Karam v ANZ Banking Group Limited

THE RELEVANT CONSIDERATIONS 8 The Plaintiffs' application is made on two alternative bases, the second of which emerging in course of argument. 9 The first basis was that the addition of KBF is authorised by Pt 8 r8 of Supreme Court Rules ("SCR"). As a subset of that basis, the Plaintiffs rely upon Pt 8 r2 of SCR. I quote the relevant rules below: " [8.2] Joinder of parties generally 2 Two or more persons may be joined as plaintiffs or defendants in any proceedings - (a) where - (i) if separate proceedings were brought by or against each of them, as the case may be, some common question of law or of fact would arise in all the proceedings; and (ii) all rights to relief claimed in the proceedings (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions; or (b) where the Court gives leave so to do."

" [8.8] Addition of parties 8 (1) Where a person who is not a party - (a) ought to have been joined as a party; or (b) is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon, the Court, on application by him or by any party or of its own motion, may order that he be added as a party and make orders for the further conduct of the proceedings. (2) A person shall not be added as a plaintiff without his consent. (3) Without limiting the generality of subrule (1), where a person not a party to proceedings for possession of land is in possession (by himself or by a tenant) of the whole or any part of the land, the Court, on application by him, may order that he be added as a defendant and make orders for the further conduct of the proceedings."

10 However, the Plaintiffs are then faced by Pt 8 r11 and in particular sub-rule (3) which I quote below: "(3) Where in any proceedings a party is added otherwise than pursuant to an order under rule 10 or Part 20 rule 4(3), the date of commencement of the proceedings so far as concerns him shall be - (a) where he is added as a defendant - the date on which the amendment adding him as a defendant is made or the date of entry of his appearance or the date of filing his defence, whichever is earliest; (b) otherwise - the date on which the amendment adding him as a party is made."

