FEDERAL COURT OF AUSTRALIA
YAF Master v S&P Global, Inc (Applications for Leave) [2025] FCA 333
File number(s): NSD 73 of 2021 Judgment of: SHARIFF J Date of judgment: 9 April 2025 Catchwords: PRACTICE AND PROCEDURE – application to amend pleadings and to rely upon further evidence in circumstances of complex litigation listed for 8 week final hearing commencing in June 2025 when proceedings were listed for final hearing in December 2023 – where litigation relates to matters occurring over 20 years ago and preceding the Global Financial Crisis in 2007 - inadequate explanations for delay and presumptive prejudice balanced against just resolution of the proceedings having regard to the dictates of case management – application allowed only in limited respects Legislation: Evidence Act 1995 (Cth) ss 50, 192A
Federal Court of Australia Act 1976 (Cth) ss 37M, 37M(1), 37M(2)(a), 37N
Cases cited: ACN 117 641 004 Pty Ltd (in liq) v S&P Global, Inc(No 3) [2024] FCA 1238
ACN 117 641 004 Pty Ltd (in liq) v S&P Global, Inc (No 4) [2025] FCA 72
Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175
Bishopsgate Insurance Australia Ltd v Deloitte Haskins & Sells [1999] 3 VR 863
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541
Cement Australia Pty Limited v ACCC (2010) 187 FCR 261
Dye v Commonwealth Securities (No 2) [2010] FCAFC 118
Ensham Resources Pty Ltd v AIOI Insurance Company Ltd [2012] FCA 537
Tamaya Resources Ltd (in liq) v Deloitte Touche Tohmatsu (a firm) [2016] FCAFC 2; 332 ALR 199
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 75 Date of hearing: 4 April 2025 Counsel for the Applicants: Mr R A Dick SC with Mr G Donnellan, Mr D T W Wong and Mr S Murray Solicitor for the Applicants: Webb Henderson Counsel for the Respondents: Mr J Sheahan KC with Mr J Williams SC and Ms J Taylor Solicitor for the Respondents: Ashurst ORDERS
NSD 73 of 2021 BETWEEN: YAF MASTER (WK-155253) (A COMPANY INCORPORATED IN CAYMAN ISLANDS)
First Applicant
BASIS PAC-RIM OPPORTUNITY FUND (MASTER) (IN VOLUNTARY LIQUIDATION) (WK-155158) (A COMPANY INCORPORATED IN CAYMAN ISLANDS)
Second Applicant
AND: S&P GLOBAL, INC. (A COMPANY INCORPORATED IN NEW YORK)
First Respondent
STANDARD & POOR'S INTERNATIONAL, LLC (A COMPANY INCORPORATED IN DELAWARE)
Second Respondent
ORDER MADE BY:
SHARIFF J
DATE OF ORDER:
9 APRIL 2025
THE COURT ORDERS THAT:
1.The parties are to provide to the Associate to Shariff J consent or competing short minutes of order reflecting these reasons by 5pm on 11 April 2025.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
SHARIFF J:
1. INTRODUCTION
In proceedings NSD 73 of 2021 (Basis Proceedings),…
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Details
- Case
- [2025] FCA 333
- Decision Date
CaseChat Overview and Summary
In the Federal Court of Australia, YAF Master brought an application against S&P Global, Inc concerning an amendment to their pleadings and the admission of additional evidence in a complex litigation scheduled for an eight-week final hearing in June 2025. The litigation dated back over two decades and occurred prior to the Global Financial Crisis in 2007. YAF Master sought leave to amend their statement of claim and order and to incorporate further evidence. The court was tasked with balancing the applicants' right to amend their pleadings and introduce new evidence against the delay caused and the potential prejudice to S&P Global, Inc.
The key legal issues were whether the delay in seeking amendments and additional evidence was justified and whether the proposed changes would prejudice S&P Global, Inc's right to a fair trial. The court considered the principle of case management, which aims for the just resolution of disputes, and the need to weigh the applicants' reasons for the delay against the potential prejudice to the respondent. The court also evaluated whether the new evidence was relevant and necessary for the fair determination of the case.
The court granted leave to YAF Master to amend their statement of claim and order and to rely on the Fowler Outline, subject to the condition that they produce relevant documents requested by S&P Global, Inc within approximately seven days. However, the court refused leave for the remaining amendments and additional evidence as they found insufficient justification for the delay and potential prejudice to S&P Global, Inc.
