Re AWB Limited No 10

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

CORPORATIONS LIST

No 9938 of 2009

RE AWB LIMITED (ACN 081 890 459)

BETWEEN:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION	Plaintiff
v
ANDREW ALEXANDER LINDBERG	Defendant

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	23, 24, 25, 26 and 27 November 2009
DATE OF JUDGMENT:	9 December 2009
CASE MAY BE CITED AS:	Re AWB Limited No 10
MEDIUM NEUTRAL CITATION:	[2009] VSC 566

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CORPORATIONS – civil penalty proceedings - abuse of process – application to permanently stay second proceeding – second proceeding raises similar issues to proceeding already part heard between the same parties - rationale underlying double jeopardy - factors relevant to abuse of process - Anshun estoppel – whether Anshun estoppel available where two proceedings both on foot – relevant tests for Anshun estoppel - court’s inherent jurisdiction – stay ordered as second proceeding constitutes an abuse of process – r 23.01 Supreme Court (General Civil Procedure) Rules 2005

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M J Colbran QC with Mr N J O'Bryan SC, Ms M S Wall and Mr C H Truong	The Australian Securities and Investments Commission
For the Defendant	Mr D G Collins SC with Mr K J A Lyons and Ms M Tittensor	Galbally & O’Bryan Solicitors

Aon Risk Services Australia Limited v Australian National University (2009) 258 ALR 14
Australian Securities and Investments Commission v Lindberg [2009] VSCA 235
AWB Limited (No 1) [2008] VSC 473
AWB Limited (No 2) [2009] VSC 70
AWB Limited (No 3) [2009] VSC 209
AWB Limited (No 4) [2009] VSC 315
AWB Limited (No 5) [2009] VSC 258
AWB Limited (No 6) [2009] VSC 330
AWB Limited (No 7) [2009] VSC 413
AWB Limited (No 8) [2009] VSC 469
AWB Limited (No 9) [2009] VSC 485
Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256
Blair v Curran (1939) 62 CLR 464
Branir Pty Ltd v Wallco Pastoral Co Pty Ltd [2006] NTSC 70
Clorox Australia Pty Ltd v International Consolidated Business Pty Ltd [2005] FCA 1135
Davern v Messel (1984) 155 CLR 21
Gibbs v Kinna [1999] 2 VR 19
Gill v Walton (1991) 25 NSWLR 190
Green v United States (1957) 355 US 184
Henderson v Henderson (1843) 3 Hare
Hunter v Chief Constable of West Midland Police [1982] AC 529
Jago v District Court (NSW) (1989) 168 CLR 23
Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd (2009) 260 ALR 34
Johnson v Gore Wood & Co [2002] 2 AC 1
Lidden v Composite Buyers Ltd (1996) 139 ALR 549
Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210
Moevao v Department of Labour [1980] 1 NZLR 464
Moore v Inglis (1976) 9 ALR 509
PNJ v R (2009) 252 ALR 612
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198
Rogers v R (1994) 181 CLR 254
R v Carroll (2002) 194 ALR 1
R v Tait and Bartley (1979) 24 ALR 473
The Ampthill Peerage [1977] AC 547
Thirteenth Corporation Pty Ltd v State (2006) 232 ALR 491
Walton v Gardiner (1993) 177 CLR 378
Yat v Tung [1975] AC 581

Zavodnyik v Alex ConstructionsPty Ltd (2005) 67 NSWLR 457

TABLE OF CONTENTS

INTRODUCTION AND SUMMARY............................................................................................ 3

THE HISTORY OF THE PROCEEDINGS.................................................................................... 6

Background to these Proceedings: the Cole Inquiry.................................................................. 6
Earlier Proceeding Issued.......................................................................................................... 8
Trial Directions and Trial Date in the First Proceeding........................................................... 9
The May Amendment Application.......................................................................................... 11
The June Amendment Application.......................................................................................... 14
The August Amendment Application..................................................................................... 16
ASIC Appeal and the 18 September Reasons.......................................................................... 19
Correspondence Before the Trial of the First Proceeding......................................................... 19
The Trial of the First Proceeding............................................................................................. 20
The second Proceeding............................................................................................................. 21

AFFIDAVIT OF BRENDAN FRANCIS CARIDI...................................................................... 22

Project Rose.............................................................................................................................. 25
The IIC Inquiry........................................................................................................................ 28
Tigris Payment to AWB from the UN Escrow Account, Payment from AWB to Tigris and the Tigris Agreement................................................................................................................................ 29
Conclusion on the new allegations.......................................................................................... 31

MR LINDBERG’S CONTENTIONS............................................................................................ 32

ASIC’S CONTENTIONS................................................................................................................ 34

OVERLAP OF ISSUES.................................................................................................................... 37

Does the first proceeding claim go beyond the fall of the Government of Iraq....................... 37
Parties...................................................................................................................................... 39
Lindberg’s general responsibilities and duties......................................................................... 39
Lindberg’s general responsibilities and duties.............................. Error! Bookmark not defined.
United Nations Resolutions on Trade with Iraq..................................................................... 39
Wheat sales and purported fees................................................................................................ 40
Lindberg’s knowledge as at April 2003................................................................................... 40
Project Rose.............................................................................................................................. 42
25 May 2004 Presentation....................................................................................................... 43
July 2004 Power Point Presentation....................................................................................... 43
The IIC Inquiry........................................................................................................................ 43
February 2005 interview.......................................................................................................... 43
The September Report and the IIC Letter................................................................................ 44
Tigris Payment to AWB from the UN Escrow Account......................................................... 44

RELEVANT AUTHORITIES......................................................................................................... 46

Anshun Estoppel...................................................................................................................... 46
Abuse of Process....................................................................................................................... 56
Double Jeopardy....................................................................................................................... 60
The relevant factors in considering the abuse application....................................................... 70

SUMMARY OF RELEVANT PRINCIPLES................................................................................ 71

Anshun estoppel....................................................................................................................... 71
Abuse of process....................................................................................................................... 73

APPLYING THE RELVANT PRINCIPLES TO THIS CASE.................................................. 75

The Anshun estoppel................................................................................................................ 75
Overlap..................................................................................................................................... 76
Unreasonable not to raise......................................................................................................... 78
Abuse of process - General....................................................................................................... 79
Overlap..................................................................................................................................... 80
Double jeopardy rationale........................................................................................................ 80
Second proceeding denies Mr Lindberg the benefit of the decision on the amendment applications 81
Prejudice to Mr Lindberg in conduct of first proceeding........................................................ 83
Public interest.......................................................................................................................... 84

CONCLUSION................................................................................................................................. 85

HIS HONOUR:

INTRODUCTION AND SUMMARY

By an interlocutory process dated 11 November 2009, the defendant, Mr Lindberg, applies for an order that proceeding No 9938 of 2009 (‘the second proceeding’) be permanently stayed pursuant to r 23.01 of the Supreme Court (General Civil Procedure) Rules 2005 or, alternatively, pursuant to the inherent jurisdiction of the court; that the plaintiff, ASIC, pay the costs of the second proceeding; and alternatively, if the proceeding is not stayed, an order that the second proceeding be consolidated with proceeding No 10078 of 2007 in this court (‘the first proceeding’) and that the consolidated proceeding continue as proceeding No 10078 of 2007.

In the first proceeding ASIC seeks declarations, civil penalties, Mr Lindberg’s disqualification from managing a corporation and other relief by reason of Mr Lindberg’s alleged breaches of duties as a director and officer of AWB Limited arising out of the alleged payment of fees to the former Government of Iraq or its instrumentalities, that ASIC alleges were bribes, in relation to the sale of wheat to Iraq by AWB and other related incidents. The nature of the proceedings have been dealt with in previous decisions.[1] Nevertheless, it is useful that I give a very short summary based on ASIC’s allegations. In some instances Mr Lindberg does admit some of the non contentious allegations. He denies, however, any wrongdoing and any knowledge that the transportation and service fees being paid by AWB were bribes as alleged.
[1]Re AWB Limited (No 1) [2008] VSC 473; Re AWB Limited (No 2) [2009] VSC 70; Re AWB Limited (No 3) [2009] VSC 209; Re AWB Limited (No 4) [2009] VSC 315; Re AWB Limited (No 5) [2009] VSC 258; Re AWB Limited(No 6) [2009] VSC 330; Re AWB Limited (No 7) [2009] VSC 413; Re AWB Limited (No 8) [2009] VSC 469 and Re AWB Limited (No 9) [2009] VSC 485.

AWB carried on a substantial wheat trade with Iraq. In about 1999, the Iraqi Grain Board (IGB) demanded that wheat contracts provide for the payment of an inland transportation fee to transfer the wheat from the discharge port of Umm Qasr to the provinces of Iraq and later an after sales service fee. The payment of bribes and the provision of internationally traded currencies to the Government of Iraq was conduct that UN resolutions had sought to outlaw. The moneys for the wheat and the inland transportation fees were obtained from Government of Iraq moneys held in an UN escrow account that could only be used for humanitarian purposes.

ASIC alleges that the purported inland transportation fee and the after sales service fee were not a genuine fee for transport and after sales services provided to AWB or the IGB and were a sham. ASIC alleges the purpose of these fees was to allow the Government of Iraq to obtain internationally traded currency. ASIC alleges that the payment of those fees for that purpose contravened the UN sanctions against Iraq and allowed the Government of Iraq to obtain internationally traded currency.

Mr Lindberg took up his position as managing director of AWB in 2000. ASIC alleges that by February 2001 or thereafter, he became aware (or ought to have become aware) that the fees were not a genuine fee for transport or after sales service and the purpose of the fees was to allow the Government of Iraq to obtain internationally traded currency contrary to UN sanctions. ASIC describes these payments for that purpose as bribes. ASIC alleges that Mr Lindberg failed to tell the board of AWB about the disputed fees or do anything to stop them being paid which has led to serious damage to AWB.

Further, ASIC alleges that AWB sought to pay an IGB claim for the delivery of contaminated wheat by AWB to it by inflating the price of wheat on subsequent contracts and paying hard currency to the Government of Iraq contrary to the sanctions. Secondly, ASIC alleges that AWB agreed to help the Tigris Corporation recover a debt owed to it by the IGB for a previous shipment of wheat by BHP, that had been assigned to Tigris, by AWB inflating the price of wheat sold by AWB to the IGB on subsequent contracts as it alleges was done with the inland transportation fees.

The first proceeding is limited to some 50 odd alleged breaches of Mr Lindberg’s duties that occurred before the Government of Iraq fell, that is, when the alleged payment of the disputed fees ceased although the allegations of the damage suffered by AWB continue until the present time.

In the second proceeding, ASIC seeks similar if not identical relief against Mr Lindberg arising out of the same matters alleged in the first proceeding. The second proceeding is limited to alleged breaches of Mr Lindberg’s duties that occurred after the Government of Iraq fell. On the other hand, ASIC rely on Mr Lindberg’s alleged knowledge acquired both before and after the Government of Iraq fell.

