Consideration
28 Leave to amend should be granted for the following reasons.
29 First, the delay was relatively short.
30 The point in time from which delay is measured is no earlier than the date of commencement of the proceeding: see Tamaya Resources at [136]. As noted above, the Originating Process was filed on 14 July 2021 and the application to amend the Originating Process was foreshadowed on 3 September 2021 and filed on 1 October 2021. Thus, the application to amend has been brought at an early stage of the proceeding and prior to the defendants filing their Points of Defence.
31 The Company and the Liquidator submitted that in assessing the delay, regard should be had to the period commencing in October 2016 (when, it is submitted, the plaintiffs became aware of the Department's claim that it was owed an amount in the order of $30 million by the Company) because the plaintiffs could have sought the removal of Mr Cadman for failing to "pursue the Department" but took no steps to do so.
32 Whilst, as the Full Court explained in Tamaya Resources at [135]-[136], it is permissible to have regard to events prior to the commencement of a proceeding in considering the question of delay (being the delay commencing from the start of the proceeding to the making of the amendment application), I do not accept the submission made. The Removal Claim concerns the present Liquidator and her conduct, including her admission of the Proof of Debt. Any failure by the plaintiffs to pursue Mr Cadman is of little, if any, moment.
33 Secondly, the absence of prejudice.
34 Importantly, none of the defendants contend that they would be prejudiced by the delay in including the relief concerning the Removal Claim as part of the Originating Process. In any event, it is difficult to discern any substantial prejudice given the early stage of the proceeding.
35 Thirdly, the explanation for the delay is adequate in the circumstances.
36 The strength of the explanation required to explain the delay in bringing an amendment application depends on the particular case and affidavit evidence is not always required: Tamaya Resources at [154]. In the present case, the plaintiffs' solicitor has deposed that the need to amend became apparent during the preparation of the Points of Claim. This explanation is far from detailed, however it falls to be considered in the present case in the context of a short delay in respect of which no defendant is prejudiced.
37 The relatively brief period of the delay and the absence of any apparent resulting prejudice to the defendants are factors which tend strongly toward an exercise of the discretion in favour of allowing the amendment. In this context, a less than detailed explanation for the delay is of less weight than it might be in a case in which there had been an extensive delay or the delay had caused prejudice to any of the defendants.
38 Fourthly, none of the other factors discussed in Aon tend against a favourable exercise of the discretion.
39 As the amendment application has been made at an early stage of the proceeding, a number of the other factors discussed in Aon are of little moment in the exercise of the discretion. For example: the parties' choices to date in the proceeding and the consequences of those choices; the detriment to other litigants in the Court; and question of costs associated with the amendment, are factors which may carry significant weight where the amendment is sought when the proceeding is well underway, but that is not this case. None of the defendants submitted that any of these factors were significant to the present application.
40 Fifthly, allowing the amendment will likely avoid a further proceeding.
41 If leave to amend were not to be given, then the likely result would be a separate proceeding in which the Removal Claim would be pursued. Such a result is one to be avoided if possible, as is clear from s 22 of the FCA Act and r 8.21(1) (b).
42 Sixthly, there may be some overlap between the factual substrata of the two Claims. The Proof of Debt Claim will have, at its core, a calculation of the balance owing as between the Company and the Department. The Removal Claim will likely also include consideration of that calculation and the related question as to whether the Liquidator undertook such a calculation and if so the method of such calculation and the appropriateness of such method. If the Claims were to be tried in a separate proceeding, then a different conclusion as to the balance owing as between the Company and the Department might be reached in each proceeding. There may be other areas of overlap which become apparent upon the close of pleadings or from the evidence once filed. In circumstances where the Court is not in a position to conclude definitively that there will be no overlap, it is more efficient for both Claims to be kept together in the one proceeding.
43 The question of factual overlap also arises for consideration in the application of r 8.21(1) (g), and in particular whether the new claim for relief arises out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the plaintiffs. I accept that the new claim for relief in paragraph 3A does not arise from the same facts as those pleaded in support of the existing claim. Whether that new claim for relief can be said to arise from substantially the same facts involves a question of degree: Camilleri v Trust Company (Nominees) Ltd [2015] FCA 1138; (2016) 109 ACSR 191 at [10].
44 However, it is not necessary to resolve this question because even if the new claim for relief were not to arise from substantially the same facts, this would not be a factor of significance in the exercise of the discretion. It is not a necessary condition for a grant of leave to amend that r 8.21(1) (g) be satisfied. As noted above, subrules 8.21(1) (a) to (g) do not provide a code and the Court's discretion is broad. The short delay, the absence of prejudice to the defendants, the desirability of avoiding a further proceeding and the possibility of overlapping factual substrata discussed above significantly outweigh any non-satisfaction of r 8.21(1) (g).
