Re AWB Limited (No 9)
[2009] VSC 485
•26 October 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST
No 10078 of 2007
| IN THE MATTER OF AWB LIMITED (ACN 081 890 459) |
| AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION | Plaintiff | |||
| v | ||||
| ANDREW ALEXANDER LINDBERG | Defendant | |||
JUDGE: | ROBSON J | |||
WHERE HELD: | Melbourne | |||
DATE OF HEARING: | 19 October 2009 | |||
DATE OF JUDGMENT: | 26 October 2009 | |||
CASE MAY BE CITED AS: | Re AWB Limited (No 9) | |||
MEDIUM NEUTRAL CITATION: | [2009] VSC 485 | |||
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CORPORATIONS – civil penalty proceedings – trial commenced – applications to amend pleadings to introduce new claims previously refused – application for leave to appeal against decision to refuse application to amend previously dismissed – at commencement of the trial the court informed that ASIC proposes to issue separate proceedings to pursue claims sought to be raised by the amendments previously refused– application by the defendant to direct ASIC issue proceedings so that defendant could seek to have it stayed as an abuse of process or otherwise consider seeking the court to adjourn the further hearing of the trial to be heard with the proposed proceeding – direction that trial be suspended pending hearing and determination of application to stay the proposed proceedings – duty of party proposing further proceedings to inform the defendant and the court as soon as intention reached
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N J O'Bryan SC with Mr J P Moore, 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 |
Cases cited
Aldi Store Ltd v WSP Group PLC [2008] 1 WLR 749
ASIC v Lindberg [2009] VSCA 235
Henderson v Henderson (1843) 3 Hare 100
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Re AWB Ltd (No 4) [2009] VSC 315
Re AWB Ltd (No 5) [2009] VSC 258
Re AWB Ltd (No 7) [2009] VSC 413
Stuart v Goldberg Linde [2008] 1 WLR 823
HIS HONOUR:
INTRODUCTION
On 19 October 2009, the trial of this matter was called on for hearing. After appearances were taken, Mr Collins QC senior counsel for Mr Lindberg applied that I require ASIC to commence as soon as possible proceedings they have foreshadowed they intend to issue against Mr Lindberg. Mr Lindberg also seeks that I give directions for the hearing of the application Mr Lindberg will make for those proceedings to be permanently stayed. Mr Collins submits that if Mr Lindberg is successful in staying those proceedings permanently Mr Lindberg can proceed with this trial knowing that he will not be facing a multiplicity of proceedings or a series of trials. Alternatively, Mr Collins submits that if Mr Lindberg is not successful in staying the proposed proceedings permanently, and if the allegations to be made in the proposed proceedings are the allegations which ASIC sought to introduce by amendments to the statement of claim, then Mr Lindberg will apply for those proposed proceedings to be heard together with this proceeding. In other words, Mr Lindberg will apply for the further hearing of the current trial to be adjourned to be further heard with the proposed proceeding at some time in the future.
Mr O’Bryan SC for ASIC said that he did not wish to make any response to the application unless I required him to. When I again asked him whether he wished to say anything in response he submitted that the application was unprecedented and that there is no provision of law, written or unwritten, which would ever require a party to commence a new proceeding by a certain date. I reserved my decision on Mr Collins’ application which I now give.
THE MATERIAL FACTS
The proceedings were instituted by ASIC in December 2007. The allegations are not easy to summarise in a few words. Further the exact nature of the allegations may be a matter of dispute between the parties in this trial. Accordingly, anything I do say about the allegations should be taken as only my preliminary view and that I am entirely open to being persuaded otherwise by the parties.
Speaking very broadly, ASIC alleges that after the First Gulf War the United Nations imposed trade sanctions on the Government of Iraq headed by Saddam Hussein. The UN also established an Oil for Food Program. Under this program, the proceeds from the sale of Iraq’s oil would be kept in an escrow account and could be used to pay for humanitarian aid to the people of Iraq including the purchase of foodstuffs such as wheat. Under the trade sanctions, member countries were requested by the UN to take steps to ensure their citizens did not engage in transactions that led to the Government of Iraq obtaining hard currencies.