Contrary to my summary, ASIC contends that the first proceeding is not limited to alleged breaches of Mr Lindberg’s duties that occurred before the fall of the Government of Iraq but extend to alleged breaches that occurred up until he left AWB in February 2006. If ASIC is correct, the overlap between the proceedings is even greater than I have described.

As it is, I do not accept ASIC’s contentions on this issue. In my decision of September 2009, I found in effect that the existing further amended statement of claim filed on 24 July 2009 only raised alleged breaches of Mr Lindberg’s duties that occurred before the fall of the Government of Iraq.[2] I only permitted amendments to the further amended statement of claim concerning such alleged breaches of duty.
[2]Re AWB Limited (No 7) [2009] VSC 413.

ASIC unsuccessfully sought leave to appeal against my September decision on grounds, inter alia, that my construction of the existing further amended statement of claim was wrong.[3] Subsequently, some two weeks after the trial of the first proceeding commenced, ASIC issued the second proceeding that essentially alleges the matters that I refused ASIC leave to include in the first proceeding. If the second proceeding is not stayed, ASIC will have achieved by the second proceeding that which they could not achieve by amendment.
[3]Australian Securities and Investments Commission v Lindberg [2009] VSCA 235.

Mr Lindberg seeks to permanently stay the second proceeding on the basis of an Anshun estoppel and as an abuse of process. He submits that the second proceeding is unjustifiably vexatious, oppressive and manifestly unfair and brings the administration of justice into disrepute in the minds of right-thinking people.

The power to grant a stay of a proceeding on the grounds of abuse of process is only exercisable in exceptional circumstances although the court may do so for the reasons relied on by Mr Lindberg, if made out.

For the reasons that follow, I find that Mr Lindberg will be unjustifiably vexed and oppressed and manifestly denied a fair trial by the existence of the pending second proceeding. I also find that the second proceeding brings the administration of justice into disrepute in the minds of right-thinking people. I should add that this finding is based on the effect of the second proceeding. I do not find that ASIC intentionally sought to abuse the processes of the court.

In the circumstances, it is unnecessary for me to decide whether the Anshun principle of estoppel applies where both proceedings are extant. If it does, then I find that the estoppel has been made out.

Accordingly, I propose to permanently stay the second proceeding as an abuse of process. I shall hear the parties on costs.

THE HISTORY OF THE PROCEEDINGS[4]
[4] In reciting the history of the proceedings I have relied extensively on the affidavit of Paul Thomas Galbally, the solicitor for Mr Lindberg, of 11 November 2009.
Background to these Proceedings: the Cole Inquiry

On 10 November 2005, letters patent were issued for the Honourable Terence Cole AO RDF QC to inquire into certain matters relating to decisions or actions of Australian companies, in particular AWB, mentioned in the Final Report of the Independent Inquiry Committee into the United Nations Oil for Food Programme (‘the Cole Inquiry’).

Commissioner Cole handed down his report on 24 November 2006 (‘the Cole Report’). The Cole Inquiry heard evidence from 75 witnesses between December 2005 and September 2006. In addition, statements from a further 130 witnesses were tendered. Tens of thousands of documents were produced to the Cole Inquiry. There were over 70 sitting days.[5]
[5] A summary of the proceedings before the Cole Inquiry is contained in paragraphs 7.14 to 7.16 of the Cole Report: see Exhibit “PTG-1” to the affidavit of Paul Thomas Galbally of 17 August 2009.

In the Cole Report, Commissioner Cole relevantly found that the conduct of officers or employees of AWB, including Jim Cooper, Trevor Flugge, Peter Geary, Paul Ingleby, Michael Long and Charles Stott, might have constituted breaches of the Corporations Act 2001.

Counsel assisting submitted during the course of the Cole Inquiry that Mr Lindberg may also have breached ss 180 to 182 and other provisions of the Corporations Act2001 and ss 194 and 195 of the Crimes Act 1958. Commissioner Cole concluded that Mr Lindberg had not breached any of these provisions in the following terms:

31.393. On the material before me, there is no basis for any finding that Mr Lindberg might have breached s.1309 Corporations Act 2001. I make no such finding. Nor is there any basis for finding contraventions of s.180, s.181 and s.182 of the Corporations Act 2001. …
Conclusion

31.394 Mr Lindberg has resigned as Managing Director of AWB. In doing so he has accepted responsibility for events which happened during his stewardship. As he said in evidence, speaking of the payments to Iraq via Alia:
It would appear that it was set up before I arrived by former employees and it continued under my stewardship, and it shouldn’t have.”

31.395 This was a correct statement.
31.396 Mr Lindberg was not well served by some of those who reported to him, and on whom he relied. He has paid a very considerable price in reputational and no doubt monetary terms. I wish to make clear that on the material before me he has not been guilty of any criminal conduct.

Commissioner Cole relevantly found, however, that the conduct of Messrs Cooper, Flugge, Geary, Ingleby, Long and Stott (amongst others) might have constituted breaches of the Corporations Act 2001.

Commissioner Cole recommended that:

There be a joint Task Force comprising the Australian Federal Police, Victoria Police, and the Australian Securities and Investment Commission to consider possible prosecutions in consultation with the Commonwealth Director of Public Prosecutions and the Victorian Director of Public Prosecutions. Administrative responsibility for the conduct of a Task Force should reside with the Commonwealth Attorney-General. [6]

[6]Cole Report lxxii.

Commissioner Cole further recommended that contraventions of the Corporations Act2001, including contraventions of the civil penalty provisions, be investigated by the task force or by ASIC in consultation with the task force.

In February 2007, consistent with Commissioner Cole’s recommendations, the Commonwealth Attorney-General announced the terms of reference for a task force to investigate the findings contained in the Cole Report. ASIC assigned nine investigative staff to the task force who worked with the task force for some five months.

On 28 August 2007, ASIC withdrew its operational staff from the task force and commenced a separate investigation under s 13 of the Australian Securities and Investments Commission Act 2001 (‘ASIC Act’) to examine suspected breaches of the Corporations Act 2001 that had been identified by Commissioner Cole which included the possible breaches of the civil penalty provisions s 180 and s 181.

During the period between August and December 2007, ASIC conducted numerous witness interviews and compulsory examinations and sought the production of documents under notices from numerous persons and entities including AWB.

Earlier Proceeding Issued

On 19 December 2007, ASIC commenced the first proceeding against Mr Lindberg alleging contraventions of s 180 and s 181 of the Corporations Act 2001. On that day, five other related civil penalty proceedings were issued against Trevor Flugge, Paul Ingleby, Charles Stott, Peter Geary and Michael Long. In the other civil penalty proceedings, ASIC alleged various contraventions and sought declaratory orders, pecuniary penalties and disqualification orders from the court.

On 1 February 2008, a first directions hearing was held in the civil penalty proceedings. ASIC foreshadowed that it would need to file an amended statement of claim. On 18 April 2008, ASIC filed and served an amended statement of claim in each of the civil penalty proceedings including one against Mr Lindberg.

On 18 April 2008, a second directions hearing was held in the civil penalty proceedings. By that time, Mr Ingleby had filed an application for a stay of the civil penalty proceeding against him in light of the possibility of criminal charges arising out of the task force investigation or the ongoing ASIC investigation.

Prior to that directions hearing, several of the defendants in the civil penalty proceedings had indicated to ASIC that they intended to file a stay application. At the second directions hearing, orders were made providing for the filing of the stay applications. The stay applications were filed by each of the other defendants in the civil penalty proceedings in late April 2008 and early May 2008.

The stay applications were heard in July 2008. I handed down my reasons for judgment on 12 November 2008.[7] I also stayed the other civil penalty proceedings essentially because I found that criminal proceedings were ‘on the cards’. I did not stay the first proceeding against Mr Lindberg because I was not satisfied that criminal proceedings against Mr Lindberg were ‘on the cards’.
[7]Re AWB LimitedNo 1 [2008] VSC 473.

Trial Directions and Trial Date in the First Proceeding

On 21 November 2008, a further directions hearing was held for the first proceeding. The directions hearing made interlocutory orders in order for the first proceeding to proceed to trial. The court ordered, among other things that:

(a) Mr Lindberg file and serve a defence by 12 December 2008;

(b) ASIC file and serve a list of documents upon which it proposed to rely at trial by 30 January 2009;

(c) ASIC file and serve an affidavit of documents by 27 February 2009;

(d) Mr Lindberg may, if he wished, identify to ASIC those documents in ASIC’s lists that were disputed by Mr Lindberg whether as to relevance, authenticity or otherwise before 23 February 2009;

(e) all applications in connection with subpoenas, discovery, privilege and non party confidentiality issues were to be brought on before 27 March 2009;

(f) ASIC file and serve a statement of evidence of each witness it proposed to call at trial on or before 1 May 2009; and

(g) the first proceeding be set down for trial commencing on 13 July 2009.

Under these orders, Mr Lindberg was to be given approximately six months notice of the documents which ASIC intended to rely on at the trial and approximately two months notice of the oral evidence to be led by ASIC. These orders were made to ensure that Mr Lindberg had adequate notice of the case to be made against him.

On 12 December 2008, Mr Lindberg filed and served his defence in accordance with the 21 November 2008 orders.

On 21 January 2009, ASIC filed an application for an order staying the first proceeding against Mr Lindberg so that issues common to the first proceeding and the other civil penalty proceedings, then stayed, might be jointly determined in the one trial. In the alternative, ASIC sought to extend the time for ASIC to provide discovery until 21 May 2009.

The January applications were heard on 19 February 2009. On 24 February 2009, I delivered judgment refusing ASIC’s stay application and granting the requested extension of time for ASIC’s discovery.[8]
[8]Re AWB Limited (No. 2) [2009] VSC 70.

ASIC failed to comply with the 21 November 2008 orders requiring it to serve a list of documents upon which it proposed to rely at trial on or before 30 January 2009. Subsequently, ASIC served two notices seeking admissions in relation to documents ASIC sought to rely upon at trial dated 10 and 27 February 2009.

On 27 March 2009, ASIC filed an application seeking non party discovery against AWB returnable on 24 April 2009. The non party discovery application sought 10 broad ranging categories of documents from AWB.

The May Amendment Application

On 22 April 2009, ASIC wrote to the solicitors for Mr Lindberg enclosing a draft of a proposed further amended statement of claim and advising that ASIC intended to seek leave to file and serve the proposed further amended statement of claim. At the directions hearing on 24 April 2009, the court directed that ASIC file and serve any application to file a further amended statement of claim together with any further affidavit material in support thereof by 1 May 2009 and listed the application for hearing on 7 May 2009. The court also adjourned the non party discovery application to 7 May 2009.

