Federal Court of Australia
Canavan v ICRA Rolleston Pty Ltd (Receivers and Managers Appointed) (in liquidation) [2022] FCA 117
ORDERS
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. The plaintiff has leave to amend his points of claim in terms of the amendments which appear on pages 1 – 21 and in paragraphs 66, 66A and 66B(b) of the proposed amended points of claim annexed to the affidavit of Joel Michael Shaw filed 4 February 2022.
2. Subject to order 1, the interlocutory application filed 8 February 2022 is dismissed.
3. The question of costs of the interlocutory application is reserved to the trial.
THE COURT NOTES THAT:
1. This order is made pursuant to rule 1.36 of the Federal Court Rules 2011 (Cth).
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
(Revised from transcript)
DOWNES J:
1 This is an application by the plaintiff for an order that he have leave to amend his points of claim in terms of the proposed amended points of claim annexed to the affidavit of Joel Michael Shaw filed on 4 February 2022 (proposed amended points of claim).
2 The application was heard on 11 February 2022 in circumstances where the trial of these proceedings is due to commence in 10 days, that is, on 21 February 2022. For that reason, this application has been heard and determined on an urgent basis as it will affect, amongst other things, pre-trial directions and whether the trial will be able to proceed.
3 For the following reasons, and except in relation to amendments which were not opposed, the application is dismissed.
Relevant background
4 The plaintiff is the sole director of the first defendant (the Company). The external administration of the Company arose from the failure of a coal mining joint venture, which was regulated by what was known as the “Rolleston Joint Venture Agreement”, under which the Company and Rolleston Coal Holdings Pty Ltd (RCH) (the interested party in this proceeding) were parties.
5 In November 2020, the second defendants (the liquidators) were approached by RCH to be receivers of the Company appointed under the security granted to RCH under the arrangement. RCH did not ultimately select the liquidators and, on 8 December 2020, others were appointed receivers and managers (receivers).
6 On 10 December 2020, the plaintiff appointed Mr Nick Combis as voluntary administrator under s 436A of the Corporations Act 2001 (Cth) (the Act). At the first creditors’ meeting on 21 December 2020, RCH proposed that the liquidators replace Mr Combis as the Company’s voluntary administrator. That resolution was passed, and the liquidators were then appointed administrators of the Company.
7 The liquidators reported to creditors in their report of 30 August 2021 that the receivers had realised the assets of the Company, subject to RCH’s security under a joint venture interest sale agreement dated 23 February 2021 (Contract), with the sale completing on 11 June 2021.
8 The liquidators received a copy of the Contract from the receivers under cover of a letter dated 5 May 2021. The letter referred to the obligations of confidence applying to the Contract and requested that the liquidators ensure they “do not provide the Contract to, or disclose the contents or terms of the contract to, any third party without first seeking our consent and that of RCH and Joint Venturers”.
9 The letter also requested that the liquidators provide the receivers with notice of any of the information provided and concluded, “we consider that you are also bound to keep the [Contract], and its terms including those summarised above, confidential”.
10 The terms of the Contract included in clause 16.15 a confidentiality provision, which incorporated by reference clause 19 of the Rolleston Joint Venture Agreement. The broad terms of clause 19 excluded third parties (such as the plaintiff) from having access to the Contract.
11 In May 2021, the Supreme Court of Queensland heard and dismissed proceedings that had been brought by Mr Canavan, the plaintiff, under s 1303 of the Act against the receivers to obtain access to the Contract. That decision is currently the subject of an appeal.
12 The adjourned second meeting of creditors was held on 7 September 2021. On this occasion, the chairperson recommended that creditors resolve that the Company be wound up in liquidation. The plaintiff opposed the resolution and proposed that the Company execute a deed of company arrangement. In the end, the resolution that the Company be wound up was passed and the liquidators, who are the second defendants in this proceeding, were appointed liquidators of the Company.
