INSURANCE COMMISSION OF WESTERN AUSTRALIA -v- ANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF THE BELL GROUP LTD (IN LIQ) [No 2] [2017] WASC 372 (1 February 2018)

Supreme Court of WA|2018-02-01|Before: Pritchard J

1 PRITCHARD J: These reasons deal with an application made on 4 October 2016, as amended on 21 February 2017 (Application), by which the Ninth and Tenth Defendants (BGNV) have applied to strike out a number of the prayers for relief (PFR) set out in the Writ of Summons filed by the Plaintiff (ICWA), and numerous paragraphs of ICWA's Statement of Issues, Facts and Contentions (SIFC). BGNV has also applied, in the alternative, for summary judgment in respect of PFR 12 in the Writ, and [513] [592] of the SIFC.

2 For the reasons set out below, the Application will be allowed to the extent that PFR 12 and the corresponding paragraphs in the SIFC ([513] [592]), save to the extent that they may be relevant to any other PFR, will be struck out. Further, there will be an order that [899] and [900] of the SIFC be redacted. The Application will otherwise be dismissed.

Overview of the action, its history and related proceedings;
The Application;
The delay in the determination of the Application;
Principles in respect of applications to strike out pleadings and for summary judgment;
Determination of the Application;
The orders which should be made.

4 Before turning to deal with those matters, it is necessary to identify the version of the Writ and the SIFC which was, in effect, the subject of the Application. The Application sought to strike out, or to obtain summary judgment on, various PFRs in the Writ dated 9 June 2016 and the SIFC dated 18 October 2016. However, subsequent to the filing of the Application, ICWA amended the Writ and the SIFC. As at the date of the hearing of the Application, the version of each document which was before the Court was a Minute of Further Amended Writ dated 14 February 2017, and a Minute of Amended SIFC dated 14 February 2017 (Minutes). As at the date of the hearing of the Application, no application had been made to amend the Writ and SIFC in the terms set out in those Minutes. However, counsel agreed that the argument on the Application should proceed, for convenience, by reference to the Minutes setting out the amendments to the Writ and SIFC as at 14 February 2017, although with two qualifications.[1] First, the Application did not deal, at all, with two PFRs which formed part of the proposed amendments to the Writ, namely PFR 30 and 31, and the corresponding paragraphs ICWA sought to insert into the SIFC, namely [1145] [1152], which were particularly contentious (the disputed amendments).[2] (The disputed amendments were subsequently the subject of an application for an interlocutory injunction, to which I will refer later in these reasons.) Secondly, counsel for BGNV effectively reserved his client's position in respect of whether the Court should grant ICWA leave to amend the Writ and the SIFC in terms of the Minutes.[3] At that stage, it appeared (in view of counsel's concession to proceed on the basis of the Writ and the SIFC in terms of the Minutes) that any dispute in respect of leave to amend the Writ and SIFC was likely to be confined to the amendment of the Writ and SIFC to include the disputed amendments.[4]

5 The upshot of that background is that the Application was, effectively, an application to strike out paragraphs of, or for summary judgment in respect of, the Writ and the SIFC as set out in the Minutes dated 14 February 2017. References to the Writ and the SIFC in these reasons should be understood as references to those documents.

1. Overview of the action, its history and related proceedings

6 In the wake of the collapse of The Bell Group Ltd (TBGL) and Bell Group Finance Pty Ltd (BGF), various parties, including at various times, ICWA, the Law Debenture Trust Corporation PLC (LDTC), BGNV, the Commonwealth (collectively, the indemnifying creditors) and the then liquidators of TBGL and BGF (referred to herein, in each case, and both cases, as the liquidator), entered into agreements for the purpose of securing funding to enable the liquidator to pursue proceedings to recover or preserve the assets of TBGL and BGF, especially through proceedings against a number of banks (the Bell Litigation). As a result of the Bell Litigation,[5] and other proceedings brought by the liquidator, the liquidator has recovered approximately $1.8 billion[6] (including interest) (the Proceeds). In due course, the Proceeds will need to be distributed by the liquidator to the creditors of TBGL and BGF, in the ordinary course of the liquidation of each of those companies.

7 In related proceedings commenced in this Court by an originating process (COR 146 of 2014), the liquidator has applied for orders pursuant to s 564 of the Corporations Law (Cth) (Law) (as applied by s 1408(1) of the Corporations Act 2001 (Cth) (Act)) (the Liquidator's Application). The orders sought include orders as to how the liquidator is to apply what is referred to as the Recovered Amounts (that is, the Proceeds) in the liquidation of TBGL and BGF. Section 564 of the Law provided:

Where in any winding up:

(a) property has been recovered under an indemnity for costs of litigation given by certain creditors, or has been protected or preserved by the payment of moneys or the giving of indemnity by creditors; or

(b) expenses in relation to which a creditor has indemnified a liquidator have been recovered;

the Court may make such orders, as it deems just with respect to the distribution of that property and the amount of those expenses so recovered with a view to giving those creditors an advantage over others in consideration of the risk assumed by them.

8 I note that s 564 of the Act is in materially identical terms. It appears that the parties anticipate that the question may arise for determination, in due course, as to whether s 564 of the Law or s 564 of the Act governs the Liquidator's Application. It is not necessary to express any view on that issue for present purposes. For convenience, I will simply refer to the relevant provision whether of the Law or the Act as s 564.

9 The orders sought in the Liquidator's Application are directed, in particular, to the amounts to be paid to each of the indemnifying creditors, each of which, to varying extents, is said to have provided an indemnity for the costs and expenses of the litigation pursued by the liquidator, which resulted in the recovery of the Proceeds. In summary, the liquidator seeks an order that he pay, first, his own unpaid costs and expenses; then that he repays the indemnifying creditors rateably, according to the amounts they advanced to the liquidator; then that the liquidator discharges any liability he has incurred, as the liquidator of each of TBGL and BGF, to the liquidator of BGF and TBGL respectively; then that he distributes twothirds of the balance of the Proceeds to the Commonwealth, ICWA and the LDTC, and BGNV, in particular ratios; and, finally, that he distributes the remaining onethird of the Proceeds in the order provided by s 556 of the Law.

10 Shortly after the Liquidator's Application was filed, ICWA commenced two proceedings in this Court (which were ultimately consolidated in COR 208 of 2014) in which it sought declarations and orders relating to numerous issues which it contends are relevant to the exercise of the Court's discretion under s 564. In light of jurisdictional questions which arose in relation to COR 208 of 2014, ICWA subsequently commenced the present action in the High Court. This action was then remitted to this Court.[7] COR 208 of 2014 was subsequently discontinued.

Overview of the relief sought in the present action

11 In the present action, ICWA seeks declaratory and other relief in respect of a wide range of issues which it says will be relevant to the Court's ultimate exercise of discretion under s 564 in the Liquidator's Application. Leaving the disputed amendments to one side, the Writ seeks 29 different PFRs. The SIFC is 300 pages long (excluding annexures) and contains 1153 paragraphs. By way of a general overview of the nature of the issues raised, it suffices to note that the relief ICWA seeks includes the following:

a declaration that for the purposes of s 564, ICWA is a creditor of BGF, and that the Proceeds were recovered by the liquidator under indemnities given by ICWA for the liquidator's costs of litigation or expenses (so that the Court would be able to make an order under s 564 in favour of ICWA);[8]
a declaration that pursuant to s 564 the Court may make an order in favour of a creditor which has paid money or indemnified a liquidator for the costs of litigation or expenses, which has resulted in property being recovered, protected or preserved, and which order pertains to the payment of money to the creditor by the liquidator, BGF or TBGL, in a way that is not limited by reference to the amount of money due to that creditor in its capacity as a creditor, and which will not alter the priority of that creditor in the winding up of TBGL or BGF; and which will not reduce the amount for which that creditor's claim may be admitted to proof in the liquidation; or which will not reduce the principal amount for which that creditor's claim may be admitted to proof but may reduce the amount of post liquidation interest otherwise payable to that creditor;[9]
a declaration that for the purposes of s 564, ICWA is a creditor of BGNV;[10]
declarations in relation to the proper construction of agreements known as the TBGL AFI[11] and the BGF AFI[12] (collectively, the AFIs) and the PTICA,[13] namely that on the proper construction of those agreements, the liquidator is not precluded from repaying, and ICWA would not be in breach of those agreements if it encouraged the liquidator to repay, funds which were advanced to the liquidator in accordance with the AFIs, or costs and expenses properly incurred by the liquidator in relation to the winding up of TBGL and BGF, prior to the determination of the Liquidator's Application;[14]
a declaration that ICWA may seek an order pursuant to s 564, in advance of the determination of the Liquidator's Application, without breaching any obligation under the AFIs or the PTICA;[15]
various declarations (as discussed below) in relation to the operation of specified clauses of trust deeds of which trusts the LDTC is the trustee (known as the TBGL Trust Deed and the BGF Trust Deed) relating to bonds issued by TBGL and BGF and held by ICWA, which clauses are said to constitute subordination and turnover trust clauses in respect of particular amounts, for the benefit of unsubordinated creditors of TBGL and BGF (I will refer to these clauses as the subordination and turnover trust clauses);
declarations that any monies paid to the LDTC or ICWA by the liquidator pursuant to s 564 are not subject to the subordination and turnover trust clauses;[16]
an order pursuant to s 564 that the liquidator of BGNV pay to ICWA, out of any proceeds connected with debts owed by TBGL or BGF to BGNV, an amount equal to the aggregate of any monies received or receivable by him from BGF, TBGL, the liquidator, or the LDTC, pursuant to the operation of the subordination and turnover trust clauses, in priority to any other amount payable in the liquidation of BGNV;[17]
a declaration that the TBGL Trust Deed and the BGF Trust Deed may be amended by the LDTC (in its capacity as the trustee of those Trusts) with the consent of ICWA;[18] and a declaration that BGNV may not bring any action against ICWA, TBGL, BGF, the liquidator, or the LDTC to resist the amendment of those Trust Deeds, and may not oppose any application for TBGL, BGF, the liquidator or the LDTC to be released from certain undertakings, given in other proceedings in this Court, not to seek to amend those Trust Deeds;[19]
declarations in relation to the construction of the PTICA, including declarations that any monies which are payable to BGNV by TBGL, BGF or the liquidator, or by ICWA or the LDTC, pursuant to an order by the Court made under s 564, are required to be dealt with by BGNV in accordance with certain clauses of the PTICA;[20]
declarations that any monies paid to ICWA by the liquidator pursuant to s 564, and which may be subject to the subordination and turnover trust clauses, are not required to be dealt with by ICWA in accordance with certain clauses of the PTICA;[21]
alternatively, if the construction and operation of the PTICA and the parties' obligations under the PTICA are otherwise than as contended by ICWA, an order that the PTICA be rectified to reflect the terms of the agreement ICWA contends was reached between the parties to the PTICA;[22]
alternatively, if BGNV's obligations under the PTICA are otherwise than as contended by ICWA, orders that BGNV pay damages to ICWA for loss or damage ICWA claims to have suffered as a result of the contravention by BGNV of s 52 of the Trade Practices Act 1974 (Cth) or s 10 of the Fair Trading Act 1987 (WA) by reason of alleged misleading and deceptive conduct by BGNV in its negotiation of the PTICA;[23]
declarations in relation to the construction and operation of agreements known as the Western Interstate Assignment Agreement (WIAA) and the Western Interstate InterCreditor Agreement (WIICA) including declarations that BGNV is a 'Terminating Indemnifier' for the purposes of the WIAA and the WIICA;[24] that upon becoming a Terminating Indemnifier, BGNV ceased to have any interest in or claim to 57,000 ordinary shares in Western Interstate Pty Ltd (in prov liq) (Western Interstate) which were the subject of the WIAA;[25] declarations that Bell Bros Pty Ltd (in liq) (Bell Bros) is obliged to transfer those 57,000 shares to the liquidator of BGF;[26] that the liquidator is obliged to receive those shares;[27] and that upon that transfer BGF will hold those shares on trust for ICWA and the Commonwealth;[28] and that ICWA and the Commonwealth are the sole beneficial owners of those shares;[29] and a declaration that any distribution by Western Interstate to ICWA and the Commonwealth, with respect to those shares, is not subject to certain clauses of the WIICA or the PTICA.[30]