45 Seventhly, I am not satisfied that allowing the amendment so as to include the Removal Claim would likely affect the quick, inexpensive and efficient conduct of the proceeding in such a way that leave should be refused.
46 The defendants submitted that allowing the amendment would likely have several effects, which the Court should strive to avoid.
47 The first is that the amendment would substantially broaden the proceeding. That may be so, but it is not a reason to disallow the amendment. It was open to the plaintiffs to have included the broader allegations from the commencement of the proceeding and as noted above, the defendants have not suggested that the inclusion of those claims now instead of then would prejudice them.
48 The second effect, which was suggested by the Department, concerns procedural issues in hearing the two Claims together. In particular, the Department submitted that:
(1) the Proof of Debt Claim will involve a hearing de novo as to whether the Proof of Debt disclosed a true liability of the Company enforceable against it and thus whether it should have been admitted;
(2) in contrast, the Removal Claim does not focus upon the legal relationship between the Company and the Department but instead focuses primarily upon the propriety of the Liquidator's conduct since her appointment;
(3) trying the Removal Claim together with the Proof of Debt Claim would cause significant procedural difficulties for the parties and the Court because the Court would be required to determine the validity of the Proof of Debt de novo whilst receiving evidence and submissions concerning the Liquidator's conduct and being asked to determine whether or not the Liquidator acted properly in admitting the Proof of Debt; and
(4) this would be analogous to a Court hearing a merits review and judicial review of administrative action in the same hearing and evidence that may be admissible on one Claim may not be admissible on the other.
49 Whilst I accept that the legal framework in which each of the Claims is to be determined is different and that there is a possibility that evidence admissible in respect of one Claim would not be admissible in respect of the other (noting that the submissions made did not descend from the general to any particular examples) I am not satisfied that these matters are of such significance as to tend against a grant of leave to amend.
50 It is commonplace for a proceeding to involve more than one claim and for those claims to be different in nature, requiring the application of different legal standards and the consideration of the use which may be made of the evidence adduced. For example, courts are sometimes required to determine in the same proceeding issues which require an objective analysis (such as the construction of a contract) and other issues which require subjective analysis (such as duress, equitable estoppel, undue influence and misrepresentation); and to use particular evidence for the resolution of one issue but not another.
51 Eighthly, I do not accept the defendants' submissions that it would be more efficient to determine only the Proof of Debt Claim in this proceeding. In this regard:
(1) the Company and the Liquidator submitted that if the Proof of Debt Claim were to be determined in favour of the plaintiffs, then the Removal Claim would be otiose, particularly as the plaintiffs would then have the voting power required to remove the Liquidator using the process provided for by IPS s 90-35;
(2) the Department submitted that if the Proof of Debt Claim were to be determined in favour of the defendants, then the Removal Claim may fall away because if there were to be no error in the admission of the Proof of Debt it is difficult to see how the Removal Claim could proceed; and
(3) all of the defendants submitted that the Proof of Debt Claim should be heard independently of the Removal Claim, with the Removal Claim to be brought as a separate proceeding once the Proof of Debt Claim had been determined.
52 It cannot be concluded on the materials presently before the Court that the Removal Claim would be rendered otiose by the determination of the Proof of Debt Claim assuming that the latter claim were to be heard first.
53 To the extent that there may be some merit in determining one of the Claims prior to the other, this should be considered within this proceeding rather than by limiting this proceeding to the Proof of Debt Claim and requiring the plaintiffs to commence a separate proceeding in order to pursue the Removal Claim, for the reasons already discussed.
54 Finally, I am not persuaded by the remaining submissions of the Company and the Liquidator that leave to amend should be refused. In particular:
(1) their submission that the Removal Claim may be motivated by a desire to frustrate or delay the prosecution of proceeding NSD 613/2020, which appears to suggest a potential abuse of process by the plaintiffs, was not expanded upon orally and no application was made to cross examine Mr Lange. The evidentiary basis for such a serious conclusion is absent. In these circumstances, the submission cannot be accepted; and
(2) their submission that the Removal Claim has slight prospects of success and thus should not be allowed, is not accepted. That submission is pitched at a high level of generality and falls well short of establishing that the Removal Claim is so untenable that it would be futile to allow the proposed amendment to the Originating Process. As part of this, the submission that the Removal Claim requires a pleading that the Liquidator admitted the Proof of Debt with knowledge that the Proof of Debt was inaccurate or with indifference as to its accuracy is not accepted. It may be sufficient to plead, as the plaintiffs have, that the Liquidator failed to give proper or adequate consideration to the Department's claim.