The Bell Group Ltd (In Liquidation) & Ors v Westpac Banking Corporation & Ors (3)

[2004] WASC 93

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   THE BELL GROUP LTD (In Liquidation) & ORS -v- WESTPAC BANKING CORPORATION & ORS (3) [2004] WASC 93

CORAM:   OWEN J

HEARD:   16-20 OCTOBER & 23-27 OCTOBER 2000; 2 MARCH 2001; 28 FEBRUARY 2002; 25, 26 & 27 MARCH 2002; 31 OCTOBER 2002; 5 & 6 MAY 2003

DELIVERED          :   19 DECEMBER 2003

PUBLISHED           :  6 APRIL 2004

FILE NO/S:   CIV 1464 of 2000

BETWEEN:   THE BELL GROUP LTD (In Liquidation) (ACN 008 666 993)

First Plaintiff

THE BELL GROUP LTD (In Liquidation) AS TRUSTEE FOR DOLFINNE PTY LTD (In Liquidation)
THE BELL GROUP LTD (In Liquidation) AS TRUSTEE FOR INDUSTRIAL SECURITIES PTY LTD (In Liquidation)
THE BELL GROUP LTD (In Liquidation) AS TRUSTEE FOR MARANOA TRANSPORT PTY LTD (In Liquidation)
THE BELL GROUP LTD (In Liquidation) AS TRUSTEE FOR NEOMA INVESTMENTS PTY LTD (In Liquidation)
Second Plaintiffs

BELL GROUP FINANCE PTY LTD (In Liquidation) (Receiver and Manager Appointed)
Third Plaintiff

BELL GROUP (UK) HOLDINGS LTD (In Liquidation) (In Administrative Receivership)
Fourth Plaintiff

BELL PUBLISHING GROUP PTY LTD (In Liquidation)
Fifth Plaintiff

BELL GROUP NV (In Liquidation)
Sixth Plaintiff

AMBASSADOR NOMINEES PTY LTD (In Liquidation) and OTHER COMPANIES NAMED IN SCHEDULE 1, PART 1
Seventh Plaintiffs

GEOFFREY FRANK TOTTERDELL AS LIQUIDATOR OF FIRST PLAINTIFF AND OF THE COMPANIES NAMED IN SCHEDULE 1, PART 2
Eighth Plaintiff

ANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF THE THIRD PLAINTIFF, THE FIFTH PLAINTIFF AND OF THE COMPANIES NAMED IN SCHEDULE 1, PART 3
Ninth Plaintiff

[No Text]
Tenth Plaintiff

[No Text]
Eleventh Plaintiff

GARRY JOHN TREVOR AS LIQUIDATOR OF THE SIXTH PLAINTIFF
Twelfth Plaintiff

THE LAW DEBENTURE TRUST CORPORATION PLC
Thirteenth Plaintiff

AND

WESTPAC BANKING CORPORATION (ACN 007 457 141)
First Defendant

SOCIETE GENERALE AUSTRALIA LTD
NATIONAL AUSTRALIA BANK LTD
HONGKONGBANK OF AUSTRALIA LTD
STANDARD CHARTERED BANK
COMMONWEALTH BANK OF AUSTRALIA
Second Defendants

LLOYDS TSB BANK PLC (formerly LLOYDS BANK PLC)
BANCO ESPIRITO SANTO SA (formerly BANCO ESPIRITO SANTO E COMERCIAL DE LISBOA)
BfG BANK AG (formerly BANK FUR GEMEINWIRTSCHAFT AG)
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
CAISSE NATIONALE DE CREDIT AGRICOLE
BANK AUSTRIA AKTIENGESELLSCHAFT (formerly CREDITANSTALT-BANKVEREIN)
CREDIT LYONNAIS
DRESDNER BANK AG
KBC BANK VERZENKERINGS HOLDINGS NV (formerly KREDIETBANK NV)
SKOPBANK
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
THE GULF BANK KSC
GENTRA LIMIITED (formerly ROYAL TRUST BANK)
CREDIT AGRICOLE INDOSUEZ (formerly BANQUE INDOSUEZ)
Third Defendants

[No Text]
Fourth Defendant

EQUITY TRUST (CURACAO) NV
Fifth Defendant

(BY ORIGINAL ACTION)

WESTPAC BANKING CORPORATION (ACN 007 457 141)
First Plaintiff by Counterclaim

SOCIETE GENERALE AUSTRALIA LTD
NATIONAL AUSTRALIA BANK LTD
HONGKONGBANK OF AUSTRALIA LTD
STANDARD CHARTERED BANK
COMMONWEALTH BANK OF AUSTRALIA
Second Plaintiff by Counterclaim

LLOYDS TSB BANK PLC (formerly LLOYDS BANK PLC)
BANCO ESPIRITO SANTO SA (formerly BANCO ESPIRITO SANTO E COMERCIAL DE LISBOA)
BfG BANK AG (formerly BANK FUR GEMEINWIRTSCHAFT AG)
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
CAISSE NATIONALE DE CREDIT AGRICOLE
BANK AUSTRIA AKTIENGESELLSCHAFT (formerly CREDITANSTALT-BANKVEREIN)
CREDIT LYONNAIS
DRESDNER BANK AG
KBC BANK VERZENKERINGS HOLDINGS NV (formerly KREDIETBANK NV)
SKOPBANK
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
THE GULF BANK KSC
GENTRA LIMIITED (formerly ROYAL TRUST BANK)
CREDIT AGRICOLE INDOSUEZ (formerly BANQUE INDOSUEZ)
Third Plaintiffs by Counterclaim

AND
THE BELL GROUP LTD (In Liquidation)
First Defendant by Counterclaim

BELL GROUP FINANCE PTY LTD (In Liquidation) (Receiver and Manager Appointed)
Second Defendant by Counterclaim

BELL GROUP UK HOLDINGS (In Liquidation)
Third Defendant by Counterclaim

BELL PUBLISHING GROUP PTY LTD (In Liquidation)
Fourth Defendant by Counterclaim

BELL GROUP NV (In Liquidation)
Fifth Defendant by Counterclaim

AMBASSADOR NOMINEES PTY LTD (In Liquidation) and OTHER COMPANIES NAMED IN SCHEDULE 1, PART 1
Sixth Defendant by Counterclaim

GEOFFREY FRANK TOTTERDELL AS LIQUIDATOR OF FIRST PLAINTIFF AND OF THE COMPANIES NAMED IN SCHEDULE 1, PART 2
Seventh Defendant by Counterclaim

ANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF THE THIRD PLAINTIFF, FIFTH PLAINTIFF AND OF THE COMPANIES NAMED IN SCHEDULE 1, PART 3
Eighth Defendant by Counterclaim

GARRY JOHN TREVOR AS LIQUIDATOR OF THE SIXTH PLAINTIFF
Ninth Defendant by Counterclaim

THE LAW DEBENTURE TRUST CORPORATION PLC
Tenth Defendant by Counterclaim

(BY COUNTERCLAIM)
 

FILE NO/S              :CIV 2061 of 1996

BETWEEN              :COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124)

First Plaintiff

NATIONAL AUSTRALIA BANK LTD (ACN 004 044 937)
Second Plaintiff

SOCIETE GENERALE AUSTRALIA LTD (ACN 002 093 021)
Third Plaintiff

STANDARD CHARTERED BANK
Fourth Plaintiff

WESTPAC BANKING CORPORATION (ARBN 007 457 141)
Fifth Plaintiff

HONGKONGBANK OF AUSTRALIA LTD (ACN 006 434 162)
Sixth Plaintiff

BANCO ESPIRITO SANTO SA (formerly BANCO ESPIRITO SANTO E COMERCIAL DE LISBOA)
BfG BANK AG (formerly BANK FUR GEMEINWIRTSCHAFT AG)
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
BANK AUSTRIA AKTIENGESELLSCHAFT (formerly CREDITANSTALT-BANKVEREIN)
CREDIT LYONNAIS
DRESDNER BANK AG
CREDIT AGRICOLE INDOSUEZ (formerly BANQUE INDOSUEZ)
Seventh Plaintiffs

LLOYDS TSB BANK PLC (formerly LLOYDS BANK PLC)
CAISEE NATIONALE DE CREDIT AGRICOLE
GENTRA LTD (formerly ROYAL TRUST BANK)
KBC BANK VERZENKERINGS HOLDINGS NV (formerly KREDIETBANK NV
GULF BANK KSC
DG BANK DEUTSCHE GENOSSENSCHAFTBANK
Eighth Plaintiffs

AND

THE LAW DEBENTURE TRUST CORPORATION PLC
First Defendant

THE BELL GROUP LTD (In Liquidation)
(ACN 008 666 993)
Second Defendant

GEOFFREY FRANK TOTTERDELL
Third Defendant

BELL GROUP FINANCE PTY LTD (In Liquidation) (RECEIVER AND MANAGER APPOINTED) (ACN 009 165 182)
Fourth Defendant

ANTONY LESLIE JOHN WOODINGS
Fifth Defendant

THE INSURANCE COMMISSION OF WESTERN AUSTRALIA (formerly STATE GOVERNMENT INSURANCE COMMISSION OF WESTERN AUSTRALIA)
Sixth Defendant

BELL GROUP NV (In Liquidation)
Seventh Defendant

THE COMMONWEALTH OF AUSTRALIA
Eighth Defendant

(BY ORIGINAL ACTION)

THE LAW DEBENTURE TRUST CORPORATION PLC
THE INSURANCE COMMISSION OF WESTERN AUSTRALIA (formerly STATE GOVERNMENT INSURANCE COMMISSION OF WESTERN AUSTRALIA)
Plaintiffs by Counterclaim

AND

AUSTRALIAN CONSOLIDATED INVESTMENTS LTD (ACN 008 670 924)
GODINE DEVELOPMENTS PTY LTD (ACN 009 237 307)
BELL RESOURCES DEVELOPMENTS PTY LTD (ACN 009 152 569)
First Defendants by Counterclaim

LLOYDS TSB BANK PLC (formerly LLOYDS BANK PLC)
Second Defendant by Counterclaim

W A GLENDINNING & ASSOCIATES PTY LTD (ACN 008 762 721)
W U INVESTMENTS PTY LTD (ACN 008 985 644)
EXPECTATION PTY LTD (ACN 009 030 102)
Third Defendants by Counterclaim

COMMONWEALTH OF AUSTRALIA
Fourth Defendant by Counterclaim

WESTPAC BANKING CORPORATION (ARBN 007 457 141)
Fifth Defendant by Counterclaim

(BY COUNTERCLAIM)
 

SCHEDULE 1, PART 1

AMBASSADOR NOMINEES PTY LTD
(In Liquidation)
BELCAP ENTERPRISES PTY LTD (In Liquidation)
BELL BROS PTY LTD (In Liquidation)
BELL EQUITY MANAGEMENT LIMITED
(In Liquidation)
DOLFINNE PTY LTD (In Liquidation)
GREAT WESTERN TRANSPORT PTY LTD
(In Liquidation)
HARLESDEN FINANCE PTY LTD (In Liquidation)
INDUSTRIAL SECURITIES PTY LTD
(In Liquidation)
MARADOLF LIMITED (In Liquidation)
MARANOA TRANSPORT PTY LTD (In Liquidation)
WANSTEAD PTY LTD (In Liquidation)
WESTERN TRANSPORT PTY LTD (In Liquidation)
WIGMORES TRACTORS PTY LTD (In Liquidation)
W & J INVESTMENTS LIMITED (In Liquidation)
DOLFINNE SECURITIES PTY LTD (In Liquidation)
NEOMA INVESTMENTS PTY LTD (In Liquidation)
TBGL ENTERPRISES LIMITED (In Liquidation)
WANSTEAD SECURITIES PTY LTD
(In Liquidation)
WAON INVESTMENTS PTY LIMITED
(In Liquidation)
WESTERN INTERSTATE PTY LTD (In Liquidation)

SCHEDULE 1, PART 2

THE BELL GROUP LIMITED (In Liquidation)
AMBASSADOR NOMINEES PTY LTD
(In Liquidation)
BELCAP ENTERPRISES PTY LTD (In Liquidation)
BELL BROS PTY LTD (In Liquidation)
DOLFINNE PTY LTD (In Liquidation)
MARADOLF LIMITED (In Liquidation)
MARANOA TRANSPORT PTY LTD (In Liquidation)
WANSTEAD PTY LTD (In Liquidation)
WIGMORES TRACTORS PTY LTD (In Liquidation)
W & J INVESTMENTS LIMITED (In Liquidation)
NEOMA INVESTMENTS PTY LTD (In Liquidation)
TBGL ENTERPRISES LIMITED (In Liquidation)
WAON INVESTMENTS PTY LIMITED
(In Liquidation)

SCHEDULE 1, PART 3

BELL GROUP FINANCE PTY LTD (In Liquidation)
BELL PUBLISHING GROUP PTY LTD
(In Liquidation)
BELL EQUITY MANAGEMENT LIMITED
(In Liquidation)
GREAT WESTERN TRANSPORT PTY LTD
(In Liquidation)
HARLESDEN FINANCE PTY LTD (In Liquidation)
INDUSTRIAL SECURITIES PTY LTD
(In Liquidation)
WESTERN TRANSPORT PTY LTD (In Liquidation)
DOLFINNE SECURITIES PTY LTD (In Liquidation)