13 Since his appointment as administrator, one of the liquidators has identified a range of potential claims against the plaintiff, including insolvent trading claims and claims arising from the payment of substantial dividends to entities controlled by the plaintiff at a time when the Company was financially distressed.
This proceeding
14 This proceeding was commenced by originating application filed on 23 September 2021 by the plaintiff, seeking orders to the effect that the liquidators be replaced by other liquidators of his choosing.
15 The plaintiff also swore a lengthy affidavit in support of the relief sought in the originating application which was also filed on 23 September 2021. With annexures, that affidavit exceeds 1,100 pages in length.
16 On 22 October 2021, the matter came on for hearing for a case management hearing before a Judicial Registrar. The transcript of that hearing is in evidence.
17 In particular, at that hearing, counsel who appeared for the plaintiff told the Judicial Registrar,
What I’m chasing is a hearing this year, and why I’m chasing that is because it’s well-established that in cases for the removal of a liquidator, it becomes more difficult for the applicant to succeed the longer a liquidator is in office.
18 For that reason, the plaintiff’s counsel resisted an order that points of claim be filed. However, it was indicated by the Registrar that the points of claim did not need to be a full statement of claim and that it just needed to be a document which was concise and which identified the exact facts upon which the plaintiff relies and the reasons that he says that he is entitled to the relief, being the fairly drastic step of replacing the liquidators with different liquidators.
19 During the course of that hearing, the plaintiff submitted that the hearing would be between one to two days, but the Registrar indicated that he thought that it could potentially take three days.
20 The plaintiff was ordered to file and serve a points of claim by 4.00 pm on 29 October 2021.
21 By consent and pursuant to r 2.13(1)(a) of the Federal Court (Corporations) Rules 2000 (Cth), RCH was granted leave to be heard in the proceeding. No limitations were imposed on that leave at that time.
22 The plaintiff filed his points of claim on 29 October 2021 and was thereby provided with an opportunity to present his case as to why the liquidators should be removed.
23 The points of claim raised various factual matters covering the periods in and prior to the liquidator’s initial appointment as administrators. Collected together in paragraphs 68 to 73 of the original points of claim, these matters are alleged to give rise to a view that a reasonable fair-minded observer might reasonably apprehend that the liquidators “might not, as liquidators of the Company, discharge their duties with independence and impartiality”. This conclusion appears to be founded principally upon the existence of historical relationships between the liquidators and RCH and its solicitors, Arnold Bloch Leibler (ABL).
24 In particular, it is alleged that these relationships may disincline the liquidators from properly investigating the sale of assets by the receivers and reaching a conclusion that they breached s 420A of the Act when selling the Company’s property under the Contract.
25 The case management hearing set down for 8 November 2021 was vacated and an order was made on 1 November 2021 requiring the liquidators and RCH to file and serve any affidavits on which they wished to rely by 4.00 pm on 11 November 2021.
26 The dates for filing of affidavit material, including by RCH, was amended by consent order dated 4 November 2021.
27 By this conduct, the plaintiff accepted that RCH was entitled to file affidavit material in relation to his claim without limitation.
28 A points of defence was filed by the liquidators on 16 November 2021 and affidavit material was also filed by the liquidators. On 16 December 2021, further time was granted to RCH to file and serve its affidavits and the matter was listed for a case management hearing before me on 25 January 2022. RCH filed affidavits in December 2021.
29 On 26 November 2021, the parties were advised by the Court that the proceedings had been listed for final hearing on 21, 22 and 23 February 2022. This was to accommodate the expedition sought by the plaintiff.
30 Special arrangements had been made to have the trial listed on 21 February 2022 for three days, which were dates suitable to the parties. Such arrangements included obtaining consent from the Chief Justice to list a trial during February 2022, which is the month of Full Court sittings.
31 The listing of the trial in February 2022 therefore had immediate impact on other litigants in this Court. However, because of the submissions made by the plaintiff’s counsel at the hearing in October 2021, the Court accepted that there was urgency.