12 ICWA does not seek an order from the Court pursuant to s 564 in relation to the winding up of BGF or TBGL. As I have already observed, ICWA considers that some of the issues raised in the present action are relevant or antecedent to the exercise of the Court's discretion under s 564. By way of example, the relief sought in respect of the shares in Western Interstate is considered relevant to the determination of the assets of BGF which will ultimately be available for distribution in the liquidation of BGF. The relief sought appears to be intended to deal with a contention, actual or anticipated, that BGNV has an interest in those shares.

13 Other issues and relief sought, as I presently understand them, are intended to deal with contentions, actual or anticipated, that ICWA is not entitled to advance certain arguments in the Liquidator's Application, or that the liquidator would not be able to take certain action prior to the determination of the Liquidator's Application (such as the repayment of funds advanced, or expenses paid, by any indemnifying creditors). Other issues raised and relief sought will, or may, bear upon the exercise of the Court's discretion under s 564 in the Liquidator's Application (for example, that ICWA is a creditor of BGF for the purposes of that application, and that the Proceeds were recovered, or protected, by virtue of the indemnity given by ICWA for the costs of the liquidator).

14 Given the nature of an application under s 564, and the number and complexity of the issues which it appeared were likely to be involved, both in this matter and in the Liquidator's Application, I took the view that these were matters in which formal pleadings would not be the most efficacious way to proceed. I therefore made orders that these matters should proceed on the basis of statements of issues, facts and contentions (SIFCs) filed by the parties. Proceeding by way of SIFCs has had the advantage of illuminating very clearly, and from the outset, the legal issues which each matter raises, and what the parties' position is in respect of each of those legal issues. Furthermore, in a case such as the present, where the matters are closely related, proceeding by way of SIFCs highlights far more clearly, from the outset, the potential and actual overlap in the matters. That is, and will be, of considerable assistance to the Court and to the parties, in making determinations about the most efficacious way to bring these matters to trial.

15 In the Application, BGNV seeks the following relief:

Pursuant to O 20 r 19(1)(a), (c) or (d) of the Rules of the Supreme Court 1971 (WA) (RSC), the following PFRs and pleadings be struck out on the basis that they disclose no reasonable cause of action, are prejudicial, embarrassing or may delay the fair trial of the action, or are otherwise an abuse of process:

(a) PFR 1 and [16] [19] and [23] [132] of the SIFC;

(b) PFR 2 and [415] [446] of the SIFC;

(c) PFR 4 and [286] [414] of the SIFC;

(d) PFRs 5, 9 and 11 and [20] [22] and [208] [285] of the SIFC;

(e) PFR 12 and [513] [592] of the SIFC;

(f) PFR 13 and [594] [745] of the SIFC;

(g) PFR 18 and [955] [977] of the SIFC;

(h) PFRs 21 and 22 and [746] [835] of the SIFC;

(i) PFRs 23 to 29 and [978] [1144] of the SIFC.

In the alternative to the strike out of PFR 12 and [513] [592] of the SIFC, summary judgment in respect of that part of ICWA's claim, pursuant to O 16 r 1 RSC.
In the alternative to the strike out of PFR 18 and [955] [977] of the SIFC, an order that ICWA file and serve a statement of claim in support of its claim for relief in PFR 18.

16 In addition, BGNV contended that a number of paragraphs of the SIFC should be struck out on the basis that they plead communications in respect of which BGNV asserts legal professional privilege, or which BGNV says are subject to a 'without prejudice' privilege.

17 Of the 29 PFRs in the Writ (excluding the disputed amendments in PFR 30 and 31), the Application seeks to strike out all but 13 of them. The Application thus seeks to strike out a very significant proportion of the relief sought by ICWA, together with the corresponding paragraphs of the SIFC which are said to support the grant of that relief.

18 In support of the Application, BGNV filed detailed written submissions dated 24 November 2016, which were largely (but not entirely) superseded by detailed written submissions dated 21 February 2017. In addition, BGNV relied on the affidavit of Scott Bruce Foreman sworn 14 March 2017, and tendered a document referred to in that affidavit but not exhibited to that affidavit.

19 ICWA filed detailed written submissions in response dated 28 February 2017. Counsel for ICWA also relied on the affidavit of David Jonathan Hargreaves sworn 28 February 2017, and the affidavit of Angela Hamersley sworn 16 October 2014, filed in proceeding COR 208 of 2014. According to ICWA's submissions, it also relied on the affidavit of Angela Hamersley affirmed 10 February 2017.

3. The delay in the determination of the Application

20 The Application was heard on 24 March 2017, and I reserved my decision. Shortly thereafter, the disputed amendments were the subject of an application for an interlocutory injunction. In PFR 30 and 31, ICWA sought a permanent injunction restraining BGNV from pursuing certain prayers for relief in the course of litigation it has commenced in the Federal Court (WAD 191 of 2016) (the Federal Court proceedings) or from pursuing relief of the same kind in any other proceedings, and/or damages for breach of contract. ICWA sought an interlocutory injunction to restrain BGNV from pursuing the Federal Court proceedings, pending the determination of its application for the permanent injunctive relief it sought in the disputed amendments. BGNV opposed the grant of an interlocutory injunction on a variety of bases, including that there was no serious question to be tried on the disputed amendments. On 13 April 2017, I granted ICWA's application for an interlocutory injunction.[31] BGNV then appealed that order to the Court of Appeal (the interlocutory appeal). The interlocutory appeal was heard on an expedited basis on 27 and 28 July 2017.

21 By the time that that appeal had been filed, ICWA had made an application to amend the Writ and SIFC in terms of a Minute of Amended Writ and Minute of Further Amended SIFC, both dated 8 May 2017 (amendment application). BGNV opposed the grant of leave to amend.

22 As I have already mentioned, the disputed amendments appeared to be at the centre of BGNV's opposition to the amendment application. It also appeared likely that the judgment delivered by the Court of Appeal in respect of the interlocutory appeal would address the question whether there was a serious question to be tried in respect of the claims which were the subject of the disputed amendments. In turn, the answer to that question was likely to be highly relevant to the question whether the disputed amendments disclosed a reasonable cause of action, and thus whether leave should be given to amend the Writ and SIFC to include the disputed amendments.

23 In those circumstances, I formed the view that from a case management perspective (including the prospect of multiple appeals) it would be preferable to defer the hearing of ICWA's amendment application until after the Court of Appeal delivered its reasons on the interlocutory appeal, to hear the amendment application prior to publishing my reasons in respect of the present Application, and then to deliver one set of reasons which would deal, in effect, with the totality of BGNV's objections to the Writ and SIFC, including the proposed amendments thereof. That view was also based on some assumptions about the likely timeframe in which all of those steps might occur.

24 The Court of Appeal delivered its judgment on 22 December 2017. It concluded that there was no serious question to be tried in respect of the disputed amendments.[32]

25 With the benefit of hindsight, it would have been preferable to publish these reasons in respect of the Application without reference to the amendment application. That would have avoided what has turned out to be a lengthy delay in delivering judgment on the Application.

26 In light of the Court of Appeal's judgment on the interlocutory appeal, ICWA has now filed a Second Further Minute of Further Amended Writ, and a Second Further Minute of Amended SIFC, both dated 19 January 2018. The primary thrust of the most recent of its proposed amendments appears to be to abandon the claims which were the subject of the disputed amendments. By an email to my associate dated 25 January 2018, BGNV's solicitors advised that BGNV intended to oppose ICWA's proposed amendments to the Writ and SIFC, on the basis that those amendments disclose no reasonable cause of action, may prejudice, embarrass or delay the fair trial of the action, and are otherwise an abuse of the process of the Court. In documents filed on 29 January 2018, BGNV's position was expanded upon. It seeks to advance arguments as to why leave to amend should be refused in respect of certain paragraphs of the writ and SIFC. It also, apparently, wishes to advance arguments as to why other paragraphs should be struck out.

27 Given the nature of those arguments, deferring the publication of these reasons until the amendment application is heard has the potential to add to the already considerable delay in progressing this action.

28 In the circumstances, I have decided that, notwithstanding the approach I have adopted to date, the preferable course is now to publish these reasons without further delay. In reaching that view, I have taken into account the fact that the action is listed for a strategic conference on 1 February 2018, which is the only date convenient to all of the parties' counsel in the immediate future. It is important that that opportunity be used for a full discussion as to how to most efficiently progress the action to final determination. Resolution of the present Application will assist in that discussion.

29 ICWA's amendment application, which now pertains to the proposed amendments to the writ and SIFC as at 19 January 2018, (and BGNV's opposition thereto) is listed for hearing on Thursday 1 February 2018. The Court will endeavour to determine those matters as soon as possible thereafter, so that the pleadings can be finalised and the parties' attention can turn to other interlocutory steps necessary to progress the action to trial.

4. Principles in respect of applications to strike out pleadings and for summary judgment Strike out applications

30 In so far as the Application seeks to strike out a number of the PFRs and paragraphs of the SIFC, BGNV relies on O 20 r 19(1)(a), (c) and (d) RSC which provide:

(1) The Court may at any stage of the proceedings ... order to be struck out or amended any pleading, or the indorsement of any writ in the action, or anything in any pleading or in the indorsement on the ground that

(a) it discloses no reasonable cause of action or defence, as the case may be; or

(b) ...