WANSTEAD SECURITIES PTY LTD
(In Liquidation)

Catchwords:

Practice and procedure - Pleadings - Amendments to defence and counterclaim - Further and better particulars - Programming orders - Turns on own facts

Legislation:

Trade Practices Act 1974 (Cth), s 52

Bankruptcy Act 1966 (Cth), s 120, s 121
Companies Code, s 451
Corporations Law, s 564
Property Law Act 1969 (WA), s 89

Trustees Act 1962 (WA), s 75

Result:

Application allowed in part

Category:    B

Representation:

CIV 1464 of 2000

Original Action

Counsel:

First Plaintiff  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Second Plaintiffs  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Third Plaintiff  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters

& Mr J T Svehla

Fourth Plaintiff  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters

& Mr J T Svehla

Fifth Plaintiff  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Sixth Plaintiff  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Seventh Plaintiffs  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Eighth Plaintiff  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Ninth Plaintiff  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Tenth Plaintiff  :      -

Eleventh Plaintiff  :      -

Twelfth Plaintiff  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Thirteenth Plaintiff  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

First Defendant  :      Mr T M Jucovic QC,

Mr J L B Allsop QC,

Mr D E J Ryan SC &

Mr A V McCarthy

Second Defendants  :      Mr T M Jucovic QC,

Mr J L B Allsop QC,

Mr D E J Ryan SC &

Mr A V McCarthy

Third Defendants  :      Mr T M Jucovic QC,

Mr J L B Allsop QC,

Mr D E J Ryan SC &

Mr A V McCarthy

Fourth Defendant  :      -

Fifth Defendant  :      No appearance

Solicitors:

First Plaintiff  :      Blake Dawson Waldron

Second Plaintiffs  :      Blake Dawson Waldron

Third Plaintiff  :      Blake Dawson Waldron

Fourth Plaintiff  :      Blake Dawson Waldron

Fifth Plaintiff  :      Blake Dawson Waldron

Sixth Plaintiff  :      Blake Dawson Waldron

Seventh Plaintiffs  :      Blake Dawson Waldron

Eighth Plaintiff  :      Blake Dawson Waldron

Ninth Plaintiff  :      Blake Dawson Waldron

Tenth Plaintiff  :      -

Eleventh Plaintiff  :      -

Twelfth Plaintiff  :      Blake Dawson Waldron

Thirteenth Plaintiff  :      Blake Dawson Waldron

First Defendant  :      Freehills

Second Defendants  :      Freehills

Third Defendants  :      Freehills

Fourth Defendant  :      -

Fifth Defendant  :      No appearance

Counterclaim

Counsel:

First Plaintiff by Counterclaim      :      Mr T M Jucovic QC,

Mr J L B Allsop QC,

Mr D E J Ryan SC &

Mr A V McCarthy

Second Plaintiff by Counterclaim      :      Mr T M Jucovic QC,

Mr J L B Allsop QC,

Mr D E J Ryan SC &

Mr A V McCarthy

Third Plaintiffs by Counterclaim      :      Mr T M Jucovic QC,

Mr J L B Allsop QC,

Mr D E J Ryan SC &

Mr A V McCarthy

First Defendant by Counterclaim       :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Second Defendant by Counterclaim  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Third Defendant by Counterclaim  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Fourth Defendant by Counterclaim  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Fifth Defendant by Counterclaim  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Sixth Defendant by Counterclaim  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Seventh Defendant by Counterclaim :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Eighth Defendant by Counterclaim  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Ninth Defendant by Counterclaim  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Tenth Defendant by Counterclaim  :      Mr R M Robson QC,

Mr T K Tobin QC, Mr J W S Peters & Mr J T Svehla

Solicitors:

First Plaintiff by Counterclaim  :      Freehills

Second Plaintiff by Counterclaim  :      Freehills

Third Plaintiffs by Counterclaim  :      Freehills

First Defendant by Counterclaim  :      Blake Dawson Waldron

Second Defendant by Counterclaim  :      Blake Dawson Waldron

Third Defendant by Counterclaim  :      Blake Dawson Waldron

Fourth Defendant by Counterclaim  :      Blake Dawson Waldron

Fifth Defendant by Counterclaim  :      Blake Dawson Waldron

Sixth Defendant by Counterclaim  :      Blake Dawson Waldron

Seventh Defendant by Counterclaim :      Blake Dawson Waldron

Eighth Defendant by Counterclaim  :      Blake Dawson Waldron

Ninth Defendant by Counterclaim  :      Blake Dawson Waldron

Tenth Defendant by Counterclaim  :      Blake Dawson Waldron

CIV 2061 of 1996

Original Action

Counsel:

First Plaintiff  :      Mr T M Jucovic QC,

Mr J L B Allsop QC,

Mr D E J Ryan SC &

Mr A V McCarthy

Second Plaintiff  :      Mr T M Jucovic QC,

Mr J L B Allsop QC,

Mr D E J Ryan SC &

Mr A V McCarthy

Third Plaintiff  :      Mr T M Jucovic QC,

Mr J L B Allsop QC,

Mr D E J Ryan SC &

Mr A V McCarthy

Fourth Plaintiff  :      Mr T M Jucovic QC,

Mr J L B Allsop QC,

Mr D E J Ryan SC &

Mr A V McCarthy

Fifth Plaintiff  :      Mr T M Jucovic QC,

Mr J L B Allsop QC,

Mr D E J Ryan SC &

Mr A V McCarthy

Sixth Plaintiff  :      Mr T M Jucovic QC,

Mr J L B Allsop QC,

Mr D E J Ryan SC &

Mr A V McCarthy

Seventh Plaintiffs  :      Mr T M Jucovic QC,

Mr J L B Allsop QC,

Mr D E J Ryan SC &

Mr A V McCarthy

Eighth Plaintiffs  :      Mr T M Jucovic QC,

Mr J L B Allsop QC,

Mr D E J Ryan SC &

Mr A V McCarthy

First Defendant  :      Mr J A Chaney SC,

Mr A R Beech &

Ms A Hamersley

Second Defendant  :      Mr R M Robson QC,

Mr J T Svehla & Mr E M Corboy

Third Defendant  :      Mr R M Robson QC,

Mr J T Svehla & Mr E M Corboy

Fourth Defendant  :      Mr R M Robson QC,

Mr J T Svehla & Mr E M Corboy

Fifth Defendant  :      Mr R M Robson QC,

Mr J T Svehla & Mr E M Corboy

Sixth Defendant  :      Mr J A Chaney SC,

Mr A R Beech & Ms A Hamersley

Seventh Defendant  :      Mr M F Blue QC, Mr J D Karas &

Mr P Redding

Eighth Defendant  :      Ms L B Price

Solicitors:

First Plaintiff  :      Freehills

Second Plaintiff  :      Freehills

Third Plaintiff  :      Freehills

Fourth Plaintiff  :      Freehills

Fifth Plaintiff  :      Freehills

Sixth Plaintiff  :      Freehills

Seventh Plaintiffs  :      Freehills

Eighth Plaintiffs  :      Freehills

First Defendant  :      Edgar & Co

Second Defendant  :      Blake Dawson Waldron

Third Defendant  :      Blake Dawson Waldron

Fourth Defendant  :      Blake Dawson Waldron

Fifth Defendant  :      Blake Dawson Waldron

Sixth Defendant  :      Edgar & Co

Seventh Defendant  :      Williams & Hughes

(Agents for Fisher Jeffries)

Eighth Defendant  :      Australian Government Solicitor

Counterclaim

Counsel:

Plaintiffs by Counterclaim  :      Mr J A Chaney SC, Mr A R Beech & Ms A Hamersley

First Defendants by Counterclaim  :      No appearance

Second Defendant by Counterclaim  :      No appearance

Third Defendants by Counterclaim  :      No appearance

Fourth Defendant by Counterclaim  :      Ms L B Price

Fifth Defendant by Counterclaim  :      Mr T M Jucovic QC,

Mr J L B Allsop QC &

Mr A V McCarthy

Solicitors:

Plaintiffs by Counterclaim  :      Edgar & Co

First Defendants by Counterclaim  :      Clayton Utz

Second Defendant by Counterclaim  :      Freehills

Third Defendants by Counterclaim  :      Williams & Hughes

(Agents for Fisher Jeffries)

Fourth Defendant by Counterclaim  :      Australian Government Solicitor

Fifth Defendant by Counterclaim  :      Freehills

Case(s) referred to in judgment(s):

Acorn Consolidated Pty Ltd v Hawkslade Investments Pty Ltd (1999) WAR 425

Bowes v Chaleyer (1923) 32 CLR 159

Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589

The Bell Group Ltd & Ors v Westpac Banking Corporation & Ors [2001] WASC 315

The Bell Group Ltd and Ors v Westpac Banking Corporation and Ors [2000] 104 FCR 305

Whitlock v Brew [1967] VR 803

Case(s) also cited:

Not included

1. OWEN J:    There are two relevant actions: CIV 1464 of 2000 ("the Main Action") and CIV 2061 of 1996 ("the LDTC Action").  In the Main Action the plaintiffs have sued the defendants.  For their part the defendants have commenced a separate action against some of the plaintiffs and others.  The latter suit is the LDTC Action.  These reasons cover a number of interlocutory applications that have been filed (and amended from time to time) in both actions.  The exact applications to which the reasons relate will become apparent as the discussion proceeds.  Essentially, these reasons cover what has become known in the litigation as "the overlap question", namely the extent to which issues with common features appear in each action and the way in which those issues should be resolved. 

Background

1. The background to the litigation appears from my reasons in The Bell Group Ltd & Ors v Westpac Banking Corporation & Ors [2001] WASC 315 and I will not repeat all of what I said on that occasion, although it is necessary to set some of it out again. When it is necessary to refer to my earlier reasons I will call them "the 2001 judgment". Regard should also be had to The Bell Group Ltd and Ors v Westpac Banking Corporation and Ors [2000] 104 FCR 305 (to which I will refer as "Carr J's judgment").

The impugned transactions

1. The case involves a series of transactions in 1990 by which control of assets of the Bell group of companies was granted to certain banks that were unsecured creditors of three companies only in the group.  Those companies were The Bell Group Ltd ("TBGL"), Bell Group Finance Pty Ltd ("BGF") and Bell Group (UK) Holdings Ltd ("BG(UK)").  Another company in the group was Bell Group NV ("BGNV"), which acted as a financier to other group members.  The plaintiffs in the Main Action (at the time it was commenced) were numerous corporations within the Bell group of companies and the liquidators of some of those corporations.  Since then another company, The Law Debenture Trust Corporation plc, ("LDTC") has been added as a plaintiff.  I will refer to those entities and persons collectively as "the plaintiffs" even though it may cause some confusion as they (or some of them) are defendants in the LDTC Action.  With one exception the defendants in the Main Action are banks that loaned moneys to some of the corporations in the Bell group.  There are two groups of banks.  One is a syndicate of Australian banks led by Westpac Banking Corporation.  The other is a syndicate of overseas banks led by Lloyds Bank plc.  I will call these defendants collectively "the banks".  Another defendant is a corporation that was a director of one of the plaintiff corporations but it has taken no part in the litigation. 

2. I should add that TBGL was placed in provisional liquidation on 18 April 1991 and in liquidation on 24 July 1991.  BGF was placed in official liquidation on 3 March 1993.  A liquidator was appointed to BGNV on 3 January 1995.

3. The plaintiffs say that the transactions were entered into when TBGL, BGF, BG(UK) and BGNV (among others) were insolvent, nearly insolvent, of doubtful solvency or would inevitably become insolvent and that the banks knew they were obtaining an advantage at the expense of other unsecured creditors.  The plaintiffs also say that the directors effected the transaction in breach of their duties to companies within the group at the expense of the other unsecured creditors and in the interest of the ultimate shareholder of the group, Bond Corporation Holdings Ltd ("BCH"), and Alan Bond.  It is alleged that the banks knowingly participated or assisted in the breaches of duties by the directors.

1. The critical transactions by which the banks took security over the assets of the various companies occurred in January 1990 and following.  Paragraph 19A of the statement of claim in the Main Action describes the transactions and their effect in these terms:

   "The Banks and [companies in the Bell group] were parties to a scheme (hereafter called the 'Scheme') constituted by a series of transactions (each, a 'Transaction') entered into during the period from about 8 January 1990 to about 31 July 1990 (the 'Scheme Period'), effected by or required by the instruments pleaded in [nominated paragraphs] whereby all significant and worthwhile assets of [companies in the Bell group] were made available to the Banks for repayment of the debts owed to the Banks by BGF and BG(UK) in priority to the claims of all other creditors and future creditors of [companies in the Bell group] (save for certain immaterial exceptions)."

2. The borrower companies defaulted in their obligations under the transaction documents.  The banks exercised powers under the security documents and received proceeds amounting to approximately $280,000,000.  In addition, the plaintiffs allege that during 1990 and 1991 the banks made gains from the arrangement of approximately $68,000,000.

