Ingot Capital Investments Pty Ltd & Ors v Macquarie Equity Capital Markets Ltd & Ors

BPM Pty Ltd v HPM Pty Ltd (1996) 14 ACLC 857; Emanuel v Australian Securities Commission (1997) 188 CLR 114; Home Corp Projects (No 100) Pty Ltd v Austrralian Home Mortgage Corp Pty Ltd [2001] NSWSC 701; (2001) 19 ACLC 1491; Humber & Co v John Griffiths Cycle Co (1901) 85 LT 141; CASES CITED: Jackamarra v Krakouer (1998) 195 CLR 516; Marshall v Proteus Solutions Ltd (in liq) [2006] NSWSC 994; King v Yurisich [2006] FCA 1368; [2006] 59 ACSR 598; Oceanic Life Ltd v Insurance & Retirement Planning Services Pty Ltd (in liq)(1993) 11 ACSR 516; Skinner v Jeogla Pty Ltd [2001] NSWCA 15.

(Parties on appliation for extension of time) PARTIES: New Cap Reinsurance Corporation Ltd (in liquidation) - Claimant The Guy Carpenter parties - Opponents

COUNSEL: L McCallum & D L Cook - Claimant M Pembroke SC & L Menzies - Opponents

SOLICITORS: Henry Davis York - Claimant TressCox - Opponents

LOWER COURT JURISDICTION: Supreme Court

LOWER COURT DATE OF DECISION: 30 March 2007

LOWER COURT MEDIUM NEUTRAL CITATION: Ingot Capital Investments & Ors v Macquarie Equity Capital Markets & Ors (No 6) [2007] NSWSC 124

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40249/07 SC 50169/01

Tuesday 27 November 2007 INGOT CAPITAL INVESTMENTS PTY LTD & ORS v MACQUARIE EQUITY CAPITAL MARKETS LTD & ORS Judgment 1 HIS HONOUR: The Guy Carpenter parties oppose the filing of a cross-appeal against them by NCRA. For the reasons which follow, the cross-appeal may not be filed.