(c) it may prejudice, embarrass or delay the fair trial of the action; or

(d) it is otherwise an abuse of the process of the Court,

and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.

31 The principles in respect of a strike out application made pursuant to O 20 r 19(1)(a) RSC are well established. They were set out by Master Staples in Kimberley Downs Pty Ltd v Western Australia and have been applied on numerous occasions. Those principles are: [33]

(1) The rule is intended to apply only to cases which are really not arguable and not to cases where under the previous practice demurrer would have been the proper course.

(2) On the application, not only must all the facts alleged in the statement of claim be accepted as true, but it must be taken for granted that on all other points the pleading is unassailable.

(3) Great care must be exercised to ensure that a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal.

(4) But the rule should not be reserved for those cases where argument is unnecessary to show the futility of the plaintiff's claim. Argument, even extensive argument, may be necessary to demonstrate that the plaintiff's case is so clearly untenable that it cannot possibly succeed.

(5) As a general rule, a plaintiff is 'entitled ... as of right to have his case heard, to have the facts found and then to argue the question of law as it arises before the trial Judge upon the facts as found. It is only in cases in which it can be seen from the outset that, however the facts be found, there is no basis for the legal conclusion contended for by the plaintiff that the pleading should be struck out.

(6) A court at first instance should be careful not to risk stifling the development of the law by summarily rejecting a claim where there is a reasonable possibility that, as the law develops, it will be found that a cause of action will lie.

32 If a plaintiff omits to plead a critical element of a cause of action, or fails to plead facts which are capable of constituting a cause of action, the pleading will fail to disclose a reasonable cause of action.[34] In the case of a deficiency of that kind, however, the plaintiff would ordinarily be permitted to amend the pleading to address the deficiency. The Court would usually expect that deficiencies of that kind would be resolved by conferral between the parties leading to an amendment, rather than by applications to strike out the pleading.

Pleadings which would prejudice, embarrass or delay the fair trial of the action

33 As for O 20 r 19(1)(c), the phrase 'prejudice, embarrass or delay the fair trial of the action' is one which 'imports the notion [that] the character of the pleading is such as to make the fair trial of the action more difficult to achieve, that the trial will be unduly protracted or delayed or the pleading is calculated to prejudice the legal process'.[35] That description may be apt in a variety of circumstances, such as where the pleadings are evasive, or conceal or obscure the real questions in controversy, or are ambiguous or not reasonably intelligible, or raise immaterial or irrelevant issues, or fail to confine the issues or state the case of the party with reasonable particularity, or raise a case in terms which are too general to identify the cause of action.[36]

Pleadings which would give rise to an abuse of the process of the Court

34 Finally, under O 20 r 19(1)(d), the Court has the power (in addition to its inherent power[37]) to prevent the misuse of its procedures in a way which, although not inconsistent with a literal application of the other procedural rules of the Court, would nevertheless be manifestly unfair to a party to litigation, or which would bring the administration of justice into disrepute.[38] The underlying policy is to prevent the waste of judicial resources and to maintain confidence in, and respect for, the authority of the courts.[39]

35 The circumstances in which an abuse of process may arise are extremely varied and the courts have refrained from attempting any exhaustive categorisation of those circumstances.[40] However, a recognised category of abuse of process includes commencing successive proceedings which cause oppression, or are likely to be oppressive, to a party because they constitute an attempt by a litigant to run the same case again.[41] It is also prima facie vexatious to bring two extant civil actions where one will lie, if the issues overlap or significantly overlap or there is a similarity of subject matters of the proceedings.[42] That will be so irrespective of whether the two proceedings are in separate courts or one,[43] and even if the parties, or the relief sought, are not identical.[44]

36 It will also be an abuse of process for a party to make a claim in later proceedings which is based wholly or substantially on the facts of a claim made by the same party in earlier proceedings, such as by pursuing the same claim against a different defendant.[45] An abuse of process may even arise where there is no identity of parties.[46] Further, not only will it be an abuse of process to attempt to re-litigate an issue which has, in substance, been determined in earlier proceedings, but it will also be an abuse if a party attempts to litigate an issue which should have been raised and determined in earlier proceedings.[47] This category of abuse of process has been described as an extension of Anshun estoppel.[48]

37 The jurisdiction to stay for abuse of process is not limited to cases where the proceedings have been brought for an improper purpose or where there is no possibility of the court affording the affected party a fair hearing.[49]

38 Whether a subsequent action constitutes an abuse of process must be assessed by reference to guiding considerations of 'oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice'.[50] Among the matters which may be relevant to that issue will be:[51]

(a) The importance of the issue in and to the earlier proceedings, including whether it is an evidentiary or an ultimate issue;

(b) The opportunity available and taken to fully litigate the issue;

(d) The identity between the relevant issues in the two proceedings;

(e) Any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceeding;

(f) The extent of the oppression and unfairness to the other party if the issue was re-litigated and the impact of the re-litigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and

(g) An overall balancing of justice to the alleged abuser against the matters supportive of abuse of process.

The Court should also consider whether there was reasonable justification for the second proceeding based on legitimate considerations of convenience, cost or the like.[52]

39 A defendant to an action may apply to the Court for summary judgment pursuant to O 16 r 1 RSC. O 16 r 1 requires the Court to be satisfied either that the action is frivolous or vexatious, or that the defendant has a good defence on the merits, or that the action should be disposed of summarily.

40 An application for summary judgment by a defendant must be brought within 21 days of the defendant's appearance or any later time by leave of the Court.[53] BGNV filed an appearance in the matter on 17 June 2016. The Application was filed on 4 October 2016. BGNV should have leave to proceed with the Application in so far as it seeks summary judgment. ICWA did not object to the Application on the basis that it was out of time. Summary judgment was sought in the alternative to the strike out application in respect of PFR 12 and [513] [592] of the SIFC, and I am unable to see that any prejudice to ICWA would arise from the grant of leave to proceed out of time.

41 The principles in relation to the determination of applications for summary judgment are well established. A party should not ordinarily be denied the opportunity to have his or her case determined following trial, and for that reason, the jurisdiction to grant summary judgment should be reserved for the clearest of cases, where there is a high degree of certainty about the ultimate outcome of the action if it were allowed to go to trial.[54] In other words, the question is whether, on the material before the Court, it has been demonstrated that the plaintiff's action should not be permitted to proceed to trial because it is apparent that it must fail.[55] However, that does not mean that summary judgment will be given only where the case is so hopeless as not to require argument. Extensive argument may be necessary to demonstrate that a party's case is so clearly untenable that it cannot possibly succeed.[56]

42 The defendant bringing the summary judgment application bears the legal onus of establishing that there is no serious question to be tried on any cause of action raised by the plaintiff.[57] Under O 16 r 1(2) the defendant is required to file an affidavit verifying the facts upon which the application is based.

43 The plaintiff is also entitled, under O 16 r 2, to file an affidavit to show cause against the application. If the plaintiff shows cause against the application for summary judgment by filing an affidavit in response, the plaintiff may assume an evidentiary onus to show why summary judgment should not be given. In other words, the plaintiff needs to show, on the evidence, that there exists a 'triable issue'.[58] In doing so, the affidavit must 'condescend upon particulars' - that is, it must set out facts which establish that it is reasonable to permit the plaintiff to pursue the action.[59]

44 While the plaintiff may assume an evidentiary onus, the defendant retains the legal onus of demonstrating that there is no real question to be tried on any cause of action raised by the plaintiff.[60]

5. Determination of the Application (a) [877], [899] and [900] of the SIFC BGNV's claim to legal professional privilege;

[702], [857] [875], [894] [895] and [898] of the SIFC BGNV's claim to 'without prejudice' privilege

45 Counsel for BGNV submitted that various paragraphs of the SIFC plead communications in respect of which BGNV has claimed legal professional privilege, or which it claims are subject to without prejudice privilege.

46 This issue can be readily dealt with. BGNV contended that [877], [899] and [900] of the SIFC disclosed material in respect of which BGNV claimed legal professional privilege. Counsel for ICWA indicated that ICWA does not seek to rely on [899] and [900] of the SIFC, and, in the minute of amended SIFC dated 14 February 2017, those paragraphs have been struck through. BGNV complains that that is not enough, and that the paragraphs should be deleted entirely. ICWA proposes that those paragraphs be deleted or redacted. In my view, the proper course is to redact the paragraphs in question.

47 As for [877] of the SIFC, the material before the Court does not support the conclusion that that paragraph contains a reference to privileged material. The paragraph refers to a communication between the legal adviser for BGNV's liquidator, and ICWA and the Commonwealth, in which the former provided an opinion (whether his own or counsel's is not clear) to confirm a particular view. The pleading, on its face, does not permit the conclusion that BGNV is entitled to claim legal professional privilege in the reference to the opinion. The affidavits on which BGNV relies do not advance that position.

48 Counsel for BGNV submitted that [702], [857] [875], [894] [895] and [898] of the SIFC referred to a number of communications which were the subject of without prejudice privilege, and that those paragraphs should be struck out.

49 [857] [875] deal with the negotiation of the PTICA. [894] [895] and [898] deal with the possible amendment of the TBGL InterCreditor Agreement, the WIICA and the PTICA.

50 Having regard to its context in the pleading, [702] appears to refer to communications which took place in the context of a broader discussion about settlement of claims made by the plaintiffs in another related proceeding, which overlapped with the Bell Litigation, namely CIV 2061 of 1996.

51 The principles in relation to without prejudice privilege were discussed by the Full Court of this Court in Old Papa's Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd.[61] Justice McLure summarised those principles, in the context of a discussion about the admissibility of documents marked 'without prejudice'. Her Honour observed:[62]

Statements made without prejudice in an attempt to settle a dispute or action are privileged. Without prejudice privilege is a joint privilege and thus cannot be waived without the consent of the negotiating parties. The mere fact that a document is or is not marked 'without prejudice' is not decisive. The test is whether the communication was part of a genuine attempt to settle a dispute. If so, the whole course of the negotiations is privileged. (case references omitted)

52 The operation of the privilege was also discussed by the Queensland Court of Appeal in Glengallen Investments Pty Ltd v Arthur Andersen.[63] Williams JA, with whom McPherson JA and Ambrose J agreed, noted that the two essential prerequisites for the operation of the rule are:[64]

(1) a genuine attempt to reach a settlement of a dispute the subject of litigation or which will become so if the dispute is not resolved; and

(2) the making of an express or implied admission in so doing. The rule then operates to prevent the use of such admissions in subsequent litigation.

