Clurname Pty Limited v McGraw-Hill Financial, Inc

The existing pleading 5 The proceeding commenced by Clurname is a representative proceeding under Part IVA of the Federal Court of Australia Act 1976 (Cth) (FCA Act). Clurname alleges that it and the group members on whose behalf the proceeding has been commenced sustained losses arising from their investments in financial products which were issued by Corsair (Jersey) No. 2 Ltd and Helix Capital (Jersey) Ltd. The financial products in question were particular forms of synthetic collateralised debt obligations or SCDOs. As the name suggests, SCDOs are a form of collateralised debt obligation, or CDO. The SCDOs were given various names. For the sake of simplicity, they will be referred to as the Pure and Oasis SCDOs, or collectively as the SCDOs. 6 The "arranger" of the issue of the Pure SCDOs was JP Morgan Australia Limited. The arranger of the Oasis SCDOs was Banc of America Securities Limited. The Commonwealth Bank of Australia was a distributor of the SCDOs in Australia. It appears to have purchased the Pure and Oasis SCDOs as principal and to have then on-sold them to investors, including Clurname. 7 Standard & Poor's involvement in the issue of the Pure and Oasis SCDOs came about because it assigned credit ratings to the SCDOs. Some of the Pure and Oasis SCDOs were assigned a AAA rating, which Clurname alleges represented that those SCDOs "should be able to withstand an extreme level of stress" and that their capacity to pay coupons and principal at maturity was "extremely strong". Some were issued a AA rating, which was said to represent that those SCDOs "should be able to withstand a severe level of stress" and that their capacity to pay coupons and principal at maturity was "very strong". Finally, some of the Oasis SCDOs only received an A rating. That was said to represent that those SCDOs "should be able to withstand a substantial level of stress" and that their capacity to pay coupons and principal at maturity was "strong". 8 Clurname's existing pleading makes two key allegations against Standard & Poor's in relation to their conduct in issuing the ratings in respect of the Pure and Oasis SCDOs. 9 First, Clurname alleges that in assigning the AAA, AA and A ratings to the Pure and Oasis SCDOs, Standard & Poor's intended to, and did, communicate and represent that their "conclusions" concerning the ratings were based on reasonable grounds, and that in reaching those conclusions it had exercised reasonable care and skill. Those representations are defined in the existing pleading as the S&P AAA Representations, the S&P AA Representations and the S&P A Representations, depending on the particular SCDO to which the ratings were assigned. For the sake of brevity, those representations will be referred to collectively as the S&P Ratings Representations. 10 Clurname contends that the S&P Ratings Representations were "false and misleading and/or misleading and deceptive and/or misleading in a material particular". That was because, so it is alleged, Standard & Poor's did not have reasonable grounds for reaching the relevant conclusions, the assignment of the AAA, AA and A ratings was not the product of the exercise of reasonable care and skill, and because no reasonably competent ratings agency would have assigned AAA, AA or A ratings to the relevant Pure and Oasis SCDOs with the data and information that was obtained by Standard & Poor's as a result of its modelling processes for the SCDOs. 11 Second, Clurname alleges that Standard & Poor's represented and held out that its credit ratings of the SCDOs was "objective, independent, uninfluenced by any conflicts of interest that might compromise [Standard & Poor's] analytical judgment and reflected [Standard & Poor's] true current opinion regarding the credit risks that SCDOs posed to investors". That representation is defined in the existing pleading as the S&P Independence Representation. 12 Clurname contends, in paragraph [104] of the existing pleading, that the S&P Independence Representation was "false and misleading and/or misleading and deceptive and/or misleading in a material particular" because: 104.1 Arrangers of structured credit derivatives, including SCDOs, were S&P's primary customers and retained S&P to provide its ratings opinion as to new products they had created; 104.1 S&P generated substantial revenue and profits from rating structured credit derivatives; 104.2 S&P competed with other ratings agencies in the market for rating services; 104.3 S&P objective to increase its share of market for rating services led S&P to underestimate and disregard the true extent of the credit risks posed by SCDOs; 104.4 The underestimation of credit risks benefited the arrangers and issuers of the SCDOs by making it possible for them to issue SCDOs with less credit protection, thereby making deals more profitable to them; 104.5 That enabled issuers and arrangers to bring more ratings business to S&P; 104.6 S&P's objective to increase its market share and increase its profits and revenue by underestimating credit risks in its ratings process meant that S&P did not apply an independent and objective process to its rating of the SCDOs. 13 The S&P Ratings Representations and S&P Independence Representation are collectively referred to in the existing pleading as the S&P Representations. Clurname alleges that, in issuing the ratings and making the S&P Representations in all the pleaded circumstances, Standard & Poor's contravened various provisions of the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). It also alleges that in issuing the ratings and making the S&P Representations, Standard & Poor's breached its duty of care to potential purchasers to exercise reasonable care in forming and publishing its opinion as to the creditworthiness of the SCDOs. Finally, Clurname alleges that in failing to disclose the matters which made the S&P Independence Representation false and misleading, Standard & Poor's engaged in unconscionable conduct. 14 Clurname's case as pleaded is that, in proceeding with the acquisition of the SCDOs, it relied substantially on the ratings assigned to the SCDOs by Standard & Poor's and on the S&P Representations. It did so on the basis of a belief that the ratings were a reliable, independent indicator of the creditworthiness of the SCDOs. 15 It is important to emphasise at this juncture that none of the existing causes of action require Clurname to allege or prove that Standard & Poor's knew that the S&P Representations were false. Nor is that corporate state of mind on the part of Standard & Poor's currently pleaded. 16 It is unnecessary to attempt to summarise Standard & Poor's detailed defence to Clurname's pleading. Suffice it to say that it admits assigning the relevant ratings to the SCDOs, but effectively denies that in assigning the ratings it made the S&P Ratings Representations as alleged by Clurname. It also denies making the S&P Independence Representation and asserts that the ratings assigned to the SCDOs were objective opinions, independent and uninfluenced by conflicts of interest. 17 Importantly, in answer to the whole claim, Standard & Poor's contends that the causes of action pleaded by Clurname are statute barred. Paragraph [139] of Standard & Poor's Second Amended Defence is in the following terms: In answer to the whole of the FASOC, the Respondents say that as: (a) the alleged causes of action accrued when the Applicants acquired the SCDOs as alleged in paragraphs 87, 88 and 92 of the FASOC; or (b) in the alternative, the alleged causes of action accrued at some other time more than 6 years before the commencement of this action; the Applicants' alleged causes of action did not accrue within 6 years before the commencement of this action and are therefore statute barred. 18 It can be observed that the pleaded limitation defence is almost entirely devoid of particulars. It does not state why the causes of action accrued when the SCDOs were acquired, or the basis upon which it is asserted that the causes of action accrued at some other time more than six years before the proceeding was commenced.

Procedural background 19 The proceeding was commenced on 12 August 2015 by the filing of an originating application and statement of claim. The application and pleading were served on 25 August 2015. 20 On 24 June 2016, Clurname filed an interlocutory application seeking leave to join a related entity of Standard and Poor's, and to amend its originating application and pleading. That application was resolved by consent, with the result that Clurname filed an amended originating application and amended statement of claim on 17 August 2016 pursuant to rr 8.21 and 16.53 of the Federal Court Rules 2011 (Cth). On the same day, orders were made requiring Standard & Poor's to give discovery. Those orders required Standard & Poor's to give discovery of documents discovered by them in earlier proceedings in this Court (City of Swan & Ors v McGraw-Hill Companies, Inc & Anor, NSD 656 of 2013) (the Swan proceedings) by 1 September 2016 and to give discovery of all documents directly relevant to the assignment of ratings to the SCDOs not otherwise produced in the Swan proceedings by 15 October 2016. 21 Standard & Poor's provided Clurname with electronic copies of documents covered by the 17 August 2016 discovery orders on 19 September and 20 October 2016 respectively. 22 On 21 October 2016, the Court ordered that the proceedings be referred to mediation, in conjunction with a number of the related proceedings. That mediation occurred in early December 2016. It would appear that considerable time and effort was expended in preparing for the mediation during the months of October to December 2016. 23 On 22 December 2016, orders were made requiring Standard & Poor's to give standard discovery by 31 March 2017. 24 On 30 January 2017, Clurname filed an interlocutory application seeking leave to further amend its originating application and pleading. 25 On 31 March 2017, Standard & Poor's provided unverified lists of documents in respect of the documents covered by the 17 August 2016 discovery orders, as well as a further unverified list of documents not previously produced. On 3 April 2017, Standard & Poor's provided electronic copies of 23 documents not previously discovered. 26 It would appear that some of the documents produced by Standard & Poor's pursuant to the discovery orders were redacted. Some of the redactions were not apparent on the face of the documents. Some of the redactions were made by Standard & Poor's on the grounds of relevance. Others were apparently made on the basis of confidentiality. The discovery orders in this matter did not provide that Standard & Poor's could unilaterally decide to redact documents that were required to be discovered. The basis of that right appeared to be S&P pressing for it to be included in the Electronic Exchange Protocol (EEP) which had been ordered to be agreed between the parties. However, as at early 2017, the EEP had not yet been agreed. There had, it appears, also been considerable debate on this issue in respect of the discovery provided by Standard & Poor's in the Swan proceedings. Clurname continued to claim that it was entitled to inspect unredacted versions of the documents subject to a confidentiality regime that was ultimately agreed in May 2017. It was not until 13 June 2017, however, that Standard & Poor's provided unredacted versions of 137 documents that had previously been redacted. The contents of some of the previously redacted documents were relevant, if not of considerable importance, to the question whether it was reasonably open to Clurname to plead the new cause of action in deceit. 27 On 28 June 2017, Standard & Poor's provided Clurname with electronic copies of a further tranche of documents by way of what Standard & Poor's called "supplementary discovery". The parties disagreed as to the precise number of documents produced. Clurname said it was 1,504. Standard & Poor's said it was 1,878, though only 1,379 unique documents accounting for duplicates. It is unnecessary to resolve that dispute. Little turns on it. What is relevant is that no real explanation was given for the delay in producing those documents. Clurname contended that a number of documents which are important to the new causes of action in the proposed further amended pleading were not discovered until 28 June 2017. 28 As events transpired, the 30 January 2017 interlocutory application to further amend the originating application and pleading was not opposed by Standard & Poor's. It would appear that the position taken by Standard & Poor's was ultimately determined by the successful outcome of the amendment application in Gloucester Shire Council v Fitch Ratings, Inc (No 2) [2017] FCA 248 (the Gloucester proceedings), which concerned amendments substantially similar to those proposed by Clurname in the 30 January 2017 amendment application. The further amended originating application and pleading were eventually filed on 15 June 2017. Standard & Poor's filed its defence to the further amended pleading on 30 June 2017. 29 Standard & Poor's solicitors were first notified that Clurname would seek to further amend its originating application and pleading, and would allege deceit on the part of Standard & Poor's, in email correspondence and at a case management conference in one of the related proceedings on 14 July 2017. Clurname filed the current interlocutory application on 16 August 2017. A copy of the proposed Second Further Amended Statement of Claim (SFASOC) was annexed to the application. It follows that Standard & Poor's has been aware of the form of the proposed amended pleading since 16 August 2017. 30 There was a case management hearing of this and a number of the related Standard & Poor's matters on 17 August 2017. Standard & Poor's advised the Court that it had not determined whether or not to resist Clurname's application to amend and submitted that the interlocutory application should not be set down for hearing. Nonetheless, and after some debate, the interlocutory application was set down for hearing on 20 and 21 September 2017. Standard & Poor's was directed to file any application to vacate that hearing date by 6 September 2017. Standard & Poor's did subsequently apply to vacate the hearing. It argued that it had insufficient time to prepare for the hearing of the amendment application. That application was ultimately allowed and the interlocutory application for leave to amend was set down for hearing on 10 October 2017. Standard & Poor's had, however, wanted even more time to respond to the leave application. 31 As was noted earlier, the hearing of the interlocutory application proceeded over four days. The parties filed voluminous affidavits sworn or affirmed by their respective solicitors. The documentary exhibits to those proposed affidavits were vast and would, in ordinary circumstances, be considered to be bordering on oppressive. For this and the associated Standard & Poor's proceedings, however, they were par for the course. They were nonetheless burdensome. Both solicitors were cross-examined at some length. The parties filed lengthy and detailed written submissions raising many disputed issues of fact and law. They provided a joint bundle of authorities that filled nine lever-arch folders.

Clurname's proposed amendments 32 The critical amendments to the existing pleading that are proposed by Clurname relate to a new cause of action in deceit. There are other proposed amendments, including a new cause of action for equitable unconscionability, however Standard & Poor's opposition to the grant of leave to amend focussed almost entirely on the proposed new claim in deceit. That new claim is detailed in paragraphs [132] to [202] of the proposed amended pleading, the proposed SFASOC. The proposed amended originating application adds a new common question, being whether Standard & Poor's committed the tort of deceit. 33 While the pleading of the proposed new claim in deceit is fairly lengthy and detailed, there are essentially two critical allegations. 34 The first critical allegation is that in making the S&P Ratings Representations, Standard & Poor's either knew that those representations were false or, in the alternative, was recklessly indifferent to their truth: SFASOC [197]. In very simple terms, Clurname alleges (or seeks to allege) that Standard & Poor's was aware that the ratings for the Pure and Oasis SCDOs lacked reasonable grounds, or that there was substantial doubt about whether the ratings were based on reasonable grounds, because it was aware that there were difficulties with the new version of the model used to arrive at the ratings, version 3 of the CDO Evaluator, or issues or inaccuracies with some of the assumptions and inputs used in the model. 35 Needless to say, Standard & Poor's ratings methodology was complex. It is sufficient to note that the CDO Evaluator was a simulation model which predicted, or at least endeavoured to predict, the likely future performance of the SCDOs in terms of their ability to repay principal and interest. One of key assumptions or inputs in the model concerned statistical estimates of the likelihood of there being defaults or credit events in two or more of the underlying securities at the same time. Those assumptions or inputs were called "correlation". 36 The essence of Clurname's case is that Standard & Poor's knew that its ratings lacked reasonable grounds because: it used correlation assumptions in CDO Evaluator version 3 which it knew were lower than estimates based on historical data and did so to avoid the negative effects of using higher correlation estimates (SFASOC [194.1]; [166]-[170]); the CDO Evaluator version 3 used a static correlation assumption (an assumption that correlation remains stable over time) in circumstances where Standard & Poor's knew it was incorrect and wrong to do so (SFASOC [194.2]; [171]-[173]); it was aware that there was significant uncertainty as to the soundness of the model assumptions used by CDO Evaluator version 3 which raised significant doubts about the reliability of the ratings assigned based on the output of the CDO Evaluator model (SFASOC [194.3], [174]-[178]; and it was aware that business considerations had influenced Standard & Poor's ratings methodology (SFASOC [194.4]; [179]-[190]). 37 The particulars of those allegations in the proposed amended pleading refer to certain documents and identify the senior employees whose knowledge Clurname alleges can and should be imputed or attributed to Standard & Poor's (see also SFASOC [193]). The named employees are Mr Kai Gilkes, Mr Perry Inglis, Ms Patrice Jordan, Mr Richard Gugliada, Mr Norbert Jobst and Mr Michael Drexler. At relevant times: Mr Gilkes was the Managing Director, Structured Finance Ratings and Head of Standard & Poor's Global Qualitative Group; Mr Inglis was Managing Director, Structured Finance Ratings; Ms Jordan was Managing Director, International Structured Finance and subsequently Managing Director in charge of Standard & Poor's Global CDO Group; Mr Gugliada was Global Practice Leader, SCDOs; Mr Jobst was Director, Structured Finance Ratings and Mr Drexler was an Analyst in Criteria Group, CDO Group. 38 The second critical allegation is that when it made the S&P Independence Representation, Standard & Poor's either knew it was false or, in the alternative, was recklessly indifferent to its truth: SFASOC [200]. In essence, Clurname alleges (or seeks to allege) that Standard & Poor's was aware that its ratings of the SCDOs were not objective, independent, and uninfluenced by any conflicts of interest that might compromise its analytical judgement regarding the credit risks that the SCDOs posed to investors, or that there was substantial doubt about those matters, because: business considerations had influenced Standard & Poor's ratings methodology (SFASOC [198], [194.4]; [179]-[190]); and the S&P Independence Representation was made with the intention that investors would rely on that representation in deciding whether to rely on Standard & Poor's ratings in deciding to invest in the SCDOs (SFASOC [199]; [65], [65AA]; [133]-[136]. The particulars of those allegations again make it clear that the allegations are based on internal Standard & Poor's emails and reports which were authored by or sent to named senior employees whose knowledge was, on Clurname's case, to be imputed to Standard & Poor's. 39 The general thrust of Clurname's deceit case is that it can be inferred from the documents identified in the proposed amended pleading that each of the individuals named in the pleading, each of whom was a senior officer of Standard & Poor's, was aware that the methodology employed by Standard & Poor's in rating SCDOs at the relevant time was driven primarily by, or at least materially influenced by, business and economic imperatives and Standard's & Poor's relationship with SCDO arrangers. In short, Standard & Poor's drive to maximise market share, revenue and profitability from rating SCDOs and similar financial products, together with its mutually beneficial arrangements and relationships with arrangers, caused it to knowingly utilise unreasonable correlation estimates and assumptions and disregard other known uncertainties in its modelling assumptions. 40 Two other parts of the proposed amended pleading warrant brief consideration. 41 First, the proposed amendments include the insertion of an additional particular of the allegation that Standard & Poor's did not have reasonable grounds for concluding that the relevant SCDOs should be assigned the ratings that they were ultimately assigned. That additional particular concerns Standard & Poor's adoption of a specific "quantile table" to rate CDOs which was different to the quantile table that was used to rate corporate bonds. The additional particular (particular (f) to SFASOC [82.5]) is in the following terms: Developed for CDO Evaluator version 3.0 (which was used to rate the SCDOs) a ratings on quantile table (the CDO Ratings Quantile Table) to determine the rating for CDOs which was not identical to the ratings quantile table used by S&P to rate corporate bonds (the CDO Corporate Ratings Table) when the risk of CDOs structured in the manner of the SCDOs defaulting was determined only by the risk of corporate bonds of the Reference Entities defaulting. For example, a CDO with the same modelled probability of default (at 0.927%) would only attain an A+ rating using the CDO Corporate Ratings Table versus an AA rating using the CDO Ratings Quantile Table utilised by S&P for SCDOs. The use of the CDO specific ratings quantile table enabled the SCDOs to achieve a higher rating than they would have achieved had the ratings quantile for corporate bonds been utilised. There was no reasonable basis for S&P to utilise the CDO Ratings Quantile Table to determine the rating of the SCDOs instead of the CDO Corporate Ratings Table. 42 Second, as noted earlier, the proposed amendments introduce a new claim of unconscionable conduct in equity (SFASOC [121A]). That cause of action is based on the same factual allegations as the existing claim of unconscionable conduct in contravention of s 12CB of the ASIC Act (see SFASOC [121]). It is unnecessary to say anything further in relation to this additional cause of action. Standard & Poor's did not really make any specific submissions in relation to it, other than some relatively inconsequential (and unmeritorious) submissions concerning the sufficiency of the particulars of that proposed claim.