On 1 May 2009, ASIC filed an application by which it sought the following orders:

(a) that ASIC have leave to file and serve a further amended statement of claim dated 1 May 2009 (‘the May claim’);

(b) that the time for ASIC to file its statements of evidence be vacated or extended; and

(c) that the trial date of 13 July 2009 be vacated.

The May claim[9] sought to raise a number of new allegations of breach of duty against Mr Lindberg including:
[9] The May claim was annexed to the May application

(a) Mr Lindberg’s investigation of the US Wheat Associates complaint. This investigation was known as Project Rose within AWB. ASIC alleges that Mr Lindberg’s investigation and reporting of these matters to the AWB Board was conducted in bad faith;[10]
[10]Paragraphs 34A and 34B-34I, 35C, 35D, 96A(k) and (l) and 97(p), (s), (t), (u).

(b) M Lindberg’s reporting to the Board on matters arising from the Independent Inquiry Committee (‘IIC’) investigation;[11]

(c) Mr Lindberg’s role in the Tigris agreement (made in December 2004) and the payment by AWB to Tigris in late 2004.[12]

[11]Paragraphs 34J-34N, 35E and 97(q)-(u).

[12]Paragraphs 88A to 90B, 96A(FB) and 97(da).

Mr Lindberg opposed ASIC’s application for leave to file the May claim on the basis that: (a) the new allegations had been the subject of the Cole Inquiry and the Cole Report and there was no adequate explanation for the amendments being sought shortly before trial on 13 July 2009; and (b) the amendments would cause a vacation of the trial date, resulting in prejudice to Mr Lindberg which could not be compensated for by an order for costs. Mr Lindberg also objected to the form of the May claim.[13]
[13]Mr Lindberg filed an outline of argument dated 7 May 2009: Exhibit PTG-5 to Mr Galbally’s affidavit of 11 November 2009.

Mr Lindberg tendered extracts from the Cole Report which indicated that the new allegations had been the subject of investigation of the Cole Inquiry and findings in the Cole Report.[14]
[14]In particular, Mr Lindberg relied upon pages lxv-lxxiv of the summary of the Cole Report which addressed issues concerning the Project Rose allegations and the IIC investigations. Mr Lindberg also relied upon pages lxi-lxiii of the summary and pages 260-262 of volume 3 in relation to the Tigris payment: Exhibit PTG-6 of Mr Galbally’s affidavit of 11 November 2009.

The May application was heard on 7 May 2009.[15]
[15]On that day, ASIC provided to the court three documents: an outline of submissions, a chronology of events, and a document entitled “Key Propositions sought to be advanced by ASIC”: exhibits PTG -7, 8 & 9 of Mr Galbally’s affidavit of 11 November 2009.

At the conclusion of the argument on 7 May 2009, I refused ASIC’s application to file the May claim and to vacate or extend the time for filing the witness statements. I indicated that I would deliver reasons at a later time. I adjourned the non party discovery application.

I delivered reasons for judgment on the May application on 28 May 2009[16] that contained my reasons for refusing leave to make the amendments in the May claim.[17] In particular, I said:

The proposed amendments in the Further Amended Statement of Claim (draft 1 May 2009) are extensive. They seek to allege additional facts concerning, inter alia, the trucking fees, Mr Lindberg’s knowledge of the Arthur Andersen Report, the Ernst & Young Fraud Risk Assessment, Project Rose, the Independent Inquiry Committee into the United Nations Oil-for-Food Program (the Volcker Inquiry), the Tigris Agreement and the damage to AWB. Importantly, it is now alleged that not only did Mr Lindberg fail to warn the board about the sham transactions, but that he misinformed and allowed others to misinform the board.
On the evidence before me, I was satisfied that the proposed amendments would have lead to the vacation of the trial date. No satisfactory explanation was provided by Mr Lockett, who swore his affidavit of 1 May 2009 in support of the application to amend, for ASIC not having raised these allegations earlier to avoid the trial date being vacated. ASIC had obtained between 500,000 and 1,000,000 documents from AWB in 2007. There was no evidence before me to establish the matters that it now seeks to plead were not known to ASIC, or ought not to have been known, earlier to avoid the trial date being vacated. In my view, I have to do justice to both parties. ASIC has had the full weight of the state to enable it to frame and launch its case against Mr Lindberg. Some sixteen months after the proceedings were commenced, when the hearing was just some two months off, ASIC seeks to make extensive and substantial amendments which will lead to a vacating of the trial date.
Such amendments may be made in a commercial dispute where parties can be compensated by the appropriate order as to costs or an adjournment. In a matter as serious as a civil penalty proceeding, different considerations apply. It is now some nine years since many of the matters complained of happened. Mr Lindberg is to be called on to meet allegations about meetings and what was said nine or so years ago. It goes without saying that memories will be stretched to accurately and fairly recall what was or was not said. In my opinion, the further delay of these proceedings will unfairly prejudice Mr Lindberg in the conduct of his defence. Such prejudice exists in the context where his professional reputation and character is at risk. Such prejudice cannot be compensated for by an order as to costs.

[16]Re AWB (No. 3) [2009] VSC 209.

[17]Ibid [40]-[45].

On 22 May 2009, ASIC filed a further application (‘the 22 May application’) seeking orders that:

(a) the trial date fixed for 13 July 2009 be vacated; and

(b) the time for the plaintiff to file statements of evidence be vacated and refixed by further order in due course.

The 22 May application was supported by an affidavit of Mr Lockett of 29 May in which Mr Lockett stated that the affidavit was also filed in support of “an application that ASIC intends to file and serve a further amended statement of claim in this proceeding in the event that it is successful in the application to vacate the trial date”.[18]
[18]Paragraph 3; In opposition to the 22 May application to vacate the trial date, Mr Lindberg relied upon his 2 June 2009 submissions.

Mr Lindberg swore and filed an affidavit of 2 June 2009 deposing to the prejudice he would suffer by any further delay.

The June Amendment Application

On 4 June 2009, I ordered that AWB provide the non party discovery and vacated the trial date of 13 July 2009 to allow the non party discovery to be completed.[19] On that day, I refixed the trial for hearing on 19 October 2009. I also made further orders for the filing of statements of evidence and lists of documents upon which ASIC intended to rely at trial by reason of ASIC’s failure to comply with the original orders. Those orders were finalised on 5 June 2009. I ordered among other things that:
[19]Re AWB Ltd (No 4) [2009] VSC 315.

(a) By 25 June 2009, ASIC file and serve:

(i) a list of the witnesses, including expert witnesses, upon whose evidence it proposes to rely at trial (witness list);

(ii) statements of evidence for each of the 19 lay witnesses referred to in Mr Lockett’s affidavit of 29 May;

(iii) statements of evidence for each of the 15 to 20 further witnesses referred to in Mr Lockett’s affidavit; and

(iv) statements of evidence of each expert referred to in Mr Lockett’s affidavit.

(b) By 17 July 2009, ASIC file and serve any additional statements of evidence upon which it intends to rely and which statements have not been delivered in accordance with paragraphs [(a)(ii) – (a)(iii)] above.

(c) ASIC provide discovery to Mr Lindberg within 7 days of it receiving documents from AWB.

(d) ASIC have leave, on or before 1 September 2009, to file statements of evidence supplementary to those filed and served solely arising from the non party discovery of AWB.[20]

[20]Exhibit PTG-11 of the affidavit of Mr Galbally of 11 November 2009.

I then permitted ASIC to pursue its application to make the May claim proposed amendments to the statement of claim on the basis that the trial date had been vacated. Argument was heard on 4 June 2009 on the form of the May claim including the form of the new allegations.[21]
[21]Written submissions were subsequently filed by ASIC on 18 June 2009 (‘the 18 June 2009 submissions’) together with a revised proposed further amended statement of claim: Exhibit PTG-12 of the affidavit of Mr Galbally of 11 November 2009; Reply submissions of Mr Lindberg of 24 June 2009: Exhibit PTG-13 of the affidavit of Mr Galbally of 11 November 2009.

I delivered my reasons on the 4 June application on 17 July 2009 (‘the July Reasons’).[22] In the July Reasons, I refused leave to make most of the amendments in the May claim including the new allegations.[23]
[22]Re: AWB Limited (No. 5) [2009] VSC 258.
[23]In paragraphs [93]-[123], I set out my reasons why the new allegations in relation to Project Rose should not be allowed. In paragraphs [124]-[132], I set out my reasons why the new allegations in relation to the IIC investigation should not be allowed. In paragraphs [154]-[169], I set out my reasons why the new allegations in relation to the Tigris Agreement should not be allowed. I also refused leave to introduce new particulars of damage under paragraph 95 of the May claim.

On 31 July 2009, ASIC issued a summons seeking leave to appeal from this decision (‘the July leave application’).[24]
[24]The July leave application was supported by an affidavit of Savas Miriklis sworn 14 August 2009 (‘the 14 August 2009 Miriklis affidavit’).

In accordance with the orders made on 17 July 2009, ASIC filed a further amended statement of claim on 24 July 2009 (‘the July claim’).[25]
[25]The July claim: Exhibit PTG-14 of the affidavit of Mr Galbally of 11 November 2009.

The August Amendment Application

On 6 August 2009, ASIC filed a further application seeking leave to file a second further amended statement of claim dated 6 August 2009 (‘the August application’ and ‘the August claim’ respectively). The August claim again sought to introduce breaches of the Corporations Act2001 against Mr Lindberg based upon the new allegations. The August claim alleged that Mr Lindberg breached ss 180 and 181 of the Corporations Act2001 by:

(a) approving the payment to Tigris in December 2004, failing to inquire into facts concerning the Tigris Agreement (which it was alleged was misleading) at that time and failing to inform the AWB Board;[26]

(b)misleading the AWB Board and failing to inform the AWB Board of the true nature and findings of Project Rose in May 2004 and July 2004[27]; and
(c)misleading the AWB Board in relation to the matters of concern to the IIC Inquiry.[28]

[26] Paragraphs 59A, 61, 63(c), 64, 65(e) to (g), 66((e) to (g), 67 and 68.

[27] Paragraphs 71 and 80.

[28]Paragraphs 80 and 89.

In support of these allegations, ASIC relied upon the knowledge of Mr Lindberg allegedly obtained prior to March 2003 which formed part of the existing allegations in the July claim.

Mr Lindberg opposed ASIC’s application for leave to file the August claim on the basis, among other things, that: (a) the new allegations had been the subject of the Cole Inquiry and the Cole Report and there was no adequate explanation for the amendments shortly before trial on 19 October 2009; and (b) the amendments would cause a vacation of the trial date, resulting in prejudice to Mr Lindberg which could not be compensated for by an order for costs.[29]
[29]In opposing the August application, Mr Lindberg relied upon the 17 August 2009 affidavit of Mr Galbally , the 19 August affidavit of Mr Galbally and the 2 June affidavit of Mr Lindberg.