A simplified background 2 NCRH was a listed public company carrying on the business of reinsurance. NCRA was the subsidiary through which it carried on business in Australia. 3 NCRH made a converting notes issue. The Ingot parties acquired rights, notes and shares in NCRH. When NCRH failed, they sued to recover their losses from those connected with the issue. 4 The defendants included the Macquarie parties, which provided corporate advice and acted as broker to the issue and had a representative as a member of the Due Diligence Committee for the issue ("the DDC"); PwC, which provided accounting and taxation advice and had representatives as members of the DDC; and Trowbridge, which provided actuarial services to NCRH including an actuarial report which was reproduced in short form in the prospectus for the issue. 5 The claims against these and a host of other defendants were put in many ways. One way was the allegation that the balance sheet as at 30 June 1998 in the prospectus was misleading because it included the benefit of a retrocession of certain liabilities by NCRA to a Cologne Re company purportedly to have effect from 1 January 1998, but not the burden of a retrocession by a Cologne Re company of certain liabilities to NCRA purportedly to have effect from 1 January 1999 which was arranged at the same time. The composite transaction was arranged in September 1998. It became referred to as the GCR transaction, and the two retrocessions as the first leg and the second leg of the transaction. 6 The various defendants brought cross-claims against each other, generally for contribution but in some cases alleging independent causes of action. As well, the Macquarie parties, PwC and Trowbridge each cross-claimed against NCRA. 7 The PwC cross-claim against NCRA alleged, in short, that NCRA by its directors and chief financial officer represented that the draft prospectus was not false or misleading and had no material omission, and that the representation was false in a number of respects. Amongst them was that the second leg of the GCR transaction had not been included in the balance sheet. PwC claimed contribution from NCRA as joint wrongdoer and damages on causes of action based on the false representation. The losses for which the damages compensated were any amounts for which PwC might be liable to the Ingot parties or a cross-claimant. The cross-claims of Macquarie parties and Trowbridge against NCRA were not before me, but I assume they were to the same effect. 8 NCRA had gone into liquidation. Following an opposed application, on 29 April 2004 Bergin J granted to the Macquarie parties leave pursuant to s 500 of the Corporations Law to "proceed against [NCRA] in the terms of the draft 29th cross-claim". NCRA thereafter consented to leave to proceed being granted to PwC and Trowbridge. The other grants of leave to proceed were of leave "to proceed by way of cross-claim in these proceedings against [NCRA]". 9 NCRA cross-claimed in turn against its directors and chief financial officer and against the Guy Carpenter parties (the thirty-sixth and thirty-third cross-claims respectively - this was no ordinary litigation). The Guy Carpenter parties had brokered the GCR transaction. The cross-claim against them alleged that in arranging the GCR transaction they knowingly participated in a dishonest and fraudulent design of NCRA's directors and chief financial officer to falsify the 30 June 1998 accounts, or alternatively were involved in the contravention in that respect by the directors and the chief financial officer of ss 232(2) and (4) of the Corporations Law. The Guy Carpenter parties were not otherwise joined in the proceedings. 10 In its cross-claim against the Guy Carpenter parties NCRA claimed "compensation including equitable compensation". It did not claim contribution from them as joint wrongdoers. The cross-claim against NCRA's directors and chief financial officer was on additional causes of action and included a claim to contribution as joint wrongdoers, but in relation to the dishonest and fraudulent design and breach of director's duties and the GCR transaction claimed the same compensation. An understanding of the losses for which compensation was claimed is important to the dispute between NCRA and the Guy Carpenter parties over filing the cross-appeal. 11 Doing one's best with the turgid framing of the cross-claims, losses of two kinds were suffered on different allegations of causation. One allegation of causation was to the effect that but for the arrangement of the GCR transaction the issue would not have gone ahead and NCRA would not have been sued by the Macquarie parties, PwC and Trowbridge; the losses were any amounts for which NCRA might be liable to the Macquarie parties, PwC or Trowbridge ("the reimbursement losses"). The other allegation of causation was to the effect that but for the arrangement of the GCR transaction NCRA would have gone into run-off in September 1998 and would not have suffered trading losses and incurred various expenses after that time; the losses were the amounts of the trading losses and expenses ("the trading losses"). It may be that the reimbursement losses were claimable as a consequence of NCRA going into run-off, on the basis that the issue would then not have gone ahead, but the reverse would not apply. 12 The Ingot parties came to a compromise with Trowbridge, but it remained in the proceedings as a cross-defendant and cross-claimant. The trial judge found against all other claims of the Ingot parties. As to the GCR transaction, the judge held that the benefit of the first leg should not have been brought to account as at 30 June 1998, but that a prudential margin in the accounts had been increased to offset the benefit of the first leg so that the balance sheet was not materially misleading. 13 Since none of the Macquarie parties, PwC and Trowbridge was held liable to the Ingot parties, his Honour dismissed their cross-claims against NCRA without dealing with the merits of the cross-claims. He did, however, deal on their merits with NCRA's cross-claims against its directors and chief financial officer and against the Guy Carpenter parties, no doubt because the compensation claimed was not only for the reimbursement losses but also for the trading losses. He dismissed the cross claims: Ingot Capital Investments & Ors v Macquarie Equity Capital Markets & Ors (No 6) [2007] NSWSC 124 at [1345]-[1464]. 14 The Ingot parties filed a holding appeal on 26 April 2007 and a notice of appeal with appointment on 26 July 2007. Each of the Macquarie parties, PwC and Trowbridge filed holding cross-appeals against, amongst others, NCRA, on dates in May 2007, and notices of cross-appeal with appointment on dates in August 2007. Since their cross-claims had been dismissed consequentially upon the failure of the claims of the Ingot parties and without dealing with their merits, the cross-appeals were protective and the grounds of appeal were uninformative. The Macquarie parties' cross-appeal stated as the ground of cross-appeal that if the Ingot parties or any cross-appellant against the Macquarie parties succeeded, the trial judge "erred in dismissing" the Macquarie parties' cross-claims, and did not elaborate. The other cross-appeals were to the same effect. 15 These cross-appeals, to which as I have indicated NCRA was one of a number of cross-respondents, were filed without grants of leave to proceed against NCRA additional to those granted in the middle of 2004. By a notice of motion filed on 22 August 2007 NCRA applied to have the cross-appeals against it set aside on the ground that further leave to proceed was necessary and had not been granted. By a notice of motion filed on 27 August 2007 the Macquarie parties, while maintaining that further leave to proceed was not necessary, applied for leave to proceed if it was necessary. PwC and Trowbridge did not formally apply for leave to proceed, as I understand it because it was considered that the fate of the Macquarie parties' application would resolve the position. 16 Eventually these parties came to an agreement whereby NCRA consented to the grant of leave to proceed on the cross-appeals of the Macquarie parties, PwC and Trowbridge, and those parties consented to an extension of time for NCRA further to cross-appeal against them. On 5 November 2007 orders were made accordingly, as to leave to proceed by granting "leave, to the extent leave be necessary … to proceed by way of cross-appeal in these proceedings against NCRA". Whether further leave to proceed was necessary was not decided. 17 NCRA wished to cross-appeal, again protectively, against the Guy Carpenter parties. Its notice of motion filed on 22 August 2007 had been amended to seek an order that the time for filing NCRA's cross-appeals be extended to "14 days after the determination of this notice of motion", and the consent orders on 5 November 2007 provided for extension of time as between NCRA and the Macquarie parties, PwC and Trowbridge. The Guy Carpenter parties opposed extension of the time for filing NCRA's cross-appeal against them.