CLURNAME'S case IN SUPPORT OF AMENDMENT 43 Clurname relied, in support of its amendment application, on affidavits sworn by its solicitor, Ms Amanda Banton. Ms Banton's affidavits were relatively lengthy. Her first affidavit exhibited six very large bundles of documents. Her second affidavit exhibited a further bundle of documents. A further tender bundle, containing documents not referred to in Ms Banton's affidavits, was also produced at the hearing. All up, Ms Banton's exhibits and the tender bundle filled 12 lever-arch folders. The global tender of the entire exhibit and tender bundle was rejected. Ultimately 41 documentary exhibits were tendered from the initial exhibit bundles, though one of them (exhibit A29) comprised all of the documents referred to in the particulars to Clurname's proposed cause of action in deceit. The documents that were admitted into evidence were the documents which were the subject of cross-examination, or which the Court was taken to, either specifically or in general terms, in the parties' submissions. 44 Ms Banton's evidence in broad terms included a chronology of the events which led her to consider and investigate the availability of a claim in deceit. Those events included, in particular, Standard & Poor's pleading of a limiting defence and the eventual discovery of documents by Standard & Poor's that, when considered in context, provided a reasonable basis for the claim. Ms Banton also explained, or endeavoured to explain, why it took some months before the claim could be properly formulated in the proposed amended pleading. In short terms, Ms Banton referred to deficiencies, issues or delays with Standard & Poor's discovery, the need to brief expert witnesses, the need for the proposed amended pleading to be drafted or settled by counsel, and the complexity and difficulty of the subject-matter of the proposed amendments. 45 Ms Banton's affidavit also addressed facts or issues relating to the importance of the amendments to Clurname's case and the prospect of prejudice to Standard & Poor's arising from the amendments. In relation to the importance of the amendments, Ms Banton asserted that the proposed amendments were very important to Clurname's case because they are capable of providing an answer to Standard & Poor's limitation defences. In relation to prejudice to Standard & Poor's, Ms Banton contended that there was unlikely to be any prejudice because the documents that support the deceit claim will be deployed by Clurname in support of its existing claims in any event, and therefore will have to be answered by Standard & Poor's even if leave to amend is not granted. She also noted that it would be surprising if Standard & Poor's had not already attempted to obtain instructions from the relevant six senior employees involved in the communications and documents that provide the basis of the deceit claim, as part of Standard & Poor's defence of various proceedings brought in the United States. 46 Ms Banton was cross-examined at some length, though ultimately not to great effect. It is unnecessary to refer to that cross-examination in any detail. Suffice it to say that the general thrust of what was put to Ms Banton was that she had not investigated whether Clurname had a claim in deceit against Standard & Poor's with due diligence or despatch, and that she was aware of all of the facts and documents that she needed to formulate the claim in deceit by August 2015, when the proceeding was commenced, if not before. Ms Banton denied that was the case. She maintained, in effect, that in all the circumstances she could not have formulated the claim any earlier than she did. The question whether that and other aspects of Ms Banton's evidence should be accepted is dealt with later in the context of addressing the relevant discretionary considerations, including delay. 47 Clurname's submissions in support of the grant of leave to amend were, in summary: (a) the proposed amendments arose out of Standard & Poor's discovery, which was not complete until 28 June 2017; (b) Clurname brought the application as soon as possible after that date and could not reasonably have done so any sooner; (c) the amendments are very important to Clurname's case because they provide a basis to overcome a limitation defence raised by Standard & Poor's to most of the existing claims; (d) there is no prejudice to Standard & Poor's because the amendments are based on material which it can reasonably be inferred that Standard & Poor's has been aware of for a long time; (e) the documentary case in support of the new claims in deceit and unconscionability will be advanced in support of the existing claims in any event; (f) the expert evidence for the new claims in deceit and unconscionability is the same as the expert evidence for the existing claims, so Standard & Poor's will have to meet that case in any event; (g) consequently, the amendments will not result in the loss of the trial date; and (h) alternatively, any prejudice to Standard & Poor's can be managed by orders extending the time for service of Standard & Poor's evidence and for costs thrown away.

STANDARD & POOR'S OPPOSITION TO THE AMENDMENT 48 Standard & Poor's primarily relied on an affidavit sworn by its solicitor, Mr Timothy Grave, in opposition to the amendment application. The body of Mr Grave's affidavit was 69 pages long (single spaced) and included 295 paragraphs. Like Ms Banton's affidavit, it exhibited a very large bundle of documents. That bundle ran to over 3000 pages and filled 4 lever-arch folders. As was the case with Ms Banton's documentary exhibits, the global tender of the bundle exhibited to Mr Grave's affidavit was rejected. Ultimately only 17 documents were tendered, though many of them were very lengthy. 49 Mr Grave's affidavit evidence addressed the following topics: a general background to and overview of the proceedings; a history or chronology of the previous amendments to the pleading; a dissertation on the new legal and factual issues raised by the proposed amendments; a discussion of the history of other related or similar actions in Australia against ratings agencies and Clurname's solicitor's involvement therein; arguments in support of the proposition that Clurname's existing and proposed new causes of action are statute barred; a chronology of events said to support the proposition that the new causes of action in deceit could have been readily discovered by Clurname's solicitor at a much earlier point in time; arguments in support of the assertion that Australia is an inappropriate forum for the proposed cause of action in deceit; a chronology of events relating to Standard & Poor's discovery of documents in purported compliance with the Court's orders; and facts that were said to show that Standard & Poor's will be unfairly prejudiced by the proposed amendment. 50 Mr Grave was also cross-examined at some length. It is both unnecessary and undesirable at this point to discuss in any detail Mr Grave's evidence, including the issues that arose during cross examination. Those aspects of his evidence that are important to the resolution of the issues arising on this application will be discussed in context later. Suffice it to say at this stage that the main areas of Mr Grave's evidence that were tested, or were the subject of challenge, in cross-examination were: his contention that Ms Banton could and should have investigated the possibility of a deceit claim against Standard & Poor's earlier than she apparently did; the adequacy of Standard & Poor's discovery; his assertion that if leave to amend was granted, Standard & Poor's would effectively have to begin investigating a number of new issues "from scratch"; the steps that Mr Grave had taken to ascertain whether Standard & Poor's United States attorneys had, in the context of claims made against Standard & Poor's in the United States, conducted investigations and gathered documents in respect of the sorts of issues raised by the proposed deceit claim; and the steps, if any, that had been taken by Mr Grave to ascertain whether the former Standard & Poor's employees referred to in the proposed pleading concerning the deceit claim were willing and available to assist Standard & Poor's if the trial is heard in Sydney in March 2018. 51 Standard & Poor's also relied on affidavit evidence from an expert in the law of the United States of America, Professor Ethan J Leib. In short terms, Professor Leib's evidence was that the equivalent claim to the deceit claim that Clurname wishes to plead is, as a matter of New York law, the cause of action for common law fraud. It may be noted that Professor Leib's articulation of the elements of the cause of action for common law fraud tend to indicate that the elements are relevantly the same as the elements of a cause of action in deceit based on an alleged false misrepresentation. Professor Leib also stated that a claim for common law fraud in New York must be commenced within the greater of six years from the date of the fraud or two years from the time the plaintiff discovered or could have discovered the fraud with reasonable diligence. 52 Standard & Poor's submissions in opposition to the grant of leave to amend were, in summary: (a) there are serious and insuperable deficiencies in the pleading of the new claims; (b) the deceit claim is governed by New York law and is statute barred, which has the consequence, among other things, that the Court does not have the power to allow the amendments; (c) Australia is a clearly inappropriate forum for the resolution of the deceit claim; (d) delay is a particularly serious consideration where a party seeks to plead fraud at a late stage in a proceeding; (e) the delays by Clurname in bringing forward the new claims are serious and prejudicial to Standard & Poor's and sufficient in themselves for the amendment application to be refused; (f) the new claims for relief do not arise out of the same facts or substantially the same facts as those already pleaded for the purpose of r 8.21(1)(g)(i) of the Rules; (g) Clurname bears the burden or onus of persuading the Court that the amendment application should be allowed; and (h) any doubts in relation to the resolution of the limitation period issue resulting from the existence of disputed factual issues militates in favour of the discretion being exercised to refuse the amendment application on the basis that the plaintiff can bring a fresh action if the amendments are not allowed.

RELEVANT PRINCIPLES 53 The relevant principles in relation to application for leave to amend were recently considered in somewhat analogous circumstances in Gloucester at [84]-[89]. The analysis of the principles in Gloucester is repeated below for convenience. 54 The power of the Court to grant or refuse leave to amend under rr 8.21 and 16.51 of the Rules must be exercised in the way that best promotes the Court's overarching purpose to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible: s 37M(3) of the FCA Act; Caason Investments Pty Ltd v Cao (2015) 236 FCR 322 at 326 [19] and the cases there cited. The Court's power to grant leave to amend is broad and has the remedial objective of ensuring that any defect in the pleadings is cured and that the real questions in the controversy are properly agitated: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 185 [14]; Caason Investments at 327 [20]. The object of the Court is not to punish parties for mistakes made in the course of their case, but to correct errors with the result that a decision can be made on the real matters in controversy: Clough v Frog (1974) 4 ALR 615 at 618; (1974) 48 ALJR 481 at 482; Caason Investments at 327 [20]. 55 Leave to amend should be granted unless the proposed amendment is futile, such that the issue sought to be raised by the amendment has no reasonable prospects of success, or would be liable to be struck out as not raising a reasonable cause of action, or where the amendment would cause substantial prejudice or injustice to the opposing party in a way that cannot be compensated by the award of costs: Research in Motion Ltd v Samsung Electronics Australia Pty Ltd (2009) 176 FCR 66 at 69-70 [21]-[22]; Medich v Bentley-Smythe Pty Ltd [2010] FCA 494 at [8]; Caason at 327 [21]. 56 There are limits to be placed upon re-pleading. An amendment application should not be approached on the basis that a party is entitled to raise an arguable claim subject to the payment of costs by way of compensation: Aon at 217 [111]. An order for costs may not always provide sufficient compensation and therefore achieve a just resolution. Parties are also entitled to expect that litigation be resolved with reasonable despatch: Richards v Cornford (No 3) [2010] NSWCA 134 at [44]. 57 In Tamaya Resources Ltd (in liq) v Deloitte Touche Tohmatsu (A Firm), in the matter of Tamaya Resources Ltd (in liq) [2015] FCA 1098 at [127], Gleeson J provided a useful summary of the types of matters that the Court should consider in exercising its discretion whether or not to grant leave to amend. The principles articulated by the High Court in Aon apply to matters in this Court: Cement Australia Pty Ltd v Australian Competition and Consumer Commission [2010] FCAFC 101; (2010) 187 FCR 261 at [43]. Relevant matters the Court is to consider include: • The nature and importance of the amendment to the party applying for it: Aon at [102]; • The extent of the delay and the costs associated with the amendment: Aon at [102]; • The prejudice that might be assumed to follow from the amendment, and that which is shown: Aon at [5], [100] and [102]; • The explanation for any delay in applying for that leave: Aon at [108]; and • The parties' choices to date in the litigation and the consequences of those choices: Aon at [112] and Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75 ("Luck") at [44]; • The detriment to other litigants in the Court: Aon at [93], [95] and [114] and Luck at [44]; and • 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: Aon at [5], [24] and [30]. 58 Gleeson J did not suggest that this list was exhaustive, or that each of the matters in the list would necessarily be material in every case. At [128] her Honour noted that the weight to be given to these considerations, individually and in combination, and the outcome of the balancing process generally, may vary depending on the particular facts of the case. 59 The onus is on the party seeking leave to amend to persuade the Court that such leave should be given: Dye v Commonwealth Securities Limited (No 2) [2010] FCAFC 118 at [17].

Consideration 60 The consideration of whether Clurname should be granted leave to amend can conveniently be addressed by first considering whether, as contended by Standard & Poor's, the Court does not have power to grant leave to amend, and whether the proposed amendments would be futile because they would be liable to be struck out as defective or as not raising a reasonably arguable cause of action. Attention can then be given to the discretionary considerations.

The Court's power to grant Clurname leave to amend 61 As has already been noted, Standard & Poor's contended that the Court did not have the power to grant Clurname leave to file the SFASOC because the deceit claim in it was statute barred. That contention in turn hinged on the contention that the proper law for the determination of the claim in deceit was the law of New York. A number of other submissions advanced by Standard & Poor's for why leave to amend should not be granted also hinged on that proposition. It is accordingly convenient to address the choice of law issue first.