In his 17 August 2009 affidavit, Mr Galbally, the solicitor for Mr Lindberg, deposed that:

(a) If leave to file the August claim was granted, the new allegations would vastly increase the scope of the factual and legal issues to be determined in the earlier proceeding and it would not be possible for Mr Lindberg to defend the new allegations for a trial on 19 October 2009;

(b) As ASIC had not indicated the extent of the discovery or material it wished to rely upon in relation to the new allegations, it was difficult to determine how much time would be required for Mr Lindberg to prepare for trial in relation to the new allegations;

(c) Mr Galbally had not considered the factual or legal issues concerning the new allegations since the conclusion of the Cole Royal Commission. This was because the new allegations were not raised in the earlier proceeding and he believed that, in light of the Cole Report, ASIC had determined not to pursue the new allegations; and

(d) Mr Lindberg would suffer prejudice if the trial of the earlier proceeding was further delayed beyond 19 October 2009, particularly having regard to the 2 June 2009 affidavit of Mr Lindberg.

In his 19 August 2009 affidavit:

(a) Mr Galbally deposed that the new allegations had been investigated, and were the subject of findings by Commissioner Cole.[30]

(b) Mr Galbally deposed that Mr Stewart (the former chairman of AWB) was a witness at the Cole Inquiry and gave evidence at the Cole Inquiry in relation to the new allegations.[31]

[30]In particular, he produced as Exhibit “PTG 3” to that affidavit pages 267, 270, 274, 282- 286 and 303-304 of the Cole Report in relation to the Tigris payment. He also produced as Exhibit “PTG 4” to that affidavit pages lxvi-lxviii of the Summary of the Cole Report and pages 329- 338, 344- 347, 394-399 and 422 of the Cole Report which addressed issues concerning the Project Rose allegations and the IIC investigations.

[31] He produced as exhibits “PTG 6” and “PTG 7”, true copies of Mr Stewart’s statement to, and transcript of evidence before, the Cole Inquiry (Mr Stewart’s statement and Mr Stewart’s transcript respectively) which disclosed that the material referred to in paragraph 36 of the 17 August 2009 Lockett affidavit had been provided to the Cole Inquiry and had been available to ASIC since at least late 2007.

I heard argument on the August application on 20, 25 and 26 August 2009.[32]
[32]Mr Lindberg submissions and supplementary submissions dated 20 and 25 August 2009 respectively: Exhibits PTG-15 and 16; ASIC filed an outline of submissions dated 18 August 2009.

In the course of argument on 26 August 2009, I raised with counsel for ASIC whether there was any evidence to suggest that ASIC would start separate a proceeding over the new allegations. Senior counsel for ASIC replied that there was no such evidence.[33]
[33]Transcript PTG-18.

I delivered preliminary reasons for judgment on 28 August 2009. No formal orders were made at that time. I ordered that ASIC serve a proposed amended statement of claim in accordance with my preliminary reasons for consideration by the counsel for the defendant. ASIC circulated a proposed amended statement of claim on 4 September 2009 (‘the September claim’).

The August application was listed again for hearing on 10 September 2009.[34] I delivered reasons for judgment on the August application on 18 September 2009 (‘the September reasons’).[35] I disallowed the amendments alleging breaches of duties based upon the new allegations. I also found:

that the amendments to the pleadings and the particulars thereto that seek to rely on events that happened after the fall of the Government of Iraq should be disallowed. Thus not only Project Rose pleadings and the IIC pleadings should be disallowed, but the particulars of Mr Lindberg’s knowledge should not go beyond the end of March 2003. Matters that were formerly pleaded in para 34A(G) of the July claim onwards are irrelevant and, if sought to be repleaded in the September claim, are disallowed.[36]

[34]Mr Lindberg submissions filed 9 September 2009: PTG-19; ASIC submissions Exhibit PTG-20.

[35][2009] VSC 413.

[36]Ibid [145].

Essentially, I did so on the basis that these allegations would greatly increase the scope of the trial just two months before it was to start and would lead to the trial date being vacated.

ASIC Appeal and the 18 September Reasons

On 21 September 2009, ASIC filed a summons seeking leave to appeal from the September Reasons including my decision to refuse leave to introduce the new allegations in the August claim (‘the September leave application’).[37]
[37]Exhibit PTG-21; ASIC relied on affidavits of 14 and 25 September of Savas Miriklis: Exhibits PTG-22 and PTG-23; ASIC’s outline of submissions: Exhibit PTG-24; Mr Lindberg’s submissions: Exhibit PTG-25.

The leave applications were listed on 9 October 2009 on an expedited basis in light of the trial date of 19 October 2009. They were listed on the basis that the leave applications and the appeals (if leave were granted) would be heard and determined at the one time.

During the hearing of the leave applications on 9 October 2009, the transcript records that senior counsel for ASIC informed the Court and Mr Lindberg that ASIC intended to issue a separate proceeding relating to the new allegations if the leave applications and the appeals in relation to them were not successful. During this application before me, ASIC contended that it had conveyed to the Court of Appeal that there was “a real prospect” of a separate proceeding, rather than ASIC having a current intention to issue a separate proceeding.

On 9 October 2009, the Court of Appeal refused ASIC’s leave applications.[38]
[38]Australian Securities And Investments Commission v Lindberg [2009] VSCA 235.

On 14 October 2009, in accordance with the September reasons, ASIC filed a second further amended statement of claim dated 14 October 2008 (‘the October claim’).[39]
[39]Exhibit PTG-26.

Correspondence Before the Trial of the First Proceeding

As a result of the comments of senior counsel for ASIC in the course of the leave applications, Mr Galbally wrote a letter to ASIC on 12 October 2009 (‘the 12 October 2009 letter’).[40] That letter stated that:
[40]Exhibit PTG-27.

(a) ASIC was not entitled to pursue the new allegations sought to be made by amendment in this proceeding by commencing a second proceeding;

(b) if a second proceeding was commenced, an application would be made for the second proceeding to be permanently stayed as an abuse of process; and

(c) any further delay in commencing any second proceeding would be relied upon in support of an application for a permanent stay.

The 12 October 2009 letter stated that there was no reason, in light of ASIC’s stated intention, for ASIC to delay in deciding what course it intended to adopt. The 12 October letter sought clarification of what course ASIC proposed to follow as soon as possible.

On 16 October 2009, a directions hearing was held before me in the first proceeding for the purpose of ensuring that the first proceeding was ready to proceed to trial on 19 October 2009. ASIC informed the court that it was ready to proceed.

On the evening of 16 October 2009, ASIC responded by a letter to the 12 October 2009 letter of Mr Lindberg’s solicitors advising[41] that it proposed to issue a second proceeding relating to the new allegations “within the next 4 weeks.” ASIC advised that “it would consider any reasonable proposal to avoid the second proceeding distracting [Mr Lindberg] from the conduct of the present proceeding” and asked how Mr Lindberg proposed to proceed.
[41]Exhibit PTG-28.

The Trial of the First Proceeding

The trial of the first proceeding commenced on 19 October 2009. Before ASIC commenced to open its case, senior counsel for Mr Lindberg informed the court of the substance of the 16 October 2009 letter. Senior counsel for Mr Lindberg sought that the court order ASIC to file the second proceeding as soon as possible because it would have an impact on the first proceeding. Senior counsel for Mr Lindberg indicated that Mr Lindberg wished to argue that: (a) the second proceeding, once issued, would be an abuse of process; and (b) in the event that the court did not consider that the second proceeding was an abuse of process, Mr Lindberg would seek to adjourn the trial of the first proceeding as he did not wish to be exposed to two trials relating to the same or similar factual and legal issues arising from his time as the Chief Executive Officer and a director of AWB.

At the conclusion of the hearing on 21 October 2009, senior counsel for Mr Lindberg sought to clarify that Mr Lindberg did not wish the evidence in the trial of the first proceeding to commence before the second proceeding had been issued as he wanted to avoid two trials in the event the application to permanently stay the second proceeding was refused.[42]
[42]Exhibit PTG-29.

On Monday, 26 October 2009, I delivered my decision in relation to the defendant’s application.[43] I indicated that I considered that the court had an inherent jurisdiction to prevent an abuse of its processes and that ASIC should file any second proceeding raising the new allegation as soon as possible and before the conclusion of ASIC’s opening in the first proceeding. ASIC’s opening continued from 26 October to 29 October and concluded on Monday, 9 November 2009.
[43]Re AWB Ltd No 9 [2009] VSC 485.

The Second Proceeding

On Friday, 6 November 2009, ASIC filed and served the second proceeding which was commenced by originating motion. ASIC also filed and served a statement of claim on that day (‘the second proceeding statement of claim’).

Mr Lindberg submits that the second proceeding statement of claim includes breaches of ss 180 and 181 of the Corporations Act2001 substantially based upon the new allegations which were disallowed by me. The second proceeding statement of claim alleges that Mr Lindberg breached ss 180 and 181 of the Corporations Act 2001 by:

(a) misleading the AWB Board and failing to inform the AWB Board of the true nature and findings of Project Rose in May 2004 and July 2004;[44]
[44]Paragraphs 18 to 37.

(b) misleading the AWB Board in relation to the matters of concern to, and arising out of, the IIC Inquiry;[45] and

(c) approving the payment to Tigris in December 2004, failing to inquire into facts concerning the Tigris Agreement (which it was alleged was misleading) at that time and failing to inform the AWB Board of these matters.[46]

[45]Paragraphs 38 to 52.

[46] Paragraphs 62 to 74.

AFFIDAVIT OF BRENDAN FRANCIS CARIDI

ASIC relies on the affidavit of Mr Caridi, a senior manager employed by ASIC. He says that he had the day-to-day carriage of the ASIC Act investigation to examine suspected breaches of the Corporations Act 2001 that had been identified by Commissioner Cole. As indicated above, that investigation commenced on 28 August 2007 although nine investigators of ASIC had been working full time on the investigation with the task force since February 2007. Mr Caridi deposed to the reasons for the delay in ASIC seeking to amend its pleadings to raise the matters now the subject of the second proceeding. With leave of the court he was cross examined on his affidavit and in particular on the reason for ASIC’s delay in raising the allegations made in the second proceeding.

Mr Lindberg submits that Mr Caridi’s affidavit is misleading and should not be relied on. ASIC denies that it is misleading. It is sufficient for me to find that to avoid drawing any wrong conclusions or incorrect inferences about ASIC’s knowledge of the material facts it now raises in the second proceeding and the reason for its delay in seeking to amend its pleadings to raise the matters now the subject of the second proceeding, it is necessary to read Mr Caridi’s affidavit in the light of his cross examination. I found Mr Caridi’s oral evidence honest and frank.

Mr Lindberg contends that ASIC acted unreasonably in not raising the new allegations in time to be heard and determined in the first proceeding. Central to this contention is that the new allegations had been the subject of investigations and findings by the Cole Inquiry and ASIC.