32 The impact on other litigants by the trial being listed as a special fixture was raised today by senior counsel for the liquidators but was not addressed by the plaintiff’s senior counsel. It is an important consideration, which tells against the grant of leave in relation to the proposed amendments.
33 On 15 December 2021, a three page Notice to Produce was filed by the plaintiff, seeking production from the liquidators of 15 categories of documents to be produced on 23 December 2021. The categories were very broad, and they appear in some respects to relate to issues which went beyond that which was contained in the original points of claim.
34 There is no evidence as to why this Notice to Produce was not served earlier. There is no evidence as to why the documents referred to in this Notice to Produce were not sought earlier or obtained earlier and indeed, it is only an assumption that some of the documents which were produced in response were not already in the possession of the plaintiff or could not have been obtained by him by other means. That is important because the premise of the application to amend is that documents, including the Contract, were only obtained as a consequence of this Notice to Produce and therefore it is submitted that the amendments could not have been made at an earlier time.
35 One of the documents that fell within the scope of the Notice to Produce was, as I have said, the Contract. Given the matters stated by the receivers in the correspondence of 5 May 2021 to which I have referred, inquiry was made by the liquidators of the receivers as to whether they objected to the Contract and several other related documents being produced in compliance with the Notice to Produce.
36 On 22 December 2021, Mr Preston, one of the receivers, emailed one of the liquidators and confirmed that the receivers objected to the liquidators producing the documents on the basis of their confidentiality.
37 The Notice to Produce came before Judicial Registrar Schmidt on 23 December 2021. On that day, the liquidators’ solicitors emailed the plaintiff’s solicitors, providing a link to approximately 230 documents which were produced in response to the Notice to Produce. The plaintiff’s solicitors were also advised that:
During our review of documents falling within the [Notice to Produce], we identified 4 documents which had been provided to the Liquidators by the Receivers subject to a strict claim of confidentiality. We engaged with the Receivers whether they continued to maintain a claim of confidentiality over those 4 documents. Last night, the Receivers advised that they did maintain the claim of confidentiality. Given this, we will bring this matter to the Court’s attention at today’s hearing, with a request that the Registrar determine the appropriate way to proceed given the time of year and the small number of documents at issue (noting there are a number of attachments to two of the documents). For completeness, the documents in question comprise two emails and a covering letter to the sale agreement and the sale agreement itself.
38 At the hearing on 23 December 2021, the Judicial Registrar was advised on behalf of the liquidators of the production under the Notice to Produce, that the receivers had been written to in relation to the production, that the receivers had confirmed that they disputed production by reason of confidentiality and that they needed to engage with the plaintiff’s solicitors in relation to the matter. It was also indicated that the receivers would be notified of the next listing of the matter on 25 January 2022 and that the matter in relation to the documents might be resolved between the receivers and the solicitors for the plaintiff by the next occasion.
39 On 24 January 2022, a letter was received by the plaintiff’s solicitors setting out the receivers’ position in relation to the production. That letter confirmed that the Contract contained continuing “obligations of confidence” and that the obligations bound the liquidators. A confidentiality regime was proposed to enable production to be effected in a confidential manner.
40 The case management hearing on 25 January 2022 proceeded before me. At that hearing, the receivers appeared through counsel. On this occasion, orders were made for the production by the liquidators of further documents under the Notice to Produce with certain documents, including the Contract, being excluded from the order.
41 Also at that case management hearing, the plaintiff sought a direction that he be permitted to adduce evidence relating to an allegation in paragraph 66 of the points of claim concerning the change in coal price. This was opposed on the basis that directions had been made about the delivery of affidavit material and all parties had by that date filed and served their affidavit material for the hearing of the trial.