The proper law governing the deceit claim 62 Standard & Poor's submitted that for causes of action in tort, the applicable choice of law rule is that matters of substance are governed by the law of the place of commission of the tort in question. So much so may be accepted: Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575 at [9]; Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491. In that context, Standard & Poor's submitted that the place of the commission of the tort is the place where the relevant tortious conduct occurred. In respect of a cause of action based on fraud or deceit, Standard & Poor's submitted that the critical element of the cause of action is the state of mind of the wrongdoer. In Standard & Poor's submission, in this case the relevant conduct therefore occurred in New York because that was where the SCDO ratings methodology, criteria and assumptions, which Clurname alleged were known to be defective or flawed, were formulated by Standard & Poor's. Standard & Poor's also appeared to rely on the fact that the officers or employees of Standard & Poor's who were responsible for the ratings methodology, criteria and assumptions, were stationed in New York. 63 Standard and Poor's contention that the proper law for the determination of Clurname's proposed deceit claim is the law of New York is wrong and is rejected. It is based on an erroneous and misleading characterisation of the tortious conduct that provides the foundation for Clurname's proposed claim in deceit. 64 It is tolerably clear that Clurname's proposed claim in deceit is that Standard & Poor's made representations (the S&P Ratings Representations and the S&P Independence Representation) to it and others in Australia which Standard & Poor's knew to be false, or in respect of which it was recklessly indifferent. Those representations were made when the ratings were issued in circumstances where Standard & Poor's caused or permitted or authorised the fact of its ratings to be published or disseminated, including in Australia, and was aware that the ratings would be communicated to and relied on by potential investors in Australia (SFASOC [61], [62], [63], [64], [65], [84], [85]). Clurname's case is that it relied on the ratings and representations when deciding to invest and, most importantly, in proceeding with the acquisition of the SCDOs (SFASOC [91], [91A], [95]). The essential conduct that is the subject of Clurname's deceit case is the conduct of Standard & Poor's in knowingly making false representations to it and other investors in Australia. It is not, as Standard & Poor's contended, the determination of the ratings methodology and criteria for SCDOs. 65 A cause of action in deceit that is based on fraudulent misrepresentations that were received in Australia, or that the representor could reasonably expect would be relied on in Australia, relevantly occurs in Australia and is governed by Australian law. That is because the relevant representation is treated as having been made in Australia, even if the representor was based overseas: Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 568. In Voth, the plurality said (at 568): If a statement is directed from one place to another place where it is known or even anticipated that it will be received by the plaintiff, there is no difficulty in saying that the statement was, in substance, made at the place to which it was directed, whether or not it is there acted upon. And the same would seem to be true if the statement is directed to a place from where it ought reasonably to be expected that it will be brought to the attention of the plaintiff, even if it is brought to attention in some third place. But in every case the place to be assigned to a statement initiated in one place and received in another is a matter to be determined by reference to the events and by asking, as laid down in Distillers, where, in substance, the act took place. 66 Standard and Poor's submitted that when one looked at the events and asked where in substance the act took place, the answer would be New York because that was the place where Standard & Poor's determined its ratings methodologies, criteria and model assumptions. That submission is rejected. That is because the relevant tortious conduct was Standard & Poor's making the S&P Ratings Representations and the S&P Independence Representations in circumstances where it knew and authorised the communication of those representations to investors in Australia, or where it knew or could reasonably expect that the representations would be received and relied on by investors in Australia. 67 There could be no doubt that Clurname's existing causes of action based on the allegation that the relevant representations (the S&P Ratings Representations and the S&P Independence Representation) were misleading and deceptive are governed by Australian law because the relevant conduct, the representations, occurred in Australia. Standard & Poor's did not contend otherwise. That the representations were false or misleading because of events or circumstances that occurred outside Australia, for example the assignment of the ratings and the circumstances relied on by Clurname to establish that the relevant representations arising from the ratings were false, is irrelevant: ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1 at [739]-[744]. So too is the fact that the senior employees of Standard & Poor's whose knowledge of the falsity of the representations can, on Clurname's case, be imputed to Standard & Poor's, may have been situated outside Australia. 68 Even if the location of the persons who knew that the representations were false is of some relevance, Standard & Poor's have not established that all of those persons were located in New York. As discussed in more detail later, three of the six people identified in Clurname's proposed amended pleading appear to have been based in London, not New York. That includes perhaps the most senior of the employees, Mr Gilkes. 69 It should also be noted that Standard & Poor's further submitted, in the context of the choice of law issue, that Clurname's case as pleaded was that the Commonwealth Bank made the relevant representations and that Clurname relied on, or was induced by, the Commonwealth Bank's representations, not any representation made by Standard & Poor's. That submission must be considered in light of the fact that Standard & Poor's did not object to previous amendments to the pleading which dealt with the position of the Commonwealth Bank and questions of reliance and inducement. Those amendments followed the detailed analysis of similar pleaded allegations in Gloucester. Standard & Poor's did not oppose the previous amendments, or seek to strike out the pleading or have the claim summarily dismissed, on the basis that Standard & Poor's did not make the alleged representations, or that Clurname relied on what the Commonwealth Bank said and did, not on anything done by Standard & Poor's. It is, to say the least, somewhat surprising, then, that Standard & Poor's raised that argument in opposition to the present amendment application. It is, in any event, rejected for the reasons given in Gloucester.