The letters patent of the Cole inquiry authorised the Commissioner to inquire into and report on whether any conduct by a company mentioned in the final report of the IIC or by any person associated with those companies “might have constituted a breach of any law of the Commonwealth.” Mr Caridi accepted that included breaches of the Corporations Act 2001. Such breaches could have included breaches of the civil penalty provisions which Mr Caridi conceded were the exclusive responsibility of ASIC.

Although ASIC was not represented at the Cole inquiry, ASIC assigned three staff members to monitor the proceeding from time to time. These staff members had access to the transcript of the hearings, the exhibits and the statements provided to the inquiry other than those for which privilege was claimed. Mr Caridi said that the officers read portions of the transcript in monitoring the proceeding. In November 2007, ASIC received a copy of the Cole report and Mr Caridi read the whole report soon after it was released.

Commissioner Cole found that breaches of ss 180, 181, 182, 184 and 1309 of the Corporations Act 2001 may have been committed by a number of officers and employees of AWB. Commissioner Cole recommended that these matters be referred to the appropriate authority (that is, ASIC) for consideration of whether proceedings should be commenced. ASIC knew that the provisions of the Corporations Act2001 referred to in the Cole Report include civil penalty provisions and that ASIC was solely responsible for instituting such proceedings.

As indicated above, Commissioner Cole recommended that a task force be established to investigate possible breaches of the law. ASIC assigned nine full time operational staff to the task force including Mr Caridi. The ASIC staff were engaged for some five months with the task force during which they were “scoping” the proposed nature of their inquiries.[47] The nine staff were withdrawn from the task force on 28 August 2007 when ASIC commenced a formal inquiry into possible breaches of the Corporations Act 2001 by AWB.
[47]Transcript 35

At this stage ASIC engaged nineteen staff to undertake ASIC investigations, excluding internal lawyers, six junior counsel in relation to s 19 examinations and further counsel to draft the pleadings in the 2007 proceedings. During August and September 2007, three AFP investigators were also working for ASIC on the investigation. From 2008 after the first proceeding was commenced, ASIC engaged between 12 and 14 staff in relation to AWB investigations, including investigations of Mr Lindberg’s conduct.

In late 2007, ASIC admits it knew of Project Rose, the IIC Inquiry and the Tigris agreement. ASIC considered those matters to ascertain whether they could provide evidence of Mr Lindberg’s and other’s knowledge of the contracts containing the alleged bribes.[48]
[48]Transcript 47-48.

For the reasons discussed below, the material factual matters which gave rise to the new allegations in the second proceeding in relation to Project Rose, the IIC investigation and the Tigris agreement, were the subject of investigation and findings by Commissioner Cole and were known to or could have been established by the exercise of reasonable diligence by ASIC in December 2007 or soon thereafter.

Project Rose

The statement of claim in the second proceeding deals with Project Rose under the following headings;

(a) Project Rose;

(b) May 2004 Reports to the Board;

(c) 25 May Presentation; and

(d) July 2004 PowerPoint Presentation.

The material facts pleaded under each of these headings were known to ASIC or could have been established by the exercise of reasonable diligence by ASIC by December 2007 or soon thereafter.

In volume one of his report, Commissioner Cole gave a summary of his findings regarding AWB. The details of his findings were contained in the balance of the report.

His summary included a section on Project Rose. Volume three of the Cole Report entitled “Sales, allegations and inquiries” dealt in detail with Project Rose in a section entitled “AWB Internal Investigations: Project Rose”.[49]
[49]Cole Report 313-400; Exhibit D2.

The report dealt with the US Wheat Associates allegations which gave rise to Project Rose that are now pleaded in the second proceeding under the heading “Project Rose”.[50]
[50]Ibid [18].

His summary and detailed report on Project Rose makes findings, inter alia, on the joint information session of the boards of AWB and AWBI on 25 May 2004. This meeting constitutes one of the main elements of the claims concerning Project Rose in the second proceeding dealt with under the heading “25 May 2004 Presentation”.[51] Commissioner Cole reported that Messrs Hargrave and Cooper briefed the joint information session. Commissioner Cole reported that Mr Cooper was AWB’s corporate counsel and charged with leading the Project Rose investigation. Commissioner Cole found the minutes of the joint information session showed that the board had been informed that :

1. all AWB contracts were approved by the Office of the Iraq Program at the United Nations;
2. no evidence has been identified of any AWB knowledge that money paid to the Jordanian transport firm, Alia, was onpaid to the Iraq regime;
3. no evidence has been identified of payment of funds by AWB to any other person in relation to the OFF shipments; and
4. no evidence has been identified of payment of funds to any AWB employee by any other person in relation to OFF shipments.[52]

[51]Second Proceeding Statement of Claim [28]-[35].

[52]Cole Report Lxviii.

Under the heading of “Notification to the Boards of AWB’s Internal Investigation”, Cole dealt with the 6 May memorandum sent on behalf of Mr Lindberg to the AWB and AWBI directors[53] which is now pleaded in the second proceeding in relation to Project Rose under the heading of “May 2004 Reports to the Board.”[54] The Cole Report found that the minutes of the board of AWB recorded that it had received a memorandum on Project Rose from the managing director (Mr Lindberg) on 6 May 2004 as pleaded in the second proceeding.[55] The joint information session referred to above is dealt with in detail in the Cole Report.[56]
[53]Ibid [28.68] at 328.
[54]Second Proceeding Statement of Claim [22] and [24].
[55]Ibid [22]-[28].
[56]Cole Report [28.83] at 332 and f.

Under the heading of “July 2004 PowerPoint presentation”, the second proceeding statement of claim raises new allegations concerning the removal of a slide that referred to Alia’s links to Iraq.[57] ASIC have known about the removal of the slide on Mr Lindberg’s instructions since December 2007. On 4 December 2007, ASIC examined Mr Cooper under s 19 of the Corporations Act 2001 about the Project Rose investigation, including the May 2004 board meeting, and the decision to remove the Alia slide from the board presentation in July 2004 at the alleged request of Mr Lindberg. ASIC had formed the view in December 2007 that Mr Lindberg knew of the links of Alia to Iraq.
[57]Second Proceeding Statement of Claim [36]-[37].

Mr Caridi admitted reading the material in the Cole Report on Project Rose and admitted that information was before ASIC in December 2007.[58] ASIC also had Mr Stewart’s written statement filed with the Cole Inquiry and the transcript of his evidence dealing with Project Rose.[59]
[58]Transcript 60.
[59]Exhibits D3 and D4.

On 4 December 2007, ASIC examined Mr Cooper under s 19 about the Project Rose investigation.[60] ASIC also examined Mr Hargraves about Project Rose. Mr Hargraves took over the responsibility for the management of Project Rose after July 2004.
[60]Second Proceeding Statement of Claim [36]-[37].

In December 2007, as alleged in the first proceeding, ASIC had formed the view that Mr Lindberg knew that the inland transportation fees were in fact bribes prior to the Project Rose inquiry. ASIC knew that Mr Lindberg was present at the joint information session and the board meetings of AWB. In particular, in December 2007, ASIC had formed the view that Mr Lindberg was aware that the matters raised in the joint information meeting of the boards were false. The Cole Report found that the board minutes recorded that no evidence had been identified of any AWB knowledge that money paid to the Jordanian transport firm Alia, was onpaid to the Iraq regime. By December 2007, ASIC had formed the view that Mr Lindberg knew that money paid to Alia was onpaid to the Iraq regime. The minutes also recorded that all AWB contracts were approved by the Office of the Iraq Program at the United Nations. By December 2007, ASIC had formed the view that Mr Lindberg knew that all AWB contracts were not approved by the Office of the Iraq Program at the United Nations.

It would have been obvious to anybody, who chose to think about the matter, that assuming Mr Lindberg held the knowledge that ASIC alleged that he did, that Mr Lindberg breached his duties in allowing Project Rose to be conducted as it was and reported to the board as it was by others or himself.

In my opinion, the evidence to support the allegation that ASIC now makes against Mr Lindberg in the second proceeding in relation to Project Rose, that is that he breached his duty to report accurately to the board on the status and findings of Project Rose, was available or with the exercise of reasonable care would have been available to ASIC at the end of 2007 or soon thereafter and was open to be pleaded then. Once ASIC had formed the view that Mr Lindberg knew that the inland transportation fees were bribes, it was obvious that his conduct after the fall of the regime was open to question, in the light of AWB denying such allegations until 2006.

The IIC Inquiry

The second proceeding makes new allegations that Mr Lindberg breached his duties in relation to the IIC Inquiry under the following headings:

(a) The IIC Inquiry;

(b) The February interview; and

(c) The September Report and the IIC Letter.

Both the summary and the detailed sections of the Cole Report deal with the IIC Inquiry. The report deals with the interview with Mr Lindberg in February and March 2005.[61]
[61]Volume 3 of the Cole Report 369 at [28.225].

ASIC alleges in the second proceeding that on 27 September 2005, Mr Lindberg reported to a joint information session of the boards of AWB and AWBI on the IIC inquiry.[62] The second proceeding statement of claim alleges that Mr Lindberg had received a letter from the IIC which informed him of IIC’s findings about the payment of the bribes, but that he failed to tell the board about the full extent of the findings and that he knew them to be correct. Mr Stewart’s statement of evidence given to the inquiry records that Mr Lindberg informed the board that the findings of the IIC inquiry were “without foundation”.[63]
[62]Second Proceeding Statement of Claim [45].
[63]Exhibit D3 [168].

The Cole Report deals with the joint information session of the boards on 27 September 2005 and states that the directors were provided with a copy of AWB’s letter to Mr Volcker of 20 September 2005 and the IIC letter to AWB of 26 September 2005, as pleaded in the second proceeding statement of claim under the heading “The September Report and the IIC Letter”.[64]
[64]Exhibit D2 [28.312].

Mr Caridi deposes that ASIC was informed of Mr Stewart’s evidence that Mr Lindberg said at the 27 September board meeting that the findings of the IIC Inquiry were “without foundation” during an interview with Mr Stewart in March 2009. In fact, ASIC was aware or should have been by the exercise of reasonable diligence of Mr Stewart’s evidence to that effect in late 2007 as it was contained in his statement of evidence tendered at the Cole inquiry as referred to above.[65] I accept that ASIC did not intend to convey in Mr Caridi’s affidavit that ASIC was unaware of Mr Stewart’s evidence before March 2009. In fact, ASIC knew or could have known of it by the exercise of reasonable diligence in December 2007.
[65]Exhibit D3 [168].

By December 2007, ASIC had formed the view that Mr Lindberg knew that the allegations subsequently raised in the IIC Inquiry were true and could have raised the allegations about his report on the inquiry to the board at the 27 September 2005 meeting in December 2007 or soon thereafter.