42 During argument about the proposed direction as to whether the plaintiff should be permitted to adduce evidence relating to paragraph 66 of the points of claim, it became apparent that the plaintiff wished to advance certain contentions at the trial which had not been pleaded. I refer in particular to pages 6 to 10 of the transcript of that hearing, which is in evidence on this application.
43 Another matter which was raised by counsel for the plaintiff was the prospect that the trial could exceed three days. An inquiry was made of me as to whether, if that occurred, I would be able to accommodate that and I indicated that I had hearings on Thursday and Friday of that week as well as the following week and there would be difficulties if the trial went longer than three days.
44 The next case management hearing was set down for 7 February 2022. That is, two weeks before the trial was due to commence.
45 At 7.30 am on 7 February 2022, approximately two hours before the case management hearing, an email was received by my chambers, attaching an unfiled interlocutory application, submissions and extensive affidavit material, being the material relied upon to seek a hearing that day of an application to amend the points of claim.
46 Proposed directions were also provided, and I understood from Mr May of counsel, who appeared for RCH, that he had only seen those directions just prior to the hearing. Mr May advised that he was not in a position to make submissions about the application to amend the points of claim or the other directions which were being sought, which directions sought to limit the basis on which RCH would be permitted to participate in the trial. I note that those directions are no longer pressed by the plaintiff today on the basis that those directions will be considered at the trial itself.
47 Mr Hynes of counsel appeared for the liquidators on 7 February 2022 and he indicated that he had not had the opportunity to get instructions on the amendment application. That is not surprising. The liquidators had only been served with the material, which was quite voluminous, on the previous Friday, being after 5.00 pm Sydney time on 4 February 2022.
48 The consequence of these matters was that the hearing of the application could not proceed and, taking into account the availability of counsel and the availability of the Court, the application was set down for hearing today.
49 I invited the plaintiff to file his further affidavit material in relation to the new allegations in the proposed amended points of claim by 9 February 2022, as had been proposed in his draft order, on the basis that he would need to do so if the trial dates of 21 to 23 February were to be maintained. On 9 February 2022, the plaintiff filed three affidavits, including an affidavit of Mr Joel Shaw, which is 1,280 pages in length (including annexures).
50 Because the plaintiff seeks to rely on such extensive additional material to support his proposed new grounds for seeking the removal of the liquidators, it is an obvious inference to draw, and I draw it, that permitting the plaintiff to amend the points of claim in the manner sought and to rely on this further affidavit material will have the result that the trial will need to be adjourned.
51 Further, the unchallenged evidence of the solicitors for the liquidators and RCH is to the same effect.
52 In particular, the liquidators’ evidence is that they cannot meet the new allegations in the time available prior to the scheduled trial commencing on 21 February, further work is required to be done to deal with all of the proposed new claims (which primarily concerns the preparation of pleadings and affidavit evidence), and 12 to 15 business days is estimated to complete such work. I accept that evidence.
53 In addition to the trial being adjourned, the trial will also be lengthened for at least one day, if not longer.
54 Taking into account other matters which are due to be heard before the Court in the coming weeks, including appeals, an adjournment of the trial would mean that it is uncertain as to when this matter could come on again for trial.
55 These matters are further reasons against allowing the amendments proposed by the plaintiff to his points of claim.
56 Leaving aside that there was already dislocation in the allocation of the Court’s resources by accommodating the plaintiff’s request for an urgent trial, which impacts other litigants, a deferral of the hearing date will cause prejudice to the liquidators and, more widely, creditors of the Company.
57 The liquidators are understandably concerned to resolve these proceedings as soon as possible in order that the external administration, investigations and recovery actions may proceed without interruption for the benefit of creditors.
58 The potential impact on creditors of the Company and the liquidators’ concerns around having these proceedings resolved as soon as possible was not the subject of any submissions by the plaintiff. It is another strong factor against allowing the amendments to the points of claim.