Is an extension of time necessary? 18 Under Pt 51 r 18 (2)(b) of the Supreme Court Rules a respondent has 14 days from "service … of a notice of appeal with or without appointment" within which to file and serve a notice of cross-appeal. NCRA was a cross-respondent, but the rule applied to it as if a respondent. In applying for an extension of time, NCRA accepted that the 14 days had expired. 19 For reasons to which I will come, the issue between NCRA and the Guy Carpenter parties was not truly one of extension of time. However, on the basis that expiry of the time within which it had to file the cross-appeal against the Guy Carpenter parties was the only impediment to the cross-appeal, in the course of its application NCRA changed its position. It submitted that it did not need an extension of time, because the 14 days began to run only when leave to proceed was granted to the parties cross-appealing against it on 5 November 2007. 20 Whether an appeal against a decision in favour of a company in liquidation may be brought without leave to proceed is unclear. Under s 500 of the Corporations Law leave is required to commence or proceed with any action or civil proceeding against a company in liquidation. As a matter of language, is bringing an appeal proceeding with the first instance action or proceeding for which leave to proceed was given; put in reverse, is the appeal a separate action or proceeding? As a matter of substance, leave to proceed against a company in liquidation on a claim against it may be thought to embrace an appeal following dismissal of the claim; the appeal seeks the result denied to the claimant at first instance. On the other hand, if the claim has failed there may be occasion to consider whether the claimant should be allowed to go further, for example because the appeal lacks merit and significant further costs will be incurred. It may be that the terms of the grant of leave to proceed limit the leave to the first instance proceeding. The cases are inconclusive, see Humber & Co v John Griffiths Cycle Co (1901) 85 LT 141, BPM Pty Ltd v HPM Pty Ltd (1996) 14 ACLC 857, Skinner v Jeogla Pty Ltd [2001] NSWCA 15 and King v Yurisich [2006] FCA 1368; [2006] 59 ACSR 598. 21 It is not necessary to come to a decision. Leave to proceed against a company in liquidation may be granted under s 500 nunc pro tunc: Oceanic Life Ltd v Insurance & Retirement Planning Services Pty Ltd (in liq) (1993) 11 ACSR 516; Home Corp Projects (No 100) Pty Ltd v Austrlaian Home Mortgage Corp Pty Ltd [2001] NSWSC 701; (2001) 19 ACLC 1491; Marshall v Proteus Solutions Ltd (in liq) [2006] NSWSC 994; see also Emanuele v Australian Securities Commission (1997) 188 CLR 114 and the many cases noted in McPherson's Law of Company Liquidation, 5th ed, para 7.1010. The grant of leave to proceed on 5 November 2007 was not stated to apply from any particular time, but the cross-appeals against NCRA had been filed on the dates in May and August 2007 and, in the absence of a direction for filing other cross-appeals or specification of some other date, the grant of leave to proceed should be construed as a grant of leave to proceed nunc pro tunc. 22 The result is that the 14 days began to run from, at the latest, the dates in August 2007, and an extension of time is necessary.