53 In Pihiga Pty Ltd v Roche,[65] Lander J explained that there are two bases for the rule. The first lies in public policy, in that the existence of the rule encourages parties to engage in full and frank discussions aimed at settling their disputes without recourse to the courts. The second is that the rule is founded on the express or implied agreement of the parties that the communications between them should not be admissible in evidence if those communications do not lead to a settlement.[66] Accordingly, the rule protects admissions in the form of an offer to settle, and communications between parties generally in respect of issues in the dispute including assertions made of the strength and weakness of a party's case or an opponent's case.[67]

54 There are, however, numerous exceptions to the rule. In Old Papa's, McLure J noted that the rule is not absolute 'and resort may be had to without prejudice material for a variety of reasons and when the justice of the case requires it'.[68] By way of example, without prejudice communications are admissible when the issue is whether such communications have resulted in a concluded compromise agreement.[69] Another exception is that a party to without prejudice negotiations can rely upon anything said in the course of them in order to show that a settlement agreement should be rectified.[70] Further, evidence of negotiations conducted on a without prejudice basis is admissible to show that an agreement apparently concluded between the parties during the negotiations should be set aside on the ground of misrepresentation, fraud or undue influence.[71]

55 I am not persuaded that BGNV has established that the challenged paragraphs disclose communications which are subject to the 'without prejudice' privilege, so as to warrant the paragraphs in question being struck out of the SIFC. I have reached that view for the following reasons.

56 First, it was far from clear that the communications referred to in each paragraph were in fact subject to without prejudice privilege. BGNV did not adduce any evidence to support that conclusion. Copies of the documents referred to, for example, were not put into evidence. The surrounding context for each of the challenged paragraphs was not sufficient to establish that the privilege applied. While the surrounding context for the challenged paragraphs suggests that the communications were conducted in the course of negotiations, ICWA disputed that those negotiations were undertaken between the parties concerned for the purpose of settling a dispute. For example, in respect of [857] [875], [894] [895] and [898], which pertain to the negotiation of the PTICA, counsel for ICWA submitted that the negotiation of the PTICA

was to ensure the 'BGNV Actions' (as defined in the PTICA) were pursued thereby enhancing the prospects of success for the applicants in the Main Proceeding. Consequently, there was no relevant 'dispute' to be settled by the negotiation ...[72]

57 In the absence of evidence to establish the true position, BGNV's contention that the challenged paragraphs disclose privileged communications cannot be accepted.

58 Secondly, in so far as [702] is concerned, I am not persuaded that that paragraph discloses a privileged communication. Counsel for ICWA submitted that the communications referred to in [702] were not pleaded as evidence of an admission.[73] The paragraph refers to the fact that particular communications occurred, and in very broad terms to the subject of the communications, but does not disclose BGNV's position in respect of any matter the subject of those communications.

59 Thirdly, even if the communications referred to in [857] [875], [894] [895] and [898] are liable to attract the privilege, I am satisfied that the circumstances in which they are relied upon by ICWA brings them within the scope of exceptions to the rule that without prejudice communications are not admissible. The communications are clearly relied upon by ICWA in support of its rectification claim, and in support of its misleading and deceptive conduct claim. The former is a recognised exception to the rule against the inadmissibility of without prejudice communications. It is arguable that admission on the latter basis would be analogous to the exception for communications in order to establish misrepresentation or fraud, or (for similar reasons) would be admissible on the basis that the justice of the case requires it. I am not persuaded that the paragraphs of the SIFC should be struck out in these circumstances.

60 There will be an order that [899] and [900] of the SIFC be redacted. BGNV's application to strike out paragraphs of the SIFC on the grounds that they disclose privileged communications will otherwise be dismissed.

(b) PFR 1 and [16] [19] and [23] [132] of the SIFC;

61 BGNV seeks to strike out these PFRs and the paragraphs of the SIFC which pertain to them on the basis that they may prejudice, embarrass or delay the fair trial of the action, or that they are otherwise an abuse of the process of the Court.

62 PFRs 1 and 2 are each concerned with the construction and operation of s 564. In PFR 1, ICWA seeks a declaration for the purposes of s 564 that ICWA is a creditor of BGF and that either property (namely the Proceeds) recovered under an indemnity for the costs of litigation given by ICWA, or protected or preserved by the payment of money or the giving of an indemnity by ICWA, or expenses in relation to which ICWA has indemnified the liquidator, have been recovered by the liquidator.

63 In PFR 2, ICWA seeks a declaration that the Court may make an order pursuant to s 564 in favour of a creditor which has paid money, or given an indemnity for the liquidator's costs or expenses:

(a) for the payment of money by BGF and/or TBGL or the liquidator to that creditor, that is not limited by reference to the amount due to that creditor in its capacity as a creditor, and/or without altering the priority of that creditor in its capacity as a creditor; and

(b) for the payment of money by BGF or its liquidator and/or TBGL or its liquidator to that creditor, which will not reduce the amount for which that creditor's claim may be admitted to proof pursuant to s 555 and s 556; or

(c) for the payment of money by BGF or TBGL or the liquidator to that creditor, which will not reduce the principal amount for which that creditor's claim may be admitted to proof under s 555 or s 556 but may reduce the amount of post liquidation interest otherwise payable to that creditor.

64 BGNV contends that the relief sought in PFR 1 overlaps with the relief sought in connection with Issue 2 raised in the liquidator's SIFC in the Liquidator's Application. It further contends that the relief sought in PFR 2 overlaps with the relief sought in connection with Issues 3 to 6 in the liquidator's SIFC in the Liquidator's Application.[74]

65 The precise extent of any overlap is a matter of dispute. ICWA does not dispute that there is some overlap between the issues raised by PFR 2 in this action and Issues 4 to 6 raised in the Liquidator's Application.[75] However, it disputes that there is a precise correspondence with all of the issues in PFRs 1 and 2. For example, it disputes that there is a 'direct correspondence' between PFR 1 in this action and Issue 2 in the Liquidator's Application.[76] It says there are significant differences in the issues raised between PFR 2 and Issues 4 to 6 in the Liquidator's Application.[77] Counsel for ICWA also submitted that there is no overlap between Issue 3 identified in the Liquidator's Application, and PFR 2 in the present action.[78] In my view, it is unnecessary to resolve the precise extent of the overlap for present purposes.

66 The crux of BGNV's case for the strike out of PFRs 1 and 2 is that it is an abuse of process to seek to litigate in a further, separate proceeding a matter which is the subject of an existing proceeding. BGNV contends that there was, and is, no justification for ICWA to include PFRs 1 and 2 in this action when 'the very same questions to be answered by those prayers arise directly in [the Liquidator's Application]'.[79]

67 Whether an overlap in the issues raised in different proceedings gives rise to an abuse of process must be judged by reference to all of the circumstances. I am not persuaded that the pursuit of PFRs 1 and 2 in the action should properly be regarded as an abuse of process, notwithstanding that there is some overlap between the issues in those PFRs and the issues raised in the Liquidator's Application, having regard to the following circumstances in particular.

68 First, in my view, there is no present risk that the continued pursuit of PFRs 1 and 2 will bring the administration of the law into disrepute, or will undermine public confidence in the administration of justice. As I am case managing both of the actions, this is not one of those cases which more typically give rise to an abuse of process claim, where (for example) there exists the prospect that two overlapping actions could be separately tried, independently of each other, with the prospect of inconsistent outcomes.

69 Further, although no final decision has been made as to how the trial of the Liquidator's Application and the trial of this action should proceed, the factual and legal overlap between the two proceedings means that the prospect that the actions will be tried together (if not consolidated), has been identified as a distinct possibility from the outset. In the unlikely event that it ultimately transpires that the actions should not be tried together, and that one action should proceed to trial first, then clearly questions might arise as to whether the pursuit of overlapping issues in the later action would constitute an abuse of process. However, if that transpires, it is more likely that the later action would be the Liquidator's Application. All of that is an issue for another day. For present purposes, the point is that it is not an abuse of process for the overlapping issues to be pursued in the present action, for the time being.

70 Furthermore, once all of the SIFCs have been filed in the Liquidator's Application and this action, the question whether there should be consolidation of both proceedings may warrant consideration. At the very least, it will be appropriate for consideration to be given to the preparation of a consolidated summary of the issues that arise, in total, in both of the proceedings so that the Court is left in no doubt about what is required to be resolved at trial. That exercise will require conferral between the parties, and is an issue I intend to raise with the parties at a strategic conference or directions hearing at an appropriate point.

71 Secondly, notwithstanding any overlap with the issues raised in the Liquidator's Application, it was not suggested that the pursuit of PFRs 1 and 2 will be productive of any oppression or unfairness to BGNV. While BGNV will need to plead to similar issues in this proceeding and in the Liquidator's Application, the cost in its doing so will not give rise to an abuse of process.

72 Thirdly, the differences in the pleading of the issues in PFRs 1 and 2, as compared with the Liquidator's Application, has a certain utility. It is to the advantage of all of the parties to see how other parties seek to frame what they say are the questions the Court needs to determine in the course of construing, and then applying, s 564. That is particularly so given that those questions pertain to issues concerned with the construction of s 564 for which there is little or no authority, and which concern the operation of s 564 in a case which is, factually, quite out of the ordinary. The legal novelty of this case, and its very unusual factual circumstances, mean that particular caution is warranted in the exercise of the power to strike out, so as to ensure that the development of the law is not stifled by prematurely excluding issues from examination.

73 Fourthly, I do not see any basis for concluding that the pursuit of PFRs 1 and 2, in addition to the issues raised in the Liquidator's Application, is likely to waste the time or resources of the Court. Whether or not the issues raised by ICWA are ultimately advanced in this action, or in the Liquidator's Application, it is apparent that at the trial the Court will be asked to resolve them.

74 Accordingly, BGNV has not demonstrated that the action should be struck out under O 20 r 19(1)(d).

75 BGNV did not advance any different basis for contending that these PFRs and paragraphs of the SIFC were embarrassing or liable to prejudice or delay the fair trial of the action. For the same reasons as I have already set out, BGNV has not demonstrated that the action should be struck out under O 20 r 19(1)(c) either.

76 BGNV seeks to strike out this PFR and the paragraphs of the SIFC which pertain to it on the basis that they may prejudice, embarrass or delay the fair trial of the action, or that they are otherwise an abuse of the process of the Court.

77 ICWA is a party to the AFIs and the PTICA. In PFR 4, ICWA seeks a declaration that it may seek an order from the Court that a payment be made directly to it under s 564 without breaching any obligation it has under those agreements. ICWA seeks this relief in the alternative to the relief it seeks in PFRs 6, 7, 8, and/or 10, or alternatively to the relief it seeks in PFRs 9 and/or 11, or alternatively to the relief it seeks in PFR 12. It acknowledges that declaratory relief in relation to PFR 4 will not be necessary if it is successful in relation to any of those alternative claims for relief.

