Edingbay Pty Ltd v Horwath

8. In addition there was a proceeding in which Aroni Colman sued an indemnity insurer and there were other proceedings brought by other investors in one of which Horwath was a defendant.

11. Many settlements took place before and during the trial. By the end of the trial the only proceedings in which issues remain for adjudication are the Edingbay and Jefferson Ford cases. Even in those cases the issues, and the number of parties involved, have been reduced by settlements. More particularly, in the Edingbay case the claims for adjudication are those by the plaintiffs against Horwath as defendant and by Horwath by way of third party claims against the former partners of Aroni Colman, the solicitors Arnold Bloch Leibler (ABL), Lewski and his company Australian Commercial Underwriting Pty. Ltd., and a firm of accountants called Krampel Newman and Partners Pty. Ltd. (Krampel Newman). In the Jefferson Ford case the claims for adjudication are those by the plaintiffs against Horwath as the third defendant and by Horwath for contribution and indemnity against the first defendant Aroni Colman, and against ABL and Lewski as third parties. Neither Aroni Colman nor any of the third parties in either proceeding has a claim against Horwath and there are no claims between them.

14. Horwath now applies to amend as against Aroni Colman and ABL in both the Edingbay and Jefferson Ford cases. No amendment is sought against the other third parties, or the plaintiffs, and those parties have not appeared on this application.

17. The form of the paperwork to be amended varies in the two cases. In the Edingbay case there is a statement of claim indorsed on a thirty party notice which was filed by Horwath on or about 30 October 1998. An amended third party notice and statement of claim was filed on 20 November 1998; this did not alter the claim against Aroni Colman or ABL. A further amended statement of claim was filed on 19 February. This made some changes to the pleading against ABL but did not change the Aroni Colman pleading. On 12 May I gave leave to Horwath to amend in the terms of a second amended statement of claim. The draft had been served on 23 April. This amended the pleading against both Aroni Colman and ABL. On 20 July (the 50th day of the trial and the last day on which a witness gave evidence) I gave leave to Horwath to amend in the terms of a third amended statement of claim which amended the pleading against ABL but not against Aroni Colman. Counsel for Horwath had provided the draft amendments on 31 May. I refer below to the nature of the claims made against Aroni Colman and ABL. In the meantime Horwath's paperwork in the Jefferson Ford case has some defects which should be identified and dealt with at this stage.

21. In the Jefferson Ford case Horwath's paper work took a different form and has never been amended. In the proceeding as consolidated Aroni Colman was the first defendant, the Legal Practice Board the second defendant and Horwath the third defendant. The plaintiffs settled with the first and second defendants. Early on, on 18 September 1998, Aroni Colman had commenced third party proceedings against a number of parties including Horwath. Much later, on 25 March 1999, Horwath gave to Aroni Colman as first defendant and the existing third parties (other than itself and a firm of accountants called Gaddie Metz and Kahn (GM and K) ) a notice claiming contribution and indemnity. Each notice is in identical terms. The terms of the notice are important. It is headed 'Notice By The Third Defendant Claiming Contribution And Indemnity As Against The First Defendant" (or first third party etc.) The notice was then addressed to the relevant party and stated:

"TAKE NOTICE that the plaintiffs have brought proceedings against the third defendant ("Horwath") to recover damages for loss sustained on the grounds set out in the consolidated statement of claim dated 11 March 1999, a copy of which has been served on you. AND TAKE NOTICE that Horwath disputes the claims that the plaintiffs makes [sic] against it on the grounds set out in its defence, a copy of which has been served on you. AND TAKE NOTICE that Horwath claims to be entitled to contribution and/or indemnity from you, pursuant to Part IV of the Wrongs Act 1958 (Vic) or otherwise, in respect of any sum which the plaintiffs or any other party to this proceeding may recover against Horwath (whether by way of damages, compensation, indemnity, contribution, interest and/or costs or otherwise) to the extent of such amount as may be found by the Court to be just and equitable having regard to the extent of your responsibility for such sum on the grounds set out against you in: (a) the plaintiffs' statement of claim (as amended from time to time) filed in this proceeding; and (b) the statement of claim annexed to the defendant's (Horwath's) third party notice (as amended from time to time) filed in proceeding number 2073 of 1998."

25. As the respondents to Horwath's notices were already parties to the proceeding Horwath was required to comply with O.11.15 in Chapter 1 of the Rules of the Supreme Court. In the circumstances the rules required that a claim for contribution pursuant to Part IV of the Wrongs Act 1958 be made by a notice in accordance with Form 11B. If other claims were to be made (whether or not including a Wrongs Act Claim) the notice was with any necessary modification required to be in accordance with Form 11A and be indorsed with a statement of claim. Form 11B is a short form notice which claims contribution using the relevant language of s.24(2) of the Wrongs Act. It also provides for the claimant to state the grounds on which contribution is claimed. The notice is not indorsed with a statement of claim, in view of the fact that the respondents to it are already parties and having regard to the nature of the relief sought. Thus a party to whom it is directed does not plead to it.

28. On the other hand Form 11A is stated in O.11.02 to be the form of the third party notice for the purpose of making a third party claim pursuant to O.11.01. The rule requires that the notice be indorsed with a statement of claim. That is understandable having regard to the scope of O.11.01. That rule provides that where a defendant claims as against a person not already a party to the proceeding (called "the third party") -

(b) any relief or remedy relating to or connected with the original subject-matter of the proceeding and substantially the same as some relief or remedy claimed by the plaintiff; or

(c) that any question relating to or connected with the original such subject-matter of the proceeding should be determined not only as between the plaintiff and defendant but also as between either or both of them and the third party -

the defendant may join the third party as a party to the proceeding and make the claim against him by filing and serving a third party notice."

A claim for contribution may be made solely relying on Part IV of the Wrongs Act. And s.24(2) of the Act provides that the contribution to be recovered may amount to a complete indemnity. Thus the expression in O.11.01(a) "any contribution or indemnity" is apt to include a claim in those terms under Part IV of the Wrongs Act. But a right to contribution or an indemnity might derive from a contractual or other relationship or set of circumstances quite unconnected with the Wrongs Act. For that reason and because of the breadth of the claims that might be made under par's (a), (b) and (c) of O.11.01 and the need to have issues clearly stated and defined, the rules require a statement of claim, and subsequent pleadings in the usual way. The rules make it clear that that applies even when the claim is to be made against an existing party, unless the claim is only for contribution pursuant to the Wrongs Act.

36. The next point to note is that Form 11A requires the inclusion in the notice of a series of statements by way of notification and information to the third party and finally for the indorsement of a statement of claim. Horwath's third party notice in the Edingbay case contained all the indorsements required by Form 11A, and was indorsed with a statement of claim pursuant to O.11.02. The amendments which Horwath now seeks in the Edingbay case are to the statement of claim, not to the third party notice itself. I will come to the actual amendments later.

39. In the Jefferson Ford case Horwath's notice to Aroni Colman and the third parties was required by O.11.15 to be in accordance with Form 11A, with any necessary modification, and to be indorsed with a statement of claim. That is, of course, unless the claim was merely for contribution pursuant to Part IV of the Wrongs Act in which case Form 11B was the appropriate form. What form of notice did Horwath give?

42. The notice included the first two paragraphs in Form 11A, but excluded the balance of the paragraphs in that form which concerned the requirement of entering an appearance. That was correct because all the persons to whom the notice was directed were existing parties. I do not overlook that in substance the first paragraphs of the notices in Forms 11A and 11B cover the like ground, so no point arises in that regard. To this extent Horwath's notice is an appropriate modification of Form 11A.

45. Then, the heading of the notice and the terms of Horwath's claim in the final paragraph make it clear in my view that the claim being made by Horwath is for contribution pursuant to the Wrongs Act. At one point or another Horwath made a submission to the contrary of this conclusion. The submission concerned the phrase "or otherwise" and the reference in the notice to Aroni Colman's statement of claim in the Jefferson Ford case and Horwath's third party statement of claim in the Edingbay case.

48. In his submissions in reply on 24 September 1999, Mr. I.D. Martindale, junior counsel for Horwath, contended that properly read the phrase "or otherwise" meant and should be taken to mean that Horwath was claiming relief on a basis other than pursuant to the Wrongs Act. In other words, it was a notification to the respondent to the notice that contribution and/or indemnity was being claimed both pursuant to the Wrongs Act and on some other basis. He submitted that the reference to Horwath's third party statement of claim in the Edingbay case gave content to the phrase. In other words, one was to note the phrase "or otherwise" and then be directed by the later reference to the Horwath statement of claim in Edingbay to read that statement or claim and find in it the content or meaning to be given to the phrase that the draftsman had in mind. Not only is the reference to the statement of claim open-ended in that it merely refers to the statement of claim "as amended from time to time", the particular paragraphs of the statement of claim which were relied upon for this purpose were not specified. One might suppose that the reference was meant to be to that part of the pleading which was directed to the particular respondent to the notice, for example Aroni Colman and ABL, but that was not stated.

51. Unless on its proper construction the terms of the notice can give content to the phrase "or otherwise" the phrase can carry no sensible meaning. In this respect one sees that following that phrase the notice continues on in terms which are apt to inform a third party that the claim against it is being made pursuant to the Wrongs Act. It then concludes by stating that the grounds on which the claim is made are set out in the two statements of claim. In my view the reference to the statements of claim is to be read as no more than a reference to the documents in which the relevant third party is to find the grounds on which the claim for contribution and/or indemnity is made pursuant to the Wrongs Act. I do not accept that in the case of Aroni Colman or ABL the way in which the notice refers to a statement (or statements) of claim is tantamount to and should be taken as the pleading by a statement of claim indorsed on that very notice of a claim by Horwath against that party for contribution and/or indemnity on a basis other than or in addition to the Wrongs Act.

54. There are two further considerations which are relevant to this point. First, a party may limit a claim for contribution or indemnity to one pursuant to the Wrongs Act, no matter what the underlying factual situation may be. Secondly, Horwath's third party statement of claim in the Edingbay case requires amendment to make a claim against Aroni Colman and ABL for contribution or indemnity on a basis that is additional to the claim pursuant to the Wrongs Act.

57. Let it be repeated, O.11.15(4) and (5) required that if the claim in the Jefferson Ford case was not merely a claim for contribution pursuant to the Wrongs Act it had to be made in accordance with Form 11A, with any necessary modification, and be indorsed with a statement of claim. Horwath's notice was not indorsed with a statement of claim, it used the language of the Wrongs Act, and in my view it was reasonably to be read as having incorporated the plaintiff's statement of claim and Horwath's third party statement of claim in the Edingbay case by way of identifying the repository of the grounds on which that contribution was sought and not by way of pleading an alternative basis on which contribution or indemnity was sought. The phrase "or otherwise" carried no meaning. The use of such a phrase is not a substitute for the proper observance of the requirements of the rules, including the requirement to plead one's case so as to fairly inform an opposite party of the basis of a claim.

60. I have noticed that the phrase "or otherwise" appears in a notice which another third party in the Jefferson Ford case, the National Australia Bank Ltd., filed on 22 October 1998. That notice made a claim for contribution pursuant to the Wrongs Act in which the phrase would seem to add nothing. A quick perusal reveals the phrase being used in other notices in the litigation, including from ABL's solicitors, in which the claim is for contribution pursuant to the Wrongs Act. One example is ABL's notice to Horwath dated 16 April 1999 which seems clearly enough to have been adapted from Horwath's earlier notice dated 25 March 1999.

63. Horwath now seeks leave to amend its notice in the Jefferson Ford case by filing and serving a statement of claim against Aroni Colman and ABL, as though indorsed on the notice pursuant to the rules. The purpose is to claim contribution or indemnity on bases additional to the Wrongs Act.

67. The last witness to give evidence did so on 20 July, the 50th day of the trial. On the following day some documentary evidence was tendered, some consent orders were made, I directed written submissions by 3 July and adjourned the trial for final addresses on 9 August. I sat to hear some submissions by Aroni Colman and Lewski on issues between them on 22 July, which they subsequently resolved, and in consequence of which resolution I made orders disposing of the claims between them. The parties filed and served written submissions and addresses commenced on 10 August. The addresses occupied seven days. They concluded on 18 August, the 59th day of the trial. The initial written submissions were augmented during the addresses by large quantities of written material.