The court's decision was based on the need for a fair and efficient resolution of the dispute, considering the extensive history of the litigation and the principles of case management. The court emphasised the importance of timely and adequate explanations for delays in seeking amendments and the need to balance the rights of both parties. The court's ruling allowed for the incorporation of essential evidence while ensuring that the respondent's rights were not unduly prejudiced.
The key legal issues were whether the delay in seeking amendments and additional evidence was justified and whether the proposed changes would prejudice S&P Global, Inc's right to a fair trial. The court considered the principle of case management, which aims for the just resolution of disputes, and the need to weigh the applicants' reasons for the delay against the potential prejudice to the respondent. The court also evaluated whether the new evidence was relevant and necessary for the fair determination of the case.
The court granted leave to YAF Master to amend their statement of claim and order and to rely on the Fowler Outline, subject to the condition that they produce relevant documents requested by S&P Global, Inc within approximately seven days. However, the court refused leave for the remaining amendments and additional evidence as they found insufficient justification for the delay and potential prejudice to S&P Global, Inc.
The court's decision was based on the need for a fair and efficient resolution of the dispute, considering the extensive history of the litigation and the principles of case management. The court emphasised the importance of timely and adequate explanations for delays in seeking amendments and the need to balance the rights of both parties. The court's ruling allowed for the incorporation of essential evidence while ensuring that the respondent's rights were not unduly prejudiced.
Orders
Orders of the court
1. The parties are to provide to the Associate to Shariff J consent or competing short minutes of order reflecting these reasons by 5pm on 11 April 2025.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
In view of the impending final hearing, I have attended to these reasons as quickly as the competing priorities of my docket have enabled. For the reasons that follow, I am satisfied that leave should be granted to the Basis Applicants to amend the ASOC as set out at [349.5]-[349.6] of the Proposed FASOC. I am also satisfied that leave should be granted to the Basis Applicants to rely upon the Fowler Outline and to amend the particulars to [422]-[425] of the ASOC in which they seek to refer to that Outline subject to the condition that the Basis Applicants produce relevant documents requested by S&P within a short time of approximately seven days. However, leave should otherwise be refused in respect of the balance of the matters that were in dispute between the parties arising from the Basis Applicants’ interlocutory application dated 1 April 2025.2. RELEVANT BACKGROUND The immediate context that informs the application made by the Basis Applicants is the hearing and determination of S&P’s application under s 192A of the Evidence Act 1995 (Cth) (the 192A Application) in respect of the admissibility of, amongst other things, expert evidence sought to be relied upon by the Basis Applicants. Before turning to that context, it is necessary to set out in brief the history that preceded it. The Basis Proceedings were commenced in February 2021. For reasons that will become apparent later, it is convenient at this juncture to set out aspects of the original statement of claim (SOC) filed by the Basis Applicants on 30 March 2021. They are as follows: (a)“Part 11” of the SOC was entitled “Causation and Reliance”. It relevantly included the following pleadings: (A) Investment strategy 304. The Plaintiffs’ investment objective and strategy was to generate stable, superior risk adjusted returns for its investors by way of a diversified and low volatility exposure to international credit arbitrage and relative value instruments.(B) Investment decisions 305. The Plaintiffs’ investments in CDOs were made on their behalf by the “Structured Credit Group” of BCFM, which was based in Sydney.306. The Structured Credit Group was headed by Stuart Fowler, Managing Director of the Investment Group.307. Potential CDO investments were investigated by Mr Fowler and John Murphy, an employee of BCFM with the title “Director”.308. In all cases, Mr Fowler made the ultimate decision to invest in CDOs. (b)thereafter, the SOC at [309]-[319] pleaded facts relevant to the receipt of S&P’s ratings and, inter alia, the way in which the Basis Applicants relied upon them in respect of particular investment strategies; (c)the SOC at [320]-[323] pleaded a particular counterfactual as to “no investment” and further matters relevant to reliance, as follows: (H) No investment 320. The Plaintiffs would not have invested in the Claim CDOs had they known that S&P’s credit ratings did not represent S&P’s true, current opinion as to the credit quality of the