78 BGNV relies on two arguments to strike out PFR 4. It contends that PFR 4 assumes that the Court will find that ICWA is an indemnifying creditor of BGF that is, that the declarations sought in PFRs 1 and 2 will be made. Accordingly, BGNV contends that PFR 4 raises the same issue that will be determined in the Liquidator's Application in any event.[80] I do not agree with that contention, nor with the submission that that means that the pursuit of PFR 4 is an abuse of process. In my view, while PFR 4 is contingent upon ICWA being successful in its application for declaratory relief that it is an indemnifying creditor (PFR 1), PFR 4 does not, itself, raise that issue. PFR 4 instead raises quite distinct issues related to the construction and operation of the AFIs and the PTICA, and ICWA's obligations under those agreements.

79 Even if I am wrong in the conclusion that PFR 4 raises issues quite distinct from those raised by PFR 1 (and PFR 2), then for the same reasons as are set out above in relation to PFRs 1 and 2, I am not persuaded that it is an abuse of process for ICWA to pursue PFR 4 in this action.

80 Secondly, BGNV contends that to the extent to which PFR 4 raises a question about the construction of the PTICA, that cannot occur until ICWA's claim for rectification of the PTICA (which is the subject of PFR 18) is determined.[81] As I understand it, BGNV contends that because PFR 18 should be struck out, the foundation for PFR 4 also falls away.[82] I do not accept that submission. A quite discrete issue of construction which remains in relation to the PTICA, and which is at the heart of PFR 4, is whether, on the proper construction of the PTICA, ICWA would be precluded from seeking an order under s 564.

81 In any event, to the extent that BGNV contends that PFR 4 should be struck out on the same basis as PFR 18, I am not persuaded that PFR 4 should be struck out for the reasons identified in relation to PFR 18 below.

82 Furthermore, the relief sought in PFR 4 is not confined to the question of the construction and operation of the PTICA, but extends also to the construction and operation of the AFIs. Consequently, the outcome of PFR 18 could not, in and of itself, dictate whether PFR 4 can be pursued in any event.

83 Thirdly, it is possible that, depending on the outcome of the other issues pleaded by ICWA, the claim underlying PFR 4 may prove unnecessary to determine. That does not, however, mean it is an abuse of process for ICWA to seek the declaration it does in PFR 4 in the present action. It is not an abuse of process to seek relief in the alternative. Nor does the prospect that it may not be necessary to determine the claim underlying PFR 4 mean that that PFR (or related paragraphs of the SIFC) is embarrassing or liable to prejudice, embarrass or delay the fair trial of the action.[83]

84 Finally, the issues raised in relation to PFR 4 overlap with those raised in relation to PFRs 21 and 22. BGNV contends those PFRs are hypothetical. The purported hypothetical nature of that relief is further dealt with below in my discussion of BGNV's application to strike out PFRs 21 and 22. It suffices to say, for present purposes, that no basis has been shown for concluding that PFR 4 itself is hypothetical, so as to warrant being struck out on that basis.

(d) PFRs 5, 9 and 11 and [20] [22] and [208] [285] of the SIFC

85 BGNV seeks to strike out these PFRs and the paragraphs of the SIFC which pertain to them on the basis that they disclose no reasonable cause of action, or may prejudice, embarrass or delay the fair trial of the action, or that they are otherwise an abuse of the process of the Court.

86 In each of PFRs 5, 9 and 11, ICWA seeks an order under s 564 in relation to the winding up of BGNV (rather than in relation to the winding up of TBGL or BGF). In PFR 5, ICWA seeks a declaration that for the purposes of s 564, ICWA is a creditor of BGNV. Then in PFRs 9 and 11, ICWA seeks orders under s 564 that BGNV's liquidator pay ICWA an amount equal to the aggregate of any monies he receives from BGF, TBGL, the liquidator or the LDTC, and that that amount be paid out of the proceeds of, or connected with, any debts owed by TBGL and BGF to BGNV, pursuant to certain clauses of the TBGL Trust Deed and the BGF Trust Deed. ICWA seeks orders that that amount be paid in priority to any other amount payable in the liquidation of BGNV pursuant to s 556.

87 In order to explain my conclusions in respect of BGNV's contentions concerning these PFRs, it is necessary to briefly refer to the facts and contentions set out by ICWA in its SIFC in relation to these PFRs, read and understood in conjunction with ICWA's submissions, which clarify ICWA's intended argument in relation to this part of its case.

The facts and contentions ICWA pleads in support of PFRs 5, 9 and 11, and its submissions as to how s 564 applies in the winding up of BGNV

88 ICWA claims that it is the holder of BGNV Bonds[84] (and thus, a creditor of BGNV[85]) and that it provided various indemnities to the liquidator of BGNV in connection with the Bell Litigation, and with the overlapping action in this Court, CIV 2061 of 1996.

89 In broad sweep, ICWA claims that under the PTICA, it agreed to indemnify BGNV's liquidator in respect of his reasonable costs and expenses after 30 March 1999, and to provide security for costs ordered against BGNV, in relation to that part of the Bell Litigation which concerned a claim against BGNV by the banks, and BGNV's response to that claim (including an application to set aside a subordination deed which was the basis for the banks' claim).[86] In addition, ICWA claims that pursuant to the PTICA, ICWA and the Commonwealth agreed to pay to the liquidator amounts that were payable by BGNV pursuant to a number of other indemnities including the AFIs, the Western Interstate Indemnity Agreement (WIIA) and the WIAA.[87] ICWA claims that it paid those amounts, and that it funded BGNV's participation in the Bell Litigation in accordance with the provisions of the PTICA and the AFIs.[88] ICWA claims that it advanced over $1.689 million to BGNV's liquidator in relation to the indemnity granted under the PTICA.

90 ICWA claims that the indemnity given, and the payments it made, to enable BGNV to participate in the Bell Litigation enabled evidence to be led and arguments to be put at trial which ultimately supported the conclusion reached by the Court of Appeal that the subordination deed on which the banks relied was void ab initio.[89] ICWA claims that the result of that conclusion was that property of BGNV namely proceeds of, resulting from or connected with the debts owed to BGNV by TBGL and BGF which would not have been recovered at all, or would have been recovered in a lesser amount, could be recovered, and were protected and preserved.[90]

91 ICWA also contends that it advanced over $115,000 to BGNV's liquidator, pursuant to an agreement referred to as the BGNV Indemnity.[91] ICWA says that that indemnity was requested by BGNV's liquidator, to cover any legal costs he incurred as a result of BGNV being joined as defendants in CIV 2061 of 1996.[92]

92 In summary, ICWA claims that both prior to becoming, and while it has been, a creditor of BGNV, ICWA gave an indemnity for BGNV's costs of litigation under which property has been recovered, or paid money as a result of which property has been protected and preserved, and that it is an indemnifying creditor of BGNV for the cost of litigation, pursuant to indemnities provided under the PTICA and the BGNV Indemnity. ICWA claims that BGNV and its creditors have benefited from the provision of those indemnities by ICWA.[93]

93 Having regard to ICWA's submissions, it appears that ICWA's case is that the 'property' which was protected and preserved, by virtue of its payment of money or its indemnity to BGNV's liquidator, was the debt owed by TBGL and by BGF to BGNV.

94 ICWA seeks the relief in PFRs 5, 9 and 11 only in the alternative to the relief it seeks in PFRs 6, 7, 8 and/or 10, which deal with the construction and operation of the subordination and turnover trust clauses, and the question whether monies paid to ICWA or the LDTC (whether as trustee in respect of the BGF Trust Deed or the TBGL Trust Deed) pursuant to s 564 in the Liquidator's Application would be subject to the subordination and turnover trust clauses. ICWA seeks this alternative relief because its position is that if it is unsuccessful in its argument about the operation of the subordination and turnover trust clauses, so that monies paid to ICWA or the LDTC pursuant to an order under s 564 in the Liquidator's Application would need to be paid to BGNV, then BGNV 'will receive a windfall benefit'.[94] ICWA expressly acknowledges that it seeks the alternative relief in PFRs 5, 9 and 11 'to mitigate the consequences of the possible diversion of monies otherwise payable to ICWA if it is unsuccessful in relation to [PFRs] 6, 7, 8 and/or 10'.[95]

95 To that end, the amount of the s 564 order ICWA seeks in the winding up of BGNV (in PFRs 9 and 11) is an amount which is 'equal to the aggregate amount of monies received or receivable' by BGNV's liquidator from either TBGL, BGF or the LDTC, by virtue of the operation of the subordination and turnover trust clauses. ICWA's case is that it would be 'just' to make an order under s 564 in that amount because otherwise BGNV will receive a windfall as a result of the operation of the subordination and turnover trust clauses.

96 BGNV advances two arguments to support its claim that PFRs 5, 9 and 11 should be struck out. First, it says that PFRs 5, 9 and 11 are hypothetical. Secondly, it says that the Court does not presently have jurisdiction to deal with the claims behind these PFRs.

BGNV's contention that PFRs 5, 9 and 11 are hypothetical

97 BGNV contends that these PFRs are hypothetical in the sense that they are pursued only to the extent that ICWA is unsuccessful in obtaining the relief it seeks in PFRs 6, 7, 8 and/or 10. Counsel for BGNV contended that PFRs 5, 9 and 11 will only arise for determination if five preconditions or contingencies are satisfied: an order must be made under s 564 in favour of the LDTC or ICWA (in the Liquidator's Application); the LDTC or ICWA must have been paid monies pursuant to that order; the Court must find that those monies are caught by the subordination and turnover trust clauses; an amount must be paid to the liquidator of BGNV as a consequence of that finding; and then the Court must find that the liquidator of BGNV received those funds representing the proceeds of, or resulting from or connected with, any debts owed by TBGL and BGF to BGNV, so as to satisfy the requirements for an order under s 564 in the winding up of BGNV.[96] He submitted that this meant that PFRs 5, 9 and 11 were hypothetical.

98 Counsel for BGNV also relied on the decision of Templeman J in The Bell Group Ltd (in liq) v Westpac Banking Corporation.[97] He submitted that the argument advanced by ICWA as to why these PFRs were not hypothetical is the same argument that was rejected by Templeman J. It is convenient to deal with that argument below, in relation to BGNV's contention that the Court does not have jurisdiction to deal with ICWA's claims at present.