The intended cross-appeal 23 The unclarity of whether further leave to proceed against NCRA was necessary and the retrospectivity of a grant of leave to proceed nunc pro tunc are relevant to whether or not an extension of time for NCRA to file its cross-appeal against the Guy Carpenter parties should be granted. As I have said, however, extension of time itself was not the true issue between NCRA and the Guy Carpenter parties. The Guy Carpenter parties did not suggest that they would be prejudiced by late filing. The application for an extension of time provided the occasion for the Guy Carpenter parties to invite consideration of the intended cross-appeal. Put broadly, the true issue was whether because of contingency or, more particularly, lack of substance the filing of the cross-appeal should not be permitted. 24 The cross-appeal against the Guy Carpenter parties initially proposed by NCRA was, like the cross-appeals against NCRA, uninformative. There should have been proper grounds of appeal, since the judge had dismissed the cross-claim against the Guy Carpenter parties on its merits and it was incumbent on NCRA to state grounds for error in doing so. 25 Counsel for NCRA explained that the cross-appeal was on a limited basis. The explanation was, with respect, not easy to follow and bedevilled by obscurity in expression and what appeared to be shifts in position. It included that NCRA did not cross-appeal against the judge's dismissal of "its positive cross-claims", but that it wished to maintain a claim "based on contribution or indemnity". The thrust of the explanation was that the judge had failed to deal with a basis for NCRA's cross-claim involving the causation allegation to the effect that the issue would not have gone ahead if the full GCR transaction had been disclosed. 26 NCRA was given the opportunity to re-formulate the intended cross-appeal in order to express grounds conformably with its explanation. The grounds should be set out in full - "If, as the Cross-Claimants to the 30th, 31st and 32nd Cross-Claims in the Court below contend, his Honour should have found that NCRA is liable on the bases set out in those Cross-Claims, then: 1. His Honour erred in: (a) Dismissing the 33rd Cross-Claim in its entirety exclusively on the basis of the findings as to the likely reaction of Dresdner, PwC, Trowbridge and MECM to a reported net worth of USD119.6 million as at 30 June 1998 (at [1354] and [1411], Dresdner [1387], PwC [1395], Trowbridge [1402], Macquarie [1410]);

(b) Failing to consider (at [611] in respect of the Macquarie Cross-Claim allegations and [1344] in respect of the PwC cross-claim allegations) whether the allegations as to causation relied upon by the Macquarie Parties (in paragraphs 20, 22 and 24 to 26 of the Amended 30th Cross-Claim) and PwC (in paragraph 27 of the Amended 31st Cross-Claim) in their cross-claims against NCRA, and repeated by NCRA against the Guy Carpenter parties in paragraph 45A of the 33rd Cross-Claim, read with paragraphs 53 to 57 and 58(d) and (f) of the 36th Cross-Claim (and specifically paragraph 58(d) in respect of PwC, and paragraph 58(f) in respect of the Macquarie Parties) (the Causation Allegations) had been established;

(c) Failing to find that the Causation Allegations had in fact been established;

(d) Failing to find that, the Causation Allegations having been established, a sufficient causal basis had been established against the Guy Carpenter parties for NCRA to recover damages or equitable compensation from the Guy Carpenter parties in respect of any liability visited upon NCRA by the 30th, 31st or 32nd cross-claims;