Tigris Payment to AWB from the UN Escrow Account, Payment from AWB to Tigris and the Tigris Agreement

The second proceeding deals with the Tigris debt under the following headings:

(a) Tigris Payment to AWB from the UN Escrow Account;

(b) Payment from AWB to Tigris; and

(c) The Tigris Agreement.

The first proceeding alleges that Mr Lindberg knew of the agreement to obtain the Tigris payment from the Escrow account. The first proceeding particularises that this was done. The first proceeding alleges the payment from AWB to Tigris and the receipt by Mr Lindberg of a draft of the Tigris agreement. The matters raised under the heading of “Tigris Payment to AWB from the UN Escrow Account” were known in December 2007 and pleaded in the first proceeding. The maters alleged under the heading of “Payment from AWB to Tigris” are alleged in the first proceeding save for the alleged breaches of duty arising there from. The matters pleaded under the heading of “The Tigris Agreement” are essentially pleaded in the first proceeding save for the alleged breaches regarding the report to the board about the Tigris agreement.

Both in the summary and the detailed sections of his report, Commissioner Cole reported in detail on the payment from AWB to Tigris and the Tigris Agreement and its deficiencies.[66]
[66]Volume 1 of Cole Report, summary, “Recovery of the Tigris debt” at xiviii to lxiii; The detailed report deals with Tigris in volume 3 from pp 209 to 287.

The Cole Report deals with the payment from AWB to Tigris now alleged in the second proceeding under that heading.[67] ASIC had this information in December 2007.
[67]Volume 3 of the Cole Report, “Sign-off of the Tigris agreement”, pp 267 and following.

The Cole Report deals with the discussion of the Tigris transaction at a joint information session and board meetings on 14 and 15 December 2004. The second proceeding alleges that Mr Lindberg did not properly inform the board about the Tigris agreement from 10 November 2004 and at this joint information session. Commissioner Cole stated in his report that Mr Lindberg did not convey to the boards the true nature and false nature of the Tigris agreement.[68] He describes in detail why the Tigris agreement was a sham. He reported that “with the exception of Mr Lindberg, none of the directors of AWB and AWBI were notified of the Tigris transaction until the meetings of the Board in December 2004”.[69]
[68]Volume 1 of Cole Report, summary, “Recovery of the Tigris debt” at lxii.
[69]Volume 3 of Cole Report, 283 at [27.428].

The factual matters that give rise to the new allegations in the second proceeding were the subject of investigation and detailed findings by Commissioner Cole which were known to ASIC in December 2007. By December 2007, ASIC was aware that Mr Lindberg had not informed the board or Mr Stewart of the existence of the Tigris agreement from December 2004 until the board meetings of 14 and 15 December 2004. ASIC agrees this information was before Mr Caridi and the other investigators working on the investigation in December 2007.

The detailed section of the Cole Report disclosed that Mr Cooper advised Mr Lindberg that AWB had recouped the Tigris debt by inflating or loading up the contract price.[70] The second proceeding alleges that Mr Lindberg knew these matters and should have informed the board. ASIC had available to them Mr Stewart’s statement and transcript dealing with the Tigris agreement and had examined Mr Cooper in early December 2007 on Tigris.
[70]Ibid 263 at [27.389].

All the material matters raised in the Tigris allegations can be derived from the Cole report if one adds to it ASIC’s belief that Mr Lindberg knew of the bribes and how they were being paid. I find that by December 2007 or shortly thereafter, ASIC knew or with reasonable diligence ought to have known all the material allegations it now makes about Tigris in the second proceeding from the information it had in the Cole Report, coupled with its view that Mr Lindberg knew of the bribes and how they were financed and paid.

Conclusion on the new allegations

It is difficult to understand why ASIC did not raise in December 2007 or shortly thereafter the claims it now seeks to make in the second proceeding. The evidence before me establishes that all the material facts were in their possession or readily available from the Cole report, the statements tendered to the Cole report and their own examinations. ASIC had formed the view that Mr Lindberg knew of the payment of the bribes, how they were financed and how they were paid before the Iraq regime fell. Mr Caridi sought to explain that ASIC’s failure to plead them was because ASIC was focused on the five contracts the subject of the first proceeding and not focused on other possible breaches of the Corporations Act2001.

I am not satisfied that ASIC did not have sufficient evidence available that would have enabled it to plead the new allegations against Mr Lindberg until early 2009. On the contrary, I find that ASIC had available to them all material evidence that they now refer to as giving them sufficient evidence to commence the second proceeding.

In any event ASIC do not allege they did have not sufficient evidence earlier. Rather, Mr Caridi swore that it was not until early April 2009 that ASIC “considered” that there was sufficient evidence available to plead new allegations against Mr Lindberg to the effect that he either failed to give material information to the AWB Board, or gave material information that was false or misleading. In my opinion, ASIC has not satisfied me that its failure to consider the evidence that it did have was not unreasonable. In fact ASIC offers no satisfactory explanation for failing to consider the consequences of Mr Lindberg’s conduct after the fall of the Government of Iraq in view of its allegations that, at that time, Mr Lindberg knew the transportation fees and after sales service fees had been a sham and that their true purpose was to enable the Government of Iraq to obtain internationally traded currency.

It is unnecessary for me to find why ASIC delayed until just weeks before the first trial date in July 2009 to raise these new allegations, but I do find that it was unreasonable of ASIC not to have raised them in the first proceeding or not to have raised them considerably earlier and in time for Mr Lindberg to be given fair notice of them to defend himself against them.

MR LINDBERG’S CONTENTIONS

In substance, Mr Lindberg relies on the following grounds.

Under the Port of Melbourne Authority v Anshun Pty Ltd[71] principle, ASIC unreasonably refrained from raising the claims in the second proceeding in circumstances where the first proceeding is intimately connected with the claims now sought to be brought in the second proceeding, in the sense that each arose out of the same matters of fact.
[71](1981) 147 CLR 589 (‘Anshun’).

Secondly, the second proceeding is an abuse of process as it is, in the circumstances of the first proceeding, unjustifiably vexatious and oppressive or manifestly unfair to Mr Lindberg and would bring the administration of justice into disrepute amongst right-thinking people: Walton v Gardiner;[72] R v Rogers.[73] Mr Lindberg contends there are several relevant facts that ought to be taken into account in establishing abuse.
[72](1993) 177 CLR 378 at 392-394; See also, PNJ v R (2009) 252 ALR 612 at 613.
[73](1994) 181 CLR 254 at 286-287.

First, Mr Lindberg contends that in light of the allegations in the statement of claim of the second proceeding, it is clear that the same or substantially the same facts arise for consideration in the second proceeding as in the first proceeding. He says that this is particularly so in light of the fact that the knowledge alleged against Mr Lindberg which forms the basis of the alleged contraventions of the Corporations Act2001 in the second proceeding builds on the same allegations that are relied on to establish the knowledge alleged against Mr Lindberg in the first proceeding. As a result, there is a substantial overlap between the facts alleged in the second proceeding and the first proceeding despite some additional particulars being relied on to establish knowledge in the second proceeding. Mr Lindberg contends that in each proceeding, ASIC alleges that he knew or ought to have known that bribes were being paid to the Iraqi Government in order to secure sales of AWB wheat. Mr Lindberg contends that it is an abuse of process to seek to raise in a second proceeding the case that could have been raised in the extant first proceeding where there is no reasonable justification for not doing so.

Secondly, Mr Lindberg contends that the second proceeding offends the rationale of the double jeopardy principles in that he will be brought to court twice to answer allegations arising out of his involvement in the alleged improper sales of wheat to Iraq by AWB where ASIC had or with reasonable diligence ought to have had all the material information to make the allegations in the first proceeding or in any event.

Thirdly, Mr Lindberg contends that the second proceeding will prejudice him in his conduct of the first proceeding.

Fourthly, Mr Lindberg contends that the merging of the two proceedings in an attempt to mitigate some of the prejudice to him by the issuing of the second proceeding would lead to a delay of the hearing of the first proceeding and deprive him of the benefit of the court’s decision on the amendment application.

Fifthly, Mr Lindberg contends that unless the second proceeding is stayed the second proceeding will deny Mr Lindberg of the fruits of the decisions in the amendment applications and circumvent both my decision and the decision of the Court of Appeal and thereby bring the administration of justice into disrepute in the minds of right-thinking people.

ASIC’S CONTENTIONS

ASIC accepts that there will be an Anshun estoppel where a matter relied upon in a second action is so relevant to the subject matter of a first action that it would be unreasonable not to have relied on it in the first action. ASIC contends that an Anshun estoppel only arises where the first proceeding has been determined, which is not this case.

If an Anshun estoppel is available, ASIC contends that the claims raised in the second proceeding could not have been raised ‘much earlier’ in the first proceeding. ASIC contends that it was reasonably diligent in seeking to include in the first proceeding the allegations regarding Project Rose, the IIC Inquiry and the Tigris agreement which are now pleaded in the second proceeding.

ASIC contends that the matters that form the basis of the disputed breaches alleged in the second proceeding were discovered in the course of ASIC’s continuing investigations after the first proceeding was commenced.

ASIC contends that it sought to amend its statement of claim in the first proceeding to include the disputed breaches. It submits that the only reason they are now separately litigated is because the court upheld Mr Lindberg’s objections to the pleadings being amended.

ASIC contends that the administration of justice will not be brought into disrepute among right-thinking people if Mr Lindberg’s application was to be denied.

ASIC contends that the first and second proceedings do not arise out of “the one set of events” for the following reasons.

First, ASIC contends that the first proceeding was limited to disputed breaches of Mr Lindberg’s duties that occurred before the fall of the Government of Iraq while the second alleges breaches that arose after the fall of the Government of Iraq. Accordingly, ASIC contends, they should be able to be resolved in separate proceedings.

Secondly, ASIC contends that the first and second clearly differ in the nature of the claims. In the first proceeding ASIC seeks a pecuniary penalty order under ss 1371G(1)(b)(i) and (iii) of the Corporations Act 2001. That requires that the contravention was both serious and materially prejudiced the interests of the corporation (that is causing harm to the corporation). In the second proceeding ASIC seeks a pecuniary penalty order under s 1317G(1)(b)(iii) of the Corporations Act 2001. That requires that the contravention is serious.

Thirdly, ASIC alleges that the first and second proceedings differ in subject matter. The first is essentially concerned with Mr Lindberg’s knowledge of the disputed fees and his omission to stop it or inform others. The second proceeding is essentially concerned with Mr Lindberg’s communications with the board of AWB regarding Project Rose, the IIC inquiry and the Tigris agreement.

In summary, ASIC submits that there is no overlap or duplication in the breaches alleged in the first and second proceeding due to:

(a) the different time periods in issue in each claim;

(b) the differences in the nature of each claim; and/or

(c) the different subject matter of each claim.

ASIC contends that the first proceeding has not been completed and it is possible for the two proceedings to be heard together. ASIC submits therefore the justification for shutting out the second proceeding does not arise.