99 As the present action is clearly within federal jurisdiction, the question raised by BGNV's contention is whether the issues raised by PFRs 5, 9 and 11 constitute a 'matter' within the meaning of ch III of the Constitution. The requirement for the existence of a 'matter' as a justiciable controversy requires that there be an 'immediate right, duty or liability to be established by the determination of the Court'.[98] The implications of federal jurisdiction aside, the power to grant declaratory relief is in any event 'confined by the considerations which mark out the boundaries of judicial power'.[99] Consequently, a declaration must concern a real controversy susceptible of judicial determination.[100]

100 A party who seeks declaratory relief must therefore demonstrate a 'real interest'[101] in the subject matter of the declaration and it must be apparent that the declaration will produce foreseeable consequences for the parties.[102] The power to grant a declaration includes the power to declare that intended conduct which has not yet taken place will not be in breach of a law, or will be a nullity in law.[103] However, there is no power to grant a declaration where the question is 'purely hypothetical' in the sense that it is 'claimed in relation to circumstances that [have] not occurred and might never happen'.[104]

101 Especially in cases where declarations are sought in respect of future conduct, difficult questions can arise as to what sets apart a hypothetical question from one which constitutes a proper exercise of judicial power. There is surprisingly little authority on what criteria must be met, or which factors must be present, to avoid the prospect that the Court is being asked to give what is purely an advisory opinion. The Court is clearly required to make an evaluative judgment in the circumstances of every case.

102 One characteristic of a purely hypothetical case is that it does not arise from an actual or genuine controversy, and will not constitute a binding decision capable of founding a res judicata between parties.[105] That was the difficulty in Bass v Permanent Trustee.[106] The Full Federal Court had answered six preliminary questions of law and made consequential orders, including orders striking out claims made against a State under the Trade Practices Act 1974 (Cth). However, the preliminary questions were not based on facts which had either been found, or agreed between the parties. Accordingly, the answers to the preliminary questions could not dictate the result of the proceedings in question.[107]

103 More recently, the High Court has considered issues relating to hypothetical questions in the context of the requirement for the existence of a matter in federal jurisdiction in a number of cases, including CGU Insurance v Blakeley.[108] In that case, the liquidators of a company commenced proceedings in the Supreme Court of Victoria against former directors of the company for amounts equal to the loss or damage suffered by creditors of the company arising from debts owed by the company because of its insolvency. The liquidators alleged that the directors had breached their duties under the Act to prevent the company incurring debts when it was, or was likely to become, insolvent. Some of the directors had a policy for professional indemnity insurance with CGU. The directors made a claim on that policy, which was denied by CGU. The directors were insolvent and had no capacity to pursue proceedings against CGU themselves. The liquidators applied for an order to join CGU as a defendant to the proceedings, with a view to obtaining a declaration that CGU was required to pay to the company amounts for which it was required to indemnify the directors. Any such liability was dependent on the Supreme Court making a finding that the directors were liable for a breach of their duties, and in turn that CGU was liable to indemnify them under the policy. The order for joinder was made. CGU unsuccessfully appealed against that order, and then obtained special leave to appeal to the High Court, on the basis that the Supreme Court lacked jurisdiction to entertain the claim by the liquidators for declaratory relief against CGU.

104 The High Court held that a justiciable controversy existed, and thus that the Supreme Court, in its exercise of federal jurisdiction, had jurisdiction to entertain the claim, and the power to grant the relief sought. The plurality noted that the liquidators' claim was based on the legal consequences created by relevant federal statutory provisions, in the event that CGU was liable to indemnify the directors. They accepted that the interest on which that claim was based, and CGU's denial of liability under the policy, were sufficient to give rise to a justiciable controversy.[109] It was sufficient that the declaration sought, if granted, would be binding between the liquidators and the insurer, and would likely prevent the issue being litigated again in subsequent proceedings.[110]

105 Justice Nettle (in a separate judgment) also accepted that there was a justiciable controversy. His Honour pointed out that even though it would not be known until the conclusion of the trial whether the circumstances were such that the liquidators would have a right of priority in relation to the proceeds of the insurance policy, the liquidators' claim was not hypothetical because it arose from events which had occurred (namely the directors' alleged past breaches of the Act).[111] Furthermore, his Honour observed:[112]

the issue in this case is not theoretical but, even if it were, the court does not lack jurisdiction to make a declaration concerning a theoretical issue, in the sense of an issue that does not presently exist but which is likely to arise in future, where the issue is productive of a real and pressing dispute, is of real practical importance or is one in which the claimant has a real commercial interest. Thus, for example, it is now well established that, where a claimant intends to take action which would subject him or her to a 'theoretical' possibility of being subjected to legal process, the risk of being so subjected to that process is sufficient to ground standing to claim a declaration that the basis of the process ... is invalid and, co-ordinately, that in such cases there is a matter upon which the court has jurisdiction to adjudicate. Similarly, where a claimant has a real commercial interest in establishing the claimant's legal status or entitlement in relation to proposed commercial conduct and there is a real controversy with some contradictor as to the existence or extent of the claimant's legal status or entitlement, the claimant may have standing to obtain, and the court coordinately will have jurisdiction to grant, a declaration as to the existence or extent of the status or entitlement. (footnotes omitted)

106 The question of what constitutes a hypothetical question relevant to the existence of a 'matter' was also considered by the High Court in Palmer v Ayres.[113] In that case, the plaintiffs contended that the power of a court to summon a person for examination under s 596A of the Act was invalid, amongst other things because it did not involve an exercise of judicial power and there was no 'matter' to engage the exercise of the judicial power of the Commonwealth. Justices Kiefel, Keane, Nettle and Gordon explained the concept of a 'matter' in this way:[114]

The requirement that, for there to be a 'matter', there must be an 'immediate right, duty or liability to be established by the determination of the Court' reinforces that the controversy that the court is being asked to determine is genuine, and not an advisory opinion divorced from a controversy, and, further, that only a claim is necessary. A matter can exist even though a right, duty or liability has not been, and may never be, established. (footnotes internal to the quote omitted)

107 In other words, the existence of a 'matter' is not dependent on the acceptance of a party's claim (upon which the establishment of a right, duty or liability depends). There can be a 'matter' (and thus the Court can be exercising federal jurisdiction) even if, ultimately, the claim is dismissed.

108 In Palmer the plurality took the view that the matter was the question whether the criteria for the issue of a summons under s 596A had been met. The Court had to be satisfied that those criteria were met, on the basis of the evidence put before it. Furthermore, the plurality observed that the resolution of that 'matter'[115]

yields, as its immediate result, an order for examination with direct loss of privileges for the examinee the subject of the order. Rights and liabilities are determined by that judicial determination - they are not merely affected.

109 Most recently, in Re Barrow, Edelman J considered the nature of a hypothetical case.[116] In that case, the applicant sought a declaration that certain steps he planned to take to renounce his British citizenship would be considered 'reasonable' and would prevent him being ineligible for election as a senator at the next general election, by virtue of the operation of s 44(i) of the Constitution. The applicant proposed to seek renunciation of his citizenship by writing a letter to the British Home Office close to the date of the close of nominations. If he was not elected to the Senate, the applicant proposed to seek a withdrawal of the renunciation. The applicant had undertaken those steps on two previous occasions, and indicated that he again intended to take those steps and to nominate for election as a senator at the next election. Justice Edelman dismissed the application on the basis that the applicant sought an 'advisory opinion' only.[117] His Honour observed that what the applicant sought was 'abstracted from any real dispute, ha[d] no contradictor, and involved hypothetical facts some of which [were] even unspecified. Some, or all, of the facts might never arise'.[118]

110 These cases confirm that provided that a claim is based on facts which have occurred, and have given rise to a real dispute, the claim will not be hypothetical simply because its resolution depends on the outcome of other claims.

111 I am unable to accept BGNV's submission that the relief sought by ICWA in PFRs 5, 9 and 11 is hypothetical. The fact that the relief sought by ICWA in those PFRs is dependent on the determination of a number of contingent issues does not mean that its claim can be regarded as hypothetical. It seeks to have those contingent issues resolved in the course of the trial of the action. The resolution of those issues will require factual findings arising from events which have occurred, and legal conclusions in respect of the operation of agreements which presently exist (including the PTICA and the BGNV Indemnity). I did not understand it to be in dispute that ICWA would have a commercial interest in obtaining the declaratory relief it seeks, and in an order under s 564 in the winding up of BGNV.

112 Further, the fact that the relief sought is pursued in the alternative to other relief (in PFRs 6, 7, 8 and/or 10) does not mean that the relief sought in PFRs 5, 9 and 11 is hypothetical. For the reasons already outlined, it is not an abuse of process to seek alternative forms of relief.

113 BGNV contends that the Court does not have jurisdiction to deal with ICWA's claims at this stage because no property has yet been recovered, protected or preserved by the payment of monies or the giving of indemnity by creditors, for the purposes of s 564(a) (and ICWA does not contend that expenses have been recovered in relation to which a creditor has indemnified a liquidator, for the purposes of s 564(b)).[119]

114 As I have already mentioned, counsel for BGNV relied on the decision of Templeman J in Bell Group Ltd (In Liq) v Westpac Banking Corporation[120] (the TBGL case). BGNV submitted that the argument advanced by ICWA in this case was the same as that advanced in the TBGL case, and that the same conclusion reached by Templeman J in that case should follow here.

115 The TBGL case concerned an application brought by the liquidator in 1995 under s 564 of the Law, in which the liquidator sought orders that any property or expenses recovered in proceedings then pending in the Federal Court (the Bell Litigation, prior to the transfer of those proceedings to this Court) be distributed in a specified fashion, so as to give an advantage to the creditors who were proposing to provide (further) funding for the Bell Litigation. The key issue was whether the prerequisite for the operation of s 564 had been satisfied, namely whether it was the case that any 'property had been recovered ... or protected or preserved' by the payment of monies or the giving of an indemnity by the creditors in respect of the liquidator's pursuit of the Bell Litigation. The liquidator contended that the relevant 'property' was the claim pending in the Federal Court, and that that claim would include, in due course, the monies paid in satisfaction of that claim. The claim was said to be a chose in action which had been 'protected or preserved' by the funding provided by the creditors to that point.

116 Justice Templeman held that the Court had no jurisdiction to make an order under s 564 at that stage. His Honour doubted that the Bell Litigation then underway constituted a chose in action, but in any event, he concluded that even if that cause of action was a right which fell within the definition of 'property' in the Law, so that it was property 'which [could] be protected or preserved by the payment of money, it is only the proceeds of that right which can be the subject of a s 564 order'.[121] His Honour thus did not see any basis for the operation of s 564 before the chose in action had been established by a judgment. He held that 'an order made in advance of litigation must be hypothetical, or of uncertain operation' and that it was unlikely that the Parliament intended s 564 to apply in those circumstances.[122]

117 In contrast, ICWA relies on two later decisions Deputy Commissioner of Taxation v Currockbilly Pty Ltd[123] and Tolcher v National Australia Bank[124] which it contends illustrate that the narrow approach to the concept of 'property' in s 564 which was adopted by Templeman J has not been followed in later cases.