11 So faced, the Plaintiffs invited me to exercise the dispensing jurisdiction they contend the Court has, in the interests of justice. In particular, they sought that I dispense with Pt 8 r11(3) and instead make the leave conditional upon the joinder being deemed to have been made as from the date of the commencement of the proceedings, that is to say as from 22 April 1997. 12 It was conceded by the Plaintiffs that if the joinder were not retroactive to the date of the statement of claim, it would be a futility and would then be abandoned on that first basis. This is because ANZ Bank would otherwise have a limitation defence to any action contemplated by KBF. It is not necessary for me to reach any concluded view as to whether such a limitation defence would avail were I instead to accede to the Plaintiffs' condition of the joinder so it was retroactive. Indeed at an interlocutory stage in the present proceedings it would be inappropriate to do so. This is unless the circumstances were such that it was beyond doubt that such a limitation defence would not avail, were the joinder retroactive to 22 April 1997. Clearly on the authorities such a conclusion could not be reached at this point. This is insofar as they establish that the cause of action arose when loss was suffered, this being when loss first became reasonably ascertainable; see Wardley Australia Limited v Western Australia (1992) 175 CLR 514 at 537; Kenny & Good Pty Limited v MGICA (1992) Limited (1999) 163 ALR 611 at 618. 13 Any joinder under Pt 8 (other than pursuant to r10 which on no view could apply) would be governed by Pt 8 r11(3). That sub-rule, as I have said, would render joinder a futility as any joinder is taken to be from the date the joinder occurred, with the result that KBF's claim would be statute barred. Because of changes made later in 1989 (gazette 103 20 October 1989), inter alia to Pt 8 and Pt 20, recourse to Pt 8 r2 would not now produce a different result. But it appears that it could otherwise have done so in Fernance v Nominal Defendant (1989) 17 NSWLR 710. It was for that reason, no doubt, that Gleeson CJ in that case went to some pains respectfully to differ from the view expressed by Mahoney JA in Qantas Airways v A F Little Pty Limited (1981) 2 NSWLR 34 at 54-5 that r2 was available alternatively to r8. It is apparent that Pt 8 was amended not long after Fernance. 14 Fernance is significant for a further reason. The Court of Appeal by majority denied a belated attempt, outside the leave earlier granted, to join a later identified driver of a motor vehicle where previously the nominal defendant had been the defendant. The Court of Appeal concluded that the joinder of a defendant should be effected under Pt 8 not Pt 20. In so doing the Court rejected the application of Pt 20 r4, and the attempt by the applicant to call in aid s81 of the Supreme Court Act 1970 to cure an alleged "irregularity" in the pleading. Had Pt 20 r4 been applied, the amendment would have reflected the common law position as set out in McGee v Yeomans [1997] 1 NSWLR 273, namely that the amendment would "relate back to the date of filing the Statement of Claim"; see Pt 20 r4, (5A). 15 In reaching that conclusion, Gleeson CJ said at 723-4: "The first difficulty with this submission, and with any attempt to rely on s81 in the present case, is that there was no "failure to comply with the requirements of (the) Act or of the rules" but merely a failure by the plaintiff to take advantage of an opportunity, limited in point of time, created by the consent order. That order, pursuant to statute, extended by a certain time the limitation period in relation to the plaintiff's claim against Mrs Vaneck and, in effect, gave the plaintiff leave to propound that claim within the specified time. That leave was not taken up. There is, however, a more fundamental difficulty about seeking assistance from s81. The Limitation Act 1969 by its terms operated to extinguish the cause of action against Mrs Vaneck. That cannot, in the circumstances of the present case, be undone by an exercise of the power given by s81, especially when regard is had to the nature of those powers. I note that the President, whose reasons I have had the advantage of reading, proposes that the intended result be achieved by ordering, pursuant to s81, that the plaintiff now have leave to file an amended statement of claim against Mrs Vaneck. Such an order would presumably be made pursuant to s81(1)(b) which empowers the Court to 'exercise its powers under this Act and the rules to allow amendments'. The relevant power to allow amendments is, however, for the reasons earlier given that contained in Pt 8, r11, and subr (3) provides that if and when an amended statement of claim is filed the date of commencement of the proceedings against Mrs Vaneck will be the date of such filling. That will be too late. I see nothing in s81 that empowers this Court to amend Pt 8, r11. Treating the Rules of Court as slaves rather than masters does not warrant their emasculation."