CDO or of its collateral or reference entities or that its ratings opinions lacked reasonable grounds or there were any other matters that meant S&P’s ratings could not be relied upon as a reliable, independent indicator of the creditworthiness of the Claim CDOs.321. The Plaintiffs would not have invested in the Claim CDOs had they known that the credit quality of the collateral or reference entities was not as represented by their ratings, or those ratings could not be relied upon.322. The Plaintiffs would not have invested in subprime RMBS or CDOs that invested substantially in subprime RMBS had they known of the matters pleaded in Part 9(C). (I) Reliance on Independence Representation 323. If the Plaintiffs had known that S&P’s credit ratings were unreliable and/or influenced by business considerations, then they would not have relied on CDOE and its outputs, including the Ratings, in the ways described above or at all.PARTICULARSParticulars of the Plaintiffs’ reliance on the credit ratings of the collateral assets will be provided with the Plaintiffs’ evidence. (d)Finally, the SOC at [324] pleaded the Basis Applicants’ case as to loss, as follows: 12. LOSSES SUSTAINED BY PLAINTIFFS324. As a result of their investment in the Claim CDOs, the Plaintiffs have sustained losses, including but not limited to:324.1 loss of the whole of or a substantial portion of the value of their investment in the Claim CDOs; and/or 324.2 loss of the opportunity to invest the sums invested in the Claim CDOs in other interest-bearing investments; or 24.3 alternatively, losses arising from a decrease in the market value of the Claim CDOs; and/or or324.4 further or alternatively, loss in the form of overpaying for the Claim CDOs.PARTICULARSParticulars of the losses sustained by the Plaintiffs will be provided with the Plaintiffs’ evidence.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
The existing pleadings at [422]-[423] of the ASOC provide as follows:422. The Plaintiffs relied on the CDO Ratings Reliability Representation, the CDO Ratings Independence Representations, RMBS Ratings Reliability Representations and the RMBS Ratings Independence Representations in deciding to invest in the Claim CDOs.…423. Further and in the alternative, one or a combination of those representations materially contributed to the Plaintiffs’ decision to invest in the Claim CDOs. The particulars to [422] of the ASOC presently identify the relevantly affected Claim CDOs. They also include reference to the 2021 Fowler Affidavit at [123]-[138]. The particulars to [423] repeat the particulars to [422] of the ASOC. Relevantly for the purposes of the present dispute, by the Proposed FASOC the Basis Applicants seek to add a particular to [422] that refers to and relies upon the Fowler Outline. The existing pleading at [424] of the ASOC is as follows:(D)NO TRANSACTION CASE424. Further and in the alternative to the matters pleaded and particularised in the previous paragraph, had S&P not engaged in the conduct contravening s 1041F and s 1041G of the Corporations Act pleaded in paragraphs 386 to 394 and/or the unconscionable conduct contraventions pleaded in Part 15:424.1 S&P would not have issued some or all of the Ratings and, as a result, the Claim CDOs would not have been issued in the same form or at all424.2 the Plaintiffs would not have invested in the Claim CDOs; 424.3the issuers of the Claim CDOs would have refunded any consideration already paid by the Plaintiffs for the Claim CDOs due to the non-fulfillment of the terms of the CDO offerings and the Plaintiffs would have reinvested any refunded consideration in alternative investments; and 424.4 the Plaintiffs would have invested their capital in alternative investments. The particulars to [424] of the ASOC repeat the particulars at [422] and also rely upon the expert report of Dr Gregory. Relevantly for the purposes of the present dispute, by the Proposed FASOC, the Basis Applicants seek to add a particular to [424] that refers to and relies upon the Fowler Outline. The current pleading at [425] of ASOC is as follows: 17.LOSS AND DAMAGE425. In the premises of the matters pleaded and particularised in Parts 13 to 16 above, the Plaintiffs have suffered losses by S&P’s contraventions:425.1 loss of capital investment; 425.2 loss of the opportunity to retain or invest the sums invested in the Claim CDOs in other interest-bearing investments; and/or425.3 further or alternatively, the difference between the price paid for the Claim CDOs and their true value as at the dates of each purchase.PARTICULARSA. The Plaintiffs repeat the matters pleaded at paragraphs 402 to 424 and the particulars to those paragraphs.B. Particulars as to the true value of the Claim CDOs at the time of purchase and/or the Plaintiffs’ opportunity losses will be provided with expert evidence. Relevantly for the purposes of the present dispute, the Basis Applicants seek to amend the particulars to rely upon both the Fowler Outline and the Woo Affidavit.
Ratio Decidendi
Legal Principle Established
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