The Main Action

1. The Main Action was commenced in the Federal Court in 1995 under the management of Carr J.  It was cross‑vested to this Court in 2000.  The reasons that persuaded his Honour to transfer the action to this Court are reported in Carr J's judgment.  The plaintiffs say the securities taken as a result of the transaction are invalid and seek recompense (under various heads) for the recoveries and gains.  In essence, they contend that had the transaction not been entered into, the proceeds from the sale of the assets over which security was taken would have been available to satisfy inter‑group indebtedness and would have flowed through to subsidiaries of BGF and TBGL.  Those proceeds would therefore have been applied for the benefit of all unsecured creditors.  On their case the amount in issue could be as high as $1.4 billion.  The banks deny any wrongdoing and deny that the plaintiffs are entitled to recover anything. 

2. At the time the action was cross‑vested the plaintiffs' case was set out in a document called the 7^th Amended Statement of Claim ("7ASC").  The defence and counterclaim had been amended on five or six occasions, presumably (at least in the main) to answer the various versions of the statement of claim.  Initially the defence was essentially a joinder of issue on the entitlement of the plaintiffs to relief and the counterclaim was limited to declarations that the securities were valid.  But from 1998 the defence raised substantive issues of breach of contract and estoppel and counterclaims alleging misleading and deceptive conduct under the Trade Practices Act 1974 (Cth). I will describe these issues in more detail shortly

3. After the litigation had been transferred to this Court I heard an application in which the plaintiffs sought leave to make further and quite major changes to the statement of claim.  To a significant extent that application was successful (see the 2001 judgment) and it resulted in the filing of the 8^th Amended Statement of Claim ("8ASC").  This is the formulation of the plaintiffs' case as it presently stands.  In that application leave was also given to join LDTC as a plaintiff.  The orders made on the grant of leave to amend the statement of claim required the banks "to file and serve their amended defence to 8ASC and counterclaim" by 14 February 2002.  They did so, although the plaintiffs challenge some of the changes.  Further amendments were made to the defence and counterclaim in accordance with a minute dated 30 April 2003.  I do not understand those amendments to be controversial.

4. I will return to the status of the plaintiffs' claim and the banks' defence shortly.  Before I do, I need to discuss the role of LDTC and some events in 1995 and 1996 that precipitated the institution of the LDTC Action as they are central to the overlap question. 

The convertible bond issues

1. The impugned events of 1995 and 1996 had their genesis in fund raising exercises entered into by the Bell group over a period between December 1985 and July 1987.  In that period the Bell group raised finance by offerings of convertible bonds in five separate issues.  I will deal with each in turn.

2. In December 1985 bearer bonds with a value of $75,000,000 were issued by BGNV to the public and listed on the Luxembourg Stock Exchange.  The obligations of BGNV were guaranteed by TBGL.  There was a term of 10 years with a final redemption date of 10 December 1995.  The bonds carried interest at 11 per centum per annum payable annually on 10 December each year.  The issue was the subject of a trust deed dated 20 December 1985 with LDTC as the trustee.  The bonds could be converted to ordinary shares in TBGL at any time between 20 February 1986 and 1 December 1995.  In fact some were converted leaving an amount outstanding as at 30 June 1989 and thereafter of $60.4 million.  The proceeds from the bond issue were on-loaned by BGNV to TGBL.  This is what is known as "the first BGNV issue".

3. Clause 6(A) of the trust deed for the first BGNV issue is of particular relevance.  The effect of the provision is that on a winding up of BGNV the claims of bondholders and coupon holders (or of LDTC as trustee) against BGNV would be subordinated to the claims of all other creditors of BGNV who were not subordinated.

4. The "second BGNV bond issue" occurred in May 1987 to the value of $175,000,000.  It was for subordinated convertible bearer bonds issued on almost identical terms to the first BGNV issue.  Once again, TBGL was the guarantor and LDTC was the trustee.  The trust deed is dated 7 May 1987 and the final redemption date was 7 May 1997.  Interest at 10 per centum per annum was payable on 7 May in each year.  None of these bonds were converted meaning the entire $175,000,000 remained owing. 

5. In the "third BGNV bond issue" BGNV raised £75,000,000 by the issue of subordinated convertible bearer bonds subject to a trust deed dated 14 July 1987.  The final redemption date was 14 July 1997 and the interest rate was 5 per centum per annum.  Interest was payable on 14 July in each year.  Again the terms of the issue were almost identical to those for the first BGNV bond issue except that bondholders had an early redemption option.  None of these bonds were converted or redeemed and the face value of £75,000,000 remained owing during the relevant period.  TBGL provided a guarantee and LDTC was the trustee.

6. BGNV on‑loaned the proceeds of the second BGNV bond issue and of the third BGNV bond issue to BGF.

7. At the same time as the first BGNV bond issue TBGL issued convertible subordinated registered bonds to the value of $75,000,000 to Heytesbury Securities Pty Ltd, which was later to change its name to Group Financial Holdings Pty Ltd ("GFH").  This is known as "the TBGL bond issue".  Initially the arrangement was documented by a simple agreement in which TBGL and GFH agreed that the bonds were to be issued on the same terms and conditions as the first BGNV bond issue.  A trust deed covering this issue was not executed until 25 July 1988.  LDTC became the trustee for the issue.  Before July 1988 GFH had transferred the bonds to Drayton Capital Pty Ltd.  Both GFH and Drayton Capital Pty Ltd were associated with TBGL.  On or about 28 July 1988 the State Government Insurance Commission of Western Australia, which was later to change its name to the Insurance Commission of Western Australia ("ICWA"), became the sole holder of the bonds the subject of the TBGL bond issue.

8. This issue carried interest at 11 per centum per annum payable annually on 10 December in each year.  It had a final redemption date of 10 December 1995.  The terms of the trust deed were very similar to those in the trust deed for the BGNV bond issues.  The provision relating to subordination of the claims of bondholders against TBGL were, for present purposes, the same.  None of the bonds was converted and the whole amount of $75,000,000 remained owing at the time TBGL went into liquidation.

9. At the same time as the second BGNV bond issue BGF issued convertible subordinated registered bonds to the value of $75,000,000 to GFH (then called Heytesbury Securities Pty Ltd).  This is known as "the BGF bond issue".  Again, the arrangement was initially documented by a simple agreement between BGF, TBGL (as guarantor) and GFH which provided that the bonds were to be issued on terms which were standard for convertible bond issues in the Euromarket at the date of the agreement.  A trust deed covering this issue was not executed until 25 July 1988 by which time GFH had transferred the bonds to Drayton Capital Pty Ltd.  LDTC became the trustee of the issue.  On or about 28 July 1988 ICWA became the sole holder of the bonds the subject of the BGF bond issue.

10. This issue carried interest at 10 per centum per annum payable annually on 7 May in each year.  It had a final redemption date of 7 May 1997.  The terms of the trust deed were very similar to those in the trust deed for the BGNV bond issues.  The provision relating to subordination of the claims of bondholders against BGF were, for present purposes, the same.  None of the bonds were converted and the whole amount of $75,000,000 remained owing at the time BGF went into liquidation.

11. The TBGL bond issue and the BGF bond issue are sometimes together referred to as "the domestic bond issues".  The terms of the first BGNV bond issue, the TBGL bond issue and the BGF bond issue were each affected by a supplemental deed but the amendments brought about by those instruments are not relevant for present purposes. 

Attempts to alter the subordination provisions

1. It is common ground in the litigation that the effect of cl 6(A) of the trust deed for the first BGNV bond issue (and the equivalent provisions in relation to the other bond issues) is that in a liquidation the claims of bondholders and coupon holders would be subordinated to the claims of other unsecured but unsubordinated creditors, including the banks.  But the parties adopt markedly different positions on whether the on‑loans from BGNV to TBGL and BGF respectively are similarly subordinated.  There is a further dispute as to whether the claims of ICWA in relation to the TBGL bond issue and the BGF bond issue (there being no on‑loans of the funds arising from those issues) should continue to be subordinated.  These differences are at the heart of the overlap question. 

2. That brings me to the events of 1995 and 1996 in which some of the plaintiffs took steps to alter the subordination provisions in the trust deeds for the TBGL bond issue and the BGF bond issue as part of funding arrangements for the Main Action.  The way in which this arose is neatly summarised in Carr J's judgment in [192] to [196]:

   "LDTC, as trustee, has lodged a proof of debt against TBGL for [$182.3 million and against BGF for [$96.1 million].  Each respective liquidator has admitted those proofs of debt.

   It appears to be common ground that unless [the plaintiffs] are successful in [the Main Action] there will be no assets available to satisfy the debts of TBGL or BGF.

   In 1995 an agreement was entered into for the funding of [the Main Action]. Funding creditors included ICWA. One condition of the funding agreement was that the liquidators of [the plaintiff corporations] (save for BGNV) would make an application under s 564 of the Corporations Law for a distribution in favour of the funding creditors including ICWA.  The liquidators made such an application in 1996 but Templeman J refused it, considering it to be premature.

   LDTC and ICWA have taken the position that if an order is eventually made under s 564 in ICWA's favour, any distribution of property made pursuant to such an order will not be a distribution subordinated to any other creditor of TBGL or BGF and will not be subject to the subordination provisions contained in [the trust deeds for the TBGL bond issue and the BGF bond issue].

   Furthermore, as part of the financing arrangements referred to immediately above, at the request of ICWA, LDTC exercised its power contained in cl 20 of each of [the trust deeds for the TBGL bond issue and the BGF bond issue] to vary the terms of those trust deeds so as to 'unsubordinate' the bondholders. On 12 June 1995 ICWA executed two supplemental deeds to provide, in effect, that if an order is made by [this Court] under s 564 of the Corporations Law in favour of ICWA, any amount paid pursuant to such order is to be paid to ICWA and not to other unsecured creditors. The supplemental deeds will not be effective until the liquidators of TBGL and BGF execute them. The liquidators have applied to the Supreme Court for a direction under s 479 of the Corporations Law that they execute the supplemental deeds.  Such a direction has not yet been given and the liquidators have not executed the supplemental deeds."

3. It should be noted that the relevant parties to the supplemental deeds are "The Bell Group Ltd (In Liquidation)" and "Bell Group Finance Pty Ltd (In Liquidation)".  Obviously, the organs through whom the companies sought to act in 1995 are the liquidators but the parties to the deeds are the companies.  A little later in these reasons I will explain why I think that factor is significant.

4. In relation to the three BGNV bond issues and the on‑loans it is necessary to look at the pleadings in both the Main Action and the LDTC Action to understand the import of the overlap questions.  I will return to those issues shortly.

The commencement of the LDTC Action

1. In April 1996 the parties to the funding arrangement approached this Court for orders under s 564 as to the distribution of assets to indemnifying creditors. In May 1996 the liquidators also filed a summons for directions under s 479(3) seeking the Court's sanction to them executing the supplemental deeds referred to in par [196] of Carr J's judgment ("the supplemental deeds"). It was envisaged that the s 564 application and the summons for directions would be heard concurrently. In these reasons I will refer to the s 564 application and the summons for directions under s 479(3) as "the distribution proceedings".

2. When the banks became aware of the supplemental deeds they commenced the LDTC Action.  Initially it was concerned only with the attempt to "unsubordinate" the bondholders in the TBGL bond issue and the BGF bond issue.  The banks allege that before the TBGL bonds were issued they received a letter from TBGL, to which was attached a summary document, containing statements, among other things, that the bonds, when issued:

   •Would be direct, unconditional, unsecured and subordinated obligations of TBGL which ranked pari passu without any preference among themselves and with all present and future unsecured and subordinated obligations of TBGL.

   •Would be and remain subordinated in right of payment to the claims of all other unsubordinated creditors of TBGL.

   •Should be regarded as equity by the banks for the purposes of considering balance sheet ratios for TBGL's banking covenants.

3. The banks say they relied on the letter and summary document and on the information memorandum that accompanied the issue.  The banks further contend that this gave rise to an agreement that the bonds would be and remain a subordinated debt of TBGL and that the banks would regard the bonds as equity (rather than debt) in determining ratios.  In the latter respect the banks say that thereafter that is the way they treated the bonds.

4. In the LDTC Action the banks made similar contentions about the BGF bond issue.  They say they relied on a letter and an offering circular.

5. It is then alleged that after it became the holder of the bonds ICWA requested LDTC to amend the trust deeds so as to change the subordinated status of the bonds and to direct LDTC to hold certain distributions made to it by the liquidators of TBGL and BGF on trust for ICWA in priority to unsubordinated creditors.  The banks contend that this is the effect of the supplemental deeds.  The banks sought, among other things:

   •Declarations that the supplemental deeds were in breach of the agreements referred to above and constituted breaches of trusts and a fraud on the power of amendment.

   •Declarations that TBGL and BGF were estopped from executing the supplemental deeds.

   •Injunctions preventing LDTC ICWA from giving effect to the supplemental deeds and TBGL, BGF and their respective liquidators from executing the deeds.

6. Although the first version of the statement of claim mentioned the first BGNV bond issue and the second BGNV bond issue there was no reference to the on‑loans and no relief sought in respect of them.  There is no mention of the third BGNV bond issue but that is not surprising as the proceedings are primarily about the two domestic issues that accompanied the first and second BGNV bond issues.