ASIC also contends that as the first proceeding will not dispose of the need for the second proceeding Mr Lindberg’s application should be dismissed.

ASIC concedes that it was aware in a general way of matters relating to Project Rose, the IIC Inquiry and the Tigris Agreement after they were raised in the Cole Inquiry. It submits that before it was able to properly plead the disputed breaches, it needed to be in possession of evidence capable of proving those breaches and for that evidence to be in admissible form. There is no evidence that it did not have the relevant evidence in admissible form.

Secondly, ASIC contends that the fact that Commissioner Cole made no adverse findings against Mr Lindberg supports ASIC’s position. ASIC contends that it was only in a position to allege the disputed breaches following considerable analysis of not only Commissioner Cole’s findings and the documents that were before the Cole Inquiry, but also additional evidence obtained as a result of subsequent investigations by ASIC that were not available to Commissioner Cole. ASIC has not tendered any specific evidence of this additional evidence.

ASIC contends that it acted promptly and sought to amend as soon as it was in a forensic position to do so. I have found that this is not the case.

ASIC contends that the test of reasonable diligence takes into account that, although ASIC is a government authority, it did not have unlimited resources available to it when investigating this case.

ASIC contends that Mr Lindberg needs to demonstrate not merely that the disputed breaches could have been included in the first proceeding, but also that ASIC acted in a manner that was demonstrably unreasonable in failing to have done so. ASIC denies Mr Lindberg has demonstrated as such.

ASIC relies on the limitation period of six years. ASIC says that it did not institute the second proceeding for an ulterior purpose. ASIC contends that the circumstances of the second proceeding do not correspond with the High Court’s observations in Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd[74] as to situations that might amount to an abuse of process. It says that the first and second proceeding do not satisfy the conditions applying to multiple proceedings that constitute an abuse of process. ASIC says there are sufficient differences between the proceedings that determination of the first proceeding will not dispose of the need for the second proceeding. ASIC contends that the second proceeding was not filed because of any lack of reasonable diligence on the part of ASIC (i.e. the disputed breaches were not omitted from the first proceeding due to any negligence, inadvertence or accident on ASIC’s part).
[74](2009) 260 ALR 34.

In summary, ASIC contends that it is not submitting that it is entitled to bring whatever case it wishes whenever it wishes. ASIC says that it is, however, entitled to be given a reasonable opportunity to be heard, in the public interest, on serious allegations of wrongdoing by Mr Lindberg, where those allegations are not statute-barred.

OVERLAP OF ISSUES

[206](1989) 168 CLR 23 at 76 per Gaudron J.

(3) The jurisdiction to stay for abuse of process is not limited to cases where the proceedings have been brought for an improper purpose or where there is no possibility of the court affording the affected party a fair hearing: Walton v Gardiner;[207] Rogers v R.[208]
[207](1993) 177 CLR 378.
[208](1994) 181 CLR 251.

(4) The circumstances in which abuse of process may arise are extremely varied and the courts have refrained from limiting the circumstances to fixed categories: Hunter v Chief Constableof the West Midlands Police;[209] Rogers v R[210]; Batistatos v Roads and Traffic Authority (NSW).[211]
[209][1982] AC 529.
[210](1994) 181 CLR 251.
[211](2006) 226 CLR 256; (2006) 227 ALR 425.

(5) In considering whether to grant a stay as an abuse of process, the court should undertake a weighing process involving a subjective balancing of a variety factors and considerations: Walton v Gardiner.[212]
[212](1993) 177 CLR 378 at 398 per Mason CJ and Deane and Dawson JJ.

(6) Among those factors and considerations are the requirements of fairness to the accused, the legitimate public interest in the disposition of charges of serious offences and in the conviction of those guilty of crime, and the need to maintain public confidence in the administration of justice: Walton v Gardiner.[213]
[213]Ibid.

(7) These principles apply to civil penalty proceedings: Gill v Walton.[214]
[214](1991) 25 NSWLR 190 at 206-207 per Kirby P.

(8) The rationale underlying the principle against double jeopardy, in that an individual should not be vexed twice for the same cause, is a factor properly to be taken into account in the weighing exercise: Walton v Gardiner.[215]
[215](1993) 177 CLR 378 at 396-398 per Mason CJ and Deane and Dawson JJ.

(9) It is prima facie vexatious to bring two extant civil actions where one will lie: Moore v Inglis;[216] Thirteenth Corporation Pty Ltd v State.[217]
[216](1976) 9 ALR 509.
[217](2006) 232 ALR 491.

(10) This prima facie rule applies whether or not the two proceedings are in separate courts or one: Branir Pty Ltd v Wallco Pastoral Co Pty Ltd[218]
[218][2006] NTSC 70.

(11) The prima facie rule applies where the issues overlap or significantly overlap or there is a similarity of subject matters of the proceedings.

(12) The fact that the parties may not be identical, or the relief different, does not necessarily disentitle relief under this principle: Moore v Inglis.[219]
[219](1976) 9 ALR 509.

(13) In considering whether the rule should apply, the court should consider whether there was no reasonable justification for the second proceeding based on legitimate considerations of convenience, cost or the like: Thirteenth Corporation Pty Ltd v State.[220]
[220](2006) 232 ALR 491 at 505.

(14) The guiding considerations are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice. Regard may be had to:

(a) the importance of the issue in and to the earlier proceeding, including whether its is an evidentiary or ultimate issue;

(b) the opportunity available and taken to fully litigate the issue;

(c) the terms and finality of the finding as to the issue;

(d) the identity between the relevant issues in the two proceedings;

(e) any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceeding;

(f) the extent of the oppression and unfairness to the other party if the issue was relitigated and the impact of the relitigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and

(g) an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process: Rippon v Chilcotin Pty Ltd.[221]

[221](2001) 53 NSWLR 198 at [32].

APPLYING THE RELVANT PRINCIPLES TO THIS CASE
The Anshun estoppel

In Anshun, the first proceeding had been heard and determined. Can the Anshun principle apply if the first proceeding has not been heard and determined? The authorities referred to above where the Anshun principle was applied all involved cases where the first proceeding had been heard and determined. Where there were two proceedings on foot and they related to the same matter, the attack on the second proceeding was mounted on an abuse of process ground.

As mentioned above, in my opinion, there is little in Aon[222] to support Mr Lindberg’s contention that Anshun estoppel applies when both proceedings are still on foot. The authorities tend to suggest that the appropriate principle is abuse of process.
[222][2009] HCA 27.

For my part, I cannot see why the test for the court when considering whether an Anshun estoppel arises should be materially different to the test of whether the second proceeding constitutes an abuse of process.

I shall thus assume, for present purposes, that Anshun is available even though the first proceeding has not been determined and apply the relevant tests.

Under Anshun, the second proceeding may be estopped where the cause of action raised in the second proceeding is one that could have been raised in a previous proceeding where the same or substantially the same facts will arise for consideration in the second proceeding as in the first proceeding. That first leg of the test is satisfied for obvious reasons. Do, however, the same or substantially the same facts arise for consideration in the second proceeding as in the first?

Overlap

I have considered at length the degree of overlap between the two proceedings. In my opinion, the same or substantially the same facts arise for consideration in the second proceeding as in the first.

As discussed above, the knowledge alleged against Mr Lindberg which forms the basis of the alleged contraventions of the Corporations Act2001 in the second proceeding statement of claim is substantially based upon the same, or substantially the same, facts as the knowledge alleged against him in the first proceeding. As discussed above, knowledge is sought to be established by inference and the second proceeding does add some further particulars to establish that inference. But the substantial part of the material relied on is duplicated.

The nub of ASIC’s case is that Mr Lindberg knew or ought to have known that the inland transportation fees being paid by AWB were in fact bribes and their purpose was to allow the Government of Iraq to obtain hard currencies. The first proceeding alleges that he therefore should have stopped their payment and told the board about what AWB was doing. The second proceeding alleges that in reporting to the board that the accusations that the inland transportation fees were bribes were untrue, Mr Lindberg misled the board.

It is correct that the second set of breaches are based on Mr Lindberg misleading the board whereas the first claim alleges breaches by Mr Lindberg’s omission to tell the board. Also the second claim deals with breaches that allegedly happened after the Government of Iraq fell, whereas the first claim is limited to breaches before the Government of Iraq fell. The allegations are technically different. However, in my opinion, the substance of the complaints in both cases is founded on the same allegation: that Mr Lindberg knew or ought to have known that the payment of inland transportation fees was in fact the payment of bribes for the purpose of allowing the Government of Iraq to obtain hard currencies., and that he knew or ought to have known how they were financed and how they were paid.

In my opinion, however, these differences are greater in form than in substance. The same issue is raised in the second proceeding as in the first but extended to a later time period. The allegations giving rise to the knowledge are based on inferences drawn from the matters primarily relied on in the first proceeding. There is another complaint about the Tigris transaction, but in my opinion, the main element of the complaint is that Mr Lindberg was aware of the Tigris agreement to recover the debt and how it was to be done. That is alleged in both the first and the second proceedings.

If the Anshun principle is available it is therefore enlivened, but the second proceeding will only be estopped if it was unreasonable for ASIC to defer reliance on the claims it now wishes to make.

Unreasonable not to raise

In considering whether it was unreasonable for a plaintiff not to have relied on the cause of action raised in the second proceeding, the court should consider all the relevant facts, including the character of the previous proceeding, the scope of any pleadings, the length and complexity of the trial, any real or perceived difficulties in raising the relevant claim earlier and any other explanation for the failure to raise the claim previously: Gibbs v Kenna.[223]
[223](1999) 2 VR 19 at 28 per Kenny JA.

The failure of ASIC to raise the amendments at an earlier date to allow them to be added to the first proceeding has been brought about by ASIC’s own delay in seeking to make the claims it raises in the second proceeding by an amendment to the first. As discussed above, the evidence adduced at the hearing indicates that ASIC had all the material evidence that it now relies on to support the second claim as early as December 2007. It appears that ASIC may not have realised the consequences of it own allegation that Mr Lindberg knew or ought to have known the disputed fees were bribes before the Government of Iraq fell. When the allegations of that AWB was paying bribes were raised after the second gulf war, it is obvious that if Mr Lindberg had that knowledge that he thereafter wrongly allowed AWB to deny the payment of bribes and misled the board. For reasons not satisfactorily explained, ASIC chose not to address or consider these obvious consequences until after the matter had been set down for trial and after ASIC had been required to notify Mr Lindberg of the documents it intended to rely on at the trial. When they raised them, it was too late.

As indicated above, I am not satisfied that ASIC has identified any material evidence that has only recently come to light that would enable them to plead the new matters where without that evidence they could not.