16 The Plaintiffs have attempted to distinguish Fernance from the present circumstances in a number of ways. First, that no reference was made to the powers of the Court under ss21 and 23 of the Supreme Court Act nor to the power to dispense with the Rules under Pt 1 r11A and 12 including the power in that context to set such terms and conditions for leave as the court thinks fit. Nor was there then in the SCR an express "overriding purpose" as expressed in Pt 1 r3 (added by gazette 9 of 28 January 2000). The latter now provides that the overriding purpose is "to facilitate the just, quick and cheap disposal of the real issues in such proceedings". The court must "seek to give effect to the overriding purpose when it exercises any power given to it by the Rules or when interpreting any rules". See Pt 1 r3(2) SCR. 17 Finally, in Fernance importantly there were no allegations in the pleading relating to the party to be added as a defendant. He was a complete stranger to the litigation. Whereas in the present case, the ANZ Bank is no stranger to the litigation, having been a defendant from the outset. Furthermore, the pleadings and factual contentions are essentially the same, whether the plaintiff be the four shareholders or KBF, though now to be brought directly by KBF if the Plaintiffs' application were granted. 18 The essential difference is this. Where shareholders claim a loss based on the value of their shares, they claim damage by reference to a diminution in that value. They may be met by the contention that insofar as the company has a successful right of action it would restore the company to its undamaged state. Hence the shares must reflect the value of that right of action and its potential fruits; see Gould v Vaggelas (1983-1985) 157 CLR 215 at 269 especially the judgment of Dawson J. In that sense, the company rather than the shareholders is the proper plaintiff. No doubt it was with this in mind that the Plaintiffs seek the amendment they do, for the company could not be met with that answer. 19 The essential point in the present context is that in Fernance justice was not overwhelmingly on the side of joining a total stranger to the litigation who would otherwise be able to invoke the limitation period were the joinder not governed by Pt 8 r11(3). However, here justice does strongly favour the Plaintiffs when it comes to the Plaintiffs seeking to join a new plaintiff whose identity has been known from the outset for a known cause of action. 20 One may accept for the purposes of the present argument, without finally deciding, that the Court has jurisdiction, most readily to be found in s23 of the Supreme Court Act and Pt 1 r11A and 12 to dispense with the rules in the interests of justice; even, it may be, to dispensing with Pt 8 r11(3) in circumstances where the joinder is effected under Pt 8 r8 or indeed r2. Were it necessary finally to decide this, the strictures in NSW Bar Association v Muirhead (1988) 14 NSWLR 173 at 215-6 per Mahoney JA need to be borne in mind. As he poses the issue, it is whether the court would, permissibly be "putting aside procedural irregularities" or impermissibly "putting aside principles of law, and according to the impression of the case upon the individual judge … to do what in this sense seems appropriate". The question I first pose, however, is whether that jurisdiction, if it exists, should be exercised in the manner the Plaintiffs seek. 21 I confess to having been troubled by that question. In the end I have decided that the matter is better dealt with by reference to the second basis upon which the Plaintiffs have made their application. In so doing, I am conscious that there is an inevitable tension between the justice of permitting a party to add a further plaintiff and the expectation that the defendant has in conducting the litigation that no such addition will be permitted after the limitation period has expired. That said, the expectation is here qualified by the prospect of a later pleading amendment being permitted. What in effect ANZ Bank seeks now to do is protect its forensic windfall, which the other side inadvertently allowed by not joining KBF at the outset. That is perfectly legitimate, but it does not invoke any overwhelming sense of justice in the bank's favour. In the present case I would consider that the balance of justice clearly favours the Plaintiffs. 22 But against that consideration must be weighed the very clear authority of Fernance in requiring joinder applications covered by Pt 8 to be dealt with by Pt 8, with the consequence that they will not be retroactive unless within r10; that is by virtue of the clear policy reflected in Pt 8 r11(3). However, Fernance was distinguished by the Court of Appeal in Australian Coastal Shipping Commission v Curtis Cruising Pty Limited (1989) 17 NSWLR 734. There recourse was allowed to Pt 20 in a situation where Pt 8 and Pt 20 overlapped, though the Limitation Act 1969 (NSW) considerations differed. The failure, more clearly an irregularity within s81 of the Supreme Court Act, was in filing and serving the amended pleading after leave to join had been granted. 23 The relevance of my conclusion that the balance of justice favours the Plaintiffs is this. It has a bearing on when it comes to consider the Plaintiffs' second basis, to which I now turn. It weakens the case for treating Pt 8 as exhaustive of the circumstances permitting joinder, where a set of circumstances also comes within Pt 20 r4. 24 In the course of argument I raised the possibility that by recourse to the so-called fifth exception to the rule in Foss v Harbottle (1843) 2 Hare 461; 67 ER 189 or by recourse to the new statutory derivative action in Pt 2F.1A of the Corporations Law, the Plaintiffs could seek leave to sue in a derivative capacity. These are of course exceptions to the rule that the company alone is the proper plaintiff in seeking redress for a wrong done to it. The consequence, if such leave were given, would then be that the Plaintiffs could contend that Pt 20 r4 was applicable by reason of sub-rule (4). I quote below Pt 20 r4. " [20.4] Statutes of limitation 4 (1) Where any relevant period of limitation expires after the date of filing of a statement of claim and after that expiry an application is made under rule 1 for leave to amend the statement of claim by making the amendment mentioned in any of subrules (3), (4) and (5), the Court may in the circumstances mentioned in that subrule make an order giving leave accordingly, notwithstanding that that period has expired. (2) …. (3) where there has been a mistake in the name of a party and the Court is satisfied that the mistake was not misleading nor such as to cause reasonable doubt as to the identity of the person intended to be made a party, the Court may make an order for leave to make an amendment to correct the mistake, whether or not the effect of the amendment is to substitute a new party. (4) Where, on or after the date of filing a statement of claim, the plaintiff is or becomes entitled to sue in any capacity, the Court may order that the plaintiff have leave to make an amendment having the effect that he sues in that capacity. (5) Where a plaintiff, in his statement of claim, makes a claim for relief on a cause of action arising out of any facts, the Court may order that he have leave to make an amendment having the effect of adding or substituting a new cause of action arising out of the same or substantially the same facts and a claim for relief on that new cause of action. (5A) An amendment made pursuant to an order made under this rule shall, unless the court otherwise orders, relate back to the date of filing the statement of claim. (6) This rule has effect in relation to a summons as it has effect in relation to a statement of claim. (7) This rule does not limit the powers of the Court under rule 1."