70. By this stage the transcript ran to 5,559 pages, there were hundreds of exhibits, and other documents are to be found in one part or another of a court book of 55 lever arch files, and 120 persons had given evidence. A number of them gave evidence in support of proceedings that have settled. But there is much evidence to take account of in the Edingbay and Jefferson Ford cases. In addition to the evidence given in support of the cases of the 50 plaintiffs, which included an accounting expert, Horwath called 15 present or former employees and principals and an accounting expert, two former partners of Aroni Colman gave evidence, ABL called four present or former employees or partners including one by video link from overseas, Lewski gave evidence and one person from Krampel Newman gave evidence.

Horwath Raises Amendment Late In Final Addresses

74. On 16 August Horwath's counsel indicated that he desired a further amendment to the statement of claim against ABL. This was prompted by the statement in ABL's written submission that Horwath's only claim against ABL was for contribution pursuant to the Wrongs Act. The same point was made in the written submission of counsel for the former partners of Aroni Colman other than Mr Wollan who, for his part, supported the submission. Horwath's counsel brought the terms of the amendment into court on 17 August. On that day, after a little discussion, and so as not to further interrupt other counsel in their final addresses, I adjourned the application to amend to 24 August. In the event the application was heard on 26 August. The application was only made in the Edingbay case and only concerned ABL. During the hearing on 26 August Horwath's counsel substituted other proposed amendments. On 6 September I gave judgment refusing the application. The terms of the amendments that were then sought are set out in pars. 26 and 34 of that judgment.

77. I can state in a nutshell the point which Horwath wished to raise by these amendments. It is important to do so because it is the same point which Horwath is seeking to raise against ABL by the amendments which are the subject of the present application. It may thus be said that Horwath is seeking to have a second bite of the same cherry, at least as far as ABL is concerned. Hence ABL contends that the present application is an abuse of process and should be refused as such. The amendments against Aroni Colman make the same point in that they raise direct claims against Aroni Colman. Aroni Colman's position differs from ABL because this is the first time that amendments have been sought against it for the purpose of raising such claims. Nevertheless Aroni Colman opposes the application. I mention these matters to indicate the context in which the present application is made and the reason why it is necessary to note Horwath's prior unsuccessful application to amend.

80. In my 6 September judgment I set out at some length the nature of the claims made by Horwath against ABL in the Edingbay case; see par's. 15-24. I will not repeat that exercise. In essence Horwath's pleading against ABL alleged a case that ABL was retained by Horwath to advise Horwath and its clients in connection with the documentation associated with the proposed investment, that Horwath failed to properly advise or otherwise act with reasonable care and skill, that the plaintiffs invested in reliance upon ABL and lost their money, and that in consequence ABL is liable to the plaintiffs. The liability was alleged to arise on two bases: breach by

ABL of its contract of retainer with the plaintiffs, and breach of a duty of care owed to those plaintiffs to act with reasonable care and skill. In those circumstances, very simply and summarily expressed, Horwath claimed contribution and indemnity from ABL in respect of any liability to the plaintiffs. In the course of this pleading it was alleged that ABL had a contractual relationship with Horwath arising out of the retainer by Horwath and, in addition, that ABL owed Horwath a duty to exercise reasonable care and skill in acting for and advising Horwath and its clients (the plaintiffs), and that ABL owed Horwath a fiduciary duty of good faith and to disclose material matters of which ABL was or became aware. It was alleged that ABL breached the several duties which it owed to Horwath. The allegations of breach concerning Horwath and the plaintiffs were contained in a set of paragraphs (28-38). They were followed by par. 39 in which it is alleged that by reason of ABL's breaches (a) the plaintiffs invested money and thereby suffered loss and damage, and (b) Horwath gave the plaintiffs the advice or made to them the representations which the plaintiffs allege and rely upon in their case, namely to invest in the scheme which in truth existed and which would produce the benefits which Horwath claimed. In other words, both Horwath and the plaintiffs relied on ABL's advice and that advice caused the plaintiffs loss. Paragraph 40 then alleged that in the premises ABL is liable to the plaintiffs in respect of any loss and damage suffered by them. There is the foundation of the claim for contribution pursuant to the Wrongs Act.

84. It was not pleaded that Horwath had suffered loss and damage as the result of ABL's breaches. Nor was it pleaded that Horwath was entitled to and did claim to recover from ABL as loss and damage suffered by Horwath the amount of any judgment which it might suffer at the instance of a plaintiff. Such damages would be in the nature of an indemnity but the plea was not there. The omission of the plea is clear. As far as the prayer for relief is concerned it claimed contribution or indemnity but as I have pointed out one can achieve an indemnity under the Wrongs Act. The contention of ABL was, and remains, that in the absence of a plea of loss and damage suffered or to be suffered by Horwath of the type that I have mentioned, the statement of claim could only be read as making a claim for contribution or indemnity pursuant to the Wrongs Act. In seeking the amendment on 26 August Horwath's counsel described the omission as an error, and they have also said it was a mistake in the sense that they intended to make the plea of loss and damage and to make a "direct claim" against ABL as well as making a claim for contribution (even to the extent of a full indemnity) pursuant to the Wrongs Act. The claim pursuant to the Wrongs Act was not only made by the paragraphs mentioned but may be seen in the balance of the pleading in particular par. 45 which states that by reason of the matters aforesaid Horwath is entitled to contribution and/or indemnity pursuant to the Wrongs Act.

87. Initially Horwath sought to amend par. 40 to convert that paragraph from an allegation that ABL was liable to the plaintiffs in respect of their loss and damage, to an allegation that ABL was liable to Horwath in respect of any liability of Horwath to the plaintiffs. This seemed an ill-considered amendment because par. 40 as it stood was appropriate to complete the pleading of the claim for contribution pursuant to the Wrongs Act (see par's. 32 and 33 of my 6 September judgment). Doubtless because Horwath's counsel came to appreciate this in the course of the argument on 26 August, after lunch on that day he substituted other amendments (see par. 34 of my 6 September judgment). These amendments changed the words but not the substance of par. 40 as it stood in the statement of claim. They also added new par's. 40A and 40B which in summary alleged that if Horwath is found liable to any of the plaintiffs it will suffer loss and damage caused by ABL's breaches, that loss and damage being the amount of any judgment in favour of any such plaintiff, and claiming against ABL that it is liable to indemnify Horwath by way of damages in the amount of any such judgment.

90. The amendments were, and are, sought to achieve the following position. If and to the extent that in respect of any of the joint venture schemes (CL Melbourne, CL Sydney, CL Sydney 1998 syndicates 1-10 and 11-14) it is held that ABL came under a contractual duty to Horwath to exercise reasonable care and skill (and there are issues as to this) that was concurrent with the like duty in tort, the liability of ABL to Horwath is to be adjudged in contract, not tort, and a plea of contributory negligence will not lie. See Astley v. Austrust Ltd. (1999) 73 A.L.J.R. 403, handed down on 4 March 1999 two months before the trial started. On this basis ABL is at risk of being held 100% liable to Horwath in respect of a plaintiff for whom Horwath is adjudged to be liable, depending on whether any contractual duty of ABL to Horwath is relevant to that plaintiff. As millions of dollars are at stake the amendment could be significant, if allowed.

93. In fact ABL has not made a plea of contributory negligence, even in its amended defence filed on 4 August 1999 in relation to Horwath's third amended statement of claim. At the hearing on 26 August this was explained on the basis that Horwath had not pleaded a case against it to which a plea of contributory negligence could relate. The claim against ABL was only for contribution pursuant to the Wrongs Act and to such a claim a plea of contributory negligence is not open.

96. The final thing to mention about the application I heard on 26 August is that neither side filed any affidavit whether in support or opposition. I refer below to the two affidavits which Horwath's counsel mentioned in opening the application on that day as containing evidence which Horwath might wish to rely upon in support of that application but which in the end they elected not to rely upon. Hence that application was determined upon the basis of counsel's submissions and the various matters referred to therein.

99. In the result I concluded that Horwath's application to amend should fail.

103. The next step that occurred is that on 8 September Horwath's solicitors approached my Associate with a request for a hearing the next day at 12 noon. Under cover of a letter dated 8 September Horwath's solicitors provided a memorandum from senior counsel Mr P R Hayes Q.C. and one of his juniors in the litigation, Mr Martindale, and copies of affidavits which had been sworn on 25 August 1999, one by Mr Hayes and one by his other junior in the litigation, Mr A J Paterson. These are the affidavits I referred to above which had been sworn for use in support of Horwath's amendment application which I heard on 26 August but which Horwath's counsel elected not to rely upon. I refer below to the contents of these materials.

106. In their memorandum counsel stated that Horwath wished to make further application to amend the third party statement of claim against ABL in the Edingbay case by adding a new par. 39A, alternatively an order that the order of 6 September refusing the earlier application be set aside on the ground that the Court had been misled; and, further, that the statement of claim in Horwath's third party claim against the former partners of Aroni Colman (in the Edingbay case) be amended by the addition of two new paragraphs to the same effect as the proposed new par. 39A. The proposed par. 39A is in the following terms:

"39A. To the extent that Horwath is found liable to any of the plaintiffs herein and ordered to pay damages to any of those plaintiffs it will have suffered loss and damage by ABL's breaches of retainer, breaches of duty of care and/or breaches of fiduciary duties owed to Horwath."

While the words may be different this is in effect the same amendment which Horwath had unsuccessfully sought at the hearing on 26 August.

111. As requested by Horwath I sat at 12 noon on 9 September. Counsel appeared for Horwath, ABL and the former partners of Aroni Colman other than Mr Wollan who for some time now has separately represented himself. Mr Wollan has neither appeared nor filed any written submission on Horwath's application to amend against Aroni Colman.

114. At the outset of the hearing on 9 September Mr Hayes handed up a five page written submission bearing that date together with copies of some authorities referred to in it. Earlier on the 9th Horwath had filed two summonses returnable at noon. Each summons sought orders which essentially were for amendment of the claims against ABL and Aroni Colman. One summons was filed in the Edingbay case in which Horwath had made its earlier application to amend against ABL. The second summons was filed in the Jefferson Ford case.

"1. An Order pursuant to Order 59.01 of the Rules of the Supreme Court of Victoria that on the material facts alleged in the Statement of Claim the Court make Orders awarding damages to Horwath against Arnold Bloch Leibler for any liability for damages or costs which Horwath has to any of the Plaintiffs herein. 2. Alternatively, that Horwath be given leave to further amend its Third Amended Third Party Statement of Claim dated 20 July 1999 against Arnold Bloch Leibler by adding paragraph 39A as set out in the memorandum from Peter Hayes QC and Ian Martindale of Counsel dated 8 September 1999. 3. Alternatively, an Order that the Interlocutory Order made by this Court on 6 September 1999 herein be set aside. 4. As against the former partners of Aroni Colman that the Third Amended Third Party Statement of Claim dated 20 July 1999 against Aroni Colman be amended by the insertion of paragraphs 10A and 20A as follows "10A If Horwath is found liable to the Plaintiffs or any of them, Horwath will suffer loss and damage caused by Aroni Colman for breach of the Undertakings". "20A If Horwath is found liable to the Plaintiffs or any of them, Horwath will suffer loss and damage caused by Aroni Colman's contravention of the Fair Trading Act 1985. " "