Legal principles
59 In paragraphs 21 and 22 of the written outline provided by the liquidators, certain legal principles are identified in relation to an application to amend pleadings in the Federal Court which were accepted by the plaintiff as being correct. These are set out here:
In Tamaya Resources Ltd (in liq) v Deloitte Touche Tohmatsu [2015] FCA 1098 (Tamaya) Gleeson J set out the principles relevant to an application to amend pleadings in the Federal Court. At [125]-[126] her Honour stated:
[125] The applicable principles are well established. The Court’s powers in rules 8.21(1) and 16.53 are broad. Consideration of whether to grant leave to amend must be undertaken in accordance with the overarching purpose set out in s 37M(1) of the Federal Court Act: Australian Competition and Consumer Commission v Jutsen (No 2) [2010] FCA 982 at [12] ; Suzlon Energy Ltd v Bangad [2011] FCA 92; (2011) 196 FCR 259 at [19] ; University of Sydney v ResMed Ltd (No 5) [2012] FCA 232 at [14]; Bowen Energy Ltd v 2KD Drilling Pty Ltd [2012] FCA 275 at [8].
[126] The onus is on the party seeking leave to amend to persuade the Court that such leave should be given: Dye v Commonwealth Securities Ltd (No 2) [2010] FCAFC 118 at [17].
At [127] her Honour summarised, by reference to authority, the matters relevant to the exercise of the Court’s discretion in determining whether leave to amend ought be granted. The summary was later approved by the Full Court on appeal in (2016) 332 ALR 199 at [125] (Gilmour, Perram and Beach JJ). Those matters included:
(a) the nature and importance of the amendment to the party applying for it;
(b) the extent of the delay and the costs associated with the amendment;
(c) the prejudice that might be assumed to follow from the amendment, and that which is shown;
(d) the explanation for any delay in applying for that leave;
(e) the parties’ choices to date in the litigation and the consequences of those choices;
(f) the detriment to other litigants in the Court; and
(g) the potential loss of public confidence in the legal system which can arise where a court is seen to accede to applications made without adequate explanation or justification.
60 In particular, as was submitted, this summary of relevant matters was approved by the Full Court on appeal in Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (a firm) (2016) 332 ALR 199; [2016] FCAFC 2 at [125].
61 In that Full Court decision, it was also stated at [121] that the principles articulated in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 applied to matters in the Federal Court. That seemed to be uncontroversial on this application.
62 At [122] of that decision, the Full Court stated that:
Whilst the power to grant, or refuse, an application to amend the originating application and to further amend the amended statement of claim under rr 8.21(1) and 16.53 of the Federal Court Rules 2011 (Cth) respectively is discretionary, some care is called for, as the plurality in Aon pointed out at [89], in characterising this as a very wide discretion. The discretion is not at large. Applying, analogously, what their Honours said at [89] to this case, the objectives in s 37M of the Federal Court Act 1976 (Cth) are to be sought in the exercise of the powers given by r 8.21(1) to amend the originating applications and by r 16.53 to further amend the statements of claim.
63 At [123] of that decision, their Honours observed that:
Section 37M(1) provides that the overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. Section 37M(2), without limiting the generality of subs (1), provides, relevantly, that the overarching purpose includes, as objectives, the efficient use of the judicial and administrative resources of the Court; the efficient disposal of the Court’s overall caseload; and the disposal of proceedings in a timely manner.
64 Counsel for the plaintiff also directed me to Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261; [2010] FCAFC 101 at [68].
65 At [66] of that decision, the Full Court observed that:
The exercise of discretion involves, necessarily, a balance of exercise.
66 At [67], the Full Court stated:
Importantly, to adapt the joint judgment in Aon Risk 239 CLR 175 at [102] to reflect the relevant statutory provision in the present case, the objectives in s 37M of the Federal Court Act do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked.
67 I have taken that into account in this case.
68 At [69], the Full Court also observed that:
It should be borne in mind that the extent to which the granting of an amendment which will lead to an adjournment of a trial may have the adverse effect upon the orderly administration of justice envisaged by the High Court in Aon Risk is a question in relation to which a trial judge of the Federal Court enjoyed a peculiar advantage.