The Main Action in the Federal Court (1998 to 2000)

1. As I have already indicated the pleadings in the Main Action (and for that matter in the LDTC Action ) have been through a number of changes.  What I am about to describe is the state of the pleadings at the time of Carr J's judgment.  On 24 June 1998 Carr J gave leave to the plaintiffs to amend the statement of claim bringing into effect the 7ASC.  There is reference in some of the papers to an order made on 12 March 1999 giving leave to the banks to amend the defence and, subject to leave to proceed with the cross‑claim being granted, the cross‑claim in accordance with a minute dated 11 March 1999.  I have not been able to locate that order.  The last form of the defence and cross‑claim on the Federal Court file is dated 8 July 1998 and that is the one to which I have referred.  I understand that by the time Carr J delivered judgment in the cross‑vesting application (April 2000) both parties had evinced an intention to seek leave to further amend their respective pleadings but leave had not then been obtained.  I will therefore describe the pleadings as they stood at the time.

2. In the early parts of the statement of claim the plaintiffs plead the financial position of some of the Bell corporations.  In pars 11(a), (b) and (c) they set out the liabilities of TBGL, BGF and BGNV to bondholders under the several bond issues.  The pleading specifically refers to these liabilities as "subordinated".  In par 13(d) and (e) they plead liabilities of BGF and TBGL respectively to BGNV that are (or include) the on‑loans.  In par 13(g) they say that these liabilities were unsecured but do not canvass their status as subordinated or unsubordinated.

3. In answer to pars 13(d) and (e) the banks admit that BGNV was a creditor of BGF and TBGL respectively but say "the borrowing was at all material times a non-current subordinated liability".  Paragraph 13A then deals in detail with the allegation in pars 13(d) and (e) of the statement of claim.  In the preamble it says that the loans were or should be treated as having been at all material times subordinated to the debts of all other creditors of TBGL and BGF.  It goes on in 77 numbered subparagraphs to set out why this is said to be so.  In essence the banks say that the on‑loans were, as a matter of contract, subordinated.  If they were not, certain of the companies led the banks to believe the debts were subordinated and that this was misleading and deceptive conduct under the Trade Practices Act 1974 (Cth). Alternatively, it would be unjust and unconscionable for TBGL, BGF, BGNV and their respective liquidators to deny the fact that the on‑loans were subordinated giving rise to an estoppel.

4. In relation to the TBGL bond issue and the BGF bond issue, the defence does not, in express terms raise issues concerning the supplemental deeds.  But the cross‑claim contains a prayer that TBGL be restrained from breaching the terms of the banking arrangements by which it agreed that it would not, and it would ensure that BGF would not, seek or consent to a variation to the subordinated status of the bonds.  There are subparagraphs within par 13A that allege representations by TBGL to the banks that the terms of the TBGL bond issue and the BGF bond issue would be the same as those for the relevant BGNV bond issues and that the two issues would therefore be identical in terms of effective subordination.

The overlap question and the cross‑vesting order

1. It is apparent that Carr J recognised the overlap question and that it was a significant factor in his decision to transfer the Main Action to this Court.  This, of course, has little to say about the manner in which the two sets of proceedings should be heard and disposed of by me.  But it is interesting to see the summary description of the overlap question that commended itself to his Honour.  It appears in par [203] of Carr J's judgment:

   "The overlap between the two sets of proceedings (and hence the close relationship between them) is usefully summarised by pars 60(p), (q) and (r) of the [plaintiffs'] submissions filed on 7 December 1999, which I accept, and which I reproduce below:

   (p)in the statement of claim in [the LDTC Action] the banks allege that they relied upon the representations contained in the letter of 11 December 1985 and attached summary document (par 18), the information memorandum (pars 23I and N) and in the letter of 15 April 1987 and offering circular (par 31) 'from time to time':

   (i)in determining the liability ratios for the purposes of the banking covenants entered into from time to time and did not treat the liabilities of TBGL or BGF (as the case may be) under the first BGNV issue, [the TBGL bond issue], the second BGNV issue or [the BGF bond issue] as liabilities (but as equity) for the purposes of the balance sheet ratios;

   (ii)were induced thereby 'in the continued conduct of the banking business' of the banks 'with TBGL and other companies in the Bell Group' to treat such liabilities of TBGL or BGF 'not as a liability ranking pari passu' with such liabilities of TBGL or BGF to the banks 'and omitted in the continued conduct of that banking business to consider the possibility' of such liabilities of TBGL and BGF under such bond issues to be ranking upon a liquidation of TBGL and BGF 'wholly or partially in priority to or pari passu with the other unsecured liabilities of' TBGL and BGF;

   (q)then in par 62 of the statement of claim in [the LDTC Action] (IRA-15), the banks allege that, by reason of all of the matters mentioned in the previous subparagraphs, 'it would be unconscionable for TBGL or BGF' to be able to unsubordinate the [bonds issued in the TBGL bond issue and the BGF bond issue] by a variation to their trust deeds 'so as to depart from the representations pleaded above and relied upon by' the banks and in their prayer for relief seek against TBGL, BGF and their respective liquidators declarations that TBGL and BGF are estopped from executing the supplemental deeds of trust seeking to unsubordinate the [bonds issued in the TBGL bond issue and the BGF bond issue]: prayer 2(2) and 3(2) of the relief sought (IRA‑15);

   (r)in pars 13A(70), (72), (73), (74), (75), (76) and (77) of the amended defence and cross‑claim in this proceeding (IRA‑3) the banks alleged that 'from late 1985 to late 1989' (this is obviously what is meant 'from time to time'):

   (i)the banks believed and assumed that the bondholder debt was subordinated;

   (ii)this belief and assumption was engendered, induced and fostered by the conduct, inter alia, of the representations in the letter of 11 December 1985 and attached a [sic] summary, the provision of the information memorandum and [sic] to LMBL and subsequent provision of that to Lloyds Syndicate Banks, the offer document of April 1987 and the letter of 15 April 1987 and the conduct of the banking relationship with the banks from 1985 until about late 1989;

   (iii)from late 1985 to late 1989 the banks entered and conducted their banking relationship upon the false hypothesis and a serious misapprehension and but for the representations would have had the opportunity to reorder their banking affairs on a fundamentally different hypothesis (this is extremely similar if not the same as the allegation that they omitted in the conduct of the banking relationship to consider the possibility of unsubordination);

   (iv)it would be unfair and unjust to permit Bell Group companies to resile from the state of affairs (what is said to be unconscionable);

   (v)the [plaintiffs] are estopped from denying to the banks that the relevant bonds are not subordinated."

The Overlap Question in this Court

1. This brings me to the issues as they arise now.  On 22 July 2003 the hearing of the Main Action commenced.  I decided that it would be desirable if I were to allow the issues in the Main Action to unfold and to delay ruling on the overlap questions until I had a better understanding of the course the proceedings were likely to take.  The plaintiffs have been opening their case and tendering documents since then.  I think the time has arrived when I should, in fairness to the parties (including some who have not formally been joined), make known my views on the overlap question.

2. There are several reasons for this.  I will soon be asked to rule on the admissibility of documents that the plaintiffs have tendered.  The other parties should be afforded an opportunity to involve themselves in that process if they wish.  Secondly, there are outstanding matters peculiar to the LDTC Action (the envisaged reconsideration of the 15 March 2001 orders to which I refer under the next heading being an example) and these should be disposed of.  Thirdly, in the absence of a settlement (and despite the trials and tribulations of everyday life I retain an optimistic, if naïve, streak) these proceedings are likely to extend for a very long time and may involve taking evidence in overseas locations.  It seems to me to be in the interests of all associated with the case that these matters be resolved so that plans can be made. 

3. It seems to be common ground that there are issues that overlap.  But the parties take different views as to the extent of the overlap, the effect of the amendments made to the statement of claim as a result of the 2001 judgment and the entitlement of the banks to raise (by way of amendment to the defence consequent on those amendments to the statement of claim) issues that affect the overlap question.  The difficulties then come together in the question how best to conduct the trials of the Main Action and the LDTC Action so as to resolve the overlapping issues in a way that is fair and convenient. 

The LDTC Action - the current state of the pleadings

1. On 15 March 2001 an order was made in the LDTC Action giving leave to the banks to join BGNV and the Commonwealth of Australia as defendants and to amend the statement of claim in certain respects as set out in a minute dated 14 February 2001.  The minute contained additions and minor variations and wholesale excisions.  Leave was limited to the additions and minor variations and not to the excisions.  The order made it clear that the leave to join parties and to amend the statement of claim was to be reconsidered on a date to be fixed.  What I am about to say reflects the pleading as dealt with by that order.  The envisaged reconsideration is the subject of comment later in these reasons.

2. The excised portions take out all references to the First BGNV bond issue and the Second BGNV bond issue.  The amended pleading leaves intact the allegations concerning the TBGL bond issue, the BGF bond issue and the supplemental deeds.  It expands the range of complaints about the litigation funding arrangements by pleading and seeking relief in respect of two other agreements entered into in 1995 and 1996, namely the Inter‑Creditor Agreement and the Western Interstate Pooling Agreement.  Some or all of LDTC, ICWA, BGNV, the Commonwealth of Australia and the liquidators are parties to those agreements.  I do not need, for present purposes, to explain further the import of those agreements except to say they are part of the overall funding arrangements entered into in relation to the Main Action.  The banks say by entering into the agreements LDTC and ICWA breached duties owed to the banks (among others) as "senior creditors". 

3. There was a third agreement, namely the Western Interstate Assignment Agreement, entered into in March 1996 as part of the litigation funding arrangements.  This agreement was also the subject of the banks' amendment application.  However, as a result of an application made by the plaintiffs in the Main Action to amend the particulars in relation to Western Interstate (and which was only partially successful) the banks do not now press the relevant amendments in the LDTC Action.  Accordingly, I propose not to say anything further about that matter other than to rule formally under par 6 of the orders made 15 March 2001 disallowing the banks' application to amend the statement of claim in the LDTC Action by adding pars 45 to 47B of the minute.

4. I need to set out in a little more detail the way in which the banks have framed their case in relation to the supplemental deeds.  In par 14 and 16 the banks set out certain of the terms of the trust deeds for the TBGL bond issue and the BGF bond issue (and the conditions of those bonds).  They include:

   •The bonds were direct, unconditional, unsecured and subordinated obligations ranking pari passu without preference among themselves and at least equally with all other present and future unsecured and subordinated obligations.

   •In the event of the winding up of the issuer the claims of bondholders would be postponed to the claims of unsubordinated non‑bondholder creditors of the issuer and LDTC would hold any amounts paid to it in the winding up of the issuer on certain trusts being firstly the trustees' costs of executing the trusts, secondly for the benefit of the unsubordinated non‑bondholder creditors and thirdly in or towards payment of the moneys due under the trust deed.

   •LDTC, with the approval of the issuer, could make modifications to the trust deed but only if LDTC formed the opinion that the alteration was not materially prejudicial to the interests of the bondholders.

5. In pars 18 and 19 the banks plead certain covenants and promises said to be owed by bondholders (including ICWA) to LDTC, BGF and TBGL; by TBGL, BGF and LDTC to bondholders; by TBGL and BGF to LDTC; and by LDTC to BGF and TBGL; all of which covenants and promises were held on trust for the unsubordinated non‑bondholder creditors.  The class of unsubordinated non‑bondholder creditors includes the banks.  The covenants and promises include:

   •The liabilities of the issuer pursuant to the trust deed and the conditions of the bonds constituted subordinated obligations of the issuer on a winding up of the issuer.

   •In the event of a winding up of the issuer the claims of the bondholders would be postponed to the banks (among others).

   •In the event of a winding up LDTC would hold any amounts paid to it in the liquidation inter alia for the benefit of the banks (among others).

6. The banks then pleaded that any amount paid to LDTC in the winding up would be insufficient to cover the costs of executing the trusts and the claims of the banks.  They then set out the request by ICWA to LDTC to change the trust deeds that I have already described. 

7. Paragraphs 26 to 40 deal with the banks' contentions as to the consequences of this conduct.  They say that the request by ICWA for LDTC to amend the trust deeds and the execution of the supplemental deeds by ICWA was a breach of the trusts on which ICWA held covenants and promises for the benefit of the banks.  Before executing the supplemental deeds LDTC had not formed the opinion that the alterations would not materially prejudice the interests of the bondholders or, if it had, it was not entitled to do so because the alterations were relevantly prejudicial.  Neither could LDTC alter the trust deeds without the consent of the banks, which it had not obtained.  Accordingly, the execution by LDTC of the supplemental deeds was in breach of trust, was a breach of covenants and promises which it made to BGF and TBGL and which LDTC held on trust for the benefit of the banks.  It was also a fraud on the power of amendment.  There were similar breaches by TBGL and BGF.  Finally the liquidators of TBGL and BGF were not entitled to execute the supplemental deeds without the consent of the banks, which consent had not been obtained.  If they did so without consent they would be participating knowingly in breaches of trust by the companies.