121. The summons in the Jefferson Ford case seeks:

"1. An Order pursuant to Order 59.01 of the rules of the Supreme Court of Victoria that on the material facts alleged in the Statement of Claim in proceeding number 2073 of 1998 (as referred to in the Notice by the Third Defendant Claiming Contribution and Indemnity as against the Third Third Party dated 25 March 1999) the Court make Orders awarding damages to Horwath against Arnold Bloch Leibler for any liability for damages or costs which Horwath has to any of the Plaintiffs herein. 2. Alternatively, that Horwath be given leave to further amend its Third Amended Third Party Statement of Claim dated 20 July 1999 against Arnold Bloch Leibler in proceeding number 2073 of 1998 (as referred to in the Notice by the Third Defendant Claiming Contribution and Indemnity as against the Third Third Party dated 25 March 1999) by adding paragraph 39A as set out in the memorandum from Peter Hayes QC and Ian Martindale of Counsel dated 8 September 1999. 3. Alternatively, an Order that the Interlocutory Order made in proceeding number 2073 of 1998 by this Court on 6 September 1999 herein be set aside. 4. As against the former partners of Aroni Colman that the Third Amended Third Party Statement of Claim dated 20 July 1999 against Aroni Colman in proceeding number 2073 of 1998 (as referred to in the Notice by the Third Defendant claiming Contribution and Indemnity as against the First Defendant dated 25 March 1999) be amended by the insertion of paragraphs 10A and 20A as follows "10A If Horwath is found liable to the Plaintiffs or any of them, Horwath will suffer loss and damage caused by Aroni Colman for breach of the Undertakings". "20A If Horwath is found liable to the Plaintiffs or any of them, Horwath will suffer loss and damage caused by Aroni Colman's contravention of the Fair Trading Act 1985. " "

125. Each summons also seeks costs and further or other relief as is appropriate.

128. The summonses were supported in each case by an affidavit sworn on 9 September by Horwath's solicitor, Mr D V Fogarty. The affidavit in the Jefferson Ford case merely referred to and relied on the affidavit in the Edingbay case. The affidavit in the Edingbay case consisted of only five paragraphs, two of which (par's 3 and 5) were stated by Mr Hayes in the course of his submissions on 17 September to be not pressed. That left par. 4 as the only substantive paragraph relied on in Mr Fogarty's affidavit. In that paragraph Mr Fogarty stated his understanding of the case which Horwath had made against Aroni Colman. He stated:

"I refer to the proposed amendment of paragraph 10A and 20A of the third party claim against Aroni Colman. I have always understood and instructed Counsel that both direct claims for breach of the Letters of Undertaking and for misleading and deceptive conduct as well as a Wrongs Act claim for contribution were being pursued against the former partners of Aroni Colman. At no time was I informed by any of the former partners of Aroni Colman or any of their lawyers that they understood that Howarth [sic] was not maintaining such direct claims against them. "

That paragraph neatly encapsulates the position of Horwath on the present applications and the earlier unsuccessful application. While there are differences in the matters pleaded against Aroni Colman and ABL in the third party statement of claim in the Edingbay case, Horwath asserts it had always intended to, and thought that it had, made "direct" claims against Aroni Colman and ABL that were in addition to the claim for contribution pursuant to the Wrongs Act. The purpose of the amendments is to add to the statement of claim the allegations necessary to allege and clearly raise that claim against ABL and Aroni Colman.

133. To summarise the position, when the applications were mentioned on 9 September Horwath was moving on the following materials: counsel's memorandum dated 8 September, the two affidavits sworn on 25 August, the summonses, the affidavits of Mr Fogarty and the written submissions dated 9 September. The applications came on so quickly that neither ABL nor Aroni Colman had had sufficient time to be ready to deal with them. Counsel for ABL intimated that they desired to submit that Horwath raised no new matter and that the applications should be terminated as an abuse of process and, failing that, they would then desire the opportunity to go into evidence and demonstrate that the matters deposed to by Messrs Hayes and Paterson were controversial. This latter aspect bore on the understanding of ABL's lawyers during the conduct of the case as to whether the Horwath statement of claim included a "direct claim" against ABL. There were several difficulties in acceding to this suggested course of action. One difficulty was that my 6 September judgment had only dealt with an application by Horwath against ABL in the Edingbay case. While the now proposed par. 39A against ABL in that case was a reformulation of the amendment sought in the previous application, the application against ABL in the Jefferson Ford case is new as are the applications against Aroni Colman in both cases. Another difficulty was that I wished to avoid a series of hearings with the possibility of successive judgments, and further delay in being able to attend to the trial judgment.

136. Counsel for Aroni Colman attended the hearing on 9 September on very short notice and without having had an opportunity to read my judgment of 6 September. Accordingly he needed time to consider the matter but he warned that his clients suffered severe financial constraints and that he would have to work out "the most economic way of putting our views before the court", whether by a short oral submission or a short written submission with no oral presentation. Aroni Colman, of course, had closed its doors on 30 September 1998 and there have been indications during the trial that the financial circumstances of the former partners have suffered. I left it to the former partners of Aroni Colman to work out how they should respond to the applications.

139. I determined that all of the applications should be dealt with at the one hearing and not in stages as ABL had sought. I adjourned the hearing of the summonses to 17 September and directed that any affidavit in opposition be filed and served on 14 September and any affidavit in reply on 15 September.

142. On 14 September Mr Fogarty swore a further affidavit in support. It is convenient to mention that in the course of his submissions on 17 September Horwath's counsel stated that he did not press the following paragraphs of this affidavit: 4(b), (d), (e) and (g), 7, 8, 9, 11, 13, 14 and 16.

145. It should be recorded that the affidavits of Messrs Hayes and Paterson had been sworn on 25 August but were lost before they were filed; I accept the statements of Horwath's counsel on these matters. I also accept that the copy affidavits provided to me with their memorandum are true copies of the affidavits as sworn on 25 August for the purpose of the application heard on 26 August and that they were copies of the affidavits which in the course of their submissions on that day Horwath's counsel elected not to file or rely upon. The decision not to rely on those affidavits was deliberate and made in response to a request by myself, when Horwath was in reply, to decide whether or not to rely on the affidavits. By the time of the second application the original affidavits had been lost. For this reason the affidavits were re-sworn in the same terms, by Mr Hayes on 20 September and by Mr Paterson on 17 September, and filed.

148. On 15 September ABL took the following steps in opposition. They filed a summons in each case seeking an order that the Horwath summonses of 9 September be stayed as an abuse of process. They also filed affidavits sworn on that day by their counsel Mr J G Santamaria Q.C. who had appeared in the trial for ABL since 15 June and Mr R M Peters who has been junior counsel for ABL throughout. Up to and including 10 June Mr C M Maxwell Q.C. had appeared as senior counsel for ABL. He had to retire from the case due to a prior commitment.

151. In addition counsel for Horwath, ABL and the former partners of Aroni Colman other than Mr Wollan provided me with written submissions, each dated 16 September. The former partners of Aroni Colman did not appear by themselves or by counsel at the hearing of the applications.

154. ABL's written submission was prepared by new counsel, Mr F S McAlary Q.C. and Mr D G Collins who have appeared for ABL on the hearing of Horwath's present applications. It is not surprising that ABL engaged new counsel for this purpose. The affidavits of Messrs. Hayes and Paterson asserted that certain things had been said in discussions between them and counsel for ABL, Messrs. Maxwell and Peters. On 26 August Mr Santamaria had stated that the affidavits of Messrs Hayes and Paterson were "controversial". The affidavits of Messrs Santamaria and Peters raised a critical difference between counsel as to whether Mr Hayes had in fact stated in the conversations between them what he and Mr Paterson claimed. Once Horwath put these matters into the ring and they were responded to by ABL in terms which raised for determination an issue between counsel it was understandable and appropriate that Messrs Santamaria and Peters ceased to represent ABL on Horwath's present applications. There was a possibility if not likelihood of counsel being cross-examined on their affidavits. Nevertheless, and notwithstanding that what he had sworn to was in issue and that he might be cross-examined, Mr Hayes continued to represent Horwath on these applications, but with Mr Martindale - and not Mr Paterson - as his junior.

157. The materials were in this state when the hearing of the applications got under way on 17 September. A little way into the hearing that morning, while Mr Hayes was addressing, ABL produced two further affidavits on which it relied. These affidavits were filed and served. They were sworn on 17 September by Mr K F Frawley, a partner in ABL, and Mr Maxwell. Mr Frawley states in his affidavit that he is the partner in ABL responsible for the firm's professional indemnity insurances and that as such he has been the partner primarily responsible for instructing the solicitors and counsel representing ABL in the proceedings. I refer below to the contents of these affidavits.

160. In my 6 September judgment I referred to the existence of claims by and against ABL in the Edingbay case and to the fact that ABL had entered into settlements in that proceeding (see par.73). I referred to the matter of settlements on the issue of prejudice as a factor to be considered in exercising the discretion whether to permit the amendment then sought (see par. 79). I noted (in par. 79) that ABL had also reached settlements with parties in other proceedings; a schedule identifying the ABL settlements in the several proceedings had been given to me as part of ABL's final submissions. The schedule is also part of exhibit 264, tendered on the present applications, and is relied on by ABL. I also noted in my 6 September judgment that the several terms of settlement had not been placed before me (see par. 79). Nor was I provided with any evidence as to the reason or reasons for entry into the settlements on the terms they contain. During the hearing on 17 September, in response to a call by Horwath, ABL produced the terms of settlement on the basis that they are and should remain confidential and an undertaking by Horwath's counsel as to confidentiality. I refer to these terms below.

163. The hearing did not conclude on 17 September but was adjourned part heard to 21 September. In resuming his address that day Mr Hayes handed up a supplementary submission running to 10 pages. In the course of the submissions on that day, in particular during the address in reply of Mr Martindale, attention was directed to the unsatisfactory form of Horwath's notices claiming contribution and indemnity in the Jefferson Ford case. This concerned the use of the phrase "or otherwise", the failure to state in the notice the type of claim being made and the failure to indorse a statement of claim on the notice. These are the matters I discussed earlier. Another matter raised concerned the appropriateness of the orders sought in the summons in the Jefferson Ford case. Putting aside for the moment any issue concerning the appropriateness of orders 1, 2 and 3, it seemed unsatisfactory that one would raise a claim in the Jefferson Ford case by an amendment to the pleading in the Edingbay case. Paragraph 4 of the summons sought just such an order. When I asked counsel about this he said that that was the order that Horwath wanted. He said that this was sufficient because the Jefferson Ford notice of claim referred to the statement of claim in the Edingbay case "as amended from time to time". On this basis Horwath did not need an order in Jefferson Ford as an amendment ordered in Edingbay would automatically apply in Jefferson Ford.

166. Further, in his submissions, and following earlier discussions with me in the debate, Mr Hayes abandoned the order sought in par. 1 of each summons. It was a misconception at this point to ask the Court to make an order pursuant to O.59.01 of the Rules. The present issue is whether to allow an amendment. Order 59.01 does not arise, if at all, until judgment in the proceeding. Mr Hayes was clearly correct to abandon order No. 1.

169. I told Mr Martindale that I would not make order No. 2 in the Jefferson Ford summons. It was not appropriate to grant leave in the Jefferson Ford case to amend the third party statement of claim in the Edingbay case. That order should be made, if at all, in the Edingbay case.

172. I also told Mr Martindale that I would not make order No. 3 in the Jefferson Ford summons. That sought the setting aside of the order made on 6 September that Horwath's application be refused with costs. That order was not made in the Jefferson Ford case. Indeed in that prior application Horwath had not sought any order in the Jefferson Ford case. The order was made in the Edingbay case on the oral application of Horwath's counsel made in that case and that case alone. It may be that Horwath's counsel had in his mind that success on his application would flow on to the claim against ABL in the Jefferson Ford case but, if so, I was not told that at the time.

175. That left the order sought in par. 4 of the Jefferson Ford summons and that was attended with the difficulties just discussed. Mr Martindale said that he would further consider the form and terms of the notice. At the conclusion of his reply I reserved my judgment.

178. This discussion concerning the Jefferson Ford notice led to Horwath making a further application to amend the summons in that case. The matter came before me again on 24 September. On that day by consent I made an order in the Edingbay case extending the time in which Horwath may seek leave to appeal from my judgment and orders of 6 September. In addition, Mr Hayes, again appearing with Mr Martindale for Horwath, stated that he wished to apply for leave to amend Horwath's summons in Jefferson Ford. Counsel for ABL was present when the matter was mentioned on 24 September.

181. The application was made orally. After some discussion I fixed the hearing of the application to amend for 30 September and made directions for Horwath to file and serve submissions and a proposed amended summons, for ABL to respond and for notice to be given to Aroni Colman.

184. Pursuant to these directions counsel for Horwath provided me with a seven page submission, a proposed amended summons and a statement of claim against Aroni Colman and ABL in the Jefferson Ford case. Counsel also provided a copy of a notice of claim supported by a statement of claim which Gaddie Metz and Kahn had served on several third parties including ABL in the first case commenced (No. 2041 of 1998), ABL's defence thereto and a notice by ABL in that case in which it claimed contribution from several third parties. These latter three documents were provided for the purpose of argument.