(e) Having failed to find that such a causal basis had been established, finding (at [1354]) that it was unnecessary to consider whether the Guy Carpenter parties had knowingly involved themselves in the dishonest design of the GCRA transaction and breach of the NCRA directors' fiduciary duties owed to NCRA or whether the Guy Carpenter parties had involved themselves in the directors' contraventions of s 232(2) and (4) of the Corporations Law (as alleged in paragraphs 42 and 45 of the 33rd Cross-Claim); and

(f) Failing to find that the Guy Carpenter parties had knowingly involved themselves in the dishonest design and breach of the directors' fiduciary duties owed to NCRA or had involved themselves in the directors' contraventions of s 232(2) and (4) of the Corporations Law. 2. His Honour should have found the Guy Carpenter parties liable to pay damages or equitable compensation or compensation pursuant to s 1317HD(1) of the Corporations Law to NCRA to the extent of any liability visited upon NCRA by the 20th, 31st or 32nd Cross-Claims as a consequence of the knowing involvement of the Guy Carpenter parties in the dishonest design and directors' breach of duties owed to NCRA or involvement in the directors' contraventions of ss 232(2) and (4) of the Corporations Law ."

27 It is apparent that NCRA does not on appeal maintain its claim to the trading losses. It maintains its claim to the reimbursement losses, both by reason of participation in a dishonest and fraudulent design and by reason of contravention of director's duties. NCRA's complaint is that in dismissing its cross-claim against the Guy Carpenter parties, the judge failed to deal with a causation case founded on the Causation Allegations. I will return to the Causation Allegations. 28 The Guy Carpenter parties submitted that they were not a necessary party to the appeal by the Ingot parties or the cross-appeals between the respondents or by the respondents against NCRA; and further, that unless one or more of the Macquarie parties, PwC and Trowbridge was held liable to the Ingot parties and NCRA was then held liable to one or more of them, there would be no occasion to consider NCRA's cross-claim against them. They said that the need for the cross-appeal against them may never arise, and almost certainly would not arise for quite a long time, and that they would be put to possibly unnecessary trouble and expense if the cross-appeal were filed. 29 It may be that the cross-appeal will fall away if, for example, the appeal by the Ingot parties is dismissed. In that event, so will the cross-appeals between the respondents and against NCRA. However, that is not a reason against bringing the cross-appeals. The Ingot parties may succeed against one or more of the Macquarie parties, PwC and Trowbridge and one or more of them may succeed in its cross-appeal against NCRA - that is for the appeal. In NCRA's case, it seeks to recover from the Guy Carpenter parties losses constituted by any liability to the Macquarie parties, PwC or Trowbridge, and in order to do so it must cross-appeal against the Guy Carpenter parties. The Guy Carpenter parties should be joined in the appellate proceedings, so that they have the opportunity to participate if they wish in determination of the two prior stages of liability and are bound by the determination. Case management can relieve them of excessive burden, but leaving any cross-appeal against them to be brought if necessary at a later time (as the Guy Carpenter parties suggested) is in my view not possible or, if possible, not acceptable. I do not think these matters provide reason to refuse an extension of time. 30 The Guy Carpenter parties' opposition otherwise focussed on the substance of the cross-appeal. At the time of the cross-appeal as initially proposed they said that the uninformative ground of appeal was unsatisfactory, which was correct when the judge had dealt with and dismissed the cross-claim: proper grounds should have been framed. This complaint, however, was overtaken by the re-formulation of the cross-appeal. Their submissions responding to the explanation of the limited basis for the cross-appeal, and prior to the provision of the reformulated cross-appeal, had to cope with the obscurity of the explanation, and were in some respects also overtaken by events; for example, when it appeared that NCRA wished to maintain against the Guy Carpenter parties a claim for contribution or indemnity as joint wrongdoers, the Guy Carpenter parties understandably enough said that no such claim had been made against them. At the heart of the opposition was that the judge's reasons for dismissing the cross-appeal against the Guy Carpenter parties were fatal to the cross-appeal. The Guy Carpenter parties submitted that he had considered and found against the causal foundation for the claims to both the reimbursement losses and the trading losses. 31 It is necessary to describe further the causation for the reimbursement losses alleged in the cross-claim against the Guy Carpenter parties. 32 The thirty-third cross-claim relevantly alleged - " Damages to NCRA 45A. The Cross Claimant repeats paragraphs 57 to 59 of the 36th Cross Claim. 46 to 48. [deleted] 49. But for the capital raising, NCRA would not have been sued in these proceedings by the following parties: (a) Macquarie Equity Capital Markets Ltd, Macquarie Equities Ltd and Macquarie Bank Ltd on the 30th Cross Claim (as amended);