8. There is one aspect of the defence and counterclaim lodged by LDTC and ICWA in the LDTC Action that I should mention. In par 41 reference is made to an application to the Court under s 564 of the Corporations Law for a distribution to funding creditors, including ICWA. Paragraph 41A pleads that if an order is made under s 564 in favour of LDTC and ICWA any distribution to them will not be a distribution subordinated to any other creditor and will not be subject to the subordination provisions of the trust deeds for the TBGL bond issue and the BGF bond issue. They seek a declaration that this is in accord with the proper construction of s 564. Paragraph 42 contains an alternative plea, the effect of which is that if the Court is to make effective orders under s 564 the trust deeds should be amended and that cl 20 of the trust deeds is sufficient authority for the amendment. Not surprisingly the banks join issue on this construction question.

9. TBGL, BGF and their liquidators have also lodged a defence (but not a counterclaim) in the LDTC Action.  The latest version of the defence is dated 31 July 1997.  Paragraphs 43A to 43C of the statement of claim refer to ABFA and LSA2 and plead that it was a term of those agreements that TBGL and BGF would not seek to alter the subordinated status of the bonds.  In par 26A of the defence the defendants plead that ABFA and LSA2 are not valid or are held on trust for TBGL and BGF.  The alternative claim is that the banks cannot rely on them for the reasons pleaded in the Main Action.  A copy of what was then the 5^th Amended Statement of Claim is annexed to the defence.

The Main Action – the current state of the pleadings

1. This brings me to the 8ASC and the defence and counterclaim dated 30 April 2003.  It has to be borne in mind that while the overlap question has been a factor in the proceedings for some time it arises now largely because of the amendments to the defence and counterclaim which the banks say they have made as of right but for which the plaintiffs contend leave is required.  There are several parts of the 8ASC and the banks response to them in which the subordinated status of the several bond issues does or could reasonably be argued to arise.  I propose now to go through some of them.  The list that follows is not intended to be exhaustive.

2. I should also mention that in accordance with the orders made on 22 November 2001 and 19 December 2001 the plaintiffs filed a reply and defence to counterclaim.  Although the order does not in express terms say so, I think it is common ground that it is an "anticipated" reply as, depending on the resolution of the overlap question, the form of the defence and counterclaim may change.  I understand the anticipated reply to have been drafted so as to meet the defence and counterclaim in the form in which it was filed in February 2002.  I will proceed on that basis.

The financial position of the Bell group companies

1. As with 7ASC the current version of the statement of claim sets out the financial position of some of the Bell corporations.  In pars 11A to 11D and 11H to 11J the plaintiffs plead the three BGNV bond issues in a way that is relatively uncontroversial.  Paragraphs 11E and 11F plead the on-loans.  Paragraph 11K deals with the respective liabilities of BGNV, TBGL and BGF under the several bond issues and on‑loans.  In par 12(a) and (h) the liabilities of TBGL and BGF to bondholders under the TBGL bond issue and the BGF bond issue respectively are set out. 

2. Nowhere in pars 11A to 11D, 11H to 11K, 12(a) or 12(h) (or in the particulars to those paragraphs) is there any reference to the bonds or liabilities arising under them being "subordinated".  Nonetheless, I do not understand the plaintiffs to contend other than that the three BGNV bond issues (but not the on‑loans) were subordinated or that the TBGL bond issue and the BGF bond issue was, is and will remain subordinated unless and until the supplemental deeds become effective.  This cannot occur without court intervention.  I note in passing that the Statements of Net Assets for TBGL and BGF respectively seem to have been constructed on the basis that the liabilities under the TBGL bond issue and the BGF bond issue respectively are subordinated: see MISP. 00026.014 tiff 28 line 75 and MISP.00026.003 tiff 97 lines 76 and 128 and tiff 98 line 160.  The Statement of Net Assets for BGNV does not comment on the subordinated status of either the liability to the bondholders or in relation to the on‑loans.

3. It is clear from the preceding paragraphs that the plaintiffs raise the liabilities under the bond issues as matters relevant to the financial position of the several relevant corporations.  The financial position of the corporations is central to the case in ways that need not be elaborated.  While it is true that "a debt is a debt is a debt" issues of when and in what circumstances a debt becomes recoverable may be relevant to a proper understanding and appreciation of the financial position.

The subordinated status of the on-loans

1. The gravamen of what was par 13A of the defence as at 8 July 1998 is now to be found in an expanded form in pars 11E to 11ER, especially in par 11ED.  Much of the portions of the statement of claim in the LDTC Action that have been excised in the minute of 14 February 2001 now find their way into these paragraphs of the defence in the Main Action.  A summary of the banks' position concerning the BGNV on‑loans is to be found in par 11EA of the defence:

   "In further answer to the allegation in paragraph 11E of the statement of claim that BGNV on‑lent the moneys raised under the Three BGNV Issues to TBGL and BGF, the [banks] say that:

   (a)for the reasons, and to the extent set out, in paragraphs 11EB to 11ER below the said loans were, or should be treated as having been, at all material times, subordinated to the debts of all other creditors of TBGL and BGF for one or more of the following reasons:

   (1)there were contracts or contractual terms between TBGL and BGNV, and BGF and BGNV to the effect that the loans were subordinated to the extent pleaded below;

   (2)if there were no such contracts or contractual terms there was an estoppel between TBGL, BGF and BGNV to the same effect;

   (3)there were contracts for the first two of such loans, between TBGL, BGNV and [others], on the one hand, and various of the banks, on the other hand, to the effect that the liabilities of TBGL and BGF respectively to BGNV pursuant to those loans would, on a liquidation of TBGL and BGF, be subordinated to the same effect;

   (4)in any event, in respect of all three loans, the plaintiffs are estopped as against the banks from denying that the said loans were subordinated to the same effect."

2. In relation to each of the first BGNV bond issue the banks plead (par 11ED (17)) that TBGL wrote to the banks confirming previous advice that TBGL, through a foreign finance subsidiary (identified as BGNV), was to issue $75,000,000 in convertible subordinated bonds and that that interests associated with Robert Holmes à Court (then a principal of the group) would take a further $75,000,000 of convertible subordinated bonds to be issued by TBGL.  The letter went on to state that the two issues, with certain exceptions (including the identity of the issuer, but not the nature or extent of subordination), would be identical.  It is said that this constitutes a representation that it was the view of TBGL (and that it was the fact) that the two issues were, or would be, identical in terms of effective subordination.  Paragraph 11ED (43) contains a plea in substantially similar terms in relation to the second BGNV bond issue.  The third BGNV bond issue is dealt with in pars 11ED (49) to (58).  The nexus between the terms of the BGNV bond issues and the terms of the TBGL and BGF bond issues (at least in so far as they reflect on the subordination question) are dealt with in further and better particulars to pars 11ED (22), 11ED (48) and a section within par 11E (71) headed "particulars of position of subordination arising from capital raising to interests associated with Mr Holmes à Court".

1. In pars 11ED (82) to (86) the banks plead their belief and conduct resulting from the representations and conduct they say was engaged in by the Bell companies.  It is not much changed from the same allegations in par 13A of the previous version of the defence.  It is to this effect.  From late 1985 to late 1989 or early 1990 the banks entered and conducted their banking relationship with the group in the belief and on the assumption that all debt brought about by the bond issues was subordinated.  If that were not the case then the banks had entered into, conducted and remained in that relationship on a false hypothesis and a serious misapprehension and but for the representations would have had the opportunity to reorder their banking affairs on a fundamentally different hypothesis consistent with the supposed non‑subordination of the debts.  In pars 92 to 96 of the reply the plaintiffs put these matters firmly in issue.

2. The legal consequences of the chain of events are set out in par 11EE in which it is said that, in relation to each of the on‑loans from the three BNGV bond issues:

   "(i)the claims of BGNV against TBGL [or BGF] in respect of [the relevant on-loan] would be postponed to claims of unsubordinated creditors of TBGL [or BGF]; and/or

   (ii)if any amount was paid to BGNV in the liquidation of TBGL [or BGF] in respect of [the relevant on-loan] such money would be held on trust by BGNV for satisfaction of the claims of unsubordinated creditors of TBGL [or BGF] until those claims had been satisfied in full,

   and accordingly such were terms of [the relevant on-loan]."

3. Paragraphs 11EF and 11EG put the contractual claim in different terms, namely that the subordination of the on-loans was an implied term of the on‑loan arrangements.  This is the contractual claim referred to in par 11EA (1).

4. In pars 11EK to 11EQ the banks plead that in consideration of their promise to treat the liabilities of TBGL (or BGF) "arising from the raising and deployment of funds" from the December 1985 and the May 1987 bond issues as equity when considering ratios, the relevant companies agreed that liabilities "arising from the raising and deployment of funds" would be subordinated in a liquidation.  The banks say that if the on‑loans were not subordinated it would be a breach of these agreements and the relevant plaintiffs are not entitled in these proceedings to set up and rely on such breaches.  This is the contractual claim referred to in par 11EA (3) of the defence.

5. The estoppel claims referred to in pars 11EA (2) and (4) are described in pars 11EJ and 11ER.  In pars 11EH and 11EI the banks plead that if the on‑loans are not subordinated as a matter of contract then it arose as a consequence of an oversight or mistake such as to require BGNV to make restitution.  In any event, BGNV would be obliged in equity to account to unsubordinated creditors of TBGL and BGF.  The estoppel claims are said to arise from the fact that to treat the loans as unsubordinated would undermine the commercial intention of the parties in the fundraisings and it would be unfair and unjust.  And it would be unfair and unjust for the plaintiffs to resile from representations made or common assumptions held and on which the banks relied. 

6. In par 5 of the reply the plaintiffs join issue with the banks on the subordination issue.  In answer to par 11EA of the defence the plaintiffs deny the allegations and say there were no contractual terms as alleged and nor were there any estoppels.  Importantly, the effect of pars 12(h) and 49(f) of the reply is to deny that there was any representation that the TBGL bond issue and the BGF bond issue would be identical in terms of effective subordination to the relevant BGNV bond issues.  The plaintiffs deny that there were contracts as alleged in pars 11EK to 11EQ of the defence, pointing out, among other things, that BGNV was not a party to the alleged contracts.  I do not need to canvass the issues raised in answer to the estoppel claims in pars 11EJ and 11ER.

7. Similar issues arise in the counterclaim, where in par 144 and following the banks allege that TBGL, BGF and BGNV (among others) made statements and representations and engaged in conduct which represented to the banks "that all liabilities of TBGL [and BGF] arising from the raising and deployment of moneys from all issues of convertible subordinated bonds (whether as direct issuer or otherwise)" were subordinated.  This, the banks allege, was conduct engaged in trade and commerce and if the liabilities were not subordinated, the conduct would be misleading and deceptive under the Trade Practices Act 1974 (Cth), s 52.

8. One of the points emerging from this is that the terms of the TBGL bond issue and the BGF bond issue are in issue between the parties and so too is the question whether, assuming the bondholders were subordinated, the "effective subordination" would extend to the on‑loans.  This is relevant both to the contract claim (in this aspect of the litigation), the estoppel claims and the Trade Practices Act claim.  In this respect it is not a new issue.  To the extent it hinges on pars 11ED (17) and (43), for example, it appears in pars 13A (12) and 13A (28) of the 8 July 1998 version of the defence and counterclaim.  The Trade Practices Act claim appears in pars 100 and 101.

9. I need also to draw attention to par 11EE of the defence (which I have set out earlier) and the plaintiffs' reply to it.  In the reply the plaintiffs put in issue the terms of the subordination contended for by the banks.  The effect of par 97 of the reply (in answer generally to pars 11EA to 11ER of the defence) is a contention that even if (contrary to the plaintiffs' case) representations were made to the banks that the on‑loans would initially be subordinated the relevant representations did not go so far as to say the loans would always remain subordinated. 

10. There is another feature of the subordination argument that I need to mention.  It arises from par 59D of 8ASC:

    "Immediately before the commencement of, during and after the Scheme Period, the Banks believed or suspected that the BGNV On‑loans were or might not be subordinated or, in any event, were or might not be treated as subordinated in a winding up of TBGL and BGF, or in any valid and effective restructuring of the financial position of the Bell Participants involving TBGL and BGF and their creditors, and, as such, BGNV would or might compete with the Banks as an unsecured creditor."

11. In the particulars the plaintiffs contend that this possibility was first raised in conversations between a director of TBGL and officers of one of the banks on 15 December 1989 and was the subject of legal advice to which many, if not all, of the banks were privy from 19 December 1989 and following.  Although BGNV was a wholly‑owned subsidiary of TBGL it acted through its sole director, a Netherlands Antilles corporation called Equity Trust (Curacao) NV.  Clause 17.6(d) of each of ABFA and LSA2 is to the effect that TBGL would use reasonable endeavours to cause BGNV to enter into a subordination agreement by which its rights and claims as a creditor of BGF and TBGL would be subordinated to any claims by the banks.  On 31 July 1990 Equity Trust executed a deed ("the BGNV Subordination Deed") by which it agreed that until the banks' debts had been repaid it would:

    •subordinate its rights and claims as a creditor of (among others) TBGL and BGF to any rights and claims by the banks against those companies;

    •not demand any moneys owing or seek to enforce their rights or claims against those companies without the consent of the banks until liquidation of that company; and

    •hold on trust for the banks any payment received as creditor prior to such liquidation and distributions received in any such liquidation.