187. The amendments which Horwath seek to the Jefferson Ford summons are twofold: to substitute a new par. 1 and to delete par. 3. The new substitute par. 1 is in the following terms:

"1. Horwath be given leave to amend its Notices Claiming Contribution and Indemnity as against the Third Third Party (Arnold Bloch Leibler) and the First Defendant (Aroni Colman) dated 25 March 1999 to a Third Party Notice against those parties annexing a statement of claim in the form annexed hereto. "

The proposed statement of claim is an adaptation of Horwath's third party statement of claim in the Edingbay case but omitting those parts of it which relate to parties other than Aroni Colman and ABL. As against Aroni Colman it incorporates the proposed par's. 10A and 20A set out in the summonses. As against ABL it incorporates the proposed par. 39A.

192. These submissions of Horwath were followed by the provision of some written submissions from ABL and from counsel for the former partners of Aroni Colman other than Mr Wollan, each dated 28 September.

195. I heard Horwath's further application on 30 September in the presence of counsel for Horwath and ABL. There was no appearance by Aroni Colman. Counsel for Horwath handed up a written submission that ran to 11 pages and addressed at some length. It could not be said that all that Mr Hayes mentioned in the course of his submissions was new. In any event after not too long the hearing concluded and I reserved my judgment on Horwath's applications. This was now day 66.

198. The next day I received a memorandum from counsel for Horwath and ABL in which it was stated that Horwath applied for leave to file a further written submission for the purpose of responding to a question I had asked Mr Hayes in the concluding stages of the hearing on the day before. I had asked Mr Hayes why he submitted that the present was not an Encel type situation, which was a reference to some observations of Tadgell J in the Appeal Division in Geelong Building Society (In Liq.) v. Encel [1996] VicRp 44; [1996] 1 V.R. 594 at 608. Horwath had referred to and relied upon this passage in their submissions going right back to those put to the Court on 26 August last. Mr Hayes dealt with the point I had raised in an answer which runs over four pages of the transcript and with which the hearing on 30 September concluded.

201. Counsel for ABL opposed Horwath's application to file a further written submission, but both counsel stated that neither wished to make any submission on Horwath's application for leave to rely on a further written submission. They therefore took the course of enclosing the further submission in a sealed envelope and attaching it to the memorandum. They left it to my discretion as to whether I read the submission. I was very much disinclined to read it as Horwath's counsel had had more than a reasonable opportunity to present their submissions and had taken full advantage of each opportunity. Nevertheless, in order that it might not be said that I have not taken into account something which counsel wished to raise I read the submission. It added nothing of substance. Counsel were informed that I had read the further submission. I note that a copy of it has been provided to counsel for the former partners of Aroni Colman other than Mr Wollan.

205. On 15 September ABL filed a summons in each case for an order that Horwath's summons be dismissed as an abuse of process. ABL submits that Horwath's present application is in effect the same application which I refused on 6 September, that the failed application is properly to be understood as having been made in both cases, that the evidence which Horwath wishes to rely upon on the present application was available on the failed application but Horwath's counsel elected not to file it or to rely upon it, and that neither ABL nor its counsel had been guilty of conduct which had misled the court in dealing with the failed application.

208. On this aspect of abuse of process both counsel referred to and relied upon passages in the judgments of the Court of Appeal in D A Christie Pty Ltd v Baker [1996] VicRp 89; [1996] 2 VR 582. That case concerned a second application for an extension of time in which to sue for injuries under s.23A of the Limitation of Actions Act 1958, following the failure of an earlier application. An order allowing the second application on new material was set aside on appeal by majority (Brooking and Hayne JJA, Charles JA dissenting) on the basis that the second application constituted an abuse of process. The abuse lay in the fact that the new material had been available at the time of the first application, and there had been no explanation why it had not been put forward at that time. Hayne JA assumed that the material was omitted through oversight or neglect (at 604).

211. There is no doubt that the need for finality in litigation and the need to avoid a party being unreasonably vexed by litigation may lead to a finding that an attempt to re-litigate a case already disposed of, even when the decision in question is interlocutory and not final, may be held to constitute an abuse of process which will result in the proceeding or an application being stayed or refused: Walter v Gardiner (1993) 177 CLR 378 at 393 per Mason CJ, Deane and Dawson JJ. In their joint judgment in that case (at 393) their Honours referred with approval to the statement of Lord Diplock in Hunter v Chief Constable of the West Midlands Police [1981] UKHL 13; [1982] AC 529 at 536 where his Lordship referred to:

"the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people. "

215. It is always necessary to bear in mind the nature of the application in question. What may be considered to be "manifestly unfair" or to bring the administration of justice into disrepute in one situation may not in another. It is one thing for a party to seek to re-litigate a proceeding which has already been determined on the merits after a trial. Even if there was no estoppel the later proceeding would be an abuse of process and stayed as such. The present is not such a case. In this case a party brings forward for the second time an application on a matter of practice and procedure, namely an application to amend the pleadings. Such an application will normally require little debate even if made at the trial. Amendments during trial are an every day occurrence. In my 6 September judgment I referred to the well-known principles which guide the judicial discretion on the grant of leave to amend and I do not repeat those references now (see par's 67-69). It is a matter of determining where the interests of justice lie in the circumstances, regard always being had to the fundamental principle that a case should be determined upon the real issues in controversy between the parties.

218. In my view the present applications to amend are in the category of cases which in Hall v Nominal Defendant [1966] HCA 36; (1966) 117 CLR 423 at 429, Barwick CJ described as being "under the control of and generally within the discretion of the court in which the action is brought". In that respect his Honour instanced successive applications for extensions of time for taking a step in an action or for setting aside a default judgment. This category of case was referred to in Christie by Brooking JA at 597 and by Hayne JA at 604-606. I agree with respect with Brooking JA that the application with which their Honours dealt in Christie was not of that type. Hayne JA also acknowledged the distinction between the types of case.

221. I had the management of the Aroni Colman litigation in the Commercial List from its inception. I made many interlocutory orders and varied orders as the parties desired or was appropriate from time to time. Whether or not in the Commercial List, and whether or not one is in the trial, in principle and speaking generally, a party should be able to apply to amend a pleading even if a prior application to the same effect has been refused. There is an ongoing concern that the case is pleaded so as to conduce to the achieving of justice between the parties, and what may seem an inappropriate amendment or other order one day may be seen as appropriate on another day. That may be, if one is at trial, because of some evidence given or a change in position or a greater appreciation of the issues, and it is true too that in the pre-trial stage the perceptions and understandings of a party's position, and of the relevant facts, can and do change.

224. Further, very many orders that concern matters of practice and procedure, particularly in the Commercial List, are made without an affidavit in support. One just has to get on with a case in a sensible and practical way. That is how I managed the Aroni Colman litigation. It is only now in the context of these applications by Horwath that the parties have gone into evidence, and that is because the applications have been made so late. Otherwise, and this is the point I am making, the refusal of an application to amend does not of itself have the effect that a subsequent renewal of the application must ipso facto be rejected as an abuse of process. To use the language in Hunter, such a subsequent application is not necessarily "manifestly unfair" or such as to "bring the administration of justice into disrepute". The subsequent application may be refused, and perhaps with indemnity costs, if there is no relevant different circumstance, and in such a case may be said to constitute an abuse of process, but otherwise an unsuccessful applicant for an order on such a matter of practice and procedure is not as a matter of principle precluded from making a second application. It need hardly be said that an order on such an application, and the order I made on 6 September, is interlocutory in nature.

227. In Christie Hayne JA concluded in relation to a second application under s.23A that it will be an abuse of process unless there is proof of fraud or it is sought to adduce fresh evidence, in the sense in which that expression is used in connection with the admission of evidence on an appeal (see at 605). Several things should be noted about that conclusion. First, his Honour was careful to confine the limitation to the case there in question and to state that he did not decide whether such a limitation applied to interlocutory applications of the kind mentioned by Barwick CJ. Hayne JA stated that nothing he said should be taken as deciding whether renewal of an application of the type described by Barwick CJ is an abuse of process. Secondly, Brooking JA, whose primary view was that the earlier decision constituted an estoppel, did not dissent from those cautionary words and he himself acknowledged that a different approach might apply in this category of case (see at 597). Thirdly, Charles JA concluded (at 611) that the repetition of an unsuccessful application for interlocutory orders could not be precluded on the ground of abuse of process simply because the applicant sought to rely on additional relevant facts which did not amount to fresh evidence. Charles JA stated that some other factor must be present before an abuse of process is established. His Honour did however observe that the making of a second application on the basis of fresh evidence (if that be possible in the sense that ordinarily the evidence will always have existed) or fraud could not constitute an abuse but that a second application on facts and circumstances identical to those in the failed application would almost certainly be rejected on discretionary grounds (at 611-612). Accordingly, even if the limitation suggested by Hayne JA as appropriate for a second s.23A application was to be taken as applicable in a case such as the present, notwithstanding that Hayne JA expressly made no such decision, Charles JA differed from Hayne JA as to whether only "fresh" evidence and not merely additional evidence may be relied upon in the second application.

230. There is a limit on the extent to which the present applications can be described as a mere repetition of the prior unsuccessful application. The abuse of process point is not made by Aroni Colman, and it could not be because this is the first application against it. The point is taken by ABL. I have already mentioned that as it was put to me, and as I dealt with it, ABL's first application was made only in the Edingbay case. I made this clear in par's 3 and 10 in my 6 September judgment. Notwithstanding this, counsel for ABL pointed to the incorporation by reference in Horwath's notice in Jefferson Ford of its statement of claim in Edingbay as establishing an interdependence in the claims and, therefore, that an order in Edingbay would have operated in Jefferson Ford. Counsel for ABL also pointed to the fact that the cases have been conducted together, that Horwath had not filed a summons, and that the only statement of claim against ABL is that in the Edingbay case. There is a logical force in this submission, although it was not how the prior application was conducted before me.

233. Dealing further with ABL's submission on abuse of process, it is correct that the affidavits of Messrs Hayes and Paterson were available for use on the first application. It is also the fact that Horwath's counsel elected not to file or rely upon the affidavits. I refer to the contents of these affidavits more fully below. For the moment I note that the critical part of the affidavits is the statement of Mr Hayes that he said to ABL's counsel words to the effect that Horwath had "direct claims" against ABL. The purpose of this evidence was to establish that in conducting the case ABL's counsel knew that Horwath was making direct claims against ABL. On that basis ABL should not be heard to oppose the amendment. On 26 August Mr Hayes did not open the actual evidence in the affidavits. He confined himself to saying that he had affidavits which were available to use. To avoid embarrassment between counsel, and perhaps in the hope of otherwise succeeding before me, Mr Hayes did not tender the affidavits. He did not say that they would not be tendered. Rather, in his address he left the matter of reliance upon them in abeyance.

236. During his submissions which followed on 26 August Mr Santamaria stated that the affidavits were "controversial", although he did not go into detail. In the reply of Mr Martindale I required that Horwath elect whether or not to rely on the affidavits. After a short break to obtain instructions Mr Martindale informed me that he would not tender the affidavits. In explanation he said that the affidavits go to the point whether it was clear as between counsel that the case was being put "in a particular way" and that Mr Santamaria's submissions relied more on prejudice "than on the surprise they now get by the clarification of the pleadings that we seek to make". No discussion was had on this explanation.

239. In the memorandum of Horwath's counsel dated 8 September it is stated that the affidavits were not relied upon for three reasons: first, because there was no affidavit in opposition; secondly, to avoid embarrassment between counsel; thirdly, the ABL submission relied upon the pleaded case as distinct from the case as ABL understood it. In his affidavit sworn on 14 September Mr Fogarty sought to further explain the decision not to rely upon the affidavits (see par's 6 and 12). As he was not in court on 26 August and did not make the final decision not to rely upon the affidavits his evidence is substantially hearsay. (Of course hearsay evidence may be admitted on an interlocutory application.) To the three reasons for the decision mentioned above Mr Fogarty added a fourth, namely, that Mr Martindale was influenced by an observation of mine in the course of argument to the effect that par. 40 of the statement of claim had inadvertently omitted to refer to Horwath. This observation was made to Mr Santamaria for the purpose of drawing comment from him, as a judge is entitled to do, in the course of his submissions. I was seeking to test his position. At a later time Mr Hayes stated, correctly, that my comments should not have been relied on in this way. Finally, I note that when in the course of his submissions on 17 September Mr Hayes was dealing with par. 12 of Mr Fogarty's affidavit, he stated that he did not seek to rely upon it. Rather, he said, he relied on what Mr Martindale had stated on 26 August as the reason not to rely on the affidavits. That is the reason set out above.

