FEDERAL COURT OF AUSTRALIA

Stratford Sun Limited v OM Holdings Limited; In the Matter of OM Holdings Limited (No 3) [2011] FCA 513

IN THE MATTER OF OM HOLDINGS LIMITED (ARBN 081 028 337)

THE COURT ORDERS THAT:

1.    The document in which the plaintiff sets out its proposed amendment to its Statement of Claim be marked as “MFI-1”.

2.    The plaintiff’s application for leave to amend the Statement of Claim by adding a new par 27A in the form of the document marked “MFI-1” be refused.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE MATTER OF OM HOLDINGS LIMITED (ARBN 081 028 337)

REASONS FOR JUDGMENT

1    On 19 April 2011, I heard an urgent interlocutory application in this matter whereby the plaintiff sought interlocutory injunctive relief to restrain the putting of certain resolutions to the Annual General Meeting of the defendant which was scheduled to take place the next day, 20 April 2011, at 10.30 am. I dismissed the application for interlocutory relief (Stratford Sun Limited v OM Holdings Limited; In the Matter of OM Holdings Limited [2011] FCA 414). At the conclusion of the interlocutory hearing on 19 April 2011, I made directions designed to ready the matter for an early final hearing fixed for today. Included within those directions was a direction that the plaintiff provide a Statement of Claim by 21 April 2011 and that the plaintiff’s evidence in chief be served by 28 April 2011.

2    On 5 May 2011, the plaintiff served the affidavit of Dean Anthony Paatsch, sworn that day. Mr Paatsch’s affidavit has been read into evidence today and his accompanying report has been tendered as an expert report directed to a number of issues which the plaintiff wishes to litigate in the present hearing.

3    The parties exchanged Written Submissions during the course of this week. In those Submissions and by objections notified to the plaintiff, the defendant made the point in respect of a number of the paragraphs of Mr Paatsch’s report that those paragraphs were directed to issues and matters which did not fairly arise on the pleadings as issues at the hearing. One of the objections taken by the defendant was directed to material which is contained on page 22 of Mr Paatsch’s report under a heading “Representations about the requirement to amend the plan rules”. Mr Paatsch expressed the opinion under a general heading “Information for new plan rules” that, in effect, the reason advanced by the defendant for the proposed amendments to the plan rules was not a valid reason because the existing plan rules already complied with the Hong Kong listing requirements. The plaintiff wishes to argue that, by advancing that reason for the proposed amendment to the plan rules, the defendant engaged in misleading and deceptive conduct.

4    Soon after the matter was called on this morning, Senior Counsel for the plaintiff sought leave to amend the Statement of Claim to add an allegation to the following effect:

27A    The meeting materials were misleading or deceptive in that they convey that the proposed increase in options was necessary to comply with the HKSE listing rules.

5    The purpose of seeking leave to amend by the inclusion of paragraph 27A was to bring the allegations made in the Statement of Claim into line with the opinions expressed by Mr Paatsch on that subject matter in his report. As I understand how matters have developed, this morning was the first time that notice of this amendment was given to the defendant and its legal representatives. It is common ground that the amendment is necessary to enable the plaintiff to litigate the question covered by the amendment.

6    Senior Counsel for the plaintiff submitted that there will be no prejudice occasioned to the defendant if the proposed amendment is allowed because all that is required for the defendant adequately to meet the new allegation is for the defendant to understand what was said in the Notice of Meeting and Explanatory Memorandum (a matter which is clearly something to which the defendant and its representatives will have directed their attention before now) and to ascertain and consider the relevant provisions of the Hong Kong Stock Exchange Listing Rules which were extracted in full in Mr Paatsch’s report.

7    In addition, Senior Counsel for the plaintiff pointed to the fact that the relevant website was identified in that part of Mr Paatsch’s report so that it will be an easy task for the defendant to take such steps as it may need to take in order to meet the allegation which has been made in the report but which has not yet been made in the Statement of Claim.

8    Senior Counsel for the defendant, however, submitted that the defendant will suffer real prejudice if the amendment is allowed because the inclusion of this new allegation will require the defendant to do more than merely look at the website and look at Mr Paatsch’s report. Senior Counsel submitted that his client should have been given the opportunity to investigate, amongst other things, how the relevant part of the Hong Kong Stock Exchange Rules would be interpreted and applied in the circumstances raised by the new allegation.

9    The proceeding has been brought on very quickly, essentially at the instigation of the plaintiff. By the directions which I made on 19 April 2011, the plaintiff was required to articulate its case fully in the Statement of Claim. Notwithstanding that, the allegation now sought to be made was not made in the Statement of Claim when it was filed.

10    More importantly, the plaintiff must have been aware from 5 May 2011 (the date of Mr Paatsch’s report), at the latest, that there was a disconformity between its pleaded case and the evidence which it proposed to tender, at least in respect of the matter which is now the subject of the new allegation sought to be made in the proposed par 27A. Yet the plaintiff did not notify the defendant of its intention to seek leave to amend until this morning.

11    It seems to me that it may well have been possible for the defendant to meet this allegation had it been put on proper and fair notice, on or soon after 5 May 2011, of the fact that the allegation was going to be made. However, it is quite unfair and unreasonable to impose upon the defendant a requirement that it attempt to meet this allegation when it is raised for the first time this morning. I think that the overriding requirements of efficiency and fairness, in the circumstances of the present case, require me to refuse leave to amend as sought. Nobody has asked for an adjournment of this matter in order for the subject matter of the amendment to be allowed to go forward and, as matters presently stand, it seems to me that I should reject the amendment.

12    For these reasons I disallow the proposed amendment.

Associate:

Dated:    17 May 2011