Analysis
69 Paragraphs 66, 66A and 66B(b) in the form in which they appear in the proposed amended points of claim are not opposed, nor are the proposed amendments prior to page 22. For this reason, all of these proposed amendments will be allowed.
70 The insertion of subparagraph 66B(a) is opposed by RCH.
71 RCH submits that, by alleging that a reason why the need to investigate the receiver’s sale for possible contravention of s 420A is “obvious” having regard to the matters stated at paragraphs 64 to 66 of the points of claim, the allegation puts in issue the strength of the matters pleaded in paragraphs 64 to 66 as support for the conclusion in paragraph 66A.
72 RCH submits that the alleged “obviousness” makes relevant all other matters that may bear upon the market value of the assets at the time of sale by the receivers and that, accordingly, paragraph 66B(a) also gives rise to the need for all such evidence about the market value of the assets sold by the receivers, which RCH is not in a position to obtain prior to the scheduled trial.
73 The evidence relied upon by RCH to support the submission that it would not be able to address this allegation prior to trial was not challenged. Remembering that the plaintiff has acceded to RCH being able to file and serve affidavit material in this case, it would be unfair for RCH to be prevented from meeting this new allegation.
74 The consequence of allowing RCH to meet this allegation therefore means that the trial will be adjourned to the prejudice of the parties and the creditors of the Company.
75 The affidavit material relied upon by the plaintiff does not provide any explanation as to why the amendments in this paragraph, being 66B(a), were not made at an earlier time or, indeed, why these allegations were not made when the points of claim were first filed.
76 These matters provide further reason for refusing the amendment, being the insertion of paragraph 66B(a) into the points of claim.
Paragraphs 67A to 67Y and 82
77 Paragraphs 67A to 67Y plead a series of facts relating to proceedings in the Supreme Court of Queensland.
78 Paragraphs 67D to 67F plead that ABL prepared the Contract, being the contract that is defined in paragraph 42(a) of the original points of claim; that ABL acted for the interested party or appeared to do so and acted for the receivers or appeared to do so. The relevance of these facts to the relief sought by the plaintiff is not apparent.
79 Paragraphs 67G to 67K plead various clauses of the Contract.
80 Paragraph 67L relevantly pleads:
There is reason to doubt whether the Company’s chose in action in Proceeding BS4435/19 (the Chose) was attached by the security interest created by the deed of cross charge on a proper construction of the deed of cross charge (i.e., whether the Chose was "Charged Property" as defined in the Contract).
81 No definition of Charged Property is pleaded in the proposed amended points of claim. This is a deficiency, but it would not on its own be a reason to refuse the amendment. However, it does not assist.
82 A more important problem is that it is unclear whether the Court is being asked to determine whether the security interest attaches to the Chose or not. When I asked senior counsel for the plaintiff to identify whether that would be an issue that the Court would be required to decide at trial, the answer was that it was not and that all the Court would be required to decide is whether it was arguable. However, that is not apparent from the manner in which paragraph 67L has been pleaded but, if that is the case, it weakens the strength of the proposed cause of action that is sought to be added.
83 Paragraphs 67M and 67N refer to certain emails sent by one of the liquidators in 2021. The plaintiff’s solicitor, Mr Shaw, deposes that these emails formed part of the documents that were produced pursuant to the Notice to Produce. However, nowhere does he say that these were documents the plaintiff had not seen before or could not have obtained before and I have already observed that there is no explanation as to why the plaintiff waited until 15 December 2021 to serve the Notice to Produce. Further, the fact that one of the liquidators has identified a potential problem which he is trying to get fixed (according to these emails) does not assist the plaintiff’s cause in seeking the removal of the liquidators in any event.
84 Paragraph 67O pleads the position adopted by RCH in relation to the Chose but it is not clear what that means or how that adds to the claim against the liquidators.