118 In Deputy Commissioner of Taxation v Currockbilly Pty Ltd[125] the creditors of Currockbilly had indemnified its liquidator for the costs associated in examining the company's directors. As a result of the examination, the liquidator recommended that the creditors authorise him to institute litigation and indemnify him in doing so. The creditors agreed. One of the parties to the proposed litigation then made a settlement offer, which was accepted by the company's liquidator. The creditors then authorised the company's liquidator to apply to the New South Wales Supreme Court under s 564 of the Act for orders that the indemnifying creditors have priority over the secured creditors so that they might recover the entirety of their debts.

119 Macready AJ held that an order should be made under s 564 of the Act. In considering whether the preconditions for the operation of s 564 were satisfied, his Honour considered the judgment of Templeman J in the TBGL case, because as his Honour observed 'the fact that a settlement does not necessarily prove the existence of a valid chose in action brings into play the first reason why Templeman J found as he did'. Macready AJ held that the legislative purpose behind s 564 was to encourage the pursuit of claims by liquidators, both for the benefit of creditors and shareholders and for the recovery of property from wrongdoers. His Honour held that to construe s 564 narrowly (as Templeman J had done) by holding that a chose in action would only constitute 'property' under s 564 where it was established by a judgment, would defeat that legislative purpose, and that s 564 should be construed to include an asserted cause of action at the stage when the facts, that are alleged to be the protection or preservation of the cause of action, occurred.

120 As his Honour noted, to construe s 564 otherwise would mean that a liquidator who received a favourable settlement offer would nevertheless be forced to reject it and seek judgment in order to be eligible for an order under s 564. Accordingly, Macready AJ held that an application under s 564 was premature

until it can be established that the cause of action has been protected or preserved and that there is property available, whether as a result of judgment or a settlement, such that there can be a distribution ... . The court cannot determine what is just with respect to the distribution until the property available for distribution has been determined. The matters in par (a) [of s 564] pre-date the task of the court when it has to consider what is just in respect of property that is to be distributed. There is no difficulty caused by including what is an asserted cause of action as an item of property that may be protected or preserved because the court has to make a factual finding to that effect. ...

Clearly a cause of action accrues when material facts occur so that the right to sue upon a cause of action is a claim to curial redress or remedy based upon events that have happened.[126]

121 His Honour held that what was achieved by the examination process was the protection or preservation of the chose in action. His Honour also concluded that the requirement under s 564(a) that 'property has been recovered under an indemnity for costs of litigation', linked the recovery to the giving of an indemnity, and not to the litigation itself. On that basis, his Honour found that there was no reason to conclude that the property had to be recovered by an order made in the proceedings, as distinct from the settlement of those proceedings, and that it was up to the Court to determine that there exists the necessary causal connection between the recovery and the indemnity.[127]

122 In Tolcher v National Australia Bank, the liquidator of a company had obtained money as a result of compromising claims against another company for its receipt of an unfair preference, pursuant to s 588FF, and for insolvent trading, pursuant to s 588M, of the Act. The question arose whether that money fell within the definition of 'property' so as to be subject to an order under s 564 of the Act. His Honour observed that s 564 was concerned with the

recovery, protection or preservation of 'property' at large. It does not speak of property of the company or of property available for distribution for the purposes of the particular winding up. ... 'Property' should, in the context, be understood as referring to all property that the liquidator has, or can obtain, for the purposes of the winding up. On this basis, 'property' includes both a right of action maintainable by the liquidator under s 588FF or s 588M and money received or receivable by the company by virtue of an order made under either section at the suit of the liquidator.[128]

123 Counsel for BGNV pointed out that in both Currokbilly and Tolcher the liquidator had obtained funds in the winding up of the companies by the settlement of litigation, and by the settlement of proceedings under s 588FF and s 588M of the Act so that funds were available for distribution in the winding up. He submitted that the need for there to be property available for distribution in a winding up before a s 564 application is made was 'fatal to ICWA's case'.[129]

124 Counsel for ICWA submitted that the 'property' which may be subject to an order under s 564 in the winding up of BGNV in this case is a chose in action, namely BGNV's claim that it is owed debts by TBGL and BGF. However, counsel submitted that that 'property' was not merely a claim (as Templeman J characterised the claim the subject of the s 564 application in the TBGL case). Rather, they submitted that BGNV's chose in action had been determined, not by a judgment, but by the admission that TBGL and BGF are indebted to BGNV by the liquidator's admission of BGNV's claims in the windings up of TBGL and BGF.[130] Counsel for ICWA submitted that the admitted debt TBGL and BGF owe to BGNV could be characterised as 'property', consistent with the approach to s 564 taken in Currockbilly, and that the property which will actually be available for distribution by BGNV's liquidator in due course will be the proceeds of that debt. Accordingly, counsel for ICWA submitted that the 'property' which had been recovered, protected or preserved, and which could be the subject of a s 564 order in the winding up of BGNV in due course, is in existence.[131]

125 Counsel for ICWA also submitted that:[132]

the property ICWA claims is susceptible to such an order is not, as BGNV alleges, cash received or receivable by BGNV as a result of ICWA or LDTC being forced to turn over to the senior creditors the proceeds of a s 564 order made in favour of ICWA or LDTC in [the Liquidator's Application]. Rather, ICWA claims that the extent of the proceeds of, resulting from or connected with the debt owed to BGNV which it is 'just' to be distributed to ICWA is an amount equal to that which is received or receivable by BGNV as a result of that turn over ... . In this way, the amount so turned over serves as a means of valuing the amount that is just, it is not the actual amount that is required to be turned over.

PFRs 5, 9 and 11 should not be struck out on the basis that the Court has no jurisdiction to grant the relief sought

126 The question for the purposes of the strike out application, in so far as it concerns the Court's jurisdiction, is whether ICWA's claim that the Court has jurisdiction to grant the relief sought in PFRs 5, 9 and 11 is so clearly untenable that it cannot succeed.

127 The cases to which I have referred, and the parties' submissions, demonstrate that the operation of s 564 is far from settled. The question raised by BGNV's submissions is whether the Court's jurisdiction to deal with an application under s 564 is dependent upon the existence of funds for distribution in the winding up at the point in time the application under s 564 is made. The cases to which the parties referred do not establish that that is what is required.

128 The factual context for the decision of Templeman J in the TBGL case was very different from this case. His Honour was asked to make a s 564 order prior to the determination (in separate proceedings) of litigation which would determine whether monies were actually recovered by the liquidator. In the present case, as I understand ICWA's case, it is contended that the debt owed by TBGL and BGF to BGNV was protected or preserved by the indemnity given by ICWA to BGNV's liquidator, that that 'property' was recovered as a result of that indemnity, and that that property is available for distribution in the winding up of TBGL and BGF, including to BGNV.

129 In this case, the relief sought in PFRs 5, 9 and 11 is sought only in the alternative to other relief. If the grant of the relief in PFRs 5, 9 and 11 in fact arises for determination at trial, it will arise in circumstances where the Court will have determined that funds are to be paid to BGNV's liquidator. At that stage, there will be no doubt that BGNV's liquidator will have funds available for distribution in the winding up of BGNV. The question then will be whether those funds constitute 'property' or 'expenses' of the kind described in s 564(a) or (b) in the winding up of BGNV, and in respect of which an order under that section may be made, if the Court is satisfied that it is just to do so. The Court would clearly have jurisdiction to deal with that question at that stage.

130 In my view it would be inappropriate to strike out the PFRs at this stage on the basis that ICWA's claims (including as to the existence of the Court's jurisdiction) are untenable. Whether the Court has jurisdiction, and whether there exists a basis for granting the relief sought in PFRs 5, 9 and 11 will warrant further, and detailed, consideration at the trial of the action.

131 No different basis was advanced by BGNV for its contention that PFRs 5, 9 and 11 disclose no reasonable cause of action, may prejudice, embarrass or delay the fair trial of the action, or are otherwise an abuse of the process of the Court.

132 BGNV's application to strike out PFRs 5, 9 and 11, and the corresponding paragraphs of the SIFC, therefore fails.

133 In PFR 12, ICWA seeks a declaration that the BGF Trust Deed and the TBGL Trust Deed may be amended by the LDTC, in its capacity as the trustee of each of those Trusts, with the consent of ICWA, by an instrument substantially in the form of an annexure to Ms Hamersley's affidavit of 16 October 2014. ICWA claims that the amendment can be made pursuant to par 18 of the Second Schedule to each of the Trust Deeds.[133] The documents (there are, in fact, two documents) annexed to Ms Hamersley's affidavit are copies of two deeds which were prepared, and partially executed, in 1995 (when attempts were first made, unsuccessfully, to amend the Trust Deeds). Those documents are referred to in the SIFC as the TBGL Second Supplemental Deed (TBGL SSD) and the BGF Second Supplemental Deed (BGF SSD) (the SSDs).[134] The intention is not to amend the Trust Deeds in the same way as was proposed in the SSDs, because when those documents were prepared in 1995, it was contemplated that TBGL, BGF and the LDTC would execute the documents. (Presumably, the proposed amendment was to be made using a process for amendment set out in cl 20(B) of the Trust Deeds.) Accordingly, I have understood the reference in PFR 12 to an instrument 'substantially in the form' of the instrument annexed to Ms Hamersley's affidavit to refer to the content of the SSDs, in so far as those documents refer to the alteration of specific provisions of the Trust Deeds. It appears that the objective behind any such amendment would be to bring about the result that the subordination and turnover trust clause in each of the Trust Deeds would not apply to the repayment of advances made by ICWA, or any payment made to ICWA so as to confer a reward on it, pursuant to s 564.[135]

134 As I understand PFR 12, having regard to the parties' submissions, the question the Court would be asked to determine, for the purpose of making the declaration sought, is whether par 18 of the Second Schedule to each of the Trust Deeds sets out a process by which an amendment may be made to each Trust Deed (the terms of which are substantially in the form set out in the attachment). In other words, PFR 12 is concerned with the process by which the amendment of the Trust Deeds may occur, and not with the particular content of that amendment per se.

135 ICWA seeks this relief in the alternative to the relief it seeks in PFRs 4 and 6 to 11. That is, if ICWA is unsuccessful in obtaining declarations that any amount paid to ICWA pursuant to an order under s 564 will not be subject to the subordination and turnover trust clauses (PFRs 6, 7, 8 and 10) with the result that any such amount would become payable to BGNV, it will press for the grant of the relief in PFR 12 to avoid that outcome.