25 The questions raised by that argument are not without complexity. There are as yet no decisions on the new statutory derivative action. The first question is whether the fifth exception permitting shareholders to sue in the name of the company "where justice requires" has, with the four other exceptions, survived the introduction of a statutory derivative action under ss236 and 237 of the Corporations Law. These I quote below: " SECT 236 Bringing, or intervening in, proceedings on behalf of a company 236 (1) A person may bring proceedings on behalf of a company, or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for those proceedings, or for a particular step in those proceedings (for example, compromising or settling them), if: (a) the person is: (i) a member, former member, or person entitled to be registered as a member, of the company or of a related body corporate; or (ii) an officer or former officer of the company; and (b) the person is acting with leave granted under section 237. (2) Proceedings brought on behalf of a company must be brought in the company's name. (3) The right of a person at general law to bring, or intervene in, proceedings on behalf of a company is abolished. Note 1: For the right to inspect company books, see subsections 247A(3) to (6). Note 2: For the requirements to disclose proceedings and leave applications in the annual directors' report, see subsections 300(14) and (15). Note 3: This section does not prevent a person bringing, or intervening in, proceedings on their own behalf in respect of a personal right.

237 (1) A person referred to in paragraph 236(1)(a) may apply to the Court for leave to bring or to intervene in, proceedings. (2) The Court must grant the application if it is satisfied that: (a) it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and (b) the applicant is acting in good faith; and (c) it is in the best interests of the company that the applicant be granted leave; and (d) if the applicant is applying for leave to bring proceedings - there is a serious question to be tried; and (e) either: (i) at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying; or (ii) it is appropriate to grant leave even though subparagraph (I) is not satisfied. (3) A rebuttable presumption that granting leave is not in the best interests of the company arises if it is established that: (a) the proceedings are: (i) by the company against a third party; or (ii) by a third party against the company; and (b) the company has decided: (i) not to bring the proceedings; or (ii) not to defend the proceedings; or (iii) to discontinue, settle or compromise the proceedings; and (c) all of the directors who participated in that decision: (i) acted in good faith for a proper purpose; and (ii) did not have a material personal interest in the decision; and (iii) informed themselves about the subject matter of the decision to the extent they reasonably believed to be appropriate; and (iv) rationally believed that the decision was in the best interests of the company. The director's belief that the decision was in the best interests of the company is a rational one unless the belief is one that no reasonable person in their position would hold. (4) For the purposes of subsection (3): (a) a person is a third party if: (i) the company is a public company and the person is not a related party of the company; or (ii) the company is not a public company and the person would not be a related party of the company if the company were a public company; and (b) proceedings by or against the company include any appeal from a decision made in proceedings by or against the company."