Is the proposed deceit claim statute barred? 70 As has already been noted, Standard & Poor's contention that the proposed cause of action in deceit was statute barred was primarily based on the limitation period applicable to the cause of action for common law fraud as a matter of New York law. For the reasons already given, the proposed claim in deceit is governed by Australian law, not New York law. It follows that the limitation period as a matter of New York law is irrelevant. It should perhaps be noted, however, that even accepting Professor Leib's opinion concerning the limitation period for a common law action in fraud as a matter of New York law, if the evidence adduced by Clurname in support of the amendment application is accepted, Clurname's action would not be statute barred as a matter of New York law. That is because the effect of Ms Banton's evidence was that the alleged fraud by Standard & Poor's was not discovered, and was not discoverable with reasonable diligence, before August 2017. Thus the limitation period would not expire until August 2019. 71 Putting to one side the position under New York law, Standard & Poor's contended that the deceit claim was statute barred by reason of s 14 of the Limitation Act 1969 (NSW), which provides that a cause of action founded on tort is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff. In Standard & Poor's submission, the proposed cause of action in deceit accrued when Clurname was induced to acquire the SCDO's by reason of the allegedly false representations. That was on 6 July 2006, which was more than six years before the proceeding was commenced. It is to be noted, in that regard, that Standard & Poor's has pleaded, in its defence, that the existing causes of action are statute barred on the same basis. The same six year limitation period applies to the actions under the Corporations Act and the ASIC Act: see s 1041I(2) of the Corporations Act and s 12GF(2) of the ASIC Act. 72 Clurname's response to the contention that the proposed claim in deceit was statute barred was twofold. 73 First, while Clurname accepted that the cause of action in deceit accrued when damage was suffered, it submitted that it did not suffer damage when it acquired the relevant SCDOs. Rather, it did not suffer any damage until the first date of default of the SCDOs, which was between 2 November 2009 and 23 November 2011. In that regard, it relied on a line of authorities which, in its submission, establish that damage is not sustained merely because a party is induced to enter into a disadvantageous transaction by misrepresentation; rather, there must be "actual damage, as distinct from the risk or prospect of damage or contingent damage" which is "measurable or beyond what can be regarded as negligible": Wilson v Rigg (2002) 36 MVR 451 at [23]; see also Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 at 527-529, 536. 74 Clurname contended that the tranches of the relevant SCDOs held by it first suffered credit events breaching the attachment point on 2 November 2009, 24 December 2009 and 9 November 2010. Each of those dates is less than six years before the date on which the proceedings were commenced. On that basis it contends that the existing claims are not statute barred. Clurname submitted, relying on Gloucester at [234]-[238] and Oztech Pty Ltd v Public Trustee of Queensland (No 2) [2015] FCA 1485 at [61], that the proposed amended pleading raising the deceit claim should take effect from the date the proceeding was commenced. Accordingly, in its submission the new deceit claim would also not be statute barred. 75 Standard & Poor's did not submit that Clurname's argument that it did not relevantly suffer loss or damage until it first suffered credit events breaching the attachment point was hopeless or not reasonably arguable. That perhaps explains, at least in part, why Standard & Poor's have not sought to strike out or seek summary dismissal of the existing claims on the basis that they are statute barred. In any event, it is open to conclude not only that Clurname has at least a reasonably arguable case that the existing claims are not statute barred, but also at least a reasonably arguable case that the proposed new deceit claim is also not statute barred for the same reason. In the case of some of the relevant SCDOs, however, that may depend on whether the date upon which the amendments were to take effect was the date that the proceeding was commenced, as opposed to the date that leave to amend was granted. More will be said concerning that issue later. 76 Second, and perhaps more significantly for present purposes, Clurname relied on s 55 of the Limitation Act, which relevantly provides as follows: 55 Fraud and Deceit (1) Subject to subsection (3) where: (a) there is a cause of action based on fraud or deceit, or (b) a cause of action or the identity of a person against whom a cause of action lies is fraudulently concealed, the time which elapses after a limitation period fixed by or under this Act for the cause of action commences to run and before the date on which a person having (either solely or with other persons) the cause of action first discovers, or may with reasonable diligence discover, the fraud deceit or concealment, as the case may be, does not count in the reckoning of the limitation period for an action on the cause of action by the person or by a person claiming through the person against a person answerable for the fraud deceit or concealment. (2) Subsection (1) has effect whether the limitation period for the cause of action would, but for this section, expire before or after the date mentioned in that subsection. (3) For the purposes of subsection (1), a person is answerable for fraud deceit or concealment if, but only if: (a) the person is a party to the fraud deceit or concealment, or (b) the person is, in relation to the cause of action, a successor of a party to the fraud deceit or concealment under a devolution from the party occurring after the date on which the fraud deceit or concealment first occurs. (4) Where property is, after the first occurrence of fraud deceit or concealment, purchased for valuable consideration by a person who is not a party to the fraud deceit or concealment and does not, at the time of the purchase, know or have reason to believe that the fraud deceit or concealment has occurred, subsection (1) does not, in relation to that fraud deceit or concealment, apply to a limitation period for a cause of action against the purchaser or a person claiming through the purchaser. 77 There could be little doubt that the proposed new claim in deceit falls within s 55(1)(a) of the Limitation Act. Accordingly, the six year limitation period, which would otherwise commence to run when the cause of action accrued, would be postponed until the time that Clurname first discovered, or should with reasonable diligence have discovered, the alleged fraud or deceit. It should be noted that Clurname also relied on s 55(1)(b) and contended that the causes of action it had against Standard & Poor's were fraudulently concealed. For present purposes, however, it is sufficient to consider the potential application of s 55(1)(a). 78 A person can be said to have relevantly discovered a fraud if they know the facts capable of proving a prima facie case: Feiglin v Ainsworth [2014] VSC 376. It would follow that it can be concluded that a person should, with reasonable diligence, have discovered a fraud if the person would have discovered facts capable of proving a prima facie case if they had exercised reasonable diligence. 79 What reasonable diligence would require must be evaluated by reference to the particular facts and circumstances of the case. Ordinarily, before a person could reasonably be expected to pursue an inquiry with a view to ascertaining whether a fraud has been perpetrated, something must have put the person on notice, or raised a suspicion, in respect of that matter: CE Heath Underwriting & Insurance (Australia) Pty Ltd v Daraway Constructions Pty Ltd (unreported, Supreme Court of Victoria, Batt J, 3 August 1995) at 121-2; Clark v Clark (1882) 8 VLR (E) 303 at 328. Even then, the person might not reasonably be expected to do everything possible using all means at their disposal: Peco Arts Inc v Hazlitt Gallery Ltd [1983] 1 WLR 1315 at 1322-3. The type of enquiry that might be expected must be assessed having regard to how a person carrying on a business of the relevant kind would act if they had "adequate but not unlimited staff and resources and were motivated by a reasonable but not excessive sense of urgency": Paragon Finance plc v D B Thakerar & Co [1999] 1 All ER 400 at 418. And the enquiry that might be expected must be one that, if made, would have led to the discovery of the facts revealing the fraud: CE Heath at 121-2. 80 Clurname contended that it did not discover, and could not with reasonable diligence have discovered, the alleged deceit by Standard & Poor's until August 2017. It relied in that regard on Ms Banton's evidence. Standard & Poor's contended that Ms Banton should with reasonable diligence have discovered the deceit claim at some earlier time, though it is unclear precisely when it was said she should have discovered the claim. Much of the questioning of Ms Banton was directed to the period from August 2015, when these proceedings were commenced. Most of Standard & Poor's submissions were also directed to that date. 81 Ms Banton's evidence was that she did not discover the alleged deceit by Standard & Poor's until August 2017, or thereabouts. In very short terms, Ms Banton's evidence was that she did not have a reasonable basis to file (or seek leave to file) an amended pleading including the proposed deceit claim until she, counsel briefed by her, and expert witnesses retained by her, had fully considered the documents discovered by Standard & Poor's in this proceeding. Despite being ordered to give specific discovery in September and October 2016, and standard discovery by March 2017, a number of documents that are important to the proposed deceit pleading were not discovered until "supplementary" discovery was provided in June 2017. Other important documents, in particular copies of depositions taken in proceedings in the United States, were also not discovered in an unredacted form until May and June 2017. 82 As discussed in more detail later in the context of discretionary considerations, Standard & Poor's has not given any, or any adequate, explanation or justification for the late discovery. Some of the documents that were not discovered until June 2017 are self-evidently relevant to Clurname's existing claims. So much so appeared to be conceded by Mr Grave when cross-examined about Standard & Poor's discovery. 83 More importantly, it also could not be gainsaid that some of the documents that were not discovered until June 2017 are relevant to the proposed deceit claim. It suffices to give two examples, both of which are documents created in early December 2005, shortly before CDO Evaluator version 3 was rolled out. 84 As noted earlier, Clurname's proposed deceit case is based in part on the allegation that Standard & Poor's knew that its ratings lacked reasonable grounds because: it used correlation assumptions in its CDO Evaluator model version 3 which it knew were lower than historical averages and did so to avoid the negative effects of using higher correlation estimates; it was aware that CDO Evaluator version 3 used a static correlation assumption in circumstances where it was incorrect and wrong to do so; it was aware that there was significant uncertainty as to the soundness of the model assumptions used by the CDO Evaluator; and it was aware that business considerations had influenced Standard & Poor's ratings methodology. 85 One of the documents not produced until June 2017 was an email from Mr Inglis to Mr Gilkes, which forwarded an email from Mr Fabienne Michaux to colleagues within Standard and Poor's (Exhibit A19). In the forwarded email, Mr Michaux makes a case for elements of the CDO Evaluator model version 3, roughly a week before its release, which appears to paraphrase comments made by Mr Gilkes. Among other things, Mr Michaux talks of the importance of striking a balance between the desire not to "grandfather" Standard & Poor's' credit decisions, while at the same time "managing the impact of the model changes". Mr Michaux goes state that the number one "franchise" issue, which Mr Grave accepted in cross examination to mean Standard & Poor's' business, arising out of the new CDO evaluator model was "rating something AAA one day and dumping it to bare investment grade the next - especially anything rated after knowledge of [CDO Evaluator version 3]". In cross-examination, Mr Grave accepted that the email suggested that at that time Standard & Poor's was discussing the concern that different versions of the CDO Evaluator model would produce different ratings outcomes. Despite this concession, Mr Grave gave no convincing explanation for why the document was not discovered before June 2017. 86 A second document, an internal Standard & Poor's PowerPoint presentation titled 'CDO Product & Infrastructure Steering Committee Kick-off Meeting' (Exhibit A20), stated that the Steering Committee's charter included to "ensure that the development [of] CDO product[s] and infrastructure are aligned to CDO business strategy". Relevantly, Mr Gilkes was named as a member of the Steering Committee. 87 It is not difficult to see the potential relevance of these two documents to Clurname's proposed claim in deceit. No satisfactory explanation has been given for why they were not discovered until mid-2017. There were other documents about which the same could be said. 88 Standard & Poor's has also provided no satisfactory explanation for some of the redactions that were initially made to some of the discovered documents. It again cannot be gainsaid that some of the previously redacted material is highly relevant to the proposed deceit claim. Again, two examples suffice to demonstrate that point. 89 Amongst the material initially discovered by Standard & Poor's in 2016 was a heavily redacted transcript of a deposition of Mr Gugliada. That deposition was taken for the purposes of a civil action against Standard & Poor's in the United States. It would be fair to say that the only part of the deposition that was not blacked out when first discovered to Clurname was a short passage of Mr Gugliada's evidence, some 41 lines from over 240 pages of transcript, that was obviously favourable to Standard & Poor's. An unredacted copy of the deposition which was eventually discovered in mid-2017 included the following passages that had previously been blacked-out: Q. Throughout your employment at S&P, did you ever observe an instance in which ratings criteria were relaxed in order to maintain market share? A. I don't recall the exact year, but I do recall we were losing market share in specific products and we were asked to go back and reevaluate criteria on those specific products. Q. What specific products are you referring to? A. Principally mortgages. Q. Sorry? A. Principally mortgage-backed securities, it had to be then 2003, 2004. Q. Who asked you to reevaluate criteria? A. Not me; Frank Raiter, who was running the group at the time, was asked to reevaluate that. … Q. When we broke I was asking you whether, while at S&P, you had ever observed an instance in which ratings criteria were relaxed in order to maintain market share. Do you recall that question? A. Yes. Q. You told me that you had, is that right? A. Not on individual transactions. As I said, ratings criteria was relaxed because of good reasons, any one of three reasons, internal research developing out of additional data, externally provided data that suggested our criteria needed modification, and No. 3, on occasion peer pressure. Q. What do you mean by peer pressure? A. Significant decline in market penetration in a specific product. Q. Who were the peers that put pressure on you to relax criteria? A. Moody's and Fitch. Q. Why did they put pressure on you, what you mean by that? A. If they changed criteria, relaxing it, what would happen in certain products, not all products, but certain products was issuers would then gravitate towards the rating agency that had the most relaxed criteria and avoid those that had the highest - the most stringent, strictest, criteria. Q. How did that put pressure on S&P? A. Up until 2004 area, it didn't really matter. The vast majority of structured finance securities are issued with triple-A ratings, most investors require both Moody's and S&P to be on triple-A rated securities, so it really didn't matter whether we had a little bit higher or a little bit lower criteria, both Moody's and S&P and quite often Fitch were on every single triple-A rated security, give or take, in the neighbourhood of, you know, mid 90 percent market penetration. Fitch was a bit lower, but they were the new kid on the block. What happened in 2004 was the creation of CDOs backed by mortgage-backed securities, that changed the playing field. Up until 2004, based upon the pricing policies of all the ratings agencies, not just S&P, issuers paid on a percentage of rated securities; since the vast majority of every security is triple-A rated, 90 to 95 percent of the fees are earned by rating the triple-A security. Both Moody's and S&P were on virtually all of them, so they both had very close market penetrations, it didn't matter. But the CDOs of mortgage backs, particularly S&P's policies on mortgage backs, made them less competitive on mortgage-backed securities subordinate tranches, particularly the single A and triple-B rated tranches. S&P in 2004 had very low market penetration, somewhere, if I recall correctly, somewhere in the neighbourhood of 35 percent, whereas Moody's was significantly higher. That created a big problem for S&P; the big problem was since you require ratings on each instrument that goes into a CDO in order to evaluate its individual credit and then to produce the credit analysis for the CDO itself, you had to have a very strong feel for every security that went into it. S&P, because it had such low market penetration, was not only losing all the CDO of mortgage-backed security business, but we were also starting to lose significantly more of the mortgage-backed business. And so the Department all got together, all the department heads got together, and decided that our mortgage back subordinate rating criteria had to change if we were to maintain market presence in both of those markets. Q: You mentioned S&P's policies made them less competitive? A: Criteria, not policies, criteria. (Objections omitted) 90 It is difficult to see how these passages could reasonably have been redacted on the basis of relevance when first discovered. They are plainly relevant to Clurname's case in relation to the falsity of the S&P Independence Representation. As noted earlier, the issue concerning redactions in discovered documents purportedly based on relevance had been agitated as early as August 2015 in the Swan proceedings. Ms Banton, as solicitor for the applicants in the Swan proceedings, had been pressing for discovery of unredacted versions of the deposition transcripts since that time. It is worth noting that the unredacted transcripts were never discovered in the Swan proceedings because the matter settled before the redaction dispute was resolved. Clurname had also been pressing for discovery of unredacted versions of the transcripts. In his evidence, Mr Grave ultimately effectively accepted, albeit in hindsight, that these passages of the depositions were relevant and should not have been redacted when the depositions were first discovered. 91 Similarly, Standard & Poor's initially discovered a heavily redacted deposition of Mr Gugliada taken for the purposes of proceedings commenced against Standard & Poor's by the State of Connecticut in the United States. When the unredacted transcript was finally produced in June 2017, it contained the following passage that had previously been blacked-out: Q. So because Moody's criteria on the synthetic CDOs out of London was less stringent than S&P's, S&P was losing business on those synthetic CDOs, you weren't getting the ratings? A. Correct. Q. And in order to attempt to recoup that business, S&P attempted to update its default tables for CDO Evaluator, start? A. We spent two years while I was running that group attempting to find the solution that everybody could be comfortable with, but we never found one during my tenure. Q. My question was - I think slightly different, which is, the reason - strike the question. Part of the reason you were attempting to update your default tables was in order to win back some of the business on synthetic CDOs out of London because Moody's had more competitive criteria than S&P; is that true? A. That's true. In part, yes. There were other reasons. 92 Ms Banton was cross-examined at some length concerning her evidence that she did not have a reasonable basis to file a pleading alleging deceit against Standard & Poor's until August 2017. The general thrust of the cross-examination was that Ms Banton could have discovered the deceit claim in August 2015 because she had by that time seen, in her capacity as solicitor on the record for the applicants in the Swan proceedings, documents discovered by Standard & Poor's in the Swan proceedings in May 2015, she was aware of allegations made against Standard & Poor's in proceedings brought in the United States, and she had read and considered the Report of the United States Senate Permanent Subcommittee dated 13 April 2011 which was titled "Wall Street and the Financial Crisis: Anatomy of a Financial Collapse" (US Senate Report). 93 The submission that Clurname or Ms Banton could have discovered and pleaded the deceit claim against Standard & Poor's by August 2015on the basis of the discovery in the Swan proceedings, the allegations made in the United States proceedings, and the findings in the US Senate report is rejected. That is so for a number of reasons. 94 First, a number of the documents that are referred to in the particulars to the proposed deceit claim were not included in the Swan discovery. According to Mr Grave's slightly more generous analysis, the particulars to the proposed deceit claim refer to some 90 documents. Of those 90 documents, 60 were discovered in the Swan proceedings and 19 were said to be publicly available, at least by the time the proposed pleading was drafted. For what it is worth, Ms Banton said it was actually 75 documents, 71 of which came from the Standard & Poor's discovery. Ms Banton ultimately asserted that this left 11 documents that were not discovered by Standard & Poor's until it provided supplementary discovery in June 2017. In any event, Standard & Poor's did not take the Court to any documents that were included in the Swan discovery that, considered individually or collectively, disclosed, or were capable of disclosing, the alleged deceit. And as discussed later, it did not seek to demonstrate, by reference to the contents of the documents not discovered until June 2017, that Clurname's proposed claim in deceit could have been properly pleaded or particularised without reference to those documents. 95 Second, and in any event, Ms Banton and the counsel retained by her would not have been able to use the documents discovered in the Swan proceedings to plead Clurname's case without breaching the implied undertaking not to use documents produced pursuant to a court process for a purpose outside those proceedings without leave of the court: Hearne v Street (2008) 235 CLR 125 at [96], [103], [106]; Harman v Secretary of State for Home Department [1983] 1 AC 280. Reasonable diligence did not necessarily require Ms Banton to apply to be released from the implied undertaking. It is by no means certain that Standard & Poor's would have consented to releasing Ms Banton and her legal team from the implied undertaking and, in any event, release of the implied undertaking would most likely not have resulted in the production of the documents produced in response to the order for standard discovery on 22 December 2016, nor those that were produced in the so-called supplementary discovery in June 2017. The same can be said concerning Standard & Poor's contention that it would have been open to Ms Banton to apply for preliminary discovery in the Clurname proceedings in August 2015 or thereabouts. Standard & Poor's did not demonstrate that it would have been reasonable, in the circumstances, for Ms Banton to make such an application. It may be inferred that, if Ms Banton had made an application for preliminary discovery on behalf of Clurname, the application almost certainly would have been opposed. More significantly, even if preliminary discovery had been ordered, it is highly unlikely that Standard & Poor's would have discovered the documents that were ultimately discovered in the supplementary discovery provided in June 2017. 96 Third, Ms Banton would not have discovered the alleged fraud simply as a result of being aware of the proceedings that had been commenced in the United States, and the allegations made against Standard & Poor's in them. There were two sets of relevant proceedings in the United States. The first was an action commenced by the Department of Justice: United States of America v McGraw-Hill Companies Inc and Standard & Poor's Financial Services LLC Case No. CV 13-0779, C.D. Cal, filed 4 February 2013. The second was a class action commenced by a private litigant: Abu Dhabi Commercial Bank v Morgan Stanley & Co Incorporated 88 FSupp 2D 431 (SDNY 2012) 97 The important point to note about both sets of proceedings in the United States is that, as Standard & Poor's itself contended, the allegations made in the United States proceedings were not precisely the same as, and were different in important respects from, the allegations made in Clurname's proposed deceit pleading. The United States' proceedings concerned different financial products and apparently different ratings processes. That appears to have been one of the reasons that Standard & Poor's initially gave for redacting the deposition transcripts. 98 Ms Banton's unchallenged evidence was that the precise allegations made in Clurname's proposed deceit claim have not been made in any other proceedings, including in the United States proceedings. Ms Banton was taken in cross-examination to paragraphs [179] and [180] of the proposed SFASOC, and it was put to her that the allegations regarding delay in updating the CDO Evaluator were substantially based on allegations in the complaint filed in the Department of Justice proceedings. Ms Banton claimed legal professional privilege in respect of questions relating to the extent to which reliance was placed on the complaint, but volunteered that the complaint was one of a range of materials available to Clurname. However, aside from that brief excursion, Ms Banton was not taken to or questioned concerning any specific part or passage of the complaints filed in the United States proceedings. Nor did Standard & Poor's submissions descend into any detail in relation to those parts of the complaints that it contended should have alerted Ms Banton to Clurname's deceit claim as pleaded. 99 It should also be noted in this context that Standard & Poor's reliance on the United States proceedings in the cross-examination of Ms Banton tended to reveal a somewhat contradictory position in relation to those proceedings. On the one hand, Standard & Poor's suggested that the proceeding should have alerted Ms Banton to Clurname's proposed deceit claim. On the other hand, it maintained that it would be prejudiced by the amendments because it was taken by surprise and would have to investigate the deceit allegations "from scratch", in the sense of viewing all the documentary evidence through the new lens of the deceit claim. As discussed in more detail later, in February 2015 Standard & Poor's settled the proceedings commenced by the Department of Justice. That settlement involved Standard & Poor's paying a penalty of US$1.375 billion. It might reasonably be inferred that Standard & Poor's would not have settled those proceedings for that amount unless it had thoroughly investigated all relevant aspects of the claims made against it, including any claims that may have involved suggestions of fraud or dishonesty. 100 Fourth, as was the case in respect of the United States proceedings, in cross-examination Ms Banton was not taken to any part or parts of the US Senate Report which could be said to have alerted her to the availability of a claim in deceit against Standard & Poor's. It was merely put to Ms Banton, and she accepted, that she was aware of the US Senate Report in August 2015. Nor, in submissions, did Standard & Poor's identify any part or parts of the report that, in its submission, would have alerted Ms Banton to the claim if she had acted with reasonable diligence. This topic was dealt with at a very high, and mostly unhelpful or uninformative, level of generality. 101 Fifth, it is difficult to see how it could be seriously suggested that it would have been reasonable for Ms Banton to commence proceedings on behalf of Clurname, which included a cause of action in deceit, on the basis of her knowledge of the United States proceedings, or the findings made by the United States Senate subcommittee, without access to any of the evidence that supposedly supported those allegations or findings. Or, indeed, without any ready means by which to obtain that evidence. It was not put to Ms Banton in cross-examination that she had access to, or any means to seek access to, that evidence, beyond those documents which were on the public record. Another way of putting this point is that, even if it is accepted that the United States proceedings and the US Senate Report should have put Ms Banton on inquiry of a potential deceit claim against Standard & Poor's, there is nothing to suggest that any inquiries she might reasonably have been able to conduct would have resulted in her obtaining evidence that would be capable of supporting a prima facie claim of deceit against Standard & Poor's. 102 Standard & Poor's also suggested that, if she did not have sufficient material to mount to deceit claim against Standard & Poor's in August 2015, Ms Banton had sufficient material to support the deceit pleading by November 2016, when the main tranche of Standard & Poor's discovery was provided in this proceeding. It was put to Ms Banton in cross-examination that only 11 of the documents produced as part of the supplementary discovery in June 2017 feature in the particulars to the proposed claim in deceit. It was also suggested that the 11 documents were not "necessary" for the deceit claim to be pleaded. The suggestion appeared to be that Ms Banton would have had a reasonable basis to plead the proposed deceit claim in its current form even if she did not have those 11 documents. Ms Banton's evidence, however, was that to answer that question, she would have to review each of the 11 documents in the context of the deceit allegations as a whole, including all of the other particularised documents. The 11 documents in question, or any one of them, could not be looked at in isolation and out of context. It was not suggested that Ms Banton was being disingenuous or evasive in responding to the questioning in that way. In any event, this submission ignores the fact that Standard & Poor's standard discovery was not due to be provided until March 2017, and Ms Banton's assertion, discussed later in the context of prejudice and delay, that the supplementary discovery nevertheless delayed the bringing of the deceit claim, because the approximately 1,500 documents had to be closely scrutinised to ascertain their relevance, if any, to a possible deceit claim. 103 Ms Banton was also questioned, during cross-examination, in relation to an application to amend the pleadings in another proceedings against Standard & Poor's, known as the Khamsin proceedings (Ceramic Fuel Cells Limited v McGraw-Hill Financial Inc, NSD 559 of 2017), to include an action in deceit against Standard & Poor's. Ms Banton acted for the applicant in that matter. The application to amend was filed on 22 June 2017. The apparent suggestion was that the deceit claim in that matter was formulated by Ms Banton based purely on publically available material, which would have been available in August 2015. The problem for Standard & Poor's, however, is that one need only look at the proposed amended pleading in the Khamsin proceedings to see that it does not demonstrate that Ms Banton had access to sufficient information and documentation in June 2017 to properly plead the deceit claim it now proposes to advance . The proposed amended pleading in the Khamsin proceedings alleges only that Standard & Poor's was reckless in making the S&P Independence Representation. It is also devoid of any meaningful particulars. Standard & Poor's had indicated that it strenuously objected to the amendments proposed in the Khamsin proceedings on that and other bases. 104 In the end result, Standard & Poor's failed to demonstrate that the 11 relevant documents that were not discovered until June 2017, and the unredacted documents provided in May and June 2017, were not important or critical to the deceit claim as it was ultimately pleaded. It did not demonstrate that Ms Banton had a reasonable basis upon which to allege deceit against Standard & Poor's in this proceeding until she, her counsel, and the experts retained by her had seen and had the opportunity to consider the 11 documents and the unredacted documents in the broader context of the other documents and facts particularised in the proposed deceit claim. 105 In the end result, Ms Banton's evidence that she did not relevantly discover that Clurname had an available case in the tort of deceit against Standard & Poor's until August 2017, and had no reasonable basis to seek to plead such a case until that time, should be, and is, accepted. Nothing that arose during cross-examination cast any doubt on her evidence in that regard. 106 It should also be noted, in this context, that while Ms Banton's evidence was couched in terms of whether she had a reasonable basis to plead a deceit claim against Standard & Poor's, it is readily apparent that what she meant by that was that she was not in possession of facts which were capable of proving a prima facie case of deceit against Standard & Poor's. Her evidence, which is accepted for the purposes of this interlocutory application, was that she was not relevantly in possession of facts capable of establishing a prima facie case of deceit against Standard & Poor's until August 2017. Equally, the effect of Ms Banton's evidence was that she exercised reasonable diligence and was nevertheless not able to ascertain, or come into possession of, facts sufficient to establish a prima facie case of deceit against Standard & Poor's until August 2017. Her evidence to that effect is accepted for the purposes of this interlocutory application. Accordingly, it may be accepted, for present purposes, that the facts capable of establishing a prima facie case of deceit against Standard & Poor's could not with reasonable diligence have been discovered by Clurname, or Ms Banton on its behalf, until August 2017. 107 What, then, are the implications of those factual findings for Standard & Poor's contention that the proposed deceit claim is statute barred? 108 The question whether the proposed deceit claim is statute barred involves, as limitation questions often do, complex questions of fact and law. It is generally not appropriate to determine limitation issues at an interlocutory stage in such circumstances, particularly where all the evidence which may be relevant to the issue has not been given or fully tested: Oztech at [54] and the cases there cited; Energex Ltd v Alstom Australia Ltd (2005) 225 ALR 504 at [63]; State of New South Wales v McCloy Hutcherson Pty Limited (1993) 43 FCR 489 at 505; Skrijel v Mengler [1998] VSC 71 at [43]-[45]. 109 Standard & Poor's contention is that the amendments introducing the new deceit claim should not be permitted because that claim would clearly be statute barred. That is tantamount to submitting that leave to appeal should be refused because the amendment would be futile because it has no reasonable prospects of success, or would be liable to be struck out as not raising a reasonable cause of action. The question, in such circumstances, is whether Clurname's case that the proposed deceit claim is not statute barred is reasonably arguable, or has reasonable prospects of success. In all the circumstances, the answer to that question is "yes". 110 It is at the very least reasonably arguable that the proposed deceit claim is not statute barred by reason of the operation of s 55(1)(a) of the Limitation Act. It is at least reasonably arguable that Clurname, through its solicitor or otherwise, did not discover the alleged claim in deceit against Standard & Poor's until August 2017, as Ms Banton claimed in her evidence. Standard & Poor's submission that Ms Banton's evidence in that respect should be disbelieved or not accepted has no merit and is rejected for the reasons already given. Equally, it is at least reasonably arguable that Ms Banton could not, with reasonable diligence, have discovered the deceit claim before that time, or at least before early to mid-2017 when Standard & Poor's provided supplementary discovery and produced unredacted versions of documents previously discovered, including the depositions. Standard & Poor's submission that the Court should find that Ms Banton could, with reasonable diligence, have discovered the deceit claim in August 2015, when these proceedings were commenced, is rejected. 111 In any event, such a finding would not assist Standard & Poor's. For Standard & Poor's to make out its contention that the deceit claim would be statute barred, it would effectively have to establish that the deceit claim was discovered, or was reasonably discoverable, as early as 2011 - more than six years before Clurname sought to amend its pleading to include the deceit claim. Standard & Poor's did not expressly or clearly advance a submission that the deceit claim was discoverable by Clurname or Ms Banton as early as 2011. In any event, there is simply no evidentiary basis for such a finding. The Department of Justice proceedings against Standard & Poor's were not commenced until 2013. They were initially defended and were not settled until February 2015. While the US Senate report is dated 13 April 2011, for the reasons already given it could not seriously be contended that Ms Banton could, with reasonable diligence, have discovered the deceit claim based on her knowledge of that report alone. It is also unclear precisely when Ms Banton became aware of the United States proceedings and the US Senate Report. It was never suggested to Ms Banton in cross-examination that she did discover, or could with reasonable diligence have discovered, the deceit claim as early as 2013, let alone 2011, by reason of the United States proceedings, the US Senate report or otherwise. 112 It follows that Standard & Poor's submission that leave to amend should be refused because the amendment would be futile, or does not plead a reasonable cause of action, because the deceit claim would be statute barred has no merit is rejected. 113 Three further points should also be noted. First, Standard & Poor's submitted, in effect, that the Court should not have regard to Clurname's response to its limitation defence based on s 55 of the Limitation Act because Clurname had not provided a draft pleading or other document that indicated the facts and matters relied upon to support the postponement of the bar by reason of s 55. That submission is entirely unmeritorious. Clurname clearly foreshadowed that, if granted leave to amend, it would file a fully particularised reply to any defence filed by Standard & Poor's alleging that the deceit claim, or any of its other claims, was statute barred. Clurname's written submissions (including the schedule thereto) clearly articulated the basis of the foreshadowed reply and reliance on s 55, including the facts and matters that will be relied on. It should also be added that Standard & Poor's limitation defence, as presently pleaded, is devoid of any meaningful particulars. 114 Second, it follows from the factual findings that have just been referred to, that even if Clurname's deceit claim was governed by New York law, it is at the very least reasonably arguable that it would not be statute barred as contended by Standard & Poor's. Accepting Professor Leib's evidence concerning the limitation period for the common law cause of action in fraud as a matter of New York law, Clurname would have until August 2019 to commence the action. 115 Third, as has already been adverted to, Standard & Poor's relied on the contention that the deceit claim was statute barred not only in support of the contention that the deceit claim was not reasonably arguable and would be liable to be struck out. It went further and contended that, because the claim was statute barred, the Court did not have power to permit the amendment. That argument was based on r 8.21 of the Rules.