12. The BGNV Subordination Deed is one of the transaction documents pleaded in par 19 in relation to which the plaintiffs seek a declaration that it is liable to be set aside in equity: see par 71 and the particulars par 71(d)(i)(F).  The belief or suspicion referred to in par 59D is called in aid by the plaintiffs in support of, among other things, the equitable fraud claim in par 65M and par 65MA.

13. The banks simply deny each and every allegation in par 59D.

The effect of the transaction documents on the subordination issue

1. Paragraph 16 of 8ASC identifies certain of the transaction documents that were entered into on 26 January 1990 which are critical to the case.  One is the Australian Banks Facility Agreement ("ABFA") and another is the Lloyds Supplemental Agreement No 2 ("LSA2").  Clause 16.10 of the agreements contains an undertaking by TBGL to the effect that it would not, and would ensure that no member of the group would, seek or consent to a variation in or amendment to (among other things) the subordinated status of the bonds.  This was, of course, subject to first obtaining the approval of the banks. 

2. In par 71A of 8ASC the plaintiffs say that ABFA and LSA2 (among others) are void, or alternatively voidable at the option of the plaintiffs and have been avoided or rescinded.  The banks deny any entitlement to the plaintiffs to set aside those agreements and seek a declaration that they are valid and effectual and capable of being enforced.  In par 71AC the banks further plead that:

   "(a)the promises contained in the instruments pleaded in paragraph 16 of the statement of claim are not void, have not been so avoided and the Court would not grant any relief sought in respect of such promises;

   (b)only those parts of the instruments referred to in paragraphs 16 and 19 of the statement of claim which on the Court's findings were entered into by reason of the breaches alleged with the knowledge alleged or which constituted an equitable fraud or an inequitable and unconscientious bargain as alleged are void, have been avoided or would be subject to the Court granting the relief sought and such parts are severable from the instruments which otherwise remain valid and enforceable by the Banks."

3. I am assuming (although it does not appear clearly from the further and better particulars to par 71AC of the defence) that the banks will argue that cl 16.10 is one of the provisions covered by that plea.  The banks then raise a positive case in the counterclaim (par 153 to par 155) that the execution of the supplemental deeds by TBGL and BGF would be a breach of cl 16.10 of ABFA and LSA2 and a breach of the contracts pleaded in pars 11EK to 11EP of the defence.  They seek injunctive relief to prevent such a breach.

4. The plaintiffs deal with the severance issue in the reply to par 71AC and par 153 of the defence: see, for example par 159 (c) and par 172(a)(iv)(F) of the reply.  The preamble to par 159(c) asserts that the promise contended for by the banks is not one that a court would, or as a matter of discretion, ought to sever or enforce at the behest of the banks "as the court would have regard to the possible effects of that promise at the time it was entered into and the effect that it now has".  The elucidation of that plea makes it clear that the words "the effect that it now has" centre on the supplemental deeds: see, for example pars 159(c)(iii), (vi) and (viii) of the reply.  I think those words are significant.  I will explain why a little later in these reasons.

The parties' impetration to equity

1. The plaintiffs' case has always been centred on an appeal to equity.  For example, in pars 71A, 80 and 86 of 7ASC the plaintiffs contend that the banks received certain monies as constructive trustee for some of the plaintiffs and was liable to account to those parties for the funds so received.  They also contend that the banks are liable to pay equitable compensation for losses relating to those receipts.  This is now brought together in par 71 of 8ASC.  But this pleading adds a significant additional limb to the case based in equity.  It is the addition of the equitable fraud claim and that based on an unconscionable bargain. 

2. I do not need to describe the equitable fraud and unconscionable bargain claims in detail as I have done so in the 2001 judgment.  But there are two aspects of them that are of particular relevance.  First, the general claim for equitable relief identified in par 71 of 8ASC includes the equitable fraud claim.  Secondly, LDTC (which was added as a plaintiff as a consequence of the 2001 judgment) makes a separate claim based on equitable fraud: see par 125.

3. In par 19A the plaintiffs plead that the general effect of the transactions was to render all significant assets of the Bell group available to the banks "in priority to the claims of all other creditors and future creditors" of the group.  In listing the creditors of the group in par 12 the plaintiffs have included the liabilities under the TBGL bond issue and the BGF bond issue.  It seems therefore that the plaintiffs contend that one result of the transactions was to give to the banks priority over the holders of the TBGL bonds and the BGF bonds (namely LDTC as trustee for ICWA).  In par 33C the plaintiffs contend that the effect of the transactions was to cause the corporations to lose access to their assets to meet indebtedness to creditors, which would include LDTC as trustee of the TBGL bond issue and the BGF bond issue.  By way of answer, the banks, in par 33C(c)(3) of the defence call in aid the matters pleaded in pars 11EA to 11ER and par 153, which include the banks' case on the subordination of the on‑loans and on the contractual provisions limiting the right to change the subordinated status of the bonds.  In par 119 of the reply the plaintiffs put in issue the effect for which the banks contend in par 33C(c)(3).

4. Regard should also be had to the pleas relating to the conduct of the directors, their knowledge of the effects of the transactions and the breaches of their duties to act in the interests of creditors in pars 34, 37, 39 of 8ASC.  The allegation that the banks knew of these matters (or believed or suspected them) is set out in pars 50 to 59A of 8ASC.  Included in this is the allegation in par 59D that the banks believed or suspected that that the on‑loans might not be treated as subordinated in a winding up of TBGL or BGF.  All of this culminates in the pleas in pars 63A to 65K that the banks made the gains or received the proceeds from realisation of assets as knowing participants in the directors' breaches of duty and that such gains and proceeds are held as constructive trustee.  This includes an allegation in par 65H that the banks obtained rights under, among other things, ABFA and LSA2, and held those rights as constructive trustee. 

5. Everything pleaded in pars 1 to 65K of 8ASC is then called in aid of the equitable fraud claim.  In par 65M the claim is put as an imposition or deceit on creditors (other than the banks) of the Bell companies.  This would include LDTC as trustee for the BGNV bondholders and for the holders of bonds in the TBGL bond issue and the BGF bond issue.  It is also put as an inequitable and unconscientious bargain:  par 65MA.  That plea is expanded upon in further and better particulars.  In summary, it is said that the Bell companies that entered into the transactions did so without protecting the interests of all their creditors and acted to their disadvantage.  They suffered from a special disability of which the banks knew or ought to have known.  The banks took unconscientious advantage of the position of disadvantage in which the Bell companies were placed.  The particulars refer back to, among other things, par 33C of 8ASC.

6. In par 125 LDTC, as trustee for each the three BGNV bond issues, advances an equitable fraud claim based on imposition or deceit.  It calls in aid everything pleaded in pars 1 to 65G.

7. In the preamble to their prayer for relief the plaintiffs say they are ready, willing and able to do equity in respect of the relief granted to them.  One of the more contentious elements of the defence is par 130.  In it the banks allege that the plaintiffs are not ready, willing or able to do equity.  Par 130(e) is in these terms:

   "the plaintiffs do not offer or purport to offer to restore the Defendants to the position of the Banks prior to the entry into the Transactions and, in particular, the eighth and ninth plaintiffs now intend, unless restrained, to execute supplemental deeds amending the subordination terms of the trust deeds of the BGF Issue and the TBGL Issue notwithstanding the matters pleaded in paragraphs 11EA to 11ER and paragraphs 153 to 158 of the counter‑claim which the Banks repeat herein."

8. I will consider par 130, and in particular par 130(e), in more detail a little later. It is sufficient at this stage to say that the plaintiffs deal with the issue comprehensively in par 172 and par 173 of the reply. In essence they say it does not disclose a reasonably arguable defence because the supplemental deeds can have no effect unless and until orders are made under s 564. In any event, even if the matters asserted by the banks were made out it would not establish that the plaintiffs were unable or unwilling to do equity.

9. I note that while there were claims for equitable relief in 7ASC there was no express plea that the plaintiffs were ready willing and able to do equity.  This may explain why there was no equivalent to par 130 in the 8 July 1998 version of the defence and counterclaim.

10. The contentions made in par 130 are not the only ones in which the banks call equity in aid.  For example, in par 11EJ (1) there is a plea that it would be "unfair and unjust" to permit BGNV to argue that the on‑loans to TBGL and BGF in the event that either was wound up were unsubordinated.  There is a broad plea to the same effect in par 11ER (1).  The LDTC claim is defended on the basis that the enforcement of claim would be unconscionable: see par 125(b)(vi).  In par 113(d)(8) the banks contend (in what is in some ways a reverse appeal to equity) that SCABL was estopped in equity from relying on the demands it issued in December 1989 (with the effect that there was no default under the SCABL facility at the time).  The banks' estoppel case or cases that appear, for example at pars 11EA (4), 11EJ (2), 11ER (2), can be categorised largely as estoppels by representation, convention and conduct.  But it seems that they rely on equitable principles. 

11. For the sake of completeness I should add that par 125 of the defence contains a plea in relation to the LDTC equitable fraud claim that is not dissimilar to the one contained in par 130.  It too calls in aid some notions of equity.

12. The plaintiffs appear to have recognised the equitable basis of the estoppel pleas:  see, for example par 5(c)(ii) and par 104(d) and (e) of the reply.

The Bankruptcy Act claim

1. Since its inception the Main Action has contained claims by the plaintiffs that certain of the transaction documents are liable to be set aside as dispositions of property that were entered into with intent to defraud creditors or that were settlements of property that were void or liable to be avoided under the combined effect of the Bankruptcy Act 1966 (Cth), s 120 and s 121, and of the Corporations Law, s 565, or of the Companies Codes, s 451.  In the amendments brought about between the 6^th Amended Statement of Claim and 7ASC the range of documents said to be subject to these claims was extended to include the BGNV Subordination Deed.  Those amendments also included an alternative claim that the impugned documents were alienations of property liable to be avoided under the Property Law Act 1969 (WA), s 89. That section renders voidable voluntary conveyances done with intent to defraud creditors.

2. The amendments to 7ASC have been carried through into 8ASC with further changes that are not material for present purposes.  For sake of completeness I would simply add that as the BGNV Subordination Deed is governed by the law of the Australian Capital Territory, the Property Law Act claim has been changed to a claim under the Imperial Acts (Substituted Provisions) Act 1986 (ACT). I understand that the relevant provisions of that legislation are in similar terms to the Property Law Act 1969 (WA), s 89.

1. The references to the "deployment" of moneys could embrace the on‑loans.  I would understand "effective" subordination to mean that as a matter of contract and commercial understanding the actual result in the way the on‑loans would rank with the bank lending was to be no different from that applying to the moneys raised in the relevant BGNV bond issue which was the source of the funds.  And in terms of contract and commercial understanding the contention is that the subordinated status of the first and second BGNV bond issues and the subordinated status of the accompanying domestic bond issues were to be the same.  This process of reasoning would lead to a conclusion that subordinated status of all three limbs, namely the BGNV bond issues, the domestic bond issues and the relevant on‑loans, would be similar.

2. So it is, then, that evidence and argument going to the contractual foundation of each of the limbs may be relevant to one or more of the other limbs.  This may not necessarily and inevitably be so but it might be.  It would be difficult to divide the material into neat compartments so as to treat matters relating to the domestic bond issues (including the 1995 attempts to alter the contractual foundation) as discrete from those attending the BGNV bond issues and the on‑loans. 

3. A specific issue has arisen that illustrates what I have been trying to say.  In the correspondence emanating from, and the internal documentary records of, some of the banks in December 1989 and throughout 1990 there is evidence of a confusion of thought among the officers of some of the banks as to whether "the subordination problem" affected only the on‑loans or whether it might extend to the claims of bondholders against the issuer or the guarantor.  It is no part of the case that the liabilities of the issuer and the guarantor to the bondholders was other than subordinated.  Nor is it part of the plaintiffs' case on bank knowledge and conduct that the officers were affected by that confusion.  But it might yet arise as part of the factual matrix going to explain what happened during that period.

4. These concepts are to be found in par 13A of the defence in its existing form:  see, for example par 13A (28)(f).  Although they are expanded in pars 11EA to 11ER the fundamental import of the argument is not new. 

The involvement of equity

1. Earlier in these reasons I described the parties' impetration to equity.  Again, I will not repeat what I have already said.  Instead, I will relate some of the important features to the problems I have identified in disentangling questions arising with respect to the BVNV bond issues and the on‑loans from those that relate to the domestic issues

2. Put at its simplest the banks say the liabilities of the issuers (BGNV, TBGL and BGF) to their respective bondholders and coupon holders were, and remain, subordinated to their claims.  Similarly the claims of BGNV against BGF and TBGL in respect of the on‑loans were, and remain, subordinated to their claims.  In this respect the banks say that the subordination of the on‑loans applied at all times from and after the date on which they were made and they do not rely on the BGNV subordination deed for the fact of deferral.  The reasons why the banks say the on‑loans are subordinated has been set out at length earlier.  The relevant point here is that part of the case as to why the banks say the on‑loans are subordinated relies, at least in part, on equitable principles. 