242. That left par. 6 of Mr Fogarty's affidavit which in essence stated his understanding that ABL's objection to the amendment was a mere pleading point in the sense that there had been a simple failure to plead loss and damage, and that he did not understand ABL to be submitting that it had not understood that Horwath intended to make direct claims against ABL. He thought it was a matter of correcting a simple mistake. The only other part of that paragraph to which I refer is the assertion that Mr Hayes had made "repeated statements . . . that Horwath was making direct claims". This unparticularised statement is an assertion which is not justified by the facts in my view. In my 6 September judgment I set out the times when in an oral or written opening Mr Hayes referred to "direct claims". There were two such occasions. They do not warrant Mr Fogarty's statement. Perhaps, and it would seem that this must be the case, Mr Fogarty was referring to the occasions when, according to Messrs Hayes and Paterson in their affidavits, Mr Hayes referred to "direct claims" in conversations between counsel. Whether those statements were actually made was "controversial" and I will return to that issue below.

245. What it all boils down to is this. In the end and in the knowledge that the application to amend was opposed by ABL, which had provided a 38 page submission in opposition which referred to many matters and relied on alleged grounds of prejudice, and having being warned that the Hayes and Paterson affidavits were "controversial", Horwath elected not to rely on the affidavits and to have their application determined accordingly.

248. If those affidavits were the only different materials now before me and all other factors remained the same there would be much force in ABL's submission that the present application against it should be refused as in effect an abuse of process; see Christie and Smith v NSW Bar Association [1992] HCA 36; (1992) 176 CLR 256 at 266-267. But that is not the situation. As it happens there are in addition the affidavits filed by ABL, the evidence constituted by the various settlement agreements, the application concerning Aroni Colman, and the perspective and understanding of the situation which I have as a result. I discuss these matters below.

251. The final part of ABL's submission on abuse of process is that neither it nor its counsel were guilty of conduct which had misled me in dealing with the failed application. This submission was particularly concerned with a submission made by Mr Hayes during the hearing on 9 September "that the only conclusion is that our learned friends have deliberately sought to mislead the Court". At a later point that day Mr Hayes stated that Mr Santamaria and Mr Peters "are directly implicated in the matters we put", a statement which he said he made "with enormous reluctance". But, he stated, I had been induced into error. The complaint was that ABL, by its counsel Messrs Santamaria and Peters, had led me to the false belief that ABL had not understood that Horwath was making direct claims when in fact ABL did have that understanding. It was in order to make the position clear from Horwath's point of view that the affidavits of Messrs Hayes and Paterson were revived and relied upon, and Mr Fogarty swore his affidavits. I am not concerned at this point to deal with an issue as to whether any submission of counsel for ABL on 26 August had induced me to a false belief as to ABL's understanding of the case. That is not the point I am now concerned with. What I am now concerned with is ABL's submission that the above submission of Horwath as to misleading the Court should not have been made and should be rejected.

254. The answer to this submission came from Mr Hayes himself in his submissions on 17 September immediately following an adjournment to permit Horwath's lawyers to read the affidavits of Messrs Maxwell and Frawley. Having read them Mr Hayes, sensibly and correctly in my view, stated that Horwath withdrew any previous submission that any of ABL's counsel "have deliberately or knowingly engaged in dishonesty, fraud or sharp practice in any relevant equitable fraudulent sense" and he particularly referred to and withdrew the submission of deliberateness on 9 September mentioned above. Mr Hayes still submitted that I had been mislead as to ABL's understanding, but he put that on a different basis which I refer to below.

257. I conclude on this aspect with these final comments. In the end no deponent was cross-examined and the allegation of deliberate misleading was entirely withdrawn. In view of the seriousness of the allegation I should state my own clear and firm conclusion on the evidence that the allegation was without substance and that these applications conclude without a blemish on the professional reputation of Messrs Santamaria and Peters.

261. The amendments sought against Aroni Colman are designed to raise direct claims for the same reason that they are sought to be raised against ABL, that is, to seek to achieve a 100 % recovery against Aroni Colman, as on a contract basis, as distinct from a mere claim for contribution pursuant to the Wrongs Act.

264. The case pleaded against Aroni Colman runs along these lines. The late Mr. Green was a partner in the firm. He brought the investment scheme to the firm as work for the firm to be involved in. He had the conduct of the matter at the firm. The firm acted in the transactions for CL Custodians Pty. Ltd., a company associated with Green and Lewski, and Australian Commercial Underwriting Pty. Ltd., a company associated with Lewski, which companies Horwath allege promoted the scheme. It also acted for the financier to the scheme. A feature of the scheme was that investors' funds be deposited in Aroni Colman's trust account. Horwath then allege that Aroni Colman gave certain express undertakings to Horwath and the plaintiffs who were its clients, by letters dated 19 and 24 June and 5 December 1997. The undertakings were designed to give investors comfort that their funds would not be disbursed from the trust account, as by being paid to a third party supplier of goods to be released under the scheme, until all necessary documents had been executed, Aroni Colman had proper acknowledgment of delivery of such goods to the lessor, and other matters. The undertakings further stated that if the documentation was not executed or the transactions did not proceed for any reason Aroni Colman would refund the money. It is alleged that the plaintiffs invested in reliance on the undertakings and that if Horwath gave to the plaintiffs the advice or made the representations respectively alleged by the plaintiffs in pars. 7 and 13 of their statement of claim Horwath did so in reliance on the undertakings. It is then alleged, and it is the fact, that the undertakings were broken because Green stole most of the money from the trust account, and that as a result the plaintiffs have suffered loss and damage. Horwath's case is that a solicitor's undertaking is akin to a contractual promise and that as such Horwath can call it up and rely on it in its own behalf to found a 100% liability in Aroni Colman. Such a liability would not be amenable to a plea of contributory negligence and would be in addition to a claim for contribution pursuant to the Wrongs Act. In fact Aroni Colman has not alleged contributory negligence.

267. This is akin to the position which Horwath contends it has always intended to achieve against ABL by medium of the contract of retainer and breach of fiduciary duty. Similarly, Horwath contends that this plea against Aroni Colman was always intended to carry the additional right, or "direct claim", against Aroni Colman. Just as it had not done in relation to ABL nor had Horwath alleged in relation to Aroni Colman that if and to the extent that Horwath is found liable to any plaintiff it will suffer loss and damage caused by Aroni Colman's breach of the undertakings. Hence, Horwath seeks to amend by adding the proposed par. 10A to the pleading.

270. The pleading against Aroni Colman goes on to allege that Aroni Colman owed Horwath and its plaintiff clients a duty of care in tort in relation to the undertakings. No amendment is sought in respect of this plea.

273. The pleading then alleges that in giving the undertakings Aroni Colman made representations to Horwath and its plaintiff clients which were misleading and deceptive by reason of the fact that the scheme was a sham. On this basis Aroni Colman is alleged to be liable under s.11 of the Fair Trading Act 1985. But, again, the only plea of loss and damage is made in relation to the plaintiffs. To overcome the gap Horwath seeks to insert par. 20A to allege that if it is found liable to any plaintiff it will suffer loss and damage caused by Aroni Colman's breach of s.11.

276. The pleading continues with some further pleas to the effect that Aroni Colman was responsible for the misapplication of the funds from its trust account. It then makes some pleas that certain plaintiffs relied upon the advice of Aroni Colman. The statement of claim concludes (in par. 27) with the allegation that by reason of the matters aforesaid Horwath is entitled to contribution and/or indemnity from Aroni Colman pursuant to Part IV of the Wrongs Act.

280. In his affidavit sworn on 25 August (and re-sworn on 20 September) Mr. Hayes stated that for about two weeks before Mr. Maxwell ceased to appear for ABL (the last day being 10 June) he had a number of discussions with Mr. Maxwell about Horwath's claims against ABL. Usually their juniors Mr. Paterson and Mr. Peters were present. Mr. Hayes stated (in summary) that on a number of occasions in these discussions he said words to the effect that although Horwath had a real risk ABL was at risk too "because if we succeed in our direct claims against you, there will be no contributory negligence and your liability may well then be 100% of whatever our liability is". According to Mr. Hayes, Mr. Maxwell typically replied that he understood that but that ABL had a narrow retainer. Mr. Hayes further stated that at no time did either of his opposing counsel say that Horwath had not pleaded or could not make a direct claim against ABL or that there was a problem with Horwath's pleading against ABL. He stated that he understood that his opposing counsel proceeded on the assumption that Horwath was making and could make direct claims against ABL. They had not informed him to the contrary or that a pleading point was to be taken. He further stated that he did not understand from ABL's written or oral openings that any pleading point was being taken by ABL. Mr. Paterson's affidavit supported Mr. Hayes. He stated that at no time prior to reading ABL's written submission had he been told that ABL claimed that Horwath's third party statement of claim did not permit direct claims.

283. The other affidavit evidence is that of Mr. Fogarty which I have sufficiently referred to. He deposed as to his intention to make direct claims and his understanding that they were made against ABL and Aroni Colman. He was not present at the discussions between counsel.

286. When the hearing commenced on 17 September ABL had filed affidavits by Mr. Santamaria and his junior Mr. Peters. The evidence of Mr. Santamaria is in substance as follows. When he was retained he read the pleadings and formed the view that the only relief that Horwath was seeking was relief pursuant to the Wrongs Act. That remained his belief until recent events, meaning Horwath's recent application to amend.

289. Mr Santamaria then referred to par. 5 of the memorandum of Messrs. Hayes and Paterson dated 8 September in which those counsel allege that Messrs. Santamaria and Peters misled the Court by their submissions on 26 August. The misleading was stated to be an implied representation that they had not known that Horwath was seeking to maintain direct claims against ABL, when in truth "their lawyers had known [otherwise] as shown by the affidavits" of Messrs. Hayes and Paterson. The memorandum then suggested that ABL had apparently lain in wait for Horwath to close its pleadings "knowing of the obvious defect brought about by the lacuna between paragraphs 39 and 40, and knowing full well that Horwath thought it was running a direct case". Messrs. Hayes and Paterson then stated that "Horwath has thus been unfairly lulled into a false belief that it was able to run and was running its direct claims", and that ABL misled the Court by not making clear its understanding of Horwath's case. These are heavy and serious allegations.

292. In his affidavit Mr. Santamaria referred to this part of the memorandum and "categorically" denied the allegation that he had misled the Court. He further stated that before making any submissions on Horwath's application on 26 August he read the affidavits in draft of Messrs. Hayes and Paterson and conferred with both Mr. Maxwell and Mr. Peters and on that basis objected to the way Mr. Hayes put his case on that day and further told the Court on that day that the contents of the affidavits were controversial.

295. Mr. Peters has represented ABL throughout the trial. His affidavit is longer but to similar effect insofar as his understanding of Horwath's case is concerned. In summary, he had read the pleadings and his belief until he read Horwath's final submissions against ABL on about 2 August was that Horwath's claims against ABL were solely pursuant to the Wrongs Act. He said that the basis of every claim (that is, of all parties) against ABL was the Wrongs Act. This latter understanding is subject to some qualification in that in the claim by Gaddie Metz and Kahn in proceeding No. 2041 of 1998 (see par 56 above) had made a "direct claim" against ABL in its third party statement of claim. I say "some qualification" because in that instance the notice of claim (to which the statement of claim was indorsed) sought contribution in the terms of s.24(2) of the Wrongs Act thus indicating that that was the basis of the claim. That claim was settled prior to the trial commencing. It may be that Mr. Peters was referring to the claims which were current when the trial commenced. However that may be, the fact is that he deposed as he did both generally and in relation to Horwath's claim, and he was not cross-examined upon his affidavit.