85 Paragraph 67P pleads that a law firm was given leave to withdraw as solicitors and they ceased to so act. It is not clear where that leads or how that adds to the claim against the liquidators.
86 Paragraphs 67Q and 67R plead facts concerning an application to have the Company removed from the Supreme Court proceeding and that, in support of that application, an affidavit of Ms O’Brien was filed which exhibited the Contract.
87 Paragraph 67S pleads that a different law firm filed a notice stating that they had been appointed to act as solicitors for the Company in the proceeding and paragraph 67T pleads the adjournment of the application from one date to another.
88 Paragraph 67U pleads a series of facts in connection with the hearing of the application, such as, for example, that written submissions were filed which refer to clauses of the Contract and that Ms O’Brien’s affidavit was read in support of the application.
89 It is also pleaded that oral submissions were made about whether RCH had acquired the Chose on completion of the Contract as an issue that was uncontroversial, that the solicitor acting for the Company by the liquidators did not contradict or question that position or reserve the Company’s rights on that issue and that the solicitor ultimately consented to the proposed order that the Company be removed while keeping it as a defendant to the counterclaim.
90 Paragraph 67V pleads that the Company remains exposed to liability on the counterclaim but also pleads the Company is or may be precluded from contending that it is beneficially entitled to the Chose. Again, this is a problem as it is not clear from this pleading what it is the Court will be asked to determine at the trial if the amendments are allowed.
91 Paragraph 67W pleads something which RCH did not agree to assume under the Contract, but it is unclear from this pleading whether this allegation will require the construction of clauses of the Contract which have been pleaded or something else.
92 Paragraphs 67X and 67Y plead that there was no order made in the Supreme Court proceeding restricting access to Ms O’Brien’s affidavit and that, notwithstanding the various matters pleaded above, the liquidators at hearings in this proceeding on 23 December 2021 and 25 January 2022 declined to produce the Contract as they were required to do by the Notice to Produce.
93 It will be recalled that the Contract fell within the scope of the Notice to Produce served on 15 December 2021 and there is no challenge to the evidence that the liquidators understood they required the consent of the receivers before it could be provided. Indeed, it is apparent that was the case from the evidence before me.
94 It is said that where that all leads is to paragraph 82 in which it is pleaded that, by reason of these matters, a reasonable fair-minded observer might apprehend the liquidators might not discharge their duties with independence and impartiality. Such a case is palpably weak.
95 The plaintiff’s outline of argument dated 7 February 2022 elaborates on these allegations and asserts:
... [the liquidators] may have known full well that the Contract, which was not produced on 23 December 2021 because it was supposedly confidential, was at that time in the public domain.
... They also maintained the position that the Contract was confidential at the hearing on 25 January 2022 by failing to correct the false assertion contained in Mr Preston’s letter that the Contract was confidential. It appears Mr Ayres has had the primary conduct of the Company’s administration and subsequent liquidation. It also appears that Mr Ayres knew the Contract was not confidential. It is unclear whether Mr Ayres intended to mislead the Court...
96 The allegations that are sought to be pleaded appear to have arisen from inquiries made by the plaintiff’s solicitor, Mr Shaw, in January 2022, and access to a court file in the registry of the Supreme Court of Queensland. In particular, Mr Shaw deposes in his affidavit of 4 February 2022 that the Contract was exhibited to an affidavit that had been filed in the Supreme Court proceedings by the Company’s former solicitors, Allens.
97 Prior to bringing the amendment application in this proceeding, the liquidators and their legal representatives were not asked to indicate whether, for example, they were aware of the existence of the O’Brien affidavit or whether they were aware whether the Contract had been disclosed in the Supreme Court proceedings by the Company’s former solicitors.