3. For their part the plaintiffs contend that the on‑loans were never subordinated.  The reasons for this are set out in detail in the reply.  Briefly they are that no contracts arose as alleged and there were no representations that engendered the beliefs said to have been held by the banks or that could, in equity or at law, found the estoppels alleged.  The plaintiffs further say that the BGNV subordination deed cannot alter the unsubordinated status of the on‑loans because it is void, voidable, liable to be set aside or is otherwise ineffective.  The reasons why this is so include resort to equity in many guises.  As to the BGNV bond issues and the domestic bond issues, the plaintiffs do not argue other than that the liabilities of the issuer and the guarantor to the bondholders are other than subordinated.  But they assert the right to amend the subordinated status of the bonds for the limited purposes and in the defined and confined circumstances described in the supplemental deeds.

4. This brings me squarely to par 130 of the defence.  Broadly speaking this paragraph relates to the plaintiffs' claims for relief based on breaches of duties by the directors of various of the plaintiff companies leading to Barnes v Addy claims, those sounding in equitable fraud and an unconscionable bargain and the claims made by LDTC.  Paragraphs 130(b), (c) (c1) and (d) contains the following assertions by the banks in relation to the claims made by the plaintiffs (other than LDTC) in which they seek equitable relief:

   •The delay (until the formulation of 8ASC) in advancing the claims was unreasonable (the plaintiffs having been aware of the underlying facts), was conduct amounting to a waiver of equitable rights or acquiescence in the alleged infringement of the rights or amounted to laches.

   •The enforcement of the rights would be unconscionable.

   •If the court were to find an agreement of the type pleaded in par 11EQ, equity ought not, as a matter of discretion, countenance relief that would be a breach of that agreement.

   •If the court were to find common assumptions as pleaded in par 11ED, equity ought not, as a matter of discretion, countenance relief that would be a contrary to those common assumptions.

   •The banks may be entitled to a set‑off.

5. What then follows is par 130(e), which I have already set out and in which the banks plead that the intention of the plaintiffs to enter into the supplemental deeds is contrary to their obligations, as claimants for equitable relief themselves, to do equity.

6. The plaintiffs contend that this proposition is not good in law. They argue a number of points. First, that the liquidators are doing no more than what is necessary to give effect to their duty under s 478(1)(a) of the Corporations Law "to cause the company's property to be collected" and to increase the assets of the companies.  Secondly, that the true effect of par 130(e) is to have determined in the Main Action matters relating to priorities of creditors in the liquidation of the companies and matters relating to the distribution of the proceeds of recovery in the Main Action among creditors.  The plaintiffs say this is impermissible.  Thirdly, that "doing equity" does not involve considerations that might flow from and after the initial grant of equitable relief and nor does it involve determining theoretical questions.  Fourthly, the banks' proposal presents a danger of confusing the liquidators' duties to get in assets with the duties and functions to determine creditors' claims (including priorities) and to distribute a dividend to them if and when property becomes available.  They are distinct and separate functions.  Fifthly, the assertion of independent causes of action by the banks in the counterclaim cannot found an argument that the plaintiffs are refusing to do equity when seeking relief in respect of some other causes of action.

7. The plaintiffs seem to acknowledge that the existence (or otherwise) of contracts for the various bond issues as alleged by the banks can be determined in the Main Action. But they contend that the banks' contract and estoppel claims and prayers for injunctive relief in relation to them cannot be determined finally in the Main Action. This is because (and this is a brief summary only) for the banks to succeed in those claims (I suspect especially the estoppel claims) the banks will need to establish they would be prejudiced by the supplemental deeds. This, the argument continues, could only be established if a payment due to LDTC or ICWA was property subject to the trusts governed by the trust deeds for the domestic bond issues. This, in turn, depends on moneys becoming available as the fruits of a judgment in the Main Action and then being the subject of an order under s 564 of the Corporations Law.  The plaintiffs contend that matters relating to the trusts (and what flows from them) are at the heart of the LDTC Action and have no part in the Main Action. 

8. If only it were that simple.  The difficulty is that the estoppel and contract claims are matters of substantive defence.  They do more than set the factual matrix from which the counterclaims in pars 155 to 157 spring.  They challenge the plaintiffs' entitlement to all recovery in the Main Action.  As the banks have submitted (and I accept), the contract and estoppel claims are inextricably bound up with the allegations in 8ASC (particularly par 12 and par 33C) that the effect of the scheme and the transactions was to disadvantage the creditors of the Bell participants, including the bondholders.  While the plaintiffs concede the subordinated status of the domestic bonds at the time of the transactions it is clear from the course of events that the plaintiffs believe cl 20 of the trust deeds permit amendments which would alter that position.

9. When the disentangling problem and the involvement of equity are taken together I am compelled to the conclusion that the banks must be permitted to challenge, in the Main Action, the proposal to execute the supplementary deeds.  The plaintiffs seek equitable relief and they do so to a significant extent.  The banks say, by way of defence, that the plaintiffs are not entitled to rely on contracts and conduct by the relevant Bell companies through their directors that goes directly to the questions raised by the subordination debate.  They do so on grounds that rely on equity.  In addition, they do so on a factual basis in which the terms and circumstances of the BGNV bond issues, the domestic bond issues and the on‑loans are inextricably interwoven.

10. In my view there is a grave danger of "falling between two stools" if the equities on which the respective parties seek and resist relief are other than fully canvassed in the Main Action.  And this danger would be compounded if the constituent elements of par 130 were to be separated – with pars 130(a) to (d) being dealt with in the Main Action and par 130(e) in the LDTC Action.  A complete and effective assessment of the competing equities will involve deciding (among other things) whether the contracts alleged by the banks exist, what are their terms, how they affect the subordinated status on the on‑loans and how they interrelate not only with the BGNV bond issues from which they emanate but also with the domestic bond issues.  That, in turn, raises the question of what, if any, representations were made, whether they were relied on, and issues of prejudice generally.  It will also involve considering whether the contracts or the representations go so far as to recognise the "effective" subordination of liabilities arising from "the raising and deployment of funds" in the several bond issues.  A similar factual base is relied on to found the alleged estoppels. 

11. There are many variations to the ways in which this may all play out.  But suppose, for the purposes of this application only, that I were to find in favour of the banks on all or some of the contract questions, the representations and the conventions and conduct on which the banking relationship was formed and continued.  The matter might, as the plaintiffs submit, rest with the making of declarations.  I might, in the exercise of discretion, decline to go further and order equitable relief the effect of which would otherwise be to prohibit the plaintiffs from doing anything other than act in accord with the declarations.  But equally I might decide that the integrity of the declarations needs to be supported by injunctive or similar relief.  This will depend on an overall assessment of the respective equities.  To decide where the equities might rest without taking into account whether the liquidators could, as a matter of contract (and here I distinguish between matters of contract and those arising under the Corporations Law and, perhaps, the Trustees Act) and in other proceedings, alter the import of a potential result of those findings carries with it a risk of miscarriage. 

12. As I have indicated earlier, it has to be borne in mind that the parties to the supplementary deeds are the relevant companies, not the liquidators.  The liquidators are, of course, the guiding minds of the companies.  But the entity by or in relation to which the banks say the equities were created are the same entities that now propose to act in a way that the banks say is contrary to those equities.  Paragraph 130(e) has to be seen in this light.  At first glance it appears curious that equities that arose in 1990 and before can be affected by conduct, or potential conduct, some five years later when the entities concerned are under different control and in markedly different circumstances.  But they remain the same entities and it is arguable that the later conduct might be relevant to the equities created at the earlier time.

13. I have not overlooked the plaintiffs' characterisation of the banks' estoppel case as being incapable of finalisation unless and until trust property has become available through an order under s 564. This may be correct but not necessarily so. Depending on the evidence and the findings on the representations and course of conduct, the continuance of the proposal to execute the supplementary deeds might be sufficient prejudice for these purposes. This is all a matter or argument. I should add that I am not here confusing the search for trust property as indicative of prejudice in relation to estoppel claims with that which might trigger the jurisdiction under s 564. The later is a different question. I accept, as Templeman J said in an earlier interlocutory application, that the jurisdiction to make an order under s 564 does not arise until trust property to which an order might attach can be identified. That is not the issue to which I am now referring.

14. The next statement hardly needs to be made.  This is an application in relation to pleadings and as to the way in which complex litigation is to be conducted.  Save to the extent necessary to establish that something is arguable nothing contained in these reasons is to be taken as indicating that I have reached a view, tentative or otherwise, of the likelihood of the banks or the plaintiffs making good the propositions for which they respectively contend.  I appreciate that the ramifications of this may be far reaching.  I will return to those ramifications a little later.

The severance question

1. I take much the same view concerning the severance question.  As I understand the law, the test for severance is much the same where a provision is struck down for illegality as it is where the offending provision is uncertain:  Whitlock v Brew [1967] VR 803 at 806. For the purposes of this argument I have assumed that the grounds (if made out) on which ABFA and LSA2 are sufficiently akin to illegality to make those principles applicable.

2. Cheshire & Fifoot, 8^th Australian ed, par 6.17, in commenting on Whitlock, contains the following analysis of the law, which I adopt for the limited purposes of this application:

   "Whether or not an [illegal] provision can be severed depends on the intention of the parties as to whether the operation of the contract, apart from the impugned part, was to be conditional on the efficacy of that part, or whether it was to take effect notwithstanding the failure of that part.  That intention is to be ascertained from the construction of the contract as a whole.

   The court went on to elaborate on this by referring to the independence or interdependence of the uncertain part with the contract as a whole, the relative importance of that part and the role it plays in the consideration."

3. It is no part of this application to comment on the difficulties that might be encountered under these principles in severing cl 16.10 so as to preserve its operation if the remainder or a substantial part of the remainder of the agreements is struck down.  It is sufficient to draw out the principle that the approach the courts take to severance is similar to that applied in construing contractual terms.  It is too early to say whether the arguments advanced on the severance issue will require or justify resort to extrinsic evidence of the surrounding factual matrix: see, in the construction context, Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 and other authorities collected and commented on in Acorn Consolidated Pty Ltd v Hawkslade Investments Pty Ltd (1999) WAR 425. If they do, then some of the material relevant to the contract and estoppel claims may be applicable on this question. In those circumstances it would be better to determine the fate of cl 16.10 at the same time and on the same factual basis as the contract and estoppel claims.

4. I referred earlier to par 159(c) of the reply.  I acknowledge that the plaintiffs were there dealing with parts of the counterclaim to which objection had been taken.  But it must be borne in mind that par 71AC of the defence is a matter of substantive defence to the relief claimed by the plaintiffs.  It is more than a mere precursor to the relief set out in the counterclaim.  The plaintiffs refer to promises referred to in par 153 of the counterclaim.  They are the promises contained in cl 16 of ABFA and LSA2 that, as a matter of substantive defence in par 71AC, the banks seek to preserve by way of severance.  One of the reasons why the plaintiffs say severance should not be permitted is that the court will have regard not only to the effect of cl 16 at the time it was entered into, but "the effect which it now has".  These present day "effects" will necessarily include the proposal to execute the supplementary deeds.  I can well see why the plaintiffs have pleaded it in that way.  It illustrates the difficulty in segmenting the issues.

5. It is for this reason that I believe the plaintiffs proposal to defer the cl 16.10 severance issue to the "separate hearing" also carries with it the risk of miscarriage.

The ramifications of this approach

1. As I have already said, I have reached the conclusion that there is little alternative to dealing with the overlap question in the Main Action.  It is not a decision that I have reached lightly.  The easy course would have been to insist on a strict demarcation between "recovery" and "distribution" aspects of the litigation and deal with each separately.  But as with so many things in life it is not always possible to adopt the easy way.

2. I have not reached this decision on the basis that the banks would be presented with insuperable problems of the type referred to in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. Those problems, to the extent they exist, could have been overcome by careful programming orders. Rather the decision rests on my assessment of how the interests of justice require me to afford the parties a reasonable opportunity to put before me all matters that will be necessary to resolve competing equities.

3. This does not, to my mind, deprive the LDTC Action of all content and nor does it obviate the need for "distribution" proceedings should the plaintiffs succeed in the Main Action. 

4. In relation to the LDTC Action, I want to make it clear that what is in issue in the Main Action is essentially whether, as a matter of equity, injunctive relief should be granted to prevent the liquidators from executing contracts that amend the original contracts.  I do not intend to import into the Main Action other issues relating to the funding arrangements for the litigation beyond those that are absolutely necessary to resolve the equities.  This matter is largely in the hands of the plaintiffs and I am aware of, for example, par 159 of the reply.  But I believe that the importation into the Main Action of funding arrangement questions can be kept within limited bounds. 

1. I accept that the funding arrangements are more apt for canvassing in the distribution proceedings.  This decision is not intended to place the plaintiffs in a strait jacket in that respect.  I can illustrate this by a hypothetical example.  Suppose that the banks are successful to the extent of establishing a basis for some relief in relation to the supplementary deeds.  As I have already said, it might be limited to declarations or it might involve injunctive relief.  Suppose (again on the limited basis) the findings are such that to execute the supplementary deeds or to pursue other aspects of the distribution proceedings might be a breach of trust and the relief granted to the banks does not go beyond declarations.  In that event I would not by reason only of the findings in the Main Action preclude the plaintiffs from seeking relief from the consequences of a breach of trust.  And I have not overlooked the fact that the primary contention made by the plaintiffs on this aspect in the LDTC Action is that the execution of the supplementary deeds is not a step without which the funding arrangements can continue and the distribution applications succeed.