(b) Patrick Murray and the persons listed in Schedule 'B' to the Sixth Further Amended Summons (ie PricewaterhouseCoopers) on the 31st Cross Claim (as amended);

(c) John Trowbridge Consulting Pty Ltd on the 32nd Cross Claim (as amended). 50. In the event that NCRA is held liable to any of those persons or entities, NCRA is entitled to compensation including equitable compensation or compensation pursuant to s 1317HD(1) of the Corporations Law from Guy Carpenter UK and Guy Carpenter Australia to the extent of its liability." 33 By para 45A there were incorporated by reference paras 57 to 59 of the cross-claim by NCRA against its directors and chief financial officer, and arguably through them paras 53 to 56 as well. Paragraphs 53 to 56 alleged the dishonest and fraudulent design and contravention of s 232(2) and (4) of the Corporations Law in relation to the GCR transaction, and paras 57 to 59 alleged - "57. As a result of entry into the GCRA transaction by NCRA, (a) the 1998 half yearly accounts contained the false claim that NCRA had reinsurance recoveries receivable of US$5.675 million; and

(b) the US GAAP 1998 half yearly accounts contained the false claim that NCRA had reinsurance recoveries receivable of US$6.5 million. 58. As a result of the matters set out in paragraphs 53 to 57 above: (a) a Compliance Certificate was issued to Dresdner falsely claiming that the NewCap Group had a consolidated net worth of US$126.1 million;

(b) Dresdner continued negotiations with NCRH for an amended facility which but for the false accounting would have been terminated;

(c) NCRH avoided a demand for immediate repayment of the Facility; Particulars Credit Agreement Article IX 'Covenants' section 9.2 'Negative Covenants' - subs 9.2.2 'Minimum Consolidated Net Worth' - subs 9.2…1.6 'Restrictions on Surplus Relief Reinsurance Agreements' Credit Agreement Article XII 'Events of Default' - section 11.1(vi) 'non compliance with certain provisions' - section 11.2 'effect of event of default' (d) PwC: (i) completed its review of the draft NCRH consolidated financial statements for the period ended 30 June 1998 and on or about 2 September 1998 PwC Bermuda provided its review report in respect of those financial statements;

(ii) issued the reports, gave the confirmations and consents, and otherwise conducted itself in the manner described in sub paragraphs (a) to (i) of paragraph 27 of the 31st Cross Claim; (e) Trowbridge: (i) provided its Independent Actuaries Report dated 26 October 1998 for inclusion in the Prospectus and its report dated 10 November 1998 on outstanding claims as at 30 June 1998, in each case confirming Trowbridge's assessment of the central estimate of outstanding claims liability of the New Cap Group including NCRA at 30 June 1998 on a discounted basis at US$139.6m; and

(ii) thus concluded that the net provision adopted in the 1998 half yearly accounts was reasonable (f) MECM: (i) entered into the Macquarie Retainer referred to in paragraph 43 of the 6th Further Amended Summons (the Summons); and (ii) made the Balance Sheet Representations and the NTA Representations referred to in paragraphs 70 and 71 of the Summons, as well as the Due Diligence Committee representations referred to in paragraphs 49A, 67A and 81A of the Summons. 59. But for any one or more of the matters in paragraphs 57 or 58; (a) the Capital Raising would not have proceeded; and/or

(b) there would have been a collapse in market confidence in the New Cap Group and NCRA; and