298. Mr. Peters further stated that he did not read Horwath's written opening, in which there is a reference to direct claims, until he was preparing submissions in relation to the amendment application heard on 26 August. Hence he did not appreciate what was stated on that matter. Nor did he understand from anything else that was said at the trial, orally or in writing, including ABL's openings which did not accord with his understanding of the basis of Horwath's claim against ABL.

301. As to the affidavits of Messrs. Hayes and Paterson, Mr Peters stated that in the discussions between counsel he recalled no occasion on which Mr. Hayes referred to Horwath having "direct claims" against ABL. The only exception was in a conversation he had with Mr Hayes on 19 August during the pendency of Horwath's first amendment application and which, for that reason, may be put to one side. Otherwise Mr. Peters recalled one occasion when Mr. Hayes said to Mr. Maxwell words to the effect that "If we win, you will have to indemnify us". He recalled the remark being deflected by Mr. Maxwell and that the conversation moved on. He also recalled saying to Mr. Maxwell that he did not think that a court would order a 100% indemnity pursuant to the Wrongs Act, which he believed to be the basis of Horwath's claim. He further stated that when during the trial he pressed for the Horwath pleadings to be closed he never envisaged that Horwath would claim damages from ABL. The final written submissions of ABL were drawn on the basis of the pleadings as he and Mr. Santamaria understood them and that understanding was that Horwath's only claim was pursuant to the Wrongs Act. He denied making any "sharp" point concerning the pleadings. He did not know what perceptions Horwath's lawyers had about their pleadings. It was not until he read Horwath's final written submission that he realised Horwath thought it had made a claim against ABL for damages. It was shortly after that that he read Horwath's written opening. It is not necessary to refer to the remainder of Mr. Peters' affidavit.

304. In his affidavit Mr. Frawley said that he had read ABL's statements of claim and that as far as he was aware Horwath's only claim was under the Wrongs Act.

307. ABL did not file an affidavit by any of the solicitors who have conducted the litigation on its behalf.

310. That brings me to the affidavit sworn by Mr. Maxwell. He has had no involvement with the matter since 11 June, apart from occasional brief conversations with his successor, Mr. Santamaria, and Mr. Peters. It is evident from his affidavit that for the purpose of giving evidence Mr. Maxwell had reflected upon the matter after considering his records carefully. Mr Maxwell commenced by dealing with how he conducted the case. He stated that as far as his involvement was concerned, ABL's case "was not conducted on the basis that the only case which ABL had to meet was a Wrongs Act claim". He recalled "being aware from the outset that the focus of the Horwath case (however put) was that ABL had breached its contract with Horwath", and he stated that ABL's various answers to the "retainer case" were at the forefront of ABL's opening, which he made.

313. Mr. Maxwell then stated, in effect, that he had read Horwath's written opening and that he had marked the first three sentences of par. 49 where it refers to direct claims (see par. 40 of my 6 September judgment where I quote the first sentence). He then states that he was aware from at least that time that Horwath was contending that ABL was directly liable to it. He did not recall considering at that time whether the assertion of a direct claim in par. 49 was consistent with Horwath's pleading, or whether he was surprised at the assertion.

316. Then, Mr Maxwell states, he conducted the trial by "dealing on a factual basis with the issues of reliance and scope of retainer, for the purpose of cross-examining the various plaintiffs and plaintiffs' witnesses". That, he stated, did not require any consideration of whether the alleged failures on ABL's part would sound in direct liability to Horwath or in a liability to contribute under the Wrongs Act or both.

319. I pause here to observe that what I understand Mr Maxwell to be saying is that he saw what the allegations were in the pleadings and that they focused on the alleged breach of retainer. He set out to meet that case on the facts. That does not necessarily mean that he set out to meet a "direct claim", but that he addressed the factual issues raised in the pleading. Mr Maxwell later read the reference to direct claims in Horwath's written opening, and his awareness of the assertion is not to be gainsaid but, as he indicates, his focus in conducting the trial remained on the relevant facts concerning reliance and scope of retainer and not on any particular point of pleading. I should state that at no time during the trial did Mr Maxwell acknowledge in Court that ABL faced a "direct claim" from Horwath. The approach which Mr Maxwell describes is understandable and just how counsel might be expected to handle a complex case. I add that Mr Maxwell's involvement was in the period when the plaintiffs were in evidence. Mr Lewski also gave evidence in the period when Mr Maxwell was appearing. Mr Maxwell was not concerned with witnesses for Horwath or the third parties as they gave evidence after he retired from the case. Mr Santamaria bore responsibility for those witnesses for ABL.

322. Mr Maxwell then turned to the matter of conversations with Mr Hayes. In conversations about settlement Mr Hayes had said words to the effect that ABL could be up for 100%, but he did not recall Mr Hayes making any reference to a "direct claim" when he made such a statement. In particular he did not recall the assertion being stated by Mr Hayes to be conditional upon Horwath succeeding in its "direct claim" against ABL or on the consequential exclusion of a defence of contributory negligence. Mr Maxwell did not understand the assertions to be based on that premise but rather on what Mr Hayes contended was the extent of ABL's default. At the same time he did recall discussing with Mr Hayes the strength of Horwath's claim that ABL had breached its retainer and of him stating that ABL's case was that its retainer was a limited or narrow one. It is obvious that in their conversations Messrs. Hayes and Maxwell pushed rival views about merits but, according to Mr Maxwell, not about the way the case was pleaded. Mr Maxwell agreed with the statement in Mr Hayes affidavit that in their conversations neither he nor his junior Mr Peters said that Horwath had not pleaded or could not make a direct claim against ABL, or that there was a problem with Horwath's pleading against ABL, or that he had told Mr Hayes or anyone that any pleading point was sought to be taken or that ABL was proceeding on any false assumption as to Horwath having direct claims against it. It is a reasonable inference that in these conversations counsel discussed the "merits" of their clients positions but not the pleadings.

325. I might comment at this stage that on the point whether Mr Hayes referred to "direct claims" there is a consistency in the affidavits of Messrs Maxwell and Peters, in that they do not recall any such reference.

328. Mr Maxwell then dealt with the allegation in par. 5 of the memorandum of Messrs Hayes and Paterson and stated that insofar as it related to the period of his involvement the suggestion that ABL had laid in wait for Horwath to close its pleadings or adopted "an apparently deliberate tactic of taking unfair advantage of an obvious pleading defect" is without foundation.

331. Counsel for Horwath elected not to cross-examine ABL's deponents. Nor were Horwath's deponents cross-examined. Mr McAlary stated that he did not dispute that Mr Hayes and those whom he represents held the view that they were running direct claims; he accepted Mr Hayes' assertion in that regard. But, he submitted, an amendment application is not to be determined upon the basis of different counsel's perceptions of a case. In particular, if the issue is whether a case has been conducted outside the pleadings, the issue is to be determined by the Court on an objective basis and not by having regard to the subjective views of counsel; see Banque Commerciale S.A., en liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 286-287.

334. In similar vein Mr Hayes said that he would "not seek to challenge that the other lawyers had a different understanding of the case", and he accepted "that the other lawyers with whom we were discussing the matter have a different recollection or different understanding". He also said that he did not challenge the bona fides of the other lawyers. While these are not the only statements which Mr Hayes made on the subject they reflect the essence of the approach which he came to adopt.

337. Mr Hayes further accepted that the issue as to the basis on which the parties had conducted the case is to be determined objectively, as Mr McAlary submitted. Accordingly, he submitted, the private thoughts of ABL's lawyers did not matter. Equally, of course, the private thoughts of Horwath's lawyers could not matter. Moving from that position Mr Hayes submitted that considered objectively it was obvious that Horwath always intended to run the direct claims.

340. A matter that concerned me in this respect was how I was to deal with the evidence on the issue whether Mr Hayes had in conversations with Messrs Maxwell and Peters used words to the effect that Horwath was making direct claims against ABL. It may be that Mr Hayes' concessions concerning the state of mind of ABL's counsel mean that it is not necessary to determine what was said in the conversations. Mr Hayes went further and specifically invited me to conclude that in the conversations there was reference to a 100 % indemnity but that it was not possible to conclude whether "the extra thing was said about direct claims". He invited me to conclude that counsel came away from the conversations with different understandings. Mr McAlary's submission is that counsel are to be understood as having had different perceptions of the case. He expressly stated that he did not suggest that Messrs Hayes and Paterson should not be accepted in their evidence of what they remember.

343. If the fact is that Mr Hayes more than once said to Messrs Maxwell and Peters or used words to the effect that Horwath was making direct claims against ABL, that would be relevant objective evidence that Horwath was intending to run such claims, and not merely evidence of an undisclosed intention or perception. It seems to me to be necessary and appropriate that I reach a conclusion on this issue of fact. The position is that there has been no cross-examination and both Mr Maxwell and Mr Peters have sworn to having no recollection of Mr Hayes having used words to the effect that Horwath had "direct claims" against ABL. I conclude on the evidence that whatever Mr Hayes said in his conversations with Messrs Maxwell and Peters was not said with sufficient clarity of expression to bring to their attention that Horwath was making or intending to make direct claims against ABL. That means that the evidence of Messrs Hayes and Paterson that words were used to the effect mentioned is not established as a fact to be considered in objectively determining whether the case was conducted outside the pleadings.

346. I turn from this to another matter which Mr Hayes referred to in aid of a submission that ABL had misled me on 26 August. This concerned a statement by Mr Peters during the hearing on 17 August (at transcript 5365) that in its oral opening ABL pointed out at some length that the only claims pleaded against it were claims for contribution pursuant to the Wrongs Act. That statement was not repeated or relied upon in ABL's submissions on 26 August. Yet I was aware of it when I prepared my 6 September judgment and appreciated that it was an over-statement. I placed no reliance upon it and saw no reason to mention it. In that judgment I considered all the events and matters which occurred in the trial that were relevant to the application to amend. The statement in question occurred subsequent to the relevant events, and was evidently made by counsel before there had been sufficient time to reflect on Horwath's application.

Application To Amend The Jefferson Ford Summons

350. ABL did not oppose Horwath's application to amend its summons in the Jefferson Ford case. The amendments substitute a new par. 1 and omit par. 3. The fact is that the present par's 1 and 3 are not appropriate and were properly abandoned. The further written submission of counsel for the former partners of Aroni Colman other than Mr Wollan dated 28 September states that the amendments are not consented to. In my view the amendments are appropriate and I will grant leave to amend the summons accordingly. That ensures that the applications which Horwath wishes to raise are actually dealt with on their merits. In the discussion that follows I deal with the summons as amended.

354. I now deal with the summons in the Edingbay case. Paragraph 1 seeks an order against ABL pursuant to O.59.01 for damages in respect of any liability which Horwath has to any plaintiff. I have already mentioned that Mr Hayes abandoned this application. Accordingly, I do not consider it further. Paragraphs 2 and 4 seek respectively the amendments to the statement of claim against ABL and Aroni Colman mentioned above. Paragraph 3 seeks an order that the order made on 6 September refusing Horwath's application to amend be set aside. In fact that order had been authenticated by the time Horwath made the present applications to amend. That being the situation, my view is that if Horwath wishes to have the order set aside it should apply to the Court of Appeal for leave to appeal from my judgment and order.

357. I turn then to the applications for leave to amend the statement of claim. I can say at once that I adhere to the view I expressed in my judgment of 6 September that the amendments are necessary to make the "direct claims" which Horwath intends to make against ABL and Aroni Colman. Without the amendments the causes of action are not pleaded. This is conceded by counsel for Horwath who have used expressions such as error, lacuna and mistake to describe what they call the gap in their pleading which the amendments are designed to overcome. I repeat too that during the trial it was clear to all participants that the case was being conducted and would be determined on the pleadings. In the absence of a clear understanding to the contrary I can think of no other way that litigation as complex and massive as this could be conducted satisfactorily and without a risk of procedural unfairness; see Bank Commerciale at 286-287.

360. The function of a pleading is to inform the opposite party and the Court of the nature of the claim by stating the material facts on which the party relies to constitute the cause of action. A party may also raise a point of law and plead a conclusion of law if the material facts supporting it are pleaded; see O.13.02 of the Rules. The pleader should, in addition to observing the other requirements of the Rules, approach the task with common sense and remembering the surprise rule so as to ensure that the pleadings have satisfactorily defined the issues.