26 In particular, the Plaintiffs put an argument to the effect that the abolition under s236(3) of the common law right of derivative action, was substantive rather than procedural in character. This was with the result that, unless the amending legislation in clear terms removes that accrued right which the Plaintiffs have to bring the derivative action, it is not removed. To do justice to the Plaintiffs' argument I will quote below from their written submissions: "The amendments introduced into the Corporations Law by the Corporate Law Economic Reform Program Act 1999 ("CLERPA") do not prevent this course: 1. While s236(3) abolishes the derivative suit at general law, this provision has no operation - and the general law principles continue to apply - in the present case. The CLERPA amendments are not expressed to have retrospective operation, so as to affect accrued rights. 2. The Plaintiffs' entitlement to bring the derivative action is an accrued right; it arose when KBF's claim became statute-barred in 1998-1999; Commonwealth of Australia v Dixon (1988) 13 NSWLR 601 at 609. 3. That existing right is a substantive and not merely a procedural one: Colonial Sugar Refinery Co v Irving [1905] AC 369 at 372-3; Maxwell v Murphy (1957) 96 CLR 261 at 279-280; Carr v Finance Corporation of Australia Limited (1982) 150 CLR 139 at 149-150. 4. It is well recognised that amending legislation will not remove rights existing under the general law unless the intention that it does so emerges clearly from express language, or by necessary intendment; Sargood Bros v Commonwealth (1910) 11 CLR 258 at 279; Pyneboard Pty Limited v Trade Practices Commission (1983) 152 CLR 328 at 341. 5. The CLERPA contains no such express terms. Nor must an intention to abolish accrued rights be necessarily inferred from its provisions. Section 1472 does not assist - the derivative claim to which it refers (and which may be brought in proceedings already on foot when CLERPA commenced) will still be one arising after CLERPA commenced. The section does not address, and does not purport to interfere with, derivative rights which have previously accrued."

