the importance of the pleading obviously is to put a respondent on notice of what it is the case they have to meet, and if the case even now is changing, that is even more demonstrative of the difficulty facing my clients and, indeed, the appropriateness of the decision.  Perhaps to put it a bit more bluntly, if this is effectively version eight, and we are asked to respond to your Honour’s question about a version of the pleading which treats as not required matters which, after that, have always been required, then we would say that, notwithstanding I have given an answer, that is not a question I should have to answer now.

I do not like expressions like “on the run” because we are all capable of doing things, but nevertheless that question would have been addressed a bit more specifically by reference to matters which had been pleaded in relation to the transaction, to give your Honours perhaps a better idea of precisely why it is that each of those matters were in fact necessary.  But your Honours do not have the consideration of any reasons from the Full Court as to why, if one stripped away one of those matters or another matter, that the argument could still run.

If one turns to Justice Anastassiou’s reasons, his Honour does not address the paragraphs in relation to knowledge at all, and one can see that from paragraph 419 at ‑ ‑ ‑

GORDON J:   I do not think it would be 419; that is Justice Jackson.

MR BANNON:   No, it is not 419, your Honour.  It is 329, sorry, at page 131 of the application book.  So, at 329 and 330 on page 131, his Honour does not address any of the specific paragraphs pleading knowledge and whether they are supportive of it.  His Honour uses an expression of where there is conduct – the allegation is conduct of the fiduciary to assist, is comingled with knowledge.  His Honour does not – his Honour has obviously looked at the paragraphs but he says nothing about them.  He makes no comment about the reasons of Justice Wigney as to why they are insufficient, although he refers to those reasons.  Then similarly at paragraph ‑ ‑ ‑

GORDON J:   Well, I think to be fair to his Honour, his Honour’s point is that given the nature of the allegation and given what was pleaded, that it was inappropriate to resolve that question as a pleadings point.

MR BANNON:   Paragraph 387 was the other paragraph, but it is the same point.  So, we say, in conclusion, it is a pleading case; there no issue of principle that arises, there is no special category of case which warrants the grant of special leave based on special leave question 2.  Certainly, the first question of principle does not arise and was in no way dispositive of the case and would be an inappropriate vehicle to determine that issue.

May it please the Court.

KIEFEL CJ:   Thank you, Mr Bannon.  Reply, Mr Parkinson?

MR PARKINSON:   Thank you, your Honour.  I seek to make three points in reply.  The first point is, with respect, focus was placed upon Justice Wigney’s reasoning.  Justice Wigney, of course, found that there was no relevant assistance.  The Court can see that starting at paragraphs 160 to 167 of application book page 74 to 75.  That is, the starting point of his analysis was that there effectively was an insufficient particularisation of the legal advice and the assistance, which of course . . . . . Justice Anastassiou and Justice Jackson came.  That is, when his Honour then turned to analyse whether there was assistance, it is relevant that that was his previous finding prior to doing so.

The second point we would make is with respect to the comment about how Justice Anastassiou approached it.  The court books, at application book page 139, paragraphs 356 and following, Justice Anastassiou, particularly at paragraph 357 at application book, page 140, Justice Anastassiou says:

It is apparent that the advisory services offered by commercial law firms today are far broader than they were in the era –

of Lord Selbourne.  He then says, in effect, discussion going down, that when there are close services provided, or detailed services provided by a law firm, in such circumstances it would be open as a matter of pleading, or certainly a pleading stage, inappropriate to act, to cut off analysis of the knowledge with which the lawyers have.  And we of course would submit, in these circumstances, where it is a long-standing relationship, complex transactions, complex documents, and also the fact – particularly with respect to the no consideration point – the whole circumstance giving rise to the first transaction was that there was insufficient funding going to GRL.  That is, that was the circumstance giving rise to the first transaction. 

We then have a second transaction whereby no consideration is paid with SI to the Singh entity with respect to obtaining shares.  We would say it would be most odd in those circumstances if the sophisticated lawyer giving advice was not aware about the circumstance into consideration going with respect to the second transaction.  And this is what we would point to with respect to the analysis Justice Anastassiou adopted on this question. 

The third point we would make – going to, Chief Justice, your issue about whether this is an appropriate vehicle that is within the fact . . . . . as a vehicle to test questions of knowledge.  The Court is taken to paragraph 168 in which the nature of the allegations of knowledge were particularised of

this in the context of other matters.  That is, this is not – if we can put it this way – a superficial pleading with which the Court does not have detailed facts or assumed facts for the purposes of pleading allegations to deal with.  This is a document where there are a great number of particularised facts.  In fact, that is one of the reasons which Justice Anastassiou reached the view that was inappropriate to resolve this at a pleading level, is because of the complexity of the facts.

So, in response to the question, is this is a vehicle that gives rise to appropriate factual basis for the Court to look at the legal question as to the test that arises, we would say yes.  The Court gets that specifically from 168, and also from the nature of the debate and discussion going as to whether these particulars were or not sufficient.

May it please the Court.

KIEFEL CJ:   Yes, thank you.  The Court will adjourn to consider the course that it will take.

AT 11.11 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.16 AM:

KIEFEL CJ:   We are not persuaded that the resolution of this matter will turn on the differences of view expressed by intermediate appellant courts as to what was said in Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89 at paragraphs 179 to 184. In any event, the proposed appeal would not, in our view, be an appropriate vehicle to resolve any such issues. Special leave is refused with costs.

The Court will now adjourn until 11.30 am.

AT 11.17 AM THE MATTER WAS CONCLUDED