363. The process begins with the legal practitioner who draws the statement of claim. In this case it was the responsibility of Horwath's counsel to ensure that their pleading contained the claim or claims to be made on behalf of their client. The next stage in the process was for those representing the opposite party or parties to plead their client's defence to the claim thus brought. All this is obvious but it seems necessary to state it having regard to some of Horwath's submissions with which I now deal.

366. These are the submissions that expressly or inferentially sought to place a measure of responsibility for the state of Horwath's pleading on the legal practitioners for ABL and Aroni Colman. It seemed to be said that the legal practitioners on the opposite side should have alerted Horwath's lawyers to the fact that they had not pleaded a direct claim, or that there was a defect in their pleading in that respect, or to have told them that a point may be taken about their pleading in that respect, or that ABL was proceeding on an assumption that Horwath was not making a direct claim; see par. 5 of Mr Haye's affidavit of 20 September. I may not have stated every respect in which the submission was put but I have done so sufficiently to indicate this aspect of the submissions of Horwath's counsel.

369. It will be recalled that Horwath's counsel also contended that ABL's counsel had lain in wait, and had lulled Horwath into a false belief that it was able to and was running its direct claim; see for instance par. 5 of counsel's memorandum dated 8 September. I have already mentioned that Mr Hayes withdrew any attack on the bona fides or honesty of ABL's counsel and invited me to determine the applications on the basis that the rival counsel had different understandings of the case. I take Horwath's position to be the same in relation to counsel who appeared for the former partners of Aroni Colman other than Mr Wollan. This erodes if not eliminates the premise of Horwath's contention which is that counsel for ABL, and Aroni Colman, were aware that Horwath was running direct claims. This ought, along with what the earlier discussion, be sufficient to reject these allegations as unfounded.

372. This criticism of counsel confused and in my view misapprehended the position and responsibilities of counsel under our system of adversary litigation. It is a system under which a legal practitioner is required by virtue of his or her retainer and subject to the duties owed to the client and the court, to do his or her best for the client and accept responsibility for his or her conduct of a case in doing so. Counsel for one party cannot transfer responsibility for his or her pleading onto counsel for an opposite party. In my view there was a significant element of that in Horwath's submissions on these applications. The fact is that responsibility for the shortcomings in Horwath's pleading, and in the relevant paperwork in the Jefferson Ford case, lay with Horwath's counsel, and their instructing solicitors. If they had been vigilant to the proper performance of the pleading task that was upon them the errors and omissions which they now seek to correct would not have occurred.

375. Taking Horwath's submission to its logical conclusion, it seemed to involve the proposition that ABL's counsel should have informed Horwath's counsel that if in truth they wished to plead direct claims they should make amendments to their statement of claim to do so. These comments would also seem to run against Aroni Colman. This seems to me to be a new concept. It is a concept that involves opposite counsel being under some sort of obligation to read the pleadings of opposing counsel, to discern what the draftsman of that pleading might have intended and to advise that counsel of errors and omissions in the pleading and to how to perfect the pleading against his or her client. It would seem also to extend to verbal statements of counsel about his or her case. We are not here talking about an attack by a party on the pleading of the opposite party on the basis of a pleading defect or because a claim is considered to be hopeless, for instance; they are other matters and not the situation under discussion.

378. Furthermore, Horwath accepts the word of Messrs Santamaria and Peters that they understood Horwath's claim to be under the Wrongs Act. When one adds to this the fact that Mr Hayes did not state in language of sufficient clarity in his conversation with Mr Peters (and Mr Maxwell) that Horwath was bringing direct claims, and that no such conversation is alleged concerning Aroni Colman, the basis of these submissions falls to the ground.

381. In the end Horwath's submission seemed principally if not completely to rely upon the evidence of Mr Maxwell. Reliance was placed on Mr Maxwell's awareness of the statements about direct claims in Horwath's written opening and his evidence that he conducted the case not merely on the basis of the Wrongs Act claim but on the basis that he had to meet the claim that ABL had breached its contract with Horwath. I have already discussed the meaning and effect of these parts of his affidavit and do not repeat that discussion.

384. Horwath had the conduct of its pleadings, not Mr Maxwell who was responsible for ABL's interests in multi-million dollar litigation. If Horwath had sought leave to amend its statement of claim as it now seeks to do when Mr Maxwell was appearing he must have sought instructions whether to oppose or consent to the amendment. Looking back at the matter now it seems to me that it could not have been said that Mr Maxwell had conducted the case in such a way as to preclude ABL from objecting to such an application. Whether the application would have been granted is a different matter. The point that I am making is that Mr Maxwell's evidence does not provide a foundation for a submission that he came under some sort of obligation to advise Horwath as to its pleading. Special situations aside and dealing only with the facts of this case, Mr Maxwell came under no such obligation by reason of his awareness of the matters pleaded against ABL and by reason of having read par. 49 of Horwath's written opening. Indeed, as he stated, he does not even recall considering whether the assertion of a direct claim was consistent with the pleading.

387. For these reasons the attack on ABL's counsel and in particular the attempt by Horwath's lawyers to place a burden of responsibility for the state of their pleading upon the lawyers for ABL, and Aroni Colman it would seem, wholly fails.

390. Horwath made a further submission based in part upon the evidence of Mr Maxwell. It was submitted that the knowledge that he acquired of Horwath's intention to make direct claims was and became the knowledge of ABL and was to be aggregated with the knowledge of the other counsel and solicitors for ABL and, when put together, it became clear that ABL knew that its written and oral submissions on 26 August were false and misleading on the point as to ABL's understanding of Horwath's case. It was submitted that ABL's failure to correct those submissions in the light of Mr Maxwell's affidavit was further evidence of its intent and state of mind. It was further submitted that ABL's failure to file affidavit material to explain the terms of those submissions or to support the prejudice alleged therein also leads to that conclusion. This submission was made under the heading of Fraud in Horwath's written submission dated 21 September, and was described as such by Mr Hayes. It should be said that in his oral submissions on this aspect Mr Hayes said that this submission of fraud did not mean that any one or more of the lawyers was individually fraudulent or had a subjective intention to mislead. But, he said, it was another thing when you aggregate the knowledge.

393. The purpose of the submission was to meet ABL's abuse of process submission. That is, a second application may be justified if the first was defeated by reason of the fraud of the opposite party.

396. It was submitted that I should conclude on the probabilities that ABL at all times knew that Horwath was maintaining direct claims and had acquiesced in Horwath doing so. That was said to be established by a number of matters. Insofar as the matters were overt and occurred during the trial I dealt with them in my 6 September judgment in identifying the indicators one way or another which might establish the basis on which the case was conducted. I will not go through them again. I concluded that considering the matter objectively in all of the circumstances ABL was entitled to take the view that the claim it had to meet was that expressed in the statement of claim.

399. In his submissions Mr McAlary made a point which also went to the role of counsel under our adversary system. That was that counsel under our system make submissions and do not state personal views. He submitted that in their submissions counsel for Horwath fell into the error, in seeking to establish that I had been misled by ABL on 26 August, of treating the submissions of ABL's counsel on that day as though they were assertions of fact. Those submissions on that day were subjected by Mr Hayes to analysis almost as though they were representations made by a party in a pre-contractual negotiation. I reject the submission that on 26 August ABL's counsel made submissions (written or oral) that were false or misleading or which might be described as a fraud on the Court. I have no reason to doubt that ABL's counsel addressed submissions which in their opinion as counsel were open and proper to make. This further attack upon counsel is rejected at the threshold, just as the other attacks have been. I am not prepared to bless the attack with further discussion.

402. It is not disputed that Horwath have intended to raise the direct claims against ABL and Aroni Colman. It is also clear that the pleading requires amendment to enable the claims to be raised for determination in the proceeding. If my personal convenience, in particular in wanting to be able to conclude by responsibilities in the litigation by providing a final judgment, and the desire of the other parties for finality, was to prevail I would refuse the present applications. I am, however, even at this late stage following final addresses, required to consider whether in the interests of justice the principle of fundamental importance that a case be determined on the real issues in controversy requires that the amendments be permitted. That is of course provided that any prejudice to ABL and Aroni Colman can be met by an order for costs or otherwise.

405. The position I am now in, in considering the present applications, is somewhat different in terms of the information before me than it was on the previous application. I have affidavit evidence whereas previously I had none. I have the ABL terms of settlement whereas previously I did not know what the terms provided. I have a different set of submissions from counsel for ABL and a more refined statement of the prejudice to them if the amendment is granted. These matters also emphasise an area in which I do not have evidence from ABL on the matter of prejudice, and that is from the solicitors conducting the litigation as to, for instance, steps taken and commitments undertaken on the basis that Horwath's claim was only made pursuant to the Wrongs Act, a lack of awareness of a direct claim, as to irreparable harm that would be suffered if the amendment was permitted, and why a counterclaim (as now foreshadowed) had not previously been brought. These comments relate to the position of ABL. I refer to the submissions of Aroni Colman below.

408. For their part Horwath's counsel undertook to recall such of their witnesses as ABL or Aroni Colman might wish to further examine if the amendments are granted.

411. In my 6 September judgment I dealt with what ABL had submitted were areas of possible prejudice. I accepted that there was prejudice in ABL not having alleged contributory negligence and in having entered into settlements with other parties. There was also the factor that the trial had been had and decisions had been made along the way. I have perused the terms of settlement which ABL entered into in the Edingbay and Jefferson Ford cases and which were provided to me during the hearing. None of them provide for the payment of money by or to ABL. With the exception of the settlement with the two non-equity partners of Aroni Colman the settlements were made after Horwath's first opening on 6 May the fourth day of the trial in which direct claims were mentioned in the written opening. Between that date and the date of Horwath's second oral opening on 22 June the 32nd day of the trial (when the point as to direct claims was made again) ABL settled with two other parties, Victorian Lawyers RPA Ltd and the National Australia Bank Ltd, or at least orders disposing of the relevant claims were made prior to that date. Settlements with some other parties were subsequent to that date. But all settlements were to the same effect, that no money changed hands and the parties bore their own costs. The reason for mentioning these dates is that on them Horwath provided a statement that they made direct claims. It was not in the pleading but the statement was made. Finally, on this aspect of settlements, I note that in ABL's written submissions dated 28 September there is reference to ABL having entered into terms of settlement with Aroni Colman on 25 June 1999 and that these terms would preclude ABL from seeking contribution from Aroni Colman in relation to the direct claims. The entry into these terms was relied upon as establishing prejudice. These terms are not among the terms provided to me and I have no evidence as to them. I otherwise draw attention to the fact that they were entered into after the provision of Horwath's written opening and the making of its second oral opening. I have no evidence as to the awareness of ABL's solicitors of these openings and why ABL entered into terms of settlement to the effect alleged.

414. In light of this there is significance in that fact that ABL put in no evidence, beyond the mere provision of the terms of settlement, as to why it entered into the settlements and in particular whether the terms were entered into in reliance on the pleadings as they then stood, or with an ignorance of the "direct claims", or the possibility thereof, or as to prejudice if the amendments be granted. It is important in this respect to recall the statement of Staughton LJ in Hancock Shipping Co v Kawasaki Ltd [1992] 3 All ER 132 at 138, where his Lordship, in discussing the burden of proof on an amendment application, stated that:

"the party making the application cannot be expected to adduce evidence on all points which might conceivably affect the justice of the case. He must undertake the task of establishing the factors which he relies on as relevant; his opponent in turn may say that there are other relevant factors pointing in the other direction - and those are for him to prove."

418. This is also pertinent to the issue of prejudice as a result of ABL not having pleaded contributory negligence, as it could not do in the absence of the pleading now sought to be introduced. I have no evidence of prejudice to the ability to run a plea of contributory negligence if the amendment is permitted. Nor do I have evidence that the plea will be made if the amendment is permitted. In this latter respect Horwath points to the fact that in its defence to the Gaddie Metz and Kahn direct claim in proceeding No. 2041 of 1998 ABL did not plead contributory negligence. That defence is dated 4 December 1998. Horwath relies on that defence to support its submission that if ABL truly wished to allege contributory negligence it would have done so in the other case, and that the absence of the plea indicates that it determined not to run that defence. I have no explanation why ABL did not make the plea in that case, but its failure to do so is some indication although not at all conclusive, that it may not be taken if the amendments are permitted. The simple fact is that I have no evidence of ABL's intention in this regard.