Power to allow the amendments - rule 8.21 116 Rule 8.21 of the Rules provides as follows: (1) An applicant may apply to the Court for leave to amend an originating application for any reason, including: (a) to correct a defect or error that would otherwise prevent the Court from determining the real questions raised by the proceeding; or (b) to avoid the multiplicity of proceedings; or (c) to correct a mistake in the name of a party to the proceeding; or (d) to correct the identity of a party to the proceeding; or (e) to change the capacity in which the party is suing in the proceeding, if the changed capacity is one that the party had when the proceeding started, or has acquired since that time; or (f) to substitute a person for a party to the proceeding; or (g) to add or substitute a new claim for relief, or a new foundation in law for a claim for relief, that arises: (i) out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the applicant; or (ii) in whole or in part, out of facts or matters that have occurred or arisen since the start of the proceeding. (2) An applicant may apply to the Court for leave to amend an originating application in accordance with paragraph (1)(c), (d), (e) or subparagraph (g)(i) even if the application is made after the end of any relevant period of limitation applying at the date the proceeding was started. (3) However, an applicant must not apply to amend an originating application in accordance with subparagraph (1)(g)(ii) after the time within which any statute that limits the time within which a proceeding may be started has expired. 117 Standard & Poor's contention that the Court did not have the power to grant leave to amend was essentially based on three propositions. The first proposition was that the power to grant leave to amend to add a statute barred cause of action only arises in the circumstances in r 8.21(2). For that proposition Standard & Poor's relied on Voxson Pty Ltd v Telstra Corporation Ltd (No 7) (2017) 343 ALR 681 at [21]. Second, as has already been noted, Standard & Poor's submitted that Clurname's proposed cause of action in deceit is statute barred and therefore r 8.21(1)(g)(i) and (2) are relevantly engaged. The third proposition was that Clurname's new cause of action in deceit does not arise out of the same, or substantially the same, facts as those already pleaded to support the existing claims. 118 As for the first proposition, in Voxson, leave had already been granted to amend an originating application and pleading which raised new causes of action which were, or at least may have been, statute barred. The question for consideration was the date upon which the amendments should take effect. In considering that question, Perram J identified a lacuna in the Rules arising from the fact that r 8.21 provided for the amendment of an originating application which added a statute barred cause of action, but there was no rule which provided for the corresponding amendment of the pleading. His Honour found that there was an implied power to amend a pleading which mirrored r 8.21. In that context, Perram J said (at [21]) that "the Court has the power to grant leave to amend both an originating process and a pleading to add a statute barred cause of action but only in the circumstances referred to in r 8.21(2)" (emphasis added). Clurname did not submit that Perram J was wrong, let alone plainly wrong in arriving at that conclusion. Accordingly, the proposition may be accepted for present purposes. That said, given the inclusive wording of r 8.21, it is not entirely clear why that is necessarily so. 119 As for the second proposition, for the reasons already given, the evidence currently before the Court does not support a finding that the new deceit claim is statute barred. Clurname has available to it at least a reasonably arguable case that the proposed claim is not statute barred, based both on the date that it suffered damage for the purposes of s 14 of the Limitation Act, and more significantly on the basis of the application of s 55 of the Limitation Act. In those circumstances, it cannot be concluded that the Court's power to permit the amendment is relevantly constrained by r 8.21(1)(g)(i) and (2) of the Rules. Those rules would only appear to apply where it has clearly been established that the application to amend to add a new claim for relief "is made after the end of any relevant period of limitation applying at the date the proceeding was started". It is difficult to see how those rules could relevantly be engaged if there is merely a doubt or question about whether the proposed new action is statute barred. 120 If, on the other hand, that construction of r 8.21 is wrong, and it is necessary to determine for the purposes of this application whether the proposed new deceit action is statute barred, for the reasons already given it cannot be concluded on the evidence before the Court on this application that the action is statute barred. Indeed, the evidence adduced on this application establishes, for the purposes of s 55(1)(a) of the Limitation Act, that the action in deceit was not discovered, and was not discoverable with reasonable diligence, by Clurname or its solicitor more than six years prior to the date that the proceeding was commenced, or the application for the amendment was made. It follows that r 8.21(1)(g)(i) and (2) are not relevantly engaged. The Court therefore has power to grant Clurname leave to amend, including to add the new claim of relief in the tort of deceit, irrespective of whether or not the condition in r 8.21(1)(g)(i) is satisfied. 121 Even if, contrary to the finding just made, r 8.21(1)(g)(i) and (2) are relevantly engaged, it is necessary to consider Standard & Poor's third proposition. That is because the Court would have the power to grant leave to amend the originating application and pleading to add the deceit claim, even if it was statute barred at the time the proceeding was commenced, if that claim arises out of the same facts or substantially the same facts as those already pleaded to support the existing claims. 122 Standard & Poor's submission that the deceit claim does not arise from the same facts and circumstances as those already pleaded rested almost entirely on the proposition that a claim based on allegations of fraud and dishonesty does not and cannot arise out of the same or substantially the same facts as a claim based on allegations of negligence, lack of reasonable care or misleading and deceptive conduct. Reliance in that regard was placed on the decisions in Paragon at 418, and Althaus v Australia Meat Holdings Pty Ltd [2007] 1 Qd R 493 at [37]-[38]. The difficulty for Standard & Poor's is that Paragon and Althaus should not be read as authority for such an emphatic and unqualified proposition. If, on the other hand, they are authority for that proposition, they respectfully should not be followed. 123 Before turning to Paragon and Althaus, it is useful to refer to what other cases have said about the requirement that a new cause of action arise out of the same, or substantially the same, facts as those already pleaded. The meaning of the "same facts" is tolerably clear. Plainly "substantially the same facts" cannot be read as being tantamount to the same facts and therefore the need to prove some additional facts is not fatal: Draney v Barry [2002] 1 Qd R 145 at [57]; Brickfield Properties Ltd v Newton [1971] 3 All ER 328 at 342; [1971] 1 WLR 862 at 880. The question is whether "the overlap is so great that the new cause of action can fairly be said to arise out of substantially the same facts as the old cause of action": State of New South Wales v Radford (2010) 79 NSWLR 327 at [69] quoting Cross LJ in Brickfield Properties at 342. But what approach should be taken to determining that question? 124 Various judicial glosses or parsings have been employed in an attempt to explain what approach should be taken to the relevant question, including asking whether the amendments invoke a "new set of ideas" or a "new story": Draney at [57]; Dornan v JW Ellis & Co Ltd [1962] 1 QB 583 at 592-594; Clasul Pty Ltd v Commonwealth of Australia [2014] FCA 1133 at [41]-[51]. The authorities also suggest that the question whether a proposed new cause of action arises out of "substantially the same" set of facts is to be answered as a matter of general impression, rather than requiring precise similarity of factual circumstances: Weston v Publishing and Broadcasting Ltd (2011) 83 ACSR 206 at [592]; Welsh Development Agency v Redpath Dorman Long Ltd [1994] 4 All ER 10; [1994] 1 WLR 1409. That may involve a "fairly broad brush comparison between the nature of the original claim and that to which it is sought to be amended": Thomas v State of Queensland [2001] QCA 336 at [19]. What is abundantly clear, however, is that there are no concrete rules and each case must be considered on its own facts and circumstances. 125 A close consideration of the facts and circumstances of both Paragon and Althaus suggests that the findings in both those cases that the new causes of action did not arise from substantially the same facts as those in the existing pleading turned on their own particular facts and circumstances. The observations made in those cases should not be read as laying down any concrete rule that a claim alleging fraud cannot be based on substantially the same facts as a case alleging breach of contract or negligence. 126 Paragon concerned a case where the plaintiff initially alleged breach of contract and negligence against a solicitor arising from some real estate transactions. The plaintiff then applied for leave to amend in order to allege fraud, conspiracy to defraud, fraudulent breach of trust and intentional breach of fiduciary duty. Millet LJ (at 418) agreed with the trial judge, who had stated that "it would be 'contrary to common sense' to hold that a claim based on allegations of negligence and incompetence on the part of a solicitor involved substantially the same facts as a claim based on allegations of fraud and dishonesty". It is to be noted that, by specifically including "on the part of a solicitor" in that observation, the trial judge appeared to be tying the observation directly to the facts of the particular case. It is doubtful that he was intending to lay down a concrete rule that would apply in all cases. 127 It is true that Millet LJ then noted (at 418) that "[i]n all our jurisprudence there is no sharper dividing line than that which separates cases of fraud and dishonesty from cases of negligence and incompetence". But that statement, while it may readily be accepted, is a statement about the differences between the nature and character of a cause of action in negligence, and a cause of action for fraud or dishonesty. It says nothing about whether the facts that found those different causes of action must necessarily be substantially different. 128 In Althaus, the plaintiff's original statement of claim alleged equitable causes of action for breach of confidence and misuse of confidential information. The plaintiff subsequently sought to amend the pleading to include causes of action for breach of contract, misleading and deceptive conduct under the then Trade Practices Act 1974 (Cth), negligent misstatement and breach of fiduciary duty. Keane JA (with whom McMurdo P and Holmes JA agreed) found that the new claims were not based on substantially the same facts as the existing claims. It is critical to note, in that regard, that the original pleading did not refer to any representations or assurances, beyond contractual promises. That led Keane JA to find that the new causes of action were not based on substantially the same facts as those that were pleaded in support of the existing causes of action. 129 The plaintiff also sought to raise a new cause of action which alleged that the defendant gave the plaintiff an undertaking which was given recklessly and without regard to whether it was true or false. Again, it appears that the original pleading did not allege that any such undertaking had been given, let alone that it was given recklessly. Keane JA (at [37]) referred to the observations of Millet LJ in Paragon and noted (at [38]) that reckless or dishonest disregard for the truth was not one of the facts that the plaintiff sought to prove in the original pleading, and "nor was it an allegation which was necessarily implicit in the narrative" of facts in the original pleading. Keane JA's reference to the observations of Millet LJ in Paragon must, however, again be read in the context of the particular facts of that case, including the fact that the representations which formed the basis of the new claim alleging dishonesty were not pleaded in the original pleading. It cannot necessarily be concluded that his Honour was intending to lay down a concrete rule that would govern all amendment applications where a new claim alleging fraud is proposed. 130 As has already been noted, the question whether a proposed new cause of action arises out of "substantially the same facts as those already pleaded to support an existing claim for relief" must be approached having regard to the particular facts and circumstances of the case at hand. It should not be approached on the basis that there are any concrete rules, including any concrete rule that a new claim in fraud cannot in any case arise from substantially the same facts as an existing claim based, for example, on negligence or misleading and deceptive conduct. Plainly where the existing claim is one alleging only negligence or misleading and deceptive conduct, and the proposed new claim involves an allegation of fraud, the new claim will almost certainly involve some new factual allegations. In many, if not most, cases, the new facts in that scenario are likely to be substantial, such that it could not fairly be said that the new claim in fraud arises out of substantially the same facts as the existing claims. But that will not necessarily always be the case. 131 The question should also not be approached as some sort of mathematical exercise, which involves counting up the number of new paragraphs added by the amended pleading, or calculating the percentage increase in the length of the pleading arising from the amendments. Thus, the calculations conducted by Mr Grave in his evidence are of little importance. It may be that the length of the pleading would increase by 66 percent if the amendments are allowed, but not all of that increase in length is attributable to the proposed deceit cause of action, let alone new facts. The same can be said of Mr Grave's calculation that the proposed amendments would add 71 paragraphs and 120 paragraphs of particulars. 132 In this matter, as has already been explained, the existing claims, put in deliberately short and simple terms, are based on the allegation that Clurname acquired SCDOs in reliance on representations made by Standard & Poor's (the S&P Ratings Representations and the S&P Independence Representation). It is presently alleged that those representations were misleading and deceptive. It is not alleged, and does not need to be alleged to make out the existing causes of action, that Standard & Poor's knew that the representations were misleading and deceptive. It should, however, be noted that it is pleaded that Standard & Poor's "ought to have known" or "ought reasonably to have been aware" of the facts that were alleged to make the representations misleading and deceptive (see Further Amended Statement of Claim at [85], [85A], [85B], [97], [98]]). 133 The proposed new cause of action in deceit is based on the allegation that Standard & Poor's knew that the representations that are already pleaded were false, misleading or deceptive. That is, in substance, the main new fact. The proposed amended pleading does, of course, plead other additional facts that underlie or provide context or background for the new allegation that the representations were known to be false. It also includes lengthy and detailed particulars of the documentary evidence that will be relied on to prove the additional facts. The point remains, however, that the only new factual allegation of substance is that the representations were known to be false. 134 A further point to note is that many of the new facts pleaded in support of the deceit claim would appear to be relevant, or at least potentially relevant, to the existing claims. Likewise, the documentary evidence referred to in the particulars to the new facts would appear to be potentially relevant to the existing claims. Clurname indicated, in that regard, that it would be tendering the new documentary evidence in support of its existing claims whether or not the amendments are permitted. 135 Standard & Poor's lay evidence includes evidence from employees to the effect that the assumptions embedded in CDO Evaluator version 3 were a product of rigorous analytical debate and extensive consideration and testing. This evidence is no doubt intended to refute Clurname's allegation that there was no reasonable basis for the ratings and that Standard & Poor's methodology was not independent and objective. In those circumstances, it would be open to Clurname to tender many, if not most, of the documents particularised in the proposed deceit claim. Equally, it would be open to Clurname to tender many, if not most, of the new documents in support of its case that the S&P Ratings Representations were misleading or deceptive. Evidence that tends to prove that senior Standard & Poor's employees knew or believed representations to be false would be relevant and admissible to prove that the representations were in fact misleading and deceptive. 136 If many of the new facts, and the evidence that is likely to be tendered in support of them, are relevant and admissible in respect of the existing claims, that would tend to indicate that the new claims do not substantially add to the facts already pleaded in support of the existing claims. This consideration is also discussed later in relation to Standard & Poor's asserted prejudice. 137 There could be little doubt that there is a significant and substantial overlap between the facts already pleaded and the new facts that are sought to be pleaded in support of the new cause of action in deceit. Taking the broad and impressionistic approach advocated in the authorities, it can fairly be said that the new cause of action arises out of substantially the same facts as the existing causes of action. Unlike both Paragon and Althaus, the representations upon which the claim in deceit is based are already pleaded in the existing pleading, as are most of the facts that provide the basis for the allegation that the representations were false and misleading. Contrary to Standard & Poor's submission, the fact that the new cause of action is a cause of action alleging fraud does not alone provide a basis for a finding that it does not arise out of substantially the same facts as the existing causes of action. 138 Accordingly, even if the proposed new claim in deceit had been established to be statute barred, which it has not, and r 8.21(1)(g)(i) and (2) of the Rules were engaged, the Court has the power to grant leave to amend the originating application and statement of claim to include the new claim. That is because the new claim arises out of substantially the same facts as the existing causes of action. 139 Finally, on this topic, Standard & Poor's relied on the statement of Millett LJ in Paragon, (at 404) referring to Welsh Development Agency, that "leave to amend by adding a new cause of action should not be given unless the plaintiff can show that the defendant does not have a reasonably arguable case on limitation which will be prejudiced by the new claim or that the new cause of action arises out of the same or substantially the same facts as a cause of action in respect of which he has already claimed relief". Three points can be made about that statement and Standard & Poor's reliance on it. First, its applicability in this Court must be considered in light of r 8.21 of the Rules. Second, for the reasons already given, Clurname has demonstrated that the new deceit claim arises out of substantially the same facts as the existing claims. And third, again for the reasons already given, Clurname has shown that it has at the very least a reasonably arguable case that the proposed deceit claim is not statute barred.