For the reasons discussed above, I find that ASIC could have, with the exercise of reasonable diligence, raised the matters now sought to be raised in the second proceeding in time to be dealt with in the first proceeding. I find that ASIC was not prevented by the absence of evidence from raising the issues. I do not accept that ASIC only obtained evidence sufficient to support the claims just prior to May 2009. As discussed above, all the material evidence was disclosed in the Cole Report.

An important factor which will be addressed below is that these proceedings are civil penalty proceedings and ASIC should have ensured, if possible, that Mr Lindberg was only brought to trial once on these matters.

ASIC claims that the issue of Mr Lindberg’s knowledge prior to the fall of the Government of Iraq would be subject to issue estoppel in the second proceeding. However, that submission overlooks that the second proceeding seeks to build on the factors alleged to establish his knowledge in the first proceeding and would involve a further hearing of the evidence led in the first hearing. The findings on the relevance of the evidence and its effect would not give rise to any issue estoppel.[224]
[224]Blair v Curran (1939) 62 CLR 464 at 531 per Dixon J.

I discuss below issues of double jeopardy, prejudice to Mr Lindberg and other factors. Bearing all these considerations in mind, I find that it was unreasonable for ASIC not to have raised in the first proceeding the matters it now seeks to raise in the second proceeding. Accordingly, if an Anshun estoppel is available where the first proceeding has not been determined, I find that it has been made out.

Abuse of process - General

In Walton v Gardiner, the majority held that the question of whether criminal proceedings should be permanently stayed on abuse of process grounds falls to be determined by a weighing process involving a subjective balancing of a variety of factors and considerations.[225] In the New South Wales’ Court of Appeal, Kirby P had referred to an instinctive reaction to the abuse. Lord Diplock in Hunter v Chief Constable of the West Midlands Police,[226] in a passage cited with approval by the majority in the High Court, referred to the administration of justice being brought into disrepute “among right-thinking people”.
[225](1993) 177 CLR 379.
[226][1982] AC 529 at 536.

Overlap

As indicated earlier, it is prima facie an abuse of process to maintain two proceedings in the same court where the issues overlap or significantly overlap or there is a similarity of subject matter of the proceedings.

For the reasons expressed above, when dealing with the Anshun principle, I find that there is a sufficient degree of overlap between the first and second proceedings to raise a prima facie case of abuse of process.

I turn to the next step that is akin to the step taken in considering the application of the Anshun principle. Is there no reasonable justification based on legitimate considerations to justify the second proceeding? For similar reasons as dealt with based on the Anshun principles, I find there was no reasonable justification. ASIC should and could have made the allegations in the first proceeding for the reasons expressed.

In considering whether an abuse of process has been made out I am obliged to take into account other relevant factors which I now turn to.

Double jeopardy rationale

Another relevant factor to consider on the abuse application is that the second proceeding offends the rationale of the double jeopardy principles in that Mr Lindberg will be brought to court twice to answer alleged breaches of duty in relation to AWB’s wheat sales to Iraq. He will be vexed twice for the same cause.

Mr Lindberg’s conduct as managing director of AWB has been the subject of almost continuous scrutiny and examination since the Royal Commission commenced in late 2005. Counsel assisting submitted that adverse findings should be made against Mr Lindberg. Commissioner Cole did not accept those submissions. If the second proceeding is allowed to continue, it may not conclude until late 2010 or early 2011.

In my view it is oppressive and vexatious to bring proceedings against Mr Lindberg again for the second time, if not the third time, on the allegations made against him.

The existence of the second proceeding will be unjustifiably oppressive and vexatious to Mr Lindberg in his defence of the first proceeding. In my opinion, it is manifestly unfair for him to have to defend the first proceeding while defending the second proceeding. It is also manifestly unfair that Mr Lindberg should have to meet the allegation that he knew or ought to have known that the inland transportation fees being paid were in fact bribes to the Government of Iraq, when ASIC has brought a second civil penalty proceeding that relies on ASIC making out the same allegations.

The decisions Mr Lindberg makes on how to meet the first proceeding may be influenced by the existence of the second proceeding. Currently, he is not obliged to file a witness statement or give a detailed defence and he may chose to do so when ASIC concludes its case. Mr Lindberg would loose the benefit of those protections if the second proceeding was allowed to proceed after the first. In my opinion, he would be deprived a fair trial and be constantly threatened by double jeopardy.

If the second proceeding were stayed pending the hearing and determination of the first proceeding, in my opinion Mr Lindberg would be prejudiced in the presentation of his defence by the existence of the second proceeding.

Second proceeding denies Mr Lindberg the benefit of the decision on the amendment applications

Mr Lindberg has said that if he fails in his application for a permanent stay of the second proceeding, the hearing of the first proceeding should be adjourned, consolidated with the second proceeding and be heard at some time in the future to lessen the prejudice that he will otherwise suffer.

The fact that the institution of the second proceeding requires that course to be taken to lessen the prejudice to Mr Lindberg leads to the conclusion that the second proceeding involves a circumvention of my decision on the amendment applications. In other words, the institution of the second proceeding, unless stayed, will deny Mr Lindberg the fruits and benefits of successfully opposing ASIC’s applications to amend. It will lead to him suffering the very prejudice which I found would be unfair to him. In part the unfairness was the ever increasing effluxion of time since disputed conversations were held as long ago as 2000 or 2001. In order to ensure Mr Lindberg received a fair trial on the allegations made against him, I considered it unfair to further adjourn the trial date.

It is also of relevance that the application to appeal against my decision was refused by the Court of Appeal.

The amendments (which now appear in the second proceeding) were not permitted after the court fully considered the contention by ASIC that it was in the public interest that the amendments should be made and Mr Lindberg’s contentions that their introduction into the first proceeding would have been unfair and contrary to the interests of justice.

After fully considering the contentions of both parties I found that the amendments would have lead to the vacating of the trial date and that, in the circumstances, would have imposed prejudice and unfairness on Mr Lindberg that could not be compensated by an order as to costs. In making that decision I took into account ASIC’s explanation for the delay in seeking to raise the amendments. I also took into account the steps that had been taken to enable Mr Lindberg to have a fair hearing.

As indicated above, this was to be achieved by giving Mr Lindberg several months notice of the documents to be used against him and the statements of evidence of the witnesses to be called against him. These directions were made in the context where the relevant documents ran into the hundreds of thousands and ASIC was seeking to allege breaches of duty over a period of three years, that were not tied down to any particular date within those periods, and the number of alleged breaches of duty exceeded 50. I referred again to the prejudice I found if the amendments were allowed in Re AWB Ltd (No 3)[227] and in Re AWB Ltd (No 7).[228]
[227][2009] VSC 209 at [44]-[54].
[228][2009] VSC 413 at [73].

If the first proceeding is adjourned to be heard with the second proceeding, Mr Lindberg will suffer the prejudice that was sought to be avoided by the decision on the amendment applications. If the second proceeding is not stayed, Mr Lindberg will either be vexed by two trials arising out of the same events with the other concomitant prejudices I have referred to, or he will be denied the benefits of the decision on the amendment application and be subjected to the unfairness that the decision sought to avoid. In my opinion, such a result would bring the administration of justice into disrepute among right-thinking people.

In any event, I consider that the bringing of the second proceeding to circumvent the result of the amendment applications brings the administration of justice into disrepute.

Prejudice to Mr Lindberg in conduct of first proceeding

I find that Mr Lindberg will be subject to further prejudice flowing from preparing for the first proceeding and being tried for some nine days with much of that wasted. I have already referred to the strain and stress and humiliation of sitting through the opening. There was considerable publicity about ASIC’s opening that was especially damaging to Mr Lindberg’s credit and reputation. [229] Of course that is the natural consequence of a trial. But he should not have to put up with it twice if that can be avoided. That bad publicity will then be most probably repeated. I also take into account that ASIC did not commence the second proceeding until some three weeks into the first proceeding.
[229]Exhibit PTG-30 to Mr Galbally’s affidavit of 11 November 2009.

I was also asked to consider the wasted application of court resources to accommodate the trial, including interlocutory hearings and the fact that the Court of Appeal was specially constituted to hear the appeal from the amendment applications. As it is, I do not need to rely on these matters.

Public interest

There is considerable public interest in ensuring directors properly carry out their duties. The Australian economy is based on a free market in which the modern corporation plays a central role. The system allows individuals acting in their own interests to make decisions that affect us all. Such a system will only operate efficiently and fairly if directors and officers observe the rules which have been devised to protect the public and investors. ASIC rightly point out that it is their duty to enforce these rules. But there are other rules that ASIC itself must observe in doing so and these include not abusing the processes of the court. The rights of a citizen to be free of oppression and abuse by the state are matters that are central to the function of this court. I must keep in mind all these factors.

I accept that ASIC genuinely believes that it is in the public interest that Mr Lindberg be tried on the amendment claims. However, the court has to balance that public interest with Mr Lindberg’s fundamental right to a fair trial and not to be subject to an abuse of process.

Conduct of the amendment application

Mr Lindberg submits that I should take into account ASIC’s conduct of the amendment applications. He submits that if ASIC had addressed whether it intended to institute the second proceeding and so informed the court, then the court would have been obliged under the rules to take that into account in considering the amendment application.

Under s 29(2) of the Supreme Court Act 1986 the court must exercise its jurisdiction to secure, as far as possible, that all matters in dispute between the parties are completely and finally determined, and all multiplicity of proceedings concerning any of those matters is avoided. Further under r 1.14 of the Rules, the court should exercise any power under the Rules to endeavour to ensure that all questions in the proceeding are effectively, completely and economically determined. The power to amend under r 36.01 is enlivened to avoid multiplicity of proceedings.

I accept that if ASIC had made the decision to issue the second proceeding and informed the court of that decision on the hearing of the amendment applications then the decision on the amendment applications may have been affected. Despite the submissions of Mr Lindberg, I do not consider that I should take that matter into account in the weighing process on the abuse application.

Mr Lindberg also contends that the standard I apply to the test on the abuse application should be no greater than the standard that would have been applied if ASIC did inform the court on the amendment applications that it did intend to issue a further proceeding if the amendments were not permitted. Mr Lindberg submits that in such a case, the court would have undertaken the process referred to by French CJ in Aon and considered whether the second proceeding would have been an abuse as a separate hearing. In my opinion, I do not have to decide this issue as I have decided that, in any event on the grounds referred to above, the second proceeding does constitute an abuse of process.

CONCLUSION

For the reasons given I find that Mr Lindberg will be unjustifiably vexed and oppressed and manifestly denied a fair trial by the existence of the pending second proceeding. I also find that the second proceeding brings the administration of justice into disrepute in the minds of right-thinking people.

In the circumstances, it is unnecessary for me to decide whether the Anshun principle of estoppel applies where both proceedings are extant. If it does, then I find that the estoppel has been made out.

Accordingly, I propose to permanently stay the second proceeding. I shall hear the parties on costs.

[2009] VSC 566

9 December 2009