27 The fundamental problem in the way of the Plaintiffs' submissions however is this. The statutory derivative action, as is clear from its antecedents in terms of a number of different reform proposals culminating in CLERPA, was intended to be remedial. That is borne out by the Explanatory Memorandum introducing these amendments. At para 15 it enumerates a number of difficulties associated with the common law action and clearly indicates that the legislation, with appropriate checks and balances, is seen as ameliorative (paras 16-17). To deny its remedial effect to those whose rights had accrued prior to the introduction of the legislation would be to frustrate its remedial purpose; a purpose which the court is enjoined by s109H of the Corporations Law to have regard in interpreting a provision of that Law. 28 Indeed such indication as can be found in the Corporations Law tends against the interpretation the Plaintiffs put. In particular s1472 in dealing with the also abolished right of intervention expressly provides that a person may apply for leave to intervene, and intervene, "in proceedings started before commencement". It would be anomalous if the common law right of intervention on its face abolished by s236(3) were somehow instead to exist concurrently for those with that accrued right. It would be equally anomalous for the common law derivative action to be maintained in relation to accrued rights, yet the right of intervention removed. 29 Indeed the very distinction between substantive and procedural is, as the High Court recently recognised, a particularly difficult one though one still needing to be made: see John Pfeiffer Pty Limited v Rogerson [2000] HCA 36 (21 June 2000, unreported) paras 97-8. The whole history of the law in the development of actions on the case is, as the late Professor Maitland observed, one of substantive law secreted in the interstices of procedure. Representative actions and the rule in Foss v Harbottle and its exceptions as Gummow J observed in Scarel Pty Ltd v City Loan and Credit Pty Limited (1988) 17 FCR 344 at 349, "were the product of equity procedures". This is so, though now tending to be viewed in their developed state as common law rules whether or not conferring quasi substantive rights. 30 The Plaintiffs strenuously argue that whilst the derivative action may be viewed as procedural, its removal, like the denial of a right of action under a limitation statute, is substantive. In that regard they may have found some support in John Pfeiffer. But such a view ignores the fact that what is really happening is the substitution of what the various law reform bodies thought was an improved procedural right for that which had been removed. So regarded, it is by no means self-evident that its removal can be viewed in isolation from what is substituted and considered to be substantive with the interpretative consequence that it is not retroactive in relation to accrued rights. 31 It follows that while the matter cannot be said to be free from doubt, I consider the better view to be that the statutory derivative action has displaced any potential recourse to the fifth (or other) exception in the rule in Foss v Harbottle for the Plaintiffs, notwithstanding that the right to invoke it may have accrued. 32 The Defendant then argues that the four Plaintiffs should not be granted the leave they seek as they do not satisfy the requirements for it under s237 of the Corporations Law. And it is argued even if they did, it could not avail the Plaintiffs in seeking to come within Pt 20 r4. This, the Defendant says, is because the form of the action conferred by statute represents a fundamental difference from the common law. Section 236(2) now provides that the proceedings brought on behalf of the company must be brought "in the company's name". In contrast to the previous common law position, no longer is the company to be joined as defendant. Thus it is contended that the shareholders' proceeding under the statutory derivative action is to be equated for all purposes to a proceeding brought by the company, so precluding application of Pt 20 r4 and inexorably forcing the Plaintiffs back to Pt 8 and in particular r11(3). 33 As to the first argument, s237(2) makes clear that the Court must grant the application if it is satisfied as to each of the matters in paras (a) through (e). 34 The critical hurdle is that in (a), namely that "it is probable that the company will not itself bring the proceedings …. ." 35 Given that I would not give the dispensation from the Rules that the Plaintiffs seek were their application to proceed under Pt 8, it is clear that the company KBF will not bring the proceedings itself since, as the Plaintiffs concede, such proceedings would be a futility. It thus follows that I may safely conclude that it is probable that the company will not itself bring the proceedings and thus para (a) would be satisfied. I am equally satisfied that paras (b), (c) and (d) would be satisfied noting that the Defendant has fairly not put in issue that there is a serious question to be tried. Paragraph (e) is a procedural requirement and if otherwise I were to grant the application it presents no impediment. 36 I turn now to the second argument, namely that the form of statutory derivative action takes these proceedings outside the potential application of Pt 20 r4, being brought "in the company's name" and thus a joinder governed exclusively by Pt 8. 37 It would be to confuse form with substance to treat proceedings required by statute to be brought by individual shareholders "in the company's name" as undifferentiated from proceedings brought by the company without such intervention of the shareholders. Firstly, s237(2)(a), to which I have earlier made reference, presupposes that the company "will not itself bring the proceedings" thus assuming that difference. Like a beneficiary who obtains leave to sue in the name of the trustee following the appointment of a receiver where the trustee refuses to take action, the shareholders under the statutory derivative action are not for all purposes to be equated to the company; compare Jacob's "Law of Trusts in Australia", by R P Meagher and W M C Gummow (Butterworths, 1997) at 690. They may for example be directly liable for costs, as they are parties, albeit in a derivative capacity. 38 That consequence and the distinctness of the statutory derivative action from direct action by the company is further reflected in s242 of the Corporations Law. Under it, the Court may make orders about the costs of the persons who applied for or were granted leave under s237. That indeed reflects some parallel with the position under the common law. There the costs of the derivative action were not automatically to be mulcted upon the company, though that may be an appropriate order; see the discussion in Ford's "Principles of corporations Law" at 11.320. Indeed historically, when unincorporated associations were set up to trade in the eighteenth century under deeds of settlement, the position was quite closely analogous to that of beneficiaries seeking indemnity from the trust property for similar costs for shareholders had an interest in a quasi trust. See the "Law of Costs" Morgan and Wurtzberg (Stevens & Sons, 1882) at 124 and 278-9. The deed of settlement company, denied the advantages of incorporation sought to use trust concepts for equivalent effect as is explained in "Gower's Principles of Company Law", 6th edition (Sweet & Maxwell, 1997) at 29. The development of limited liability under incorporation was not allowed by courts of equity to frustrate shareholders acting in the name of the company. But this was subject to proper safeguards recognising the distinction between the company suing of its own motion as against being "joined" through a representative action. 39 Accordingly, it follows that if the Plaintiffs get leave under s237 to bring the statutory derivative action, they are, in the words of Pt 20 r4(4) in the situation of the plaintiff who "is or becomes entitled to sue in any capacity" and may seek amendment to the pleadings to reflect that capacity. The position is no different from an executor who may have already sued qua beneficiary and who then seeks to sue as administrator or executor on behalf of the estate; compare Bowler v John Mowlem & Co Limited [1954] All ER 556. 40 I am thus satisfied that Pt 20 r4 would apply were I to grant leave pursuant to s237 of the Corporations Law and indeed the same result would follow were I to have done so pursuant to the fifth exception to the rule in Foss v Harbottle. 41 There remains one further matter, namely the effect of such an order under Pt 20 r4 on the Limitation Act 1969 (NSW). It was not seriously disputed that were I otherwise entitled to make such an order, there is no doubt that under present authority the effect of so doing would be to preclude a defence under the Limitation Act save such defence as could be raised were the amendment made as of 22 April 1997. This is on one of two bases. First, it is because the limitation statute, though substantive rather than procedural in effect (see John Pfeiffer at paras 97-102) yields to the effect of the Rules by reason of s6 of the later Supreme Court Act 1970. That would not have been so had I simply given dispensation from the Rules. Second, it is to the Rules that recourse must be had to determine when, for the purposes of a limitation statute, action is taken to be brought. 42 Part 20 r4, when applicable to a qualifying amendment, has the consequence (in the absence of order to the contrary) that action is taken to have been brought at the date of filing the statement of claim. I should add that no basis for an order to the contrary is made out, for the justice of the case clearly favours the Plaintiffs. Similarly, though joinder might have been effected under Pt 8, were it not a futility, there is good reason in the justice of the case for not treating it as precluding application of Pt 20 r4 in these circumstances.