An inappropriate forum? 140 Standard & Poor's contention that Australia is an inappropriate forum for determination of the proposed deceit claim is based largely on the proposition that the cause of action would be governed by New York law. That proposition is wrong for the reasons already given. 141 Otherwise, Standard & Poor's largely relied on the fact that the six Standard & Poor's employees whose knowledge of the falsity of the representations is sought to be attributed to Standard & Poor's reside overseas and no longer work for Standard & Poor's. It was submitted, in that context, that the issues could not be fairly determined in Australia because Standard & Poor's could not subpoena those witnesses and could not subpoena any documents that they may have in their possession. It was also asserted that the state of mind of those employees should properly be determined in the "legal and regulatory milieu in which those individuals were operating at the relevant time". That milieu was supposedly the milieu in New York at the time. 142 There are a number of difficulties with Standard & Poor's submissions based on the fact that the former employees were located overseas. The main difficulty is that, despite Standard & Poor's being aware of the proposed deceit claim since 16 August 2017, no attempt was made to contact any of the witnesses to ascertain whether they would be willing to assist Standard & Poor's if requested, and would be willing to give evidence in Australia without being compelled to do so. Some of those employees had provided testimony in proceedings against Standard & Poor's in the United States, but that occurred in circumstances where they were compelled to do so. One of the employees, Mr Gilkes, had previously declined to provide assistance to Standard & Poor's in these proceedings. In those circumstances, it appears that Standard & Poor's simply assumed that the other witnesses would be unwilling to assist. They were therefore not approached. It also appears that Standard & Poor's United States lawyers were not asked whether or not they knew if the employees were willing and able to give evidence in Australia. 143 Mr Grave was cross-examined about why he did not attempt to contact the six former Standard & Poor's employees. His explanation was, with respect, not particularly satisfactory or persuasive. Clurname submitted that the reason he did not do so was obvious: the answer would not, or may not, have assisted Standard & Poor's case in opposing the amendment application. That was put to Mr Grave in cross-examination, though he denied it was the case. In any event, Clurname submitted that it should be inferred from Mr Grave's failure to make the inquiry that the answers would not have assisted Standard & Poor's: Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-9 (per Handley JA). 144 While Mr Grave's explanation for not making the inquiry was not persuasive, and it is difficult to comprehend why, given the circumstances, steps were not take to ascertain whether the former employees were willing and able to assist Standard & Poor's if requested, it does not follow that it should be inferred that he deliberately decided not to make the inquiry because he knew it would not assist. Nor should it necessarily be inferred that the answers to the inquiry would not have assisted Standard & Poor's. The difficulty for Standard & Poor's, however, is that on the rather unsatisfactory state of the evidence, it also cannot be inferred or assumed that the former employees, with the exception perhaps of Mr Gilkes, will or even might refuse to assist Standard & Poor's at the trial commencing in March 2018. Nor can it be inferred that the witnesses may be unwilling to assist Standard & Poor's because the trial is to be held in Australia, as opposed to in New York. It follows that the main plank of Standard & Poor's forum non conveniens argument, aside from the contention that the deceit claim is governed by New York law, is a somewhat flimsy plank indeed. It is not supported by the evidence. 145 It should also be noted that there is no indication what the evidence of the six employees would be if they were willing to voluntarily give evidence, or indeed if they were compelled to do so. The evidence may not be favourable to Standard & Poor's. If that were the case, it is highly unlikely that Standard & Poor's would call those witnesses in its case, whether they could be compelled to give evidence or not. It follows that Standard & Poor's contention that it would be unfairly prejudiced if the deceit claim was determined in Australia is at best speculative. 146 A further difficulty for Standard & Poor's is that the evidence indicates that three of the six employees were based in London at the relevant time, including Mr Gilkes, who appeared to be the most senior person with responsibility for the development of CDO Evaluator version 3 and its inputs. Thus, if the trial occurred in New York, as Standard & Poor's contends it should, Standard & Poor's would still be met by the difficulty that it would not be able to subpoena three of the six employees, including Mr Gilkes. 147 It should also perhaps be noted in this context that there was some indication in the evidence that a number of the relevant employees, in addition to Mr Gugliada, had given sworn testimony in the context of proceedings in the United States in relation to some of the issues the subject of the proposed deceit claim. If that is so, and that testimony was favourable to Standard & Poor's, Standard & Poor's could possibly seek to tender the transcripts of that testimony if the witnesses are in fact unavailable to Standard & Poor's at the trial: see s 63 of the Evidence Act 1995 (Cth). For some reason, however, Mr Grave conceded that he had only read parts of the transcripts, in preparing for the amendment application. 148 As for Standard & Poor's submissions based on the importance of resolving the factual issues concerning the knowledge of the falsity of the alleged representations in the legal and regulatory milieu in which the employees were operating at the time, the difficulty for Standard & Poor's is again that it is not entirely clear what that milieu was. Standard & Poor's submissions were premised on the assertion that the relevant legal and regulatory milieu was New York. It relied, in that regard, on the fact that the United States Securities and Exchange Commission had designated Standard & Poor's as a "Nationally Recognised Statistical Ratings Agency". 149 As has already been noted, however, three of the six employees were in fact based in London. The ratings were also not assigned in New York. The evidence indicates that the relevant SCDOs were rated in London and Hong Kong. It is therefore not clear why New York was or is the appropriate milieu, as opposed to Australia, being the place to which Standard & Poor's directed the relevant representations, and the place where the representations were received and relied on. 150 Faced with that scenario, Standard & Poor's resorted to the claim that the appropriate forum was New York because one of the relevant Standard & Poor's entities, McGraw-Hill Financial, Inc (formerly McGraw-Hill Companies, Inc) was incorporated in New York. Putting aside the fact that the other two relevant Standard & Poor's entities were not incorporated in New York, but in Delaware and England and Wales respectively, it is difficult to see why the place of incorporation of one of the parties is a particularly significant consideration in determining the appropriate forum. 151 Standard & Poor's contention that Australia is not the appropriate forum is accordingly rejected, at least for the purposes of this amendment application. None of the considerations relied on by it in support of that contention have any merit. It should also be noted in this context that Standard & Poor's conceded that Australia was clearly the appropriate forum for the existing causes of action. It submitted that the existing claims should be heard and determined in Australia, but that Clurname should commence separate proceedings in New York in respect of the claim in deceit. In circumstances where the deceit claim is based on substantially the same facts as the existing claims, it would be highly undesirable to fragment Clurname's claims in that way. It would be contrary to the overarching purpose of the civil practice and procedure: s 37M of the FCA Act. 152 Having regard to all the relevant circumstances, on balance it cannot be concluded that Australia is clearly an inappropriate forum for the determination of Clurname's deceit claim against Standard & Poor's.

Are there "serious and insuperable deficiencies" in the proposed pleading? 153 Standard & Poor's submitted that there are "serious and insuperable deficiencies" in the proposed amended pleading and that no reasonable cause of action in deceit was disclosed. To the extent that it was possible to fully understand the written and oral submissions on this point (and the oral submissions were very limited), the submission that the pleading was "bad" appeared to be based on the following contentions: first, it is not clear who it is alleged made the S&P Ratings Representations and what their state of mind was at the time; second, it is not clear who it is alleged made the S&P Independence Representation and what their state of mind was at the time; third, the alleged S&P Ratings Representations cannot be implied from the assignment of the ratings because the ratings were statements of opinion; fourth, the pleading aggregates the knowledge of a number of people without saying so; fifth, the pleading "mixes" fraudulent and non-fraudulent claims; and sixth, the pleading does not properly allege reliance or inducement. 154 None of those contentions has any merit. 155 As for the first and second contentions, for the reasons already given, it is abundantly clear that it is alleged in the pleading that Standard & Poor's made the S&P Ratings Representations and the S&P Independence Representation. The observations made earlier concerning the fact that Standard & Poor's consented to previous amendments following the decision in Gloucester are again apposite. If there was any merit in any of Standard & Poor's submissions concerning the question of who made the relevant representations, or the question of reliance or inducement, those submissions could and should have been raised in opposition to the previous amendments. 156 The contention that it is unclear from the pleading what it is alleged was the state of mind of the representor at the time the representations were made is equally unmeritorious. It is abundantly clear from the pleading that Clurname's case is that Standard & Poor's knew that each of the representations was false at the time they were made. The pleaded case, in short terms, is that at least six named senior employees of Standard & Poor's knew that the representations were false and that their positions were such that their knowledge could be attributed to Standard & Poor's (see SFASOC [193]-[197] and [198]-[200]). 157 In relation to the third contention, Standard & Poor's contended that there remains a question under Australian law whether a statement of opinion carries with it an implication that there are reasonable grounds for stating it. In that regard, Standard & Poor's relied on observations made by Heydon J in Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486 at [102]. There are two answers to that submission. First, in the passage from Forrest relied on by Standard & Poor's, Heydon J was only saying that in some circumstances to state an opinion implies that one has reasonable grounds for holding it, but that may not always be the case. Second, in ABN AMRO, the Full Court (at [752]-[753]) upheld the primary judge's conclusion that ratings issued by Standard & Poor's, in circumstances analogous to this case, carried with them the representation that they were based on reasonable grounds and were the result of an exercise of reasonable care. 158 As for the fourth contention, Standard & Poor's contention that the pleading impermissibly aggregates the knowledge or state of mind of multiple employees misunderstands the proposed pleading. The proposed pleading does not aggregate "the knowledge of a number of persons individually unaware of fraud, or facts which ought to disclose it, to create a notional person with a dishonest intent": cf. Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 at 145; Commonwealth Bank of Australia v Kojic (2016) 341 ALR 572 at [76]. Rather, it alleges that each of the six named employees were aware of the fraud, or the facts which ought to disclose it. Clurname's case is that each of the named employees knew that the relevant representations were false and that, given their senior positions, their knowledge can be attributed to Standard & Poor's. In any event, the submissions are unmeritorious for the reasons given in Gloucester. 159 The fifth and sixth contentions can also be dealt with shortly. As for the fifth contention, a fair reading of the proposed pleading reveals that it does not impermissibly mix fraudulent and non-fraudulent claims. It pleads those claims separately and in the alternative. As for the sixth contention, Standard & Poor's contended that Clurname's case as pleaded is that it relied on representations by the Commonwealth Bank. That contention is rejected for the reasons already given. Clurname alleges that it relied on the S&P Representations in completing its acquisition of the SCDOs. Standard & Poor's submissions concerning inducement appeared to be based on the merits or otherwise of Clurname's case, rather than any pleading difficulty. The merits of Clurname's case in relation to inducement are a matter for trial. It should also be noted that similar arguments concerning reliance and inducement were made and rejected in relevantly similar and analogous circumstances in ABN AMRO at [744]. 160 Standard & Poor's lengthy written submissions contain a series of complaints about certain aspects of parts of the pleading, including parts of the pleading that are not the subject of the proposed amendments. None of those complaints were the subject of any meaningful elaboration in oral submissions. That is perhaps not surprising. Most of the complaints can fairly be characterised as pleading quibbles or pettifogging. The balance appeared again to stray into arguments that Standard & Poor's will no doubt rely on in its defence of the claim, but did not go so far as to contend, let alone demonstrate, that Clurname's pleaded case in deceit was not reasonably arguable. 161 In all the circumstances it is not proposed to deal with each of the complaints separately, particularly as they were not the subject of any meaningful or comprehensible oral submissions. It suffices to make three short points. First, despite having had the proposed amended pleading for almost two months prior to the hearing of the amendment application, Standard & Poor's solicitors did not raise any of these complaints with Clurname's solicitors, or otherwise seek clarification or further particulars of any of the aspects or parts of the proposed pleading that they now seek to impugn. Second, Standard & Poor's did not contend that any of the alleged deficiencies or difficulties with the pleading were such that it could not understand the case that is made against it in the proposed pleading. Third, if there is any merit in any of the complaints concerning lack of particularisation or lack of clarity, Standard & Poor's will have plenty of time and opportunity prior to the trial to raise those matters with Clurname's solicitors and seek further particularisation or clarification. If it remains disgruntled, the complaints can be raised and agitated at a case management hearing or, if sufficiently serious, be the subject of an interlocutory application. 162 It follows from what has just been said that Standard & Poor's contention that there are serious and insuperable deficiencies in the proposed amended pleading has no merit and is rejected. It is accepted that a pleading that alleges fraud or deceit must be pleaded with specificity and particularity and, amongst other things, must plead the facts which will be relied upon at trial to support the allegation of fraud. The pleading of the proposed deceit claim is adequate in that regard. Although trite, it is worth recalling that the basic purpose of a pleading is to clearly define the issues to be tried, and to allow the other party an opportunity to know the case that they are required to meet: Dare v Pulham (1982) 148 CLR 658 at 664; Betfair Pty Ltd v Racing New South Wales (2010) 189 FCR 356 at [49]-[52]. The proposed amended pleading achieves that object. 163 Putting aside the contention that the deceit claim is statute barred, and the alleged defects or deficiencies in the proposed pleading that have just been addressed, Standard & Poor's did not separately contend that the proposed amended pleading does not disclose a reasonable cause of action in deceit, or that the proposed deceit claim did not have reasonable prospects of success. The documents that form the basis of Clurname's case that Standard & Poor's knew that the relevant representations were false, or at least was reckless in that regard, were tendered by Clurname in support of its application. Standard & Poor's did not submit that those documents did not provide a reasonable basis for the contention that the six named employees knew that the alleged representations were false, or were reckless about that fact. Nor did it contend, in terms, that the knowledge of those employees could not be attributed to Standard & Poor's, other than on the basis of the aggregation argument that has already been disposed of.

Discretionary considerations 164 As might be expected in this litigation, the parties' submissions concerning the relevant discretionary considerations were polar opposites. Clurname contended that the relevant discretionary considerations weighed strongly in favour of allowing the amendments. It submitted, in short, that the amendments are important; that they could not have been made any earlier; that to the extent that there had been any delay, that delay had been reasonably explained by Ms Banton, and was otherwise attributable to the Respondents' conduct; and that the amendments do not cause any prejudice to Standard & Poor's. Standard & Poor's submitted, in short, that the delays in making the amendments were "extraordinary" and had not been explained, particularly given that they involve allegations of fraud; that the amendments are not at all important; that it will suffer serious prejudice if the amendments are allowed; and that there would be no prejudice to Clurname if the amendments are not permitted.