It is alleged that AWB Ltd participated in the OFFP. It is alleged that commencing in about 1999, the Iraqi Grains Board, the government authority responsible for importing wheat to Iraq, requested that AWB Ltd pay an inland transportation fee in hard currency to the Government of Iraq for the purported purpose of trucking the wheat from the port of Umm Qatr, where the wheat from AWB was being discharged, to the various provinces of Iraq and that the fee was far in excess of what would be required to pay for the cost of trucking. In other words the fee was a sham designed to funnel hard currency to the Government of Iraq contrary to the conduct that the UN had asked its member states to prevent.
It is alleged that Mr Lindberg, who commenced his employment with AWB in April 2000, knew or ought to have known that the purported inland transportation fee was not a genuine fee for the transport services provided to AWB or the IGB and was a sham, the purpose of which was to allow the Government of Iraq to obtain internationally traded currency; and that accordingly the purported inland transportation fees (and the purported after sales service fees) were a sham used by the IGB and/or the Government of Iraq to obtain funds from the UN Escrow Account to which they were not entitled. [1]
[1]Second Further Amended Statement of Claim [13] and [39(d)].
It is alleged that he failed to stop the conduct or inform the board of AWB about the conduct.
The Government of Iraq fell in about March 2003. After it fell allegations were made by the Americans and the United Nations that AWB had engaged in the conduct I have set out above with the knowledge alleged. ASIC sought to amend the current proceedings to allege that within AWB investigations were undertaken into the allegations of the Americans and the United Nations known as Project Rose. Speaking very broadly, ASIC sought to amend its claim against Mr Lindberg to allege that he was aware the allegations were not properly investigated within AWB and that he misled the board of AWB about the investigations and the truth of the situation in about May 2004. ASIC also sought to allege that by reason of Mr Lindberg’s knowledge of the matters referred to above Mr Lindberg misled the boards of AWB and AWBI about a report given by the Independent Inquiry Committee into the UN OFFP in about September 2005.
For reasons which are fully canvassed in Re AWB Ltd(No 4),[2] Re AWB Ltd (No 5)[3] and Re AWB Ltd (No 7)[4] the amendments were not permitted.
[2][2009] VSC 315.
[3][2009] VSC 258.
[4][2009] VSC 413.
Both of these allegations relate to matters that occurred after the Government of Iraq had fallen but nevertheless rely on the alleged knowledge held by Mr Lindberg, before the Government of Iraq fell, of the alleged nature and purpose of the inland transportation fees (and the after service fees) which lie at the heart of the current proceedings and will be resolved in the current proceedings.[5]
[5]Proposed Second Further Amended Statement of Claim of 6 August 2009, [75] and [85].
ASIC sought leave to appeal against my refusal to allow the amendments. On the application, which was heard on Friday 9 October 2009, the Court of Appeal refused ASIC leave to appeal: ASIC v Lindberg [2009] VSCA 235. Mr Galbally of Galbally & O’Bryan solicitors for Mr Lindberg has deposed that during the hearing, senior counsel for ASIC informed the court and the defendant for the first time that ASIC intended to issue a separate proceeding relating to the allegations that I had refused ASIC to make by amendment in the current proceedings.
On 12 October 2009, the solicitors for Mr Lindberg wrote to ASIC seeking clarification of what course ASIC proposed to follow in relation to its stated intention to issue further proceedings. The letter should be read in full but it said amongst other things that ASIC was not entitled to pursue the allegations sought to be made by amendment in this proceeding by commencing new proceedings and that if new proceedings are commenced an application will be made for those proceedings to be permanently stayed and that “in addition to the unreasonable delay which occurred in seeking to make the allegations sought to be pursued against Mr Lindberg by amending the existing proceedings, any further delay in commencing any new proceedings will be relied upon in support of an application for a permanent stay.”
On Friday 16 October 2009, a directions hearing was convened in this proceeding to deal with any matters that needed to be dealt with before the trial commenced. Sitting times and dates were canvassed. ASIC provided a list showing the witnesses to be called and when it was likely they would be called. Despite the letter of Mr Lindberg’s solicitors informing ASIC that if they intended to issue fresh proceedings to make the allegations that had previously been sought be amendment Mr Lindberg would apply to have them stayed, ASIC did not inform the court that it intended to issue fresh proceedings. Of course if ASIC had informed the court that it decided to issue the fresh proceedings, it is probable that argument would have proceeded about Mr Lindberg’s application to have it stayed and how that should be accommodated in the timetable.