2. This is an important point.  It has become apparent that, to resort to the vernacular, we are all here for the long haul.  This litigation is going to take a very long time to work through.  Life is not static.  Experience has shown that judicial officers can become incapacitated during the course of a hearing.  Some of them harbour thoughts of eventual retirement.  My objective is to resolve, in the Main Action, as many critical and related aspects of the litigation as is possible given the overriding imperative to promote the interests of justice.  I cannot guarantee that the same judicial officer will hear the Main Action, the LDTC Action and the remaining distribution proceedings. 

3. There is an allied point.  The allocation of public resources to the determination of a case of this nature and to this case in particular is of serious proportions.  There is, in a very real sense, only one chance at this level to assemble all of the material necessary for findings to be made that will ensure that the dispute is able to progress through the judicial system to a resolution in the ordinary and conventional manner.

4. To this end it is likely that the programme will follow that propounded by the banks. This would involve taking all evidence and submissions in the Main Action and then move to evidence and submissions in the LDTC Action but folding into it such of the evidence in the Main Action as the trial judge deems relevant and admissible.  There would then be a single composite judgment.  I have said this is the likely programme but I do not and will not bind myself irrevocably to that course.  It may be, for example, that having heard all of the evidence and in the light of circumstances as they then appear I come to the view that I ought to deliver judgment on some or all aspects of the Main Action before proceeding to deal with the LDTC Action.  I may even come to the view that I can take this course and leave it to another judicial officer to hear and determine the LDTC Action and the distribution proceedings.  I doubt whether this would be possible if the equitable considerations concerning entry into the supplementary deeds of which I have previously made mention and the severance question are deferred.

5. There are at least three reasons why I have come to this conclusion reluctantly.  One is that it has the potential to extend the length of the trial.  I have tried to limit the import of the par 130(e) matter.  Even so, the parties, in particular the plaintiffs, may have to reassess their position so as to include in the Main Action such additional material that is primarily referable to the funding arrangements as they consider necessary to meet or make the contentions implicit in the issue.  I appreciate and regret the additional time and expense that this will involve.  It is a countervailing factor when considering the interests of justice. 

6. The second factor is that the additional time and expense may prove to have been wasted.  Speaking hypothetically, it may be that the plaintiffs fail to make good their causes of action on grounds unrelated to the banks appeal to equity in the overlap sense.  Alternatively the plaintiffs may succeed only to a limited extent and in a way that makes the pursuit of distribution proceedings unlikely or inapposite.  If that were to occur the importation of the overlap questions into the Main Action will have been to no effect.

7. But on even greater concern is the effect on entities that are not presently parties to the Main Action and who may be dragged into it.  ICWA is one.  The Commonwealth of Australia (through the Commissioner of Taxation) is another.  LDTC is already a party, although expressly limited to its capacity as trustee of the BGNV bond issues.  But in a practical sense its involvement will not be markedly different.  The same can be said for BGNV.  It will be necessary for the other entities to consider their position in relation to the Main Action.  If they apply to be joined or otherwise to play a part in the Main Action it should be possible to devise a system where a party (and by party I mean the present plaintiffs on the one hand and the banks on the other) bears the onus of giving the participating entity reasonable notice of a matter that is likely to affect its interests.

8. As so often happens in the law, I have to balance competing considerations with the interests of justice foremost in mind.  Despite these serious countervailing factors the balance weighs in favour of taking the evidence in the Main Action.

A case in chief or in reply?

1. A matter that has been raised from time to time is whether the plaintiffs should put before the court all matters on which they rely for the contention that the on‑loans were not subordinated or whether they are entitled to bring a case in reply.

2. I am not sure whether the parties have put to me everything that they wish on the subject.  My present view is that the plaintiffs would be justified in seeking leave to bring a case in reply.  The subordination problem is essentially a matter raised in the defence and counterclaim.  The complex factual matrix relating to it is outlined at length in that pleading.  So far as the statement of claim is concerned the on‑loans are treated as being unsecured and unsubordinated indebtedness of TBGL and BGF respectively.  The plaintiffs' substantive pleadings in relation to it are to be found in the reply. 

3. Whether to permit a case in reply is a matter of discretion.  I have heard an extensive opening from he plaintiffs and I have a general understanding of what I think they are likely to adduce and submit in relation to the subordination issue.  But much will depend on how the material advanced by the banks in support of the complex factual matrix in the defence plays out.  If I were called upon now to exercise that discretion my inclination would be to permit the plaintiffs to do so.  But I will hear the parties further if it is necessary.

Leave to Amend

1. Having dealt generally with the overlap issue I return now to the fascinating task of determining whether leave to amend is necessary and, if so, whether it should be granted.  I have already expressed a general view on the approach to be taken.  But I should add one other general comment.  Some of the objections include the submission that the amendments should not be allowed because they disclose no reasonable cause of action. The test is whether they are reasonably arguable in the sense that I outlined in the 2001 judgment.  It is no part of my function now to point out weaknesses in individual aspects of the case.  I content myself with saying that I have not declined any of the amendments on the basis that they do not disclose a reasonable cause of action.  Nor, in the end, have I exercised my discretion to refuse any of the amendments.  This has to be seen against some of the comments that I have made earlier in the reasons.  It is important to take these reasons as a whole.

Pars 9 and 10(a),

1. Leave is probably required but it can hardly take the plaintiffs by surprise.  I can understand the plaintiffs' concern about the particularisation of the alleged indebtedness.  But I understand that the banks have provided particulars.

Pars 141 and 143(c)

1. Leave will be granted but the banks must give particulars to elucidate whether the trust is express or implied, its foundation and its terms.

Pars 71C, 130 and 153 to 158

1. According to the amended chamber summons of 14 March 2002 the plaintiffs object only to pars 130(c), (d) and (e).  I think leave would probably be necessary because the plaintiffs were already seeking equitable relief.  There is little I wish to add to the earlier exposition.  In my view the impugned pleas are arguable and are sufficiently defined for the parties to proceed without embarrassment.

2. The plaintiffs point out that contentions of this type made in the LDTC Action were not made against LDTC, ICWA, BGNV or the Commonwealth and ask whether by moving the issues into the Main Action the banks have deprived LDTC and ICWA of the right to be heard in relation to them.  The answer to that question is no, but it is initially a matter for those entities to decide whether they wish to participate and then to make an appropriate application.

The summons par 2 items

1. Paragraph 2 of the amended chamber summons dated 14 March 2002 lists a large number of paragraphs in respect of which it is said leave is necessary.  Some of them are consequential, others are not. 

2. Objection is taken to par 11EA to par 11ER.  I doubt these are consequential because they are directed primarily at the subordination problem and amplify what was previously the subject of par 13A.  There is nothing in par 11EA to par 11EC that is particularly controversial.  The gravamen of what was previously in par 13A is to be found in par 11ED.  Paragraph 11EE is explanatory of the legal consequences.  The contractual claims based on implied terms as set out in pars 11EF to 11 EG and based on an agreement as set out in pars 11EK to 11EQ have, so far as I can see, no equivalent in par 13A.  They are therefore entirely new.  The estoppel claims in pars 11EJ to 11ER are different in formulation but not significantly different in basic substance from the equivalent pleas in par 13A. 

3. As a matter of discretion I would grant leave.  I do not think the contractual claims or the estoppel claims as presently formulated are unarguable.  I do not think they expand significantly, if at all, the factual matrix against which the subordination problem falls to be resolved.  It is more a question of the way in which the circumstances are to be construed and the legal consequences flowing from them.

4. The objections to pars 33(c)(3), 48A(d), 48D(e), 65KA(f), 87(a)(3), 145 to 148 and 150 to 152 all relate back to parts of pars 11EA to 11ER and should be regarded as having been dealt with accordingly.  Similarly, pars 136, 137, 139 and 142 relate to the subordination problem and I do not think they raise factual issues that will add materially to the factual complexity of the case.  On a quick reading I cannot see what changes have been made from the previous version of par 92AA.  That leaves pars 114(c), 115(d), 126 and 127(d).  I have tried, unsuccessfully to date, to understand the basis of the objection.  If the plaintiffs wish to pursue the objections they are at liberty to raise the matter again.

Other consequential relief

1. Other matters flow from the banks amended chamber summons dated 22 February 2002 in the LDTC Action.

2. In accordance with par 6, I can see no reason not to make an order nunc pro tunc granting leave to the banks to begin and proceed with the action against the second to fifth defendants.  The order will be on condition that the banks do not attempt to enforce any judgment arising out of or in relation to the action without first obtaining leave of the court.

3. As I have already indicated the orders made on 15 March 2001 included provisional joinder of BGNV and the Commonwealth of Australia as defendants and provisional leave to amend the statement of claim.  All parties to the LDTC Action (including the provisionally joined parties) should have the opportunity to consider these reasons and to make further submissions before those matters are finally determined.

4. In par 6A the banks seek an order that they not be required to join beneficiaries of the trusts pleaded in the statement of claim (as amended from time to time).  For the same reasons as set out in the preceding paragraph I am not prepared, at least at this stage, to give the banks the protection afforded by such an order.

Outstanding requests for particulars

The plaintiffs' requests

1. By chamber summons dated 29 October 2002 the plaintiffs requested a raft of further and better particulars of the defence and counterclaim.  Some have been answered and others have fallen away.  I now deal with those that I understand to remain.

2. The first arises under par 11ED (85)(a) of the defence.  The plaintiffs seek details of the alleged cessation of a state in which the banks were conducting their banking relationship with the companies on a "false hypothesis and under a serious misapprehension as to the financial arrangements of" relevant companies.  I do not doubt that the plaintiffs are entitled to information of the type sought.  But we are here speaking of particulars.  As I understand it the banks have now delivered to the plaintiffs all of their witness statements, including those of relevant bank officers.  If the information now sought by way of particulars is not apparent on the face of the statements delivered by the banks in relation to an issue that is pleaded positively by the banks then I rather suspect it is the banks that have a problem in this regard.  Before I put the parties to the additional trouble and expense of what would be quite extensive particulars I would want to know whether the requested information is apparent on the face of the witness statements and, if not, where that leaves the plea.

3. The second request alleges inconsistencies between particulars within the body of the defence and the further and better particulars delivered in relation to pars 33C(d)(1) and (4), 48A(c) and 48AA.  To save inevitable arguments about it, the banks should clarify the inconsistencies.  If the banks response is that there are no inconsistencies then the plaintiffs will have to indicate where they say the uncertainties lie.

The banks' requests

1. By chamber summons dated 25 October 2002 the banks also requested a raft of further and better particulars of the anticipated reply. Again, some have been answered and others have fallen away.  As I understand the matter only one remains. 

2. In pars 194 and 201 to 207 the plaintiffs allege that some of the causes of action propounded by the plaintiffs are statute barred.  In each case they have identified the limitation period by saying "the defendants brought the claim by [date] at the earliest" and that "the claim accrued at the latest by [date]". 

3. I do not think there is any embarrassment in the specification of the date on which the claim was brought.  Generally speaking the "bringing of a claim" arises by the filing of a writ or the making of an amendment.  In that respect the significance of the dates 31 January 1998, 12 March 1999, and 14 February 2002 must be apparent to the parties.  In some cases those dates are specified in the alternative.  I do not believe the addition of the words "at the earliest" will present practical difficulties. 

4. But I do think the banks are entitled to more specificity in the dates on which the causes of action are alleged to accrue.  The concept of a cause of action accruing often occasions difficulty.  The plaintiffs must, by now, know a date or a series of possible dates on which they say that the cause accrued or may have accrued.  In each case they should limit themselves to a specified date or a series of alternative dates.

Conclusion

1. I should now try to summarise the import of what I have said in these reasons.

2. In the main, the overlap question is to be resolved by removing the argument concerning the relevant plaintiffs' entitlement to enter into the supplementary deeds from the LDTC Action to the Main Action.  But it is not a wholesale importation of the issues surrounding the litigation funding arrangements with it.  The extent to which that becomes necessary will largely be in the hands of the plaintiffs.  It may mean that other parties, particularly ICWA, may wish to participate in the Main Action.  That, too, is to be worked out.

3. The second to fifth defendants in the LDTC Action have taken out a chamber summons dated 14 March 2002 seeking a stay of that action.  It flows from what I have said that this application has not succeeded.

4. A question now arises as to the status of the document that has, until now, been referred to as the plaintiffs' anticipated reply.  I presume that it could simply stand as the reply.  No doubt I will be corrected if this proves too simplistic a solution.

5. In the LDTC Action the provisional joinder of BGNV and the Commonwealth of Australia as defendants and provisional leave to amend the statement of claim may have to be the subject of further consideration in the light of these reasons. 

6. Both the plaintiffs and the banks will have to give some further and better particulars in the Main Action.  They should do so by 30 April 2004.  The plaintiffs may wish to revisit the request for particulars of par 11ED (85) but I would hope not.