The importance of the amendments 165 Clurname's submission that the amendments are important is based on the proposition that there is at least a risk that the existing causes of action may fail on limitation grounds. As has already been noted, in its existing defence Standard & Poor's pleads that the existing claims are statute barred. Clurname maintains that they are not. For the reasons already given, the limitation issues involve relatively complex questions of fact and law. Clurname is right when it says that there is at least a risk that the existing claims might fail on the basis that they are statute barred. Clurname contends, in that context, that the amendments "lay the groundwork" for a response to Standard & Poor's limitation defence. In short, the amendments permit Clurname to rely on s 55 of the Limitation Act, both in the context of the deceit claim and, more broadly, in respect of the existing claims. In that regard, Clurname has foreshadowed that it proposes to rely on s 55(1)(b) of the Limitation Act and contend that its existing causes of action, and the proposed deceit claim, were fraudulently concealed by Standard & Poor's. It provided a detailed outline of the submissions it would make in support of that claim. 166 Despite what could only be characterised as a "boots and all" opposition to the amendments, Standard & Poor's submitted that the amendments were unimportant. One wonders why, if Standard & Poor's genuinely thought that the amendments were unimportant, it would so strenuously oppose them. Standard & Poor's relied, in support of that somewhat confounding submission, on the fact that Ms Banton maintained in her evidence, not surprisingly, that she did not believe that the existing claims were statute barred. Standard & Poor's, of course, will no doubt vigorously maintain that the existing claims are statute barred. Standard & Poor's also relied on Ms Banton's evidence that she did not discover the deceit claim until August 2017. Standard & Poor's, of course, submitted that Ms Banton's evidence in that regard should be rejected. Nevertheless, it submitted, on the basis of Ms Banton's evidence, that the deceit claim will not be statute barred until August 2023 and Clurname can accordingly "afford to wait and see the result of the March 2018 hearing before deciding whether it is necessary to agitate the deceit claim". 167 Needless to say, Standard & Poor's submissions concerning the unimportance of the amendments are rejected. The amendments are self-evidently important. They raise a new, serious and reasonably arguable cause of action against Standard & Poor's and provide a basis upon which Clurname will contend that s 55(1)(b) of the Limitation Act is engaged and the limitation period for the existing and new causes of action may effectively be extended. The amendments are, in that respect at least, important in the sense that they will serve to ensure that the real questions in the controversy are properly agitated. It would plainly be contrary to the overarching purpose of the civil practice and procedure in this Court, as identified in s 37M of the FCA Act, to suggest that Clurname should, if it wishes to agitate its allegations of deceit against Standard & Poor's, be required to commence separate proceedings. For the reasons already given, there is a substantial overlap between Clurname's existing claims and the proposed deceit claim. They arise out of substantially the same facts.

Has there been delay and, if so, has it been satisfactorily explained? 168 The extent of any delay in bringing the amendment application, and the explanation for any such delay, are important discretionary considerations. That is particularly so when the proposed amendments involve adding a new cause of action, particularly one involving allegations of deceit. 169 As has already been discussed in some considerable detail, Ms Banton's evidence was that she did not believe that she had a proper or reasonable basis upon which to make the allegations of deceit against Standard & Poor's until August 2017. At risk of repetition, her evidence was, in summary, that: the publicly available documents did not, and still do not, provide a reasonable basis upon which to plead the deceit claim; Clurname needed to consider and assess the documents discovered by Standard & Poor's in order to plead the deceit claim; the discovery provided by Standard & Poor's was delayed and deficient; copies of discoverable documents that were important to the deceit claim, and unredacted versions of relevant deposition transcripts, were not discovered until June 2017; after the documents were finally discovered they had be reviewed by her legal team, including counsel, as well as by the expert witnesses who had been retained to provide reports; expert assistance was required to interpret the significance of certain documents; and the experts could not provide their reports until Standard & Poor's had filed their lay evidence, which was delayed. 170 Standard & Poor's contended that, contrary to Ms Banton's evidence, the circumstances revealed that Ms Banton could have commenced proceedings, on behalf of Clurname, including the proposed claim in deceit, as early as August 2015. The basis for that submission was, in summary, that: Ms Banton was the solicitor on the record in the Swan proceedings, which raised similar issues, and had received Standard & Poor's discovery in respect of the Swan proceedings in May 2015; Ms Banton, on behalf of Clurname, could have made an application to be released from the implied undertaking, or applied for preliminary discovery; as at August 2015, Ms Banton was aware of the allegations in the United States proceedings and was aware of the US Senate Report; and Ms Banton could have brought a claim alleging deceit based on publicly available information in August 2015 or "any time thereafter". 171 For the reasons that have already been given, Ms Banton's evidence is accepted and Standard & Poor's submissions in relation to it are rejected. Despite being cross-examined at length, Ms Banton did not resile in any material way from her position that she could not reasonably have pleaded the deceit claim against Standard & Poor's until August 2017. Nothing that she said during cross-examination cast any material doubt on the reliability and credibility of that evidence. 172 Standard & Poor's submissions in relation to Ms Banton's evidence can be dealt with shortly. The submission that Ms Banton could have reasonably and responsibly pleaded the deceit allegations on the basis of the Swan discovered documents, together with publicly available documents, rose no higher than a bare assertion. It ignored the fact that the deceit claim, as ultimately formulated, included particulars of at least 11 documents that were not discovered by Standard & Poor's until mid-2017. Ms Banton's evidence that the relative importance of those documents to the deceit claim cannot be determined by considering the documents in isolation was logical and reasonable. It cannot be concluded that those documents, considered in the context of all the other evidence, were not capable of tipping the balance in terms of the reasonableness of the case in deceit. In those circumstances, the fact that Ms Banton could have applied to be released from the implied undertaking in respect of the documents discovered in the Swan proceedings is largely immaterial. As for the suggestion that she could have applied, on behalf of Clurname, for preliminary discovery, any such application would no doubt have been vigorously opposed. It cannot be assumed that it would have been successful on the basis of what Ms Banton then knew. In any event, it can be inferred that Standard & Poor's may not have discovered all of the relevant documents until June 2017 in any event. 173 The submission that Ms Banton could have made the deceit allegations on the basis of her knowledge of the complaints in the United States proceedings and the US Senate report have already been dealt with. It is without foundation. The complaints in the United States proceedings concerned different products with different ratings processes and different allegations. In any event, Ms Banton did not have any access to, or means of access to, the evidence that was relied on in support of the complaints. Standard & Poor's did not point to any part of parts of the US Senate report that would have provided a reasonable basis for alleging deceit in Clurname's case. It is difficult to see how it could seriously be contended that Ms Banton could have reasonably or responsibly pleaded a deceit claim against Standard & Poor's simply on the strength of the complaints filed in the United States proceedings and the US Senate report. 174 The submission that Ms Banton could have pleaded the deceit claim on the basis of publicly available documents is also entirely unmeritorious. It again rose no higher than bare assertion. It appeared to be based on the fact that an application to amend the pleadings in the Khamsin proceeding was filed in June 2017. The proposed amended pleading included a claim in deceit. That submission, however, ignored the fact, adverted to earlier, that the proposed deceit claim in the Khamsin matter was considerably narrower than the proposed deceit claim in this matter: it alleged only that the S&P Independence Representation was made recklessly. It also contained none of the detail and particulars included in the draft pleading in this matter. That is no doubt one of the reasons why Standard & Poor's so vigorously opposed the amendment application in the Khamsin proceedings. 175 If anything, the evidence concerning the amendment application in the Khamsin matter supported the proposition that Ms Banton did not have sufficient material to support the proposed deceit claim in this matter until some time after the amendment application in the Khamsin proceedings was filed. If Ms Banton had access to sufficient material in June 2017, or some earlier time, to plead the deceit claim that is now sought to be advanced, it is difficult to imagine why she would not have done so in the Khamsin proceedings. The available inference is that she did not have sufficient material in June 2017. Nothing put to Ms Banton in cross-examination suggested otherwise. 176 It was not suggested to Ms Banton in cross-examination, or submitted by Standard & Poor's, that it was unreasonable for Ms Banton to seek the advice of her counsel about the pleading and reasonable prospects before applying for leave to amend. Given the complexity of this matter, and the seriousness of the allegation, it was more than reasonable for Ms Banton to seek the views of counsel before finalising the draft pleading. Equally, it was reasonable for Ms Banton to seek the views of the expert witnesses. 177 It should also be emphasised that, if there was any delay in Ms Banton advancing the proposed deceit claim on behalf of Clurname, that delay was occasioned, at least in part, by Standard & Poor's conduct of the proceeding. As has already been explained, the discovery initially provided by Standard & Poor's was defective and deficient. As has previously been noted, Standard & Poor's did not, and has not, provided any adequate or satisfactory explanation for the delay in discovering the documents included in the "supplementary" discovery in mid-2017. Nor has it provided any adequate or satisfactory explanation for withholding the redacted parts of the depositions until early to mid-2017. Standard & Poor's was also late in filing its lay evidence. It was directed to file its lay evidence on 1 May 2017, but did not serve it until 19 May 2017. That also contributed to the delay. Ms Banton's evidence, which was consistent with contemporaneous correspondence, was that Clurname's expert reports could not be finalised until the lay evidence was considered. Ms Banton's considered that she could not reasonably finalise the proposed amended pleading until the expert reports were finalised. 178 In all the circumstances, any delay by Ms Banton, on behalf of Clurname, in applying for leave to file the amended pleading was adequately explained.