As it was, ASIC informed Mr Lindberg’s solicitors by an emailed letter sent at 6.07 pm on Friday evening that ASIC considered that it is entitled to issue a new proceeding against Mr Lindberg in relation to those matters that ASIC has not been permitted to introduce into the present proceeding. It said that it proposes to issue that new proceeding as soon as practicable within the next four weeks. The letter said ASIC will consider any reasonable proposal to avoid the new proceedings distracting Mr Lindberg from the conduct of the present proceeding.
As indicted above, Mr Collins then raised the matter with me on Monday morning when the trial was called on for hearing.
Mr Collins referred me to two recent decisions of the English Court of Appeal in support of a submission that ASIC was duty bound to have brought to the attention of the Court their intention to bring the proposed proceeding. In Stuart v Goldberg Linde[6] the Court of Appeal (Sir Anthony Clarke MR, Sedley and Lloyd LJJ) allowed an appeal from a decision of a judge upholding the decision of a master to strike out parts of a claim on the grounds that those parts were an abuse of the court’s process because they raised issues which could and should have been raised in a previous action by the plaintiff against the defendants.
[6][2008] 1 WLR 823.
The Court of Appeal identified the basis of the abuse of process claim to be the decision of Wigram VC in Henderson v Henderson.[7] The High Court of Australia relied on what it called the Henderson v Henderson principle in coming to its decision in the Port of Melbourne Authority v Anshun Pty Ltd.[8]
[7](1843) 3 Hare 100.
[8](1981) 147 CLR 589 at 598.
One of the factors relied on by the defendants was that the plaintiff had not put them on notice that he was considering bringing the later proceeding. The Court accepted that a plaintiff should do so. The Court said that the failure to give such notice was relevant to whether the new proceeding constituted an abuse of process. As it was, the Court decided that despite no such notice being given the second proceeding did not constitute an abuse and allowed the appeal.
The second case referred to by Mr Collins was Aldi Store Ltd v WSP Group PLC.[9] In that case the Court of Appeal (Longmore, Thomas and Wall LJJ) said, according to the head note, that:
Where in complex commercial multi-party litigation a party wishes to purse other proceedings whilst reserving a right in existing proceedings, the proper course is for the issue to be raised with the court seized of the existing proceedings. The court will be able to express its view as to the proper use of its resources and on the efficient and economical conduct of the litigation. It is in the interests of the parties, of the public and of the efficient use of court resources that that is done. There can be no excuse for failure to do so in the future.
[9][2008] 1 WLR 749.
In this case, the court has set aside months to hear this case and made available its major commercial court to do so. In my view it behoves ASIC to advise the Court of its intentions and it behoves ASIC to now act with expedition so that the issues arising from its proposed actions on the current proceedings and otherwise can be resolved as soon as possible.
CONCLUSION
All other things being equal, I accept that the Court should not interfere with a party instituting proceedings. On the other hand, the Court has the duty and power to prevent its processes from being abused. Mr Lindberg asserts, inter alia, that ASIC’s proposed conduct does in the circumstances constitute an abuse of process.
The Court does have the power and duty to ensure that the current trial is conducted properly and fairly. Clearly, the existence of the proposed proceeding is a relevant matter to consider in doing so. ASIC accepts that its new proceedings may distract Mr Lindberg from the conduct of the present proceedings. In my view, if ASIC had formed the intention to institute the new proceedings when this proceeding was before me on Friday 16 October 2009, then ASIC was duty bound to inform the court.
ASIC has offered to consider any proposal to avoid Mr Lindberg being distracted from the conduct of this proceeding. In my view, ASIC should issue its new proceeding as soon as possible so that the distraction of whether or not it will proceed to be heard and the consequences on this proceeding can be resolved.
I assume therefore that ASIC will issue the proposed proceeding by the end of Mr O’Bryan’s opening or shortly thereafter. I will direct that at the conclusion of Mr O’Bryan’s opening, that directions be given for the hearing of Mr Lindberg’s application to stay the hearing of the proposed proceeding and that the further hearing of this trial be adjourned until the hearing and determination of that application. I will reserve the question of who should pay the costs occasioned by these matters.
I note that Mr Lindberg contends that any further delay in ASIC issuing the proposed proceedings will be relied on in support of an application for a permanent stay. The delay may well be relevant, but I will reserve my views on that contention for the hearing of Mr Lindberg’s application.
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