CONCLUSION 43 I will give leave to the Plaintiffs to bring a statutory derivative action pursuant to Pt 2F.1A of the Corporations Law, being satisfied as to the matters pursuant to s237(2) and ordering accordingly. Were it necessary to do so, I would also give such leave as was required pursuant to the fifth exception in the rule in Foss v Harbottle which would have a similar effect. This would be on terms that the company need not be joined as a Plaintiff, subject to hearing further submissions on that matter. 44 It also follows that I am satisfied that Pt 20 r4(4) would be rendered applicable by virtue of the earlier orders and the amendments which follow to the Statement of Claim. In so interpreting Pt 20 r4 I consider that I am giving effect as directed to the overriding purpose of the Rules pursuant to Pt 1 r3 with their emphasis not only on "quick and cheap" but also on justice. Finally, I am giving effect to the principles that have always guided courts to apply the Rules in the interests of justice, though not idiosyncratic justice. 45 I do not make any order to the contrary under Pt 20 r(5A) with the result that the amendment thus allowed will date back to the date of filing of the Statement of Claim.

REMAINING AMENDMENTS 46 In the Plaintiffs outline of submissions "re amendment to defence to cross-claim" dated 26 June 2000, Annexure A sets out certain amendments sought. The Defendant has put certain written submissions in response but has fairly acknowledged that the hurdle in opposition to the leave for those amendments is the relatively onerous one implied by the approach a court takes in striking out pleadings. I quite deliberately do not want to foreclose any arguments the Defendant may wish to put regarding these further amendments and their efficacy. This is in light of the terms of the guarantee and the law as it applies, for example, to the raising of a defence of equitable set-off. Indeed as the Defendant recognised it would be inappropriate at this interlocutory stage to do so. 47 Accordingly, I will give leave to the Plaintiffs to make those amendments also.

Costs 48 While I have given the Plaintiffs the leave that has been sought with the necessary orders, it is clear as indeed the High Court recognised in Queensland v JL Holdings Pty Limited (supra) that the Defendant is entitled to any additional costs as are occasioned by its need now to file any further defence or to amend its cross-claim. Indeed the Plaintiffs were not able to put anything in opposition to that consequence. I will hear further argument on costs generally.

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