421. I was told this time, more strongly than I had been by Mr Santamaria on 26 August, that ABL will cross-claim if the amendment is permitted. That was outlined as being on the basis of misleading and deceptive conduct by Horwath or some other basis involving Horwath, as to which it was obvious that thought had to be given. As mentioned already, I have no evidence as to why any such cross-claim was not brought previously. In the circumstances I do not consider that the possibility that ABL now seek to cross-claim against Horwath is a factor that to any significant degree should militate against granting the amendment.

424. I do not think I am doing an injustice to the submissions of counsel for ABL to say that in essence their submission on prejudice was that having reached the end of final addresses in this long and complex trial which had been conducted on the pleadings, one cannot now re-open the case without prejudice being suffered. It is implicit, as it were. I referred to prejudice of this type in my 6 September judgment (see par. 74). Having previously referred to this sort of prejudice, and considered it to be a factor of substance, and noting the further reliance on it, I take it into account.

427. On balance, having considered the applications as presented, I conclude that in the interests of justice the amendment against ABL should be permitted. A factor inclining me to this view is that in my estimation the likelihood is that the amendment will not lead to any further substantial body of evidence, whether from witnesses who will be re-called or other persons. I note that neither ABL nor Aroni Colman essayed any evidence on this point. The evidence given thus far is most comprehensive. Another factor is that, permitting the amendment avoids any risk if the amendment is refused that on appeal hereafter it might be said that the amendment should have been permitted and of the case being returned for further trial. That could cause a far greater prejudice than the prejudice of delay and extra costs that might be occasioned by permitting the amendment and getting the trial over and done with once and for all. Another factor is that, as the evidence of Mr Maxwell so clearly demonstrates, evidence of Horwath's intention to run direct claims was before ABL on and from the fourth day of the trial when the parties were making their opening statements. It was not Horwath's fault if the written opening was not read by ABL's counsel other than Mr Maxwell. I have no evidence from ABL's solicitors as to their state of awareness of Horwath's case in this regard.

430. I am also of the view that if and to the extent that ABL raises a defence of contributory negligence or even a cross-claim as foreshadowed, the conclusions I have stated will apply. That is, so much evidence has been given already on the areas of factual dispute that in my estimation the possibility of such pleas will not add to the trial any significant extra body of evidence or time. I also take account of the possibility of such pleas in concluding as I do that in the interests of justice the amendment should be permitted. Further I see no prejudice to the ability to fairly and adequately deal with such points as may now be desired to be raised, and be permitted, by reason of the stage that has now been reached and what has gone before.

433. For these reasons, in the Edingbay case I will make an order against ABL as sought by par. 2 in the summons. In the Jefferson Ford case I will make an order to the effect of par. 1 of the summons as amended. That order will also allow for the notice itself to be amended to bring it into proper form and rid it of inappropriate terminology. The order in par. 2 of that summons will not be made.

436. I now turn to the application against Aroni Colman. The relevant orders are those sought by par. 4 in the summons in the Edingbay case and par. 1 in the amended summons in the Jefferson Ford case.

439. Horwath's position here also is that it always intended to make direct claims against Aroni Colman, that by mistake it did not properly plead those claims, that in its written opening it referred to having such claims against Aroni Colman, that a fair reading of the pleading would have indicated that the omission of pleas that Horwath suffered loss and damage as a result of Aroni Colman's breach of the undertakings or contravention of the Fair Trading Act was an oversight, and that the amendments were merely to complete what was already there. I have already discussed the structure of the pleading against Aroni Colman.

442. Conversely, in the written submissions for final address of counsel for the former partners of Aroni Colman other than Mr Wollan (who supported counsel's submissions) it was stated that Horwath's claim against Aroni Colman was for contribution pursuant to the Wrongs Act.

445. As I have mentioned, Aroni Colman filed no evidence on these applications. Their participation was limited to some succinct written submissions which were provided to my Associate by counsel for the former partners other than Mr Wollan for my consideration. Mr Wollan made no submission at all. It follows that apart from what is stated in those written submissions I have no actual evidence from the legal practitioners or any of the former partners as to the basis on which the case was conducted or as to prejudice or otherwise.

448. Counsel's written submission relied on the fact that the litigation was conducted on the pleadings, as all parties understood, and on the fact that Horwath amended the statement of claim several times but always pleaded the case against Aroni Colman as one for contribution. He submitted that the onus was on Horwath to establish that no party would suffer prejudice if the amendment is granted. That submission is too absolute in its terms, as the judgment of Staughton LJ in Hancock Shipping demonstrates.

451. Proceeding on, counsel identified the following areas as those in which prejudice to Aroni Colman may be found: the direct claim was a profound and not a minor change; in the period prior to and during the trial Aroni Colman had resolved third party and contribution claims with numerous parties including Aroni Colman's own third party claim against Horwath, and with ABL, Titchener, Victorian Lawyers RPA, Gaddie Metz and Kahn, and all plaintiffs; Aroni Colman had limited resources and made decisions accordingly as to how best to present a case - it was not present during Horwath's case; only two of the Aroni Colman partners gave evidence; one does not now know what decisions would have been made if the direct claims had been in the pleading; there has to be finality in litigation; and Aroni Colman is financially disadvantaged as compared to Horwath.

454. It was further submitted that if the amendment is granted Aroni Colman will want the opportunity to consider their position and in particular what additional defences may be open to them. It is axiomatic that they would have that opportunity.

457. In addition a premise of the granting of an amendment is that Horwath will, as Mr Hayes undertook, recall any witness who is required for further examination by ABL or Aroni Colman.

460. Finally, it was stated that Aroni Colman had discontinued their third party claim against Horwath "in the main Edingbay proceeding at a time when the only claim by Horwath against them was a claim for contribution under the Wrongs Act". The amendment raises a new basis of liability. Hence if the amendment is allowed counsel stated that Aroni Colman would require time to consider whether it should apply to re-instate its claim against Horwath in the Edingbay proceeding.

463. Several things may be said about this submission. The first is that Aroni Colman must be allowed a period of time that is reasonable. Secondly, I take the reference to "the main Edingbay proceeding" to be to the proceeding No. 2041 of 1998 and not the Edingbay case in which the amendment is sought. The relationship between the two proceedings and the issues in the Edingbay and Jefferson Ford cases with which I am now concerned is not explained. Thirdly, I take the discontinuance to have been made pursuant to some resolution but no terms of settlement were placed before me. Nor do I know when that particular resolution occurred. For that matter, I know very little as to when Aroni Colman achieved resolution with the other parties mentioned. Having perused the terms of settlement provided to me in the trial, I note that the only terms I have which involve Aroni Colman are a set of terms with the Jefferson Ford plaintiffs and a set of terms with the plaintiffs in proceeding No. 2041 of 1998 and the plaintiffs in two other proceedings and the National Australia Bank Ltd, each set of terms being dated 21 June 1999. It would be relevant to know for instance whether the resolution with Horwath was prior to or following the provision by Horwath of its written opening on 6 May, the fourth day of the trial (see par. 40 of my 6 September judgement). Considerations such as these underline the proposition so succinctly made in Hancock Shipping that one can arrive at a point at which it is for the respondent to an amendment application to provide evidence to establish the prejudice upon which it relies.

466. Aroni Colman's participation at the trial was minimal. I venture the view, based on my observations and experience of the trial, that the probability is that it's participation would have been no greater if the direct claims had been made. In this respect a factor that may be considered is that Horwath's written opening provided as early as 6 May and prior to the time when Aroni Colman opened its case, clearly stated that Aroni Colman was liable under direct claims. I do not overlook the express statements of myself and counsel as to the case being determined on the pleadings but the statements in the written opening were clear and there to be read. Aroni Colman's submission on the present applications ignores them. For all I know they had been read and noted, but I have no evidence as to this.

469. The several points relied on for Aroni Colman have to be weighed in the balance with the principle that to the extent that the interests of justice may permit a case should be decided on the real issues in controversy between the parties. A relevant factor is that if the amendments concerning ABL are permitted there will be a re-opening of the trial to an extent that will be determined. There may be further evidence. It may be that there will be no further evidence at all. That would not surprise me. I take the possibility that there may be further evidence into account, together with the matters of further delay, such as it may be, and costs. I conclude that justice requires that the amendments be permitted. It is axiomatic that the costs of the application and any costs thrown away must be paid by Horwath.

472. In arriving at this conclusion I have considered all that has been urged on behalf of Aroni Colman. Also, as the trial judge who thought that the trial had concluded and that a judgment could be prepared, the conclusion is unsatisfactory, just as it is for the other parties who want a result in the litigation. What is necessary however, is that the case between Horwath and Aroni Colman be decided on the issues which the parties, in this instance Horwath, intended be the basis of decision. I accept that Horwath intended to bring these direct claims and that the failure to properly plead its case is attributable to the mistake of its legal practitioners. One should not perhaps ignore a factor mentioned by Horwath's counsel to the effect that in the context of the trial of this litigation a procedural mistake or two should not be considered surprising. The trial came on quickly, it was complex in terms of procedure, evidence and substantive law, there were multiple parties and proceedings, the parties in particular Horwath had to conduct the case on many fronts and the trial moved "with great dispatch". Yet, for all that, of all the parties it is only Horwath that has got itself into a mess with its pleadings. However, on an amendment application there is no element of punishing a party for its mistake or delay in seeking the amendment, as I noted in concluding my 6 September judgment.

475. In concluding as I do I am of the view that the trial can be re-opened to the extent that may be necessary without irreparable prejudice being suffered by Aroni Colman. It seems to me that to the extent, if at all, there will be any additional evidence it is likely to be of relatively short compass, as the evidence thus far given has dealt at great length with the areas of factual dispute. The extent to which, if at all, Aroni Colman participates in any further hearing will be a matter for the former partners, just as it has been in the past.

479. Subject to any submissions which counsel may wish to make the following orders will be made.

482. In the Edingbay case it will be ordered that the defendant have leave to amend its Third Amended Third Party Statement of Claim in the terms sought in par's 2 and 4 of the summons dated 9 September 1999, that the statement of claim amended as aforesaid be filed and served by 4:00p.m. on 20 October 1999, that the first to sixth and ninth third parties file and serve a defence to the said amended statement of claim by 4:00 p.m. on 27 October 1999, that the defendant file and serve any reply thereto by 4:00 p.m. on 29 October 1999, that the further hearing of the proceeding be adjourned to 10:00 a.m. on 3 November 1999, that the summons of the ninth third party dated 15 September 1999 be struck out, and that the costs of the first to sixth and the ninth third parties of and incidental to the application by the said summons including reserved costs if any and costs thrown away by reason of the amendments be paid by the defendant.

485. In the Jefferson Ford case it will be ordered that the third defendant have leave to amend the summons dated 9 September 1999 by substituting for par. 1 thereof a paragraph in terms of par. 1 in the Proposed Amended Summons provided to the Court on 24 Sep 1999 and by deleting par. 3 from the said summons, that the said summons amended as aforesaid be filed and served by 4:00 p.m. on 20 October 1999, that the third defendant have general leave to amend its Notice Claiming Contribution and Indemnity against the first defendant and the like Notice against the third third party and have leave to indorse on the said Notice as amended pursuant to such leave a statement of claim in the terms of the statement of claim provided to the Court on 24 September 1999, that such amended Notice indorsed with a statement of claim as aforesaid be filed and served by 4:00 p.m. on 20 October 1999, that the first defendant and the third third party file and serve a defence to the said statement of claim by 4:00 p.m. on 27 October 1999, that the third defendant file and serve any reply thereto by 4:00 p.m. on 29 October 1999, that the further hearing of the proceeding be adjourned to 10:00 a.m. on 3 November 1999, that the summons of the third third party dated 15 September 1999 be struck out, and that the costs of the first defendant and the third third party of and incidental to the application by the said summons including the costs of and incidental to the application to amend the said summons and reserved costs if any and costs thrown away by reason of the amendments be paid by the third defendant.