136 ICWA's case is that an amendment in accordance with par 18 of the Second Schedule to each of the Trust Deeds is one of two means by which the Trust Deeds may be amended.[136] There is no dispute between the parties that the other means by which the Trust Deeds may be amended is set out in cl 20(B) (read together with conditions 5 and 16 of the First Schedule) of each of the Trust Deeds.[137]

137 ICWA's contention that par 18 of the Second Schedule constitutes a power to amend raises questions concerning the proper construction of the Trust Deeds, whether the trustee of each of those Trusts (that is, the LDTC) can properly exercise what ICWA says is its power to amend each Trust Deed, and whether the 'Issuer' (of the bonds, namely BGF in respect of the BGF bonds, and TBGL in respect of the TBGL bonds) and the 'Guarantor' (TBGL in the case of the obligations of BGF under the BGF bonds) should, if required, consent to the exercise of the trustee's power to amend.[138]

138 There is no dispute between ICWA and BGNV that factual hurdles would need to be overcome before any amendment of the Trust Deeds could be effected. That is because in CIV 2061 of 1996, and in CIV 1464 of 2000, the LDTC, BGF, TBGL and the liquidator gave undertakings to the Court, the effect of which was to prevent any amendment to the TBGL Trust Deed or the BGF Trust Deed (Undertakings). The discharge of those Undertakings would be required for the Trust Deeds to be amended, which itself may require the LDTC (as the trustee) and the liquidator to seek directions from the Court as to the propriety of that course.[139]

139 BGNV seeks to strike out PFR 12 on the basis that it discloses no reasonable cause of action, that it is embarrassing or may prejudice or delay the fair trial of the action, or that it is an abuse of process. There are three planks to BGNV's argument: that ICWA's claim for the relief is 'hopeless as a matter of law;'[140] that a precondition for the operation of par 18 is, in any event, not pleaded; and that the relief sought is hypothetical. For the reasons outlined below, I am unable to agree that ICWA's claim for relief is hopeless so as to preclude it from being further pursued at trial. However, I am persuaded that in the circumstances of this case, the relief ICWA seeks amounts to an advisory opinion on what is presently a hypothetical question. For that reason, PFR 12 and its corresponding paragraphs in the SIFC should be struck out.

BGNV's contention that PFR 12 is hopeless as a matter of law

140 Paragraph 18 of the Second Schedule to each Trust Deed provides that a meeting of the 'Holders' (that is, the Holders of the Securities, namely the Bonds and Conversion Bonds in each company)

shall in addition to the powers hereinbefore given have the following powers exercisable by Extraordinary Resolution ... only namely:

...

(C) Power to assent to any modification of the provisions contained in these presents ... which shall be proposed by the Issuer and the Guarantor or by the Trustee.

141 As I presently understand ICWA's argument, it is that par 18 permits a modification of the provisions of the Trust Deed concerned, if that modification is either proposed by the Trustee (that is, the LDTC), or proposed by the Issuer (BGF or TBGL) and the Guarantor (TBGL, in the case of the BGF Trust Deed). In either case, ICWA says, the meeting of the Holders has power to assent (by extraordinary resolution) to such a modification of the Trust Deed.

142 BGNV says that par 18 of the Second Schedule to each Trust Deed does not constitute a power to amend the respective Trust Deeds,[141] that the consent of TBGL, BGF, and the LDTC would be required for any such amendments,[142] and that the LDTC has previously informed the English High Court that it does not consider that par 18 constitutes a power to amend the Trust Deeds.[143]

143 As to the first of these points, BGNV's case is that the construction of the Trust Deeds for which ICWA contends is simply not arguable. The arguments advanced by BGNV were, in short, that amendment of the Trust Deeds would require the consent of all of the parties to the Trust Deeds, and that on its ordinary meaning, par 18 of the Second Schedule to the Trust Deeds could not be construed as conferring a power to amend the respective Trust Deeds in the alternative to the power expressly given in cl 20(B).[144] Those submissions were not without some initial attraction, at least if par 18 is viewed in isolation. But in the end, I am not persuaded that ICWA's construction of par 18 is so hopeless that its case must be rejected summarily.

144 The proper construction of par 18 of the Second Schedule to each Trust Deed will require attention to the words used in that paragraph, understood within the context of each of the Trust Deeds as a whole, so that the purpose or intended operation of par 18 may be discerned.[145] That exercise of construction was not comprehensively undertaken in either of the parties' written or oral submissions. Without undertaking that exercise, with the benefit of counsel's submissions, I am not persuaded that ICWA's case is so clearly beyond argument as to warrant its being struck out at this early stage. Further, I am not persuaded that the pursuit of this aspect of ICWA's case would prejudice, or delay, the fair trial of the action. Construction arguments of the kind involved here are ordinarily best left for resolution at trial, rather than at the strike out stage.

145 As to the second argument advanced by BGNV, namely that the consent of TBGL, BGF and the LDTC would be required to any amendment permitted by par 18, the question whether TBGL and BGF (through the liquidator) need to give consent to the amendment of the Trust Deeds is the very issue raised by the construction question at the heart of PFR 12.

146 Contrary to BGNV's submissions, it is not the case that the consent of all parties to the Trust Deeds is required in order to effect any amendment to the Trust Deeds. It is clear from the terms of cl 20(B) of the Trust Deeds that that clause permits the Trustee (that is, the LDTC), by supplemental deed, to 'revoke, add to or vary' any of the provisions of the Trust Deeds if, in the opinion of the Trustee, 'such alteration is not materially prejudicial to the interests of the Holders', and that that amendment may be effective without the consent of the Holders, provided that the amendment is approved by the Issuer (that is, BGF or TBGL) and the Guarantor (that is, TBGL, in the case of the BGF Trust Deed).

147 Of more significance, however, are BGNV's submissions concerning the LDTC's role in securing an amendment of the Trust Deeds. I turn to explain why that is so.

148 BGNV contends that PFR 12 is hypothetical because, as ICWA itself has pleaded, no steps are in hand to amend the TBGL Trust Deed or the BGF Trust Deed.[146] Counsel for BGNV submitted that the LDTC is required to propose, or consent to, any amendment proposed for the purposes of par 18, and that its consent to any such amendment has not been obtained.[147] Counsel for BGNV submitted that as a result, PFR 12 raises a hypothetical issue.

149 There is no dispute that the Trust Deeds remain operative, and bind the parties to them, including as to the means by which the Trust Deeds may be amended. It is also clear that ICWA intends to pursue the amendment of the Trust Deeds in reliance on par 18 if it succeeds in obtaining the declaration in PFR 12[148] (and subject only to whether it obtains other relief it seeks in the alternative). However, for the reasons explained at [150] [179] below, in my view, that is not sufficient to avoid the conclusion that the claim for relief concerns a hypothetical question.

150 If ICWA is correct that par 18 of the Second Schedule constitutes an alternative means by which the Trust Deeds may be amended, then it appears that any such amendment would require a proposal by the LDTC to amend each Trust Deed, as well as the assent, given by an extraordinary resolution of all of the Holders (that is, ICWA), to that proposed amendment. The amendment of the Trust Deeds under par 18 thus requires that the LDTC intends to make that amendment. If the LDTC has no intention of doing so, and if it is not obliged to do so if ICWA requests it to do so (and there is nothing in the SIFC to suggest the contrary), then regardless of whether ICWA intends to seek an amendment pursuant to par 18, no such amendment could be achieved.

151 In my view, having regard to the contents of the SIFC, PFR 12 raises a hypothetical issue because ICWA has not pleaded that the LDTC intends to pursue an amendment of the Trust Deeds, either of its own volition, or in response to a request by ICWA. The reason for that conclusion is as follows.

152 I do not accept the submission advanced by BGNV that in order to avoid any question that PFR 12 raises a hypothetical issue, it would be necessary for ICWA to demonstrate that the LDTC has in fact proposed an amendment. However, absent any obligation on the LDTC's part to propose an amendment if requested, it would be necessary for ICWA to plead (and in due course to prove) at least a present intention on the part of the LDTC to pursue an amendment, in reliance on par 18, if it is established in this action that par 18 of the Second Schedule provides a means by which the Trust Deeds may be amended.

153 According to the SIFC, in 1995 the LDTC was willing to pursue an amendment of the Trust Deeds. It signed the SSDs, copies of which are annexed to Ms Hamersley's 16 October 2014 affidavit. However, ICWA does not plead that the LDTC remains intent on pursuing such an amendment (whether pursuant to par 18 or otherwise). It appears that the contrary is the case. ICWA proposes to amend the SIFC to refer to correspondence from 2014 in which its solicitors indicated that they were 'not aware of any present intention by any party to amend the Trust Deeds'.[149] It also seeks to include, in the SIFC, a reference to a submission made by senior counsel for the LDTC, Mr Snowden QC, in separate proceedings in the English High Court in 2014, to the effect that par 18 of the Second Schedule does not constitute a power to amend the Trust Deed.[150] Finally, ICWA wishes to amend the SIFC to provide (in [569F]) that:

While no steps are currently in hand to amend the TBGL Trust Deed or the BGF Trust Deed, consistent with the position adopted in that correspondence, ICWA intends to press for such steps to be taken in the event it is unsuccessful in obtaining the declarations sought in prayers for relief 6, 7, 8 and/or 10, including by requesting LDTC propose modifications to the provisions of the TBGL Trust Deed and BGF Trust Deed as provided for in paragraph 18 of the Second Schedule.

154 Moreover, in the SFIC the LDTC filed on 19 October 2016 in this action, the LDTC pleads that it may (not will) consider applying for trustee directions as to whether to seek to amend the Trust Deeds 'if the Supreme Court of Western Australia awards declaratory relief to recognise that amendments may be made to the TBGL and BGF Trust Deeds to effect partial desubordination; and, ICWA requests that LDTC ... should: (i) apply to be released from the undertakings in proceeding CIV 2061 of 1996; and, (ii) effect partial desubordination by executing the Second Supplemental Deeds'.[151] In other words, LDTC's pleading tends to suggest that it cannot be assumed that the LDTC would seek to amend the Trust Deeds simply if ICWA requests that it do so.

155 Counsel for ICWA submitted that BGNV's contention that PFR 12 is hypothetical could be refuted on four bases. I am unable to accept those submissions, for the following reasons.

At a glance

Court

Decision date

Before

Source

Judgment (406 paragraphs)

The facts and contentions ICWA pleads in support of PFRs 5, 9 and 11, and its submissions as to how s 564 applies in the winding up of BGNV

BGNV's contention that PFRs 5, 9 and 11 are hypothetical

PFRs 5, 9 and 11 should not be struck out on the basis that the Court has no jurisdiction to grant the relief sought

BGNV's contention that PFR 12 is hopeless as a matter of law

Legislation Cited (3)

Cases Cited (43)