98 Had such an inquiry been made, the following would have become known to the plaintiff and his lawyers:
(a) Mr Cowling (then partner of King & Wood Mallesons (KWM)) and KWM do not appear to have received Ms O’Brien’s affidavit prior to 4 February 2022 and were otherwise unaware that the Contract had been disclosed in the Supreme Court proceedings;
(b) the former solicitors for the Company posted a copy of certain documents filed in that proceeding to Mr Ayres’ office address under cover of letter dated 19 October 2021. However, these documents were not provided to Mr Cowling and were not accessed by Mr Ayres until recently for the purpose of addressing the allegations raised by the plaintiff in his application to amend;
(c) KWM’s involvement in the Supreme Court proceeding was limited to Mr Cowling going on the court record on 1 November 2021 and appearing at the removal application on 10 November 2021. Mr Cowling retired from the KWM partnership on 22 November 2021 and KWM has not undertaken any further steps or work in connection with the proceeding;
(d) Mr Cowling retired from KWM weeks prior to the issue of the Notice to Produce, which was served on 14 December 2021, and accordingly had no involvement in relation to compliance with it or in instructing counsel at the subsequent two case management hearings;
(e) the record of correspondence demonstrates plainly that the steps taken by the liquidators and their lawyers in relation to the production of the Contract were undertaken prudently and to ensure that they did not disclose information that had been claimed and continued to be claimed by the receivers to be confidential;
(f) there was plainly a sufficient basis for the liquidators’ lawyers, in submissions made before the Court on 23 December 2021, some eight days after the Notice to Produce was served, to indicate the existence of the confidentiality arrangement in respect of the Contract and to propose that the document not be produced until such time that the receivers were in a position to engage in the process, which had occurred by the time of the case management hearing on 25 January 2022.
99 Even if, prior to the steps being taken to comply with the Notice to Produce, the liquidators’ legal representatives had received notice of Ms O’Brien’s affidavit (which they had not) and even if the liquidators were aware of that affidavit and understood that it exhibited the Contract (which they did not), it is difficult to see how such a fact could lead to a conclusion that the steps that were taken were somehow improper or that it was necessary to raise any matters with the Court in relation to the document beyond that it was subject to the receivers’ claim of confidentiality.
100 Therefore, for these reasons, the proposed cause of action sought to be added by these paragraphs in the amended points of claim lacks merit and that is another reason not to allow the amendments to be made.
101 In relation to the amendments generally - that is, the ones to which I have referred as well as the other amendments which follow these in the proposed amended points of claim - the plaintiff has failed to provide sufficient evidence to explain why the claims that are made in these paragraphs were not made in the original points of claim, why the documents said to give rise to the allegations were not sought at an earlier time, to demonstrate that the plaintiff did not have access to those documents or could not obtain those documents at an earlier time and why it is that, less than two weeks before the hearing of the trial, an application is brought to make such significant amendments to the pleadings.
102 When one looks at the two affidavits of Mr Shaw in support of the application, they raise more questions than they answer, and they are hopelessly inadequate for the purposes of an application to amend a pleading so close to a trial date.
103 Relevant to this are the legal principles referred to above, including that one of the important issues as to whether leave ought to be granted to amend is the explanation for any delay in bringing the application.
104 A refusal of the application to amend the points of claim is particularly appropriate in this case, having regard to the choices made by the plaintiff at an early stage in the proceeding for the matter to be heard urgently, the Court’s accommodation of that request and the wider case management implications of the delay on the Court and other litigants.
105 A refusal of the application will achieve a fair balance of the competing interests. In this respect, the plaintiff has been given a reasonable opportunity to bring his challenge to the liquidators’ appointments, even if he will not be at liberty to take every point he now very belatedly seeks to raise. On the other hand, the liquidators and the insolvent estate will not be put to the inevitable, irrecoverable expense and delay associated with any adjournment of the trial.
106 In conclusion, for these reasons, the amendments proposed from paragraphs 66B(a) onwards are refused, and orders will be made accordingly.
I certify that the preceding one hundred and six (106) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Downes. |