Prejudice to Standard & Poor's 179 In Ensham Resources Pty Limited v AIOI Insurance Company Limited [2012] FCA 537, in the context of an application to amend made in circumstances very similar to this case, Emmett J said (at [15]): Delay is particularly serious where a party seeks to plead fraud at a late stage in a proceeding. An amendment to add an allegation of fraud should not normally be permitted where the facts giving rise to the plea of fraud were all known at the time of the original pleading. Fraud is a very serious allegation to make against a person and may, if not raised at the outset, be difficult to investigate properly at a later stage in the proceeding. The more serious the allegation that is made, the more clearly satisfied must the Court be that no prejudice will be caused that cannot be compensated for in some satisfactory way, before allowing a proposed amendment (see Atkinson v Fitzwalter [1987] 1 WLR 201 at 210 and 219). 180 The principles referred to in Ensham are applicable to Clurname's amendment application. 181 If Standard & Poor's had been able to demonstrate that the amendments would result in it suffering material prejudice, and that any such prejudice could not reasonably be remedied by appropriate procedural and costs orders, that would undoubtedly have been a very weighty consideration. The proceeding undoubtedly raises very complex and difficult questions of fact and law. The trial of this matter, which is to be heard concurrently with a number of other similar cases against Standard & Poor's commenced by different applicants, is currently set down to commence on 12 March 2018. That hearing date was allocated at a case management hearing on 9 December 2016. The amendments, as already discussed, unquestionably raise some new factual and legal issues to which Standard & Poor's must respond. Those new factual and legal issues were first properly notified to Standard & Poor's on 16 August 2017, when a draft of the proposed pleading was provided to its solicitors. 182 The critical question is whether Standard & Poor's preparation for the trial would, or would be likely to be, materially prejudiced by the amendments. If Standard & Poor's was able to demonstrate that it could not fairly or properly investigate and respond to the new legal and factual issues raised by the amendments in time for the March 2018 trial, in all likelihood the amendment application would have been refused. While Clurname flagged the possibility of vacating the March 2018 trial date if Standard & Poor's was genuinely prejudiced, which it disputed, the adjournment of the trial was certainly not a fait accompli. The vacation of the trial would have resulted in serious prejudice to, amongst others, third parties involved in the related matters. 183 Standard & Poor's contended that it would be materially prejudiced if leave to amend was granted. It submitted that it would not be possible for it to meet the new claims at the March 2018 trial and that it was inevitable that the trial date will be lost if the amendments are allowed. It relied, in that regard, primarily on the evidence of Mr Grave. In short summary, Mr Grave's evidence was that it was his opinion or view that Standard & Poor's will not be able to be adequately prepared to defend the allegations for the March 2018 trial date because: Standard & Poor's has conducted the case to date in a particular way in order to answer the case as currently pleaded; Standard & Poor's solicitors will need to re-review documents through the prism of the deceit claim, as well as consider the new factual matters raised in the amended pleading; Standard & Poor's solicitors will need to review its database of millions of documents to identify any further relevant documents as a result of the matters raised in the new pleadings; Standard & Poor's will need to re-interview existing witnesses who were parties to the relevant communications particularised in the deceit claim; Standard & Poor's will need to explore if other witnesses can assist in responding to the deceit claim, and then interview any such witnesses if necessary; the majority of the potential witnesses are no longer employed by Standard & Poor's; there will need to be other interlocutory pleading steps, including the filing of an amended defence; and Clurname has foreshadowed filing a reply containing an allegation of concealed fraud which will need to be responded to. Mr Grave went so far as to suggest that Standard & Poor's "will effectively be starting from scratch" in investigating some aspects of the new claims. 184 Clurname contended that the evidence does not satisfactorily demonstrate that Standard & Poor's will suffer any material prejudice as a result of the amendments. In that regard, Clurname submitted that: the application was made seven months before the trial and, at the time of the hearing, there was still over five months until the trial commences; Standard & Poor's is a global, well-resourced company; the deceit claim only raises, in substance, one additional factual issue, being whether the six employees referred to in the proposed amended pleading knew that Standard & Poor's ratings of the SCDOs lacked reasonable grounds and were influenced by business considerations; Clurname's pleaded case of knowledge on the part of Standard & Poor's was entirely documentary; the state of mind of the six employees is already at issue in the proceedings because it is alleged that Standard & Poor's ought to have known that its ratings were defective and not objectively determined; Standard & Poor's has, in any event, brought its state of mind in issue in its own case because it has pleaded a positive defence under s 1317 of the Corporations Act that it acted honestly; and it follows from the last two points that Standard & Poor's will have to meet the documentary evidence that is the basis for the deceit claim in any event. 185 Some potential problems and issues with Mr Grave's evidence have already been referred to. In particular, between the time that Mr Grave received notice of the proposed deceit claim on 16 August 2017, and the commencement of the hearing of the amendment application on 10 October 2016 (a period of almost two months), no real attempt was made to contact the six former employees to ascertain whether they were willing and able to give evidence in Standard & Poor's case. Nor, it appears, was any real attempt made to contact Standard & Poor's United States lawyers to ascertain, amongst other things, whether the witnesses had been interviewed previously, whether the witnesses were likely to be willing and able to give evidence in Standard & Poor's case, whether the United States lawyers were aware of the documents, or their subject matter, that formed the basis of the proposed deceit claim, and whether any work or investigations had already been conducted in relation to those types of allegations in the United States in the context of the United States proceedings, or the inquiry conducted by the Permanent Subcommittee on Investigations of US Senate. Mr Grave had also not reviewed the deposition transcripts in detail to determine whether or not any of the six employees may be able to give evidence that could assist Standard & Poor's in relation to the deceit claim. 186 In all circumstances, it is open to infer that, between the date that they were informed of the proposed deceit claim, and the date of the hearing of the amendment application, Standard & Poor's Australian solicitors made no real or concerted attempt to ascertain whether it would or would not be able to respond to the new allegations prior to the commencement of the trial in March 2019. For whatever reason, be it tactical or otherwise, Standard & Poor's, through its Australian solicitors, appears to have decided that it would rest on its laurels and simply assert, at a relatively high level of generality, that it would not be able to properly respond to the new deceit claims at the March 2018 trial, without conducting detailed inquiries of its lawyers in the United States, and the potential witnesses, to confirm whether that was in fact the case. Standard & Poor's resources would appear to have been marshalled and directed to mounting a case in opposition to the amendment application, as opposed to making reasonable inquiries the results of which would undoubtedly have assisted the Court in addressing the question of prejudice. 187 Mr Grave's opinion that Standard & Poor's will effectively be starting from scratch in addressing the new claims must also be viewed with considerable scepticism. That is so for a number of reasons. 188 First, Mr Grave himself suggested that the proposed deceit claim was "not original". That was presumably a reference, at least in part, to the United States proceedings. While, as already noted, there are material differences between the precise allegations made in this proceeding, and the allegations made in the proceedings in the United States, the case brought against Standard & Poor's by the United States Department of Justice raised at least some similar allegations. It is clear, for example, that the Department of Justice proceedings included allegations that Standard & Poor's ratings and rating methodology was influenced by business decisions and considerations, including Standard & Poor's desire not to lose market share. Standard & Poor's ultimately settled those proceedings for US$1.375 billion. The agreed statement of facts issued as part of that settlement refers specifically to facts and documents which show that Standard & Poor's ratings methodology was influenced by business considerations. 189 Mr Grave agreed in cross-examination that some of the allegations pleaded in the SFASOC are similar to allegations that were brought in the cases in the United States. He agreed that allegations concerning absence of independence and absence of reasonable grounds have been raised in at least some of those cases. 190 It would appear to be almost inconceivable that Standard & Poor's United States lawyers would not have fully investigated all potential claims against Standard & Poor's based on the reasonableness and objectivity of its ratings. It is difficult to imagine that Standard & Poor's United States lawyers would not, before advising their client to settle the Department of Justice proceedings, have compiled a database of all potentially relevant documents, and interviewed all witnesses who might be willing and able to give evidence relevant to the allegations in those proceedings. Of course, no definitive finding can be made in that regard because, amongst other things, Mr Grave apparently did not seek to ascertain whether that in fact was the case. It would, however, be a fair inference to draw that considerable work has been undertaken by Standard & Poor's and its United States lawyers in respect of at least some of the issues now proposed to be raised by Clurname, albeit perhaps in different contexts. 191 It should in this context be reiterated that the approach that Standard & Poor's took to the United States proceedings and US Senate Inquiry was beset by inconsistencies and incongruities. On the one hand, Standard & Poor's put to Ms Banton, and submitted to the Court, that because Ms Banton was aware of the complaints in the United States proceedings and the US Senate Report by August 2015, she was or should have been in a position to file the proposed deceit claim against Standard & Poor's at that time. On the other hand, Standard & Poor's appeared to suggest that its knowledge and involvement in the United States proceedings and the US Senate inquiry should for some reason be disregarded when it came to considering whether it would be readily able to respond to the new allegations in time for the trial in March 2018. Unlike Ms Banton, who only had access to publically available information about the United States proceedings, Standard & Poor's was aware of the evidence and undoubtedly would have conducted its own investigations concerning the allegations. 192 Second, Standard & Poor's have already provided extensive discovery not only in this proceeding, but in other similar or related proceedings in Australia, including the Swan proceedings. Mr Grave's evidence was that a database had been prepared containing all the documents. It is difficult to imagine that, in the course of preparing that database and providing discovery, Standard & Poor's and its Australian solicitors did not conduct some investigations into the facts underlying the deceit claim, including, for example, the process of developing CDO Evaluator version 3. While it may be accepted that the solicitors may have to revisit the database with the new allegations and issues in mind, that is far from starting from scratch. Equally, the lay evidence already filed by Standard & Poor's plainly addresses the development of the CDO Evaluator version 3. Plainly investigations were conducted in relation to that issue in the course of preparing that evidence. 193 In light of these considerations, Mr Grave's evidence that Standard & Poor's would effectively be starting from scratch in terms of responding to the new deceit claim is rejected. While he may genuinely hold that belief, it is simply not supported objectively by the surrounding facts and circumstances. 194 The same can be said for Mr Grave's evidence that in his opinion or view Standard & Poor's would not be in a position to adequately respond to the new deceit claims by the March 2018 trial and would accordingly be materially prejudiced. In many respects, that evidence rose no higher than bare assertion or ipse dixit. It was not supported by adequately detailed evidence of exactly why Standard & Poor's could not adequately prepare for the trial if the amendments are permitted, particularly given that the trial does not commence for a number of months. Some of the matters referred to by Mr Grave in support of his opinion or assertion were themselves expressed in very broad and general terms. To the extent that Mr Grave's evidence did descend into detail concerning the difficulties that Standard & Poor's will, or will likely face, that evidence was not ultimately supported by, or was in some respects inconsistent or incompatible with, the objective facts and circumstances to which reference has already been made. 195 The overall impression one gained from Mr Grave's evidence was that it tended to exaggerate the difficulty and complexity of the task that he and his client would face in responding to the new allegations. There is some merit in Clurname's submission that the proposed amended pleading, in substance, raised only one new issue: whether the six named employees knew that the Standard & Poor's Representations were false. Clurname's evidentiary case that they did is entirely documentary. The key documents were, relatively speaking, fairly small in number. They filled one lever arch folder. While it may be accepted that Standard & Poor's investigations are likely to extend beyond those documents and the six named employees, it does not follow that the investigations are particularly difficult or overly complex. That is so particularly given that the investigations are into Standard & Poor's own documents and own processes and methodology. 196 Most importantly, Mr Grave's evidence must be considered in light of the fact that, as has been discussed in detail earlier, in the lengthy period between receiving notice of the proposed amendments and the hearing of the leave application, he did not make any relevant inquiries of Standard & Poor's United States lawyers to determine what, if any, investigations and work they had carried out in relation to the sorts of issues raised by the amendments. Therefore his observations about, for example, the size or complexity of the task of re-considering the documents and other materials concerning the development of the CDO Evaluator version 3, or the CDO Ratings Quantile Table, must be considered in light of the fact that he was apparently entirely ignorant of whether or not Standard & Poor's United States lawyers have already conducted detailed investigations and reviews of the evidence concerning those matters. For the reasons given earlier, it is a reasonable inference that the United States lawyers have investigated those matters in the context of, at least, the initial defence and then settlement of the proceedings commenced by the United States Department of Justice. 197 Equally, Mr Grave's opinion or view about Standard & Poor's not being able to respond to the new allegations in time for the March 2018 trial must, insofar as it is based on the question whether or not the relevant six former employees will be willing to assist, must be considered in light of the fact that, in the two month period following Clurname's filing of the amendment application, he did not attempt to make any inquiries of the six former employees concerning their willingness to assist. In his affidavit, Mr Grave speculates at some length about what might have to be done if the witnesses are not willing to assist, and what would have to be done if they are willing to assist. Had he contacted the employees, or at least inquired of Standard & Poor's United States lawyers whether they knew about the attitude of employees, he could perhaps have given some probative evidence about what needed to be done. For whatever reason, however, he did not make those inquiries. 198 There is no doubt that the party who applies for the amendment of a pleading bears the onus of persuading the Court that the amendments should be allowed. That includes, in most cases, persuading the Court that the amendments will not give rise to any prejudice to the opposing party or parties. Where there is a real issue between the parties as to whether the amendments will give rise to any material prejudice, however, that issue must be determined on the evidence. The Court will most likely not be greatly assisted by what, when tested, may amount to little more than a bare assertion of prejudice by the opposing party. 199 It must be accepted that the proposed amendments, and in particular the amendments that relate to the new cause of action in deceit, will require Standard & Poor's and its legal team to engage in further work with a view to responding to and meeting the new factual and legal issues. To that extent, at least, it could be said that Standard & Poor's will suffer some prejudice. As has already been indicated, however, the assertion that in responding to the new issues Standard & Poor's will be "starting from scratch" is rejected. It is not supported by the evidence and objective circumstances considered as a whole. So too is the assertion or opinion of Mr Grave that Standard & Poor's will be seriously prejudiced because it will not be able to adequately respond to or defend the new allegations at the trial which is currently listed to commence in March 2018. The evidence considered as a whole does not support that assertion. Likewise, Standard & Poor's submission that it is inevitable that the March 2018 trial date will be lost if the amendments are allowed is rejected as being unsupported by the evidence considered as a whole. 200 To the extent that Standard & Poor's will suffer any prejudice, that prejudice can be, or is likely to be able to be, adequately remedied or alleviated by appropriate case management directions. For example, plainly directions can and should be made which provide Standard & Poor's with a generous time period - perhaps as much as two to three months - in which to file any additional evidence, lay and expert, in response to the factual issues raised by the amendments. If any specific issues arise, or Standard & Poor's encounters any specific difficulties in terms of, for example, witness availability, arising from the amendments, no doubt appropriate procedural orders can be made in the course of the trial. Given the likely length of the trial, and Clurname's case in chief, it is likely that there will be scope for some flexibility, including giving further time to Standard & Poor's if that is required. Needless to say, consideration can and will also be given at an appropriate time to remedying some of the prejudice suffered by Standard & Poor's as a result of the amendments by an appropriate costs order. 201 It should also be noted that Standard & Poor's appeared to separately or specifically claim that it would be prejudiced by the late amendment of the particulars to paragraph [82.5] of the existing pleading by the insertion of particular (f) to paragraph [82.5], which relates to the CDO Ratings Quantile Table. Even if it is accepted that Clurname could perhaps have included that particular in the pleading at an earlier time, it cannot be accepted that Standard & Poor's will not be in a position to deal with it in time for the trial. Clurname has filed its expert reports. One of the experts, Mr James Wood, has provided a report which runs to over one hundred pages. He deals with the issue the subject of paragraph (f) in that report. That part of his report is about three pages long. Plainly the issue raised by the new particular is not so complex or difficult that Standard & Poor's will not be able to respond to it in the five months before the trial commences. Standard & Poor's has also retained its own experts who no doubt have or will be able to respond to what Mr Wood has said about it. Any contention that Standard & Poor's has been prejudiced by the insertion of this particular is accordingly rejected. 202 Two final points should be made concerning Standard & Poor's contention that it would suffer material prejudice if the amendments were permitted. 203 First, as discussed earlier in the context of the question whether the new deceit claim arose out of substantially the same facts as the existing claims, most, if not perhaps all, of the documentary evidence referred to in the particulars to the new parts of the pleading would most likely be admissible in support of Clurname's existing claims. Clurname contended that it would be tendering the new documents whether or not the amendments were permitted. It submitted that the new documents were relevant in a number of ways. In its submission, the new documents tended to prove that senior employees of Standard & Poor's knew or believed that the S&P Representations were misleading or deceptive. That would be relevant to the question whether the representations were in fact misleading or deceptive. The documents were also said to be relevant to the existing pleaded allegation that Standard & Poor's ought to have known many of the facts that made the S&P Representations misleading. Finally, Clurname submitted that the new documents are potentially relevant to rebut Standard & Poor's case, and the lay evidence it intends to lead in support of it, that the assumptions and criteria that were embedded in CDO Evaluator version 3 were objectively determined and were the product of rigorous analytical debate and extensive consideration in testing. 204 There is considerable merit in Clurname's submission that the new facts and evidence would most likely be relevant and admissible in relation to the existing claims. It follows that Standard & Poor's will need to investigate and respond to the new facts and evidence in any event. That is relevant to a consideration of whether the amendments are likely to be productive of material prejudice to Standard & Poor's. 205 Second, to the extent that Standard & Poor's may be prejudiced by the late amendment, some of the blame for that may be apportioned to it. As discussed in detail earlier, Standard & Poor's discovery was late, defective and deficient. It did not and has not provided a satisfactory explanation for the need for the late "supplementary" discovery which included a number of the documents that, as events transpired, it did not prove could not be considered important for the new deceit claim. It did not and has not provided a satisfactory explanation for the redactions to parts of the depositions, presumably on relevance grounds. 206 In addition, Standard & Poor's were provided with the draft amended pleading in mid-August 2017, over seven months prior to the March 2018 trial date. As has already been indicated, the import of Mr Grave's evidence was that, in the two months between the time that Standard & Poor's received the draft pleading, and the hearing of the amendment application, Standard & Poor's Australian solicitors did little in terms of genuinely investigating what they would have to do to respond to the proposed new claims, and what difficulties they might encounter. Rather, they appear to have channelled their resources into mounting a case in opposition to the amendment application. It should be noted that Standard & Poor's also delayed the hearing of the amendment application, which was initially listed for hearing to commence on 20 September 2017. That listing was vacated on the application of Standard & Poor's.

Potential prejudice to others 207 Standard & Poor's submitted that Clurname would not be prejudiced if leave to amend is refused on discretionary grounds because "there is nothing stopping [it] commencing or seeking to commence new proceedings to advance the deceit claim, if and when they choose". That submission is rejected. Given the substantial overlap, factual and legal, between the existing causes of action and the proposed deceit claim, the suggestion that Clurname could reasonably be expected to commence a separate proceeding alleging deceit is somewhat fanciful. The fragmentation of Clurname's case which would arise from that course would plainly be contrary to the overarching purpose of the civil practice and procedure in this Court. The additional costs incurred by Clurname in mounting a separate case against Standard & Poor's would be substantial and potentially prohibitive. 208 As far as prejudice to other parties in the related proceedings listed for joint hearing in March 2018, the only submissions filed were by the Respondent, ANZ Bank, in Coffs Harbour City Council v Australia and New Zealand Banking Group Limited, NSD 1021 of 2014. ANZ took no position in respect of the amendment application, save for opposing leave to amend if the result of the granting of leave would be that the trial was vacated. ANZ submitted that it would suffer prejudice in its ability to prosecute its case if the trial was vacated, on the basis that the proceedings concerned events that occurred over 11 years ago. As the trial is not to be vacated as a result of the amendment, it is unnecessary to give any further consideration to this submission.

The parties' choices 209 Standard & Poor's submitted that Clurname could have chosen to take steps to obtain the documents relevant to the deceit claim by various means, including the bringing of an application for a release from the implied undertaking in relation to documents discovered in the Swan proceedings, or bringing an application for preliminary discovery. Those contentions have already been considered in the context of whether the proposed deceit claim could have been advanced at an earlier date. They are rejected for the reasons given earlier.

Other matters raised by Standard & Poor's 210 Standard & Poor's relied on the so-called rule in Weldon v Neal (1887) 56 LJQB 621; (1887) 19 QBD 394. That rule was said to be that an amendment raising a new cause of action (as opposed to an amendment expanding an existing cause of action) which would be statute barred if new proceedings were commenced should not be allowed as a matter of discretion. Putting to one side, for the moment, the question whether that is an accurate statement of the rule, which is somewhat doubtful, there are two short answers to this submission. First, for the detailed reasons given earlier, it cannot be concluded that the proposed cause of action in deceit is statute barred. Thus, there is no scope for the operation of the rule. Second, and in any event, the effect of the rule in Weldon v Neal was largely abolished in this Court by the insertion of s 59(2B) into the FCA Act, and r 8.21(2) which was made pursuant to that section: Australian Securities and Investments Commission v Australian Property Custodian Holdings Ltd (No 2) (2013) 213 FCR 289 at [16]-[19]; McGrath v HNSW Pty Ltd (2014) 219 FCR 489 at [48]-[49]; Voxson at [17]; Clasul at [26]. The application of r 8.21(2) to the proposed amendments was considered earlier.

Balancing the discretionary considerations - conclusion 211 When all the relevant discretionary considerations are weighed in the balance, the preferable decision is to grant Clurname leave to amend its originating application and pleading. In all the circumstances, the dominant considerations are the importance of allowing Clurname the opportunity to plead the arguable case it now wishes to agitate in relation to deceit and the nature and importance of the proposed amendments. While prejudice to Standard & Poor's is a potentially very weighty consideration, for the detailed reasons that have been given, the evidence adduced on this application does not support Standard & Poor's contention that it will suffer serious prejudice such that it would not be able to respond to and defend the new issues raised by the amendments at the trial in March 2018. Such prejudice that Standard & Poor's has or is likely to suffer as a result of the amendments can and will be adequately dealt with in case management orders and, potentially, appropriate costs orders. Ms Banton adequately explained any relevant delay in applying for the amendment.

Timing of the amendments 212 Clurname sought an order that the amendments to the pleading "shall be taken to have effect from the date of filing of the Statement of Claim". The Statement of Claim was filed on 12 August 2015. 213 A similar order was sought and considered in Gloucester at [234]-[239]. As was noted in that discussion, there appears to be a lacuna in the current Rules on the question of when an amendment made by leave, not as of right, takes effect. Rule 16.54 provides that an amendment made under r 16.51, which deals with amendments that do not require the leave of the Court, takes effect on the date the amendment is made. There is no equivalent rule in respect of amendments made with the leave of the Court under r 16.53. In the former rules (Federal Court Rules 1979 (Cth)), O 13 rr 2 and 3A effectively provided that, other than in the case of amendments that added new claims for relief based in whole or in part on facts or matters that occurred or arose since the commencement of the proceedings, the amendment was to take effect on the date when the pleading was first filed, unless the Court otherwise ordered. Thus, the default position was that an amendment of a pleading by leave that was based on the same, or substantially the same facts as those already pleaded, was to take effect on the date of filing of the original pleading. That was consistent with the position taken in circumstances where there was no express provision in the rules of court dealing with the timing of an amendment: see Baldry v Jackson [1976] 2 NSWLR 415 at 419; Oztech at [61]. 214 On one view, if the default position is that the amendments take effect on the date the original pleading was filed, it is unnecessary to make a specific order concerning the timing of the amendment. On the other hand, given the absence of any express rule in the current Rules concerning the timing of amendments by leave, there is something to be gained by making the order sought by Clurname. It would at least provide some certainty and clarity in relation to the operation of the amendments. In that respect, an order confirming that the amendments take effect on the date of the filing of the original pleading is appropriate in the interests of justice and can be made pursuant to r 1.32 of the Rules. 215 Standard & Poor's did not advance any specific reason why the default position should not apply. Nor did it point to any specific considerations which would lead the Court to exercise its discretion to order that the amendments take effect from the date that leave was granted, as opposed to from the time the proceeding was commenced. Having regard to all the facts and circumstances surrounding the amendment application, to which reference has already been made, the preferable course is to order that the amendments take effect from the date that the proceedings were commenced.

Conclusion 216 Clurname discharged its onus of persuading the Court that it should be granted leave to further amend its originating application and pleading. Orders were made accordingly.

DISPOSITION AND ORDERS 217 An order granting Clurname leave to file the amended originating application and SFASOC was made at the conclusion of the hearing on 13 October 2017, together with ancillary orders, including an order that the amendments take effect on the date the proceedings were commenced. It was indicated that the question of costs will be determined at a later date. I certify that the preceding two hundred and seventeen (217) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wigney.