(c) NCRA would have gone into run off on or around 2 September 1998." 34 As I have indicated, the judge dealt with these cross-claims at [1345]-[1464] of his reasons. At [1350] he extracted from the thirty-sixth cross claim a case in causation - " … that, but for the implementation of the dishonest and fraudulent design: (1) Dresdner would not have negotiated to amend the facility, but would have terminated it and demanded repayment; and

(2) because of the attitudes of PwCA, Trowbridge and MECM, the capital raising would not have proceeded and NCRA would have gone into runoff." 35 This omitted the allegation of breach of director's duties, but the causation would have been no different. The reference to Dresdner was to NCRH's financier, the allegation being to the effect that disclosure of the full GCR transaction would have caused it to terminate the finance facility whereby NCRA would have ceased to trade. MECM was one of the Macquarie parties, and the judge clearly recognised the allegation of causation through the issue not going ahead. 36 The judge said at [1352] that the "case on causation" alleged against the Guy Carpenter parties was the same. 37 The judge said - "1354 I have come to the conclusion that the threshold (if I may so call it) question of causation should be answered in favour of the cross-defendants. In part, that has been flagged in what I have said in paras [388] and [389] above. Although those paragraphs addressed only the position of Dresdner, it is plain that Dresdner's likely reaction to a reported net worth of USD119.6 million as at 30 June 1998 is the key to the present question of causation, notwithstanding that the question involves as well the likely reactions of PwCA, Trowbridge and MECM. In those circumstances, consistent with the general approach that I have outlined in para [118] above, I do not propose to deal with the questions of breach of duty and involvement. In addition to the reasons that I gave in those paragraphs, I think that it is undesirable to deal in detail (as would be necessary) with allegations of very serious commercial impropriety - more bluntly, fraud - when even a resolution of those questions in favor of NCRA would not assist it." 38 The judge went on to explain more fully his conclusions on causation. He dealt with each of paras 58(b) and (c) (wrongly given as 56(b) and (c)) of the thirty-sixth cross-claim (Dresdner), para 58(d) (PwC), para 58(e) (Trowbridge) and para 58(f) (one of the Macquarie parties), giving reasons for rejecting each as a causal consequence of the alleged dishonest and fraudulent design and breach of director's duty. 39 NCRA did not for its cross-appeal assert error in these conclusions; ground 1(a) in the re-formulated cross-appeal implicitly accepted them. NCRA's complaint was that the judge had not considered and upheld causation on the basis of the Causation Allegations. 40 The Causation Allegations, however, were allegations made by the Macquarie parties and PwC (Trowbridge appears to have fallen out of the picture) in their cross-claims against NCRA. In ground 1(b) those allegations were said to be "repeated by NCRA against the Guy Carpenter parties", with reference to para 45A of the thirty-third cross-claim read with identified sub-paragraphs of paras 53 to 57 of the thirty-sixth cross-claim. Paragraph 45A incorporated paras 57 to 59 of the thirty-sixth cross-claim, and arguably through them paras 53 to 56. If the Causation Allegations are different from the causation allegations so incorporated, they are not "repeated" by NCRA against the Guy Carpenter parties. If they are the same, and by "repeated" ground 1(b) meant reproduced by the incorporation, the incorporated causation allegations govern. The specific subparagraphs 58(d) and (f) stand as the causal steps in question, and they were dealt with by the judge. He found that they had not been established. 41 It is not appropriate in this application to exclude an arguable case for a cross-appeal by NCRA against the Guy Carpenter parties, although "where the applicant's right of appeal has gone, courts should insist, as they do, that the time for appealing will not be extended unless the proposed appeal has some prospects of success": Jackamarra v Krakouer (1998) 195 CLR 516 at 521 per Brennan CJ and McHugh J. In the present case NCRA's difficulty does not lie in consideration of the merits of the causation which it said the judge had failed to consider. It lies in whether the judge failed to consider the causation. If there is an arguable case for a cross-appeal on that basis, I regret to say that counsel's explanation has not brought it home to me and the reformulated cross-appeal does not in my opinion convey it.

Order 42 As between NCRA and the Guy Carpenter parties the application for extension of time is dismissed with costs.

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