(d) an agreement between the respondent and Mr Emmott required that the disputes between them be referred to arbitration in London. Mr Emmott was invited to be joined as a party to these proceedings, but declined.
38 The respondent submits that because the notice to produce is only relevant to the proposed amendment if allowed, it should be set aside, as the proposed amendment is hopeless.
39 That was the stage when the matter was considered by me at an oral directions hearing on 19 April 2010. I indicated that I really was disappointed in the lack of help that I was given in making a decision on this matter by the deeper issues involved in the present question not being properly explored. On that occasion, Mr G Lindsay SC who appeared with Mr G W McGrath for the appellants, repeated the submission that the London Arbitration Award may well lead to submissions that the risk discarded by the primary judge of not waiting until the London proceedings were concluded, was not as he thought remote or inconsequential.
40 However, so far as the amendment is concerned, Mr Lindsay said we are not in the area of estoppel, but in the area of abuse of process, so that questions arise where you have inconsistent verdicts about whether they can stand and whether there is an inconsistency which threatens the integrity of the administration of justice. There is a legitimate forensic purpose in the notice of produce, and that is to consider advancing the case that this Court ought not to make orders inconsistent with what has happened in the London Arbitration.
41 He then said that another way the proposition could be put is that "if it should prove that upon balance the orders made as between the respondent in these proceedings and Mr Emmott, that there is a balance in favour of Mr Emmott, and any possibility that there is a loss suffered by the respondent that is able to be open to be compensated by the appellants will have evaporated", then the appellants should be entitled to put those submissions.
42 Mr M Walton SC who appeared with Mr S Balafoutis for the respondent, put that there is no basis in law for it being an abuse of process that separate proceedings involving separate parties sometimes do produce inconsistent findings. Indeed, there is no present evidence before the Court that there were any inconsistent findings.
43 I put to Mr Walton: "The applicant says that there is (a) abuse of process because it is against the dignity of courts of justice that there should be inconsistent verdicts; and (b) can one have a successful action against accessories if the principal owes nothing. In case (b) it must be relevant to find out what happened to the principal." Mr Walton said he would dispute that because if it is indeed the fact that the principal has no liability, that was determined by arbitration proceedings not by a court. I then asked for further submissions and authority.
44 During the oral argument, Mr Lindsay did refer to the decision of this Court in Rippon v Chilcotin Pty Ltd [2001] NSWCA 142; 53 NSWLR 198. The headnote of that case shows that the purchasers of a business had sued the vendor on the grounds that a warranty of the accuracy of the financial statements had been breached and also that there had been false representations contravening s 52 of the Trade Practices Act 1974 (Cth). The purchasers were successful on the contractual claim, but lost the Trade Practices Act claim because the judge ruled that the purchasers had not relied on the accuracy of the figures but rather on the warranty. The purchasers then sued the accountants who had prepared the financial statements claiming damages for negligent misrepresentation. On appeal, the accountants successfully had that action struck out on the basis that the proceedings were an attempt to relitigate the same issue as had already been litigated and it mattered not that the parties were different.
45 In the appellants' further written submissions counsel put that it was not for this Court when dealing with an application to set aside a notice to produce to rule on the admissibility of evidence of the award or as to the merits of any ground of appeal founded upon or referable to the award. The appellants were entitled to have their notice to produce answered if they had a legitimate forensic purpose in so requiring. I would agree with that save for the complication that in the present case there has to be an amendment to the notice of appeal before at least a half of the support for a legitimate forensic purpose is shown.
46 Mr Lindsay then puts that the reasons given by the respondent in the previous document are inadequate. It does not matter that the London decision is an award rather than a court decision or that it was given between different parties or that it was given after Einstein J's decision. The submissions put that if and to the extent that the respondent failed in its claims for relief against Mr Emmott in London and those claims were substantially the same as the claims against the appellants in the NSW proceedings, it would be an abuse of the processes of the court for the respondent to maintain those claims or any judgment of the primary judge referable to those claims against the appellants.
47 I must confess I have some difficulty in accepting that proposition. The proceedings before Einstein J were determined first. If the principle advocated by Mr Lindsay has validity, then one would have expected that the respondent would have used the same argument in the London proceedings. The argument put by Mr Lindsay almost assumes: (a) that the London proceedings were decided in favour of Mr Emmott; and (b) that Einstein J was therefore wrong in reaching the view that he did. Conclusion (b) is not demonstrated by the decision of the London Arbitrators. For instance the evidence might have been different. Indeed, courts would traditionally say that a decision of a superior court judge is to be preferred to a decision of an arbitrator.
48 It may be, as Mr Lindsay puts, that the result of the NSW proceedings will be used as a means of obtaining relief for breaches of fiduciary obligations of Mr Emmott beyond any entitlement it may have against Mr Emmott personally. However, if that is what is happening, then the question is whether that so far goes to the integrity and fairness of the justice system that it should not be permitted.
49 I asked for authority on that point and was referred to the decision of CSR Ltd v Cigna Insurance Australia Ltd [1997] HCA 33; 189 CLR 345 particularly at p 394 where the High Court discussed the origins of the power, perhaps in Equity, perhaps in the inherent jurisdiction, perhaps under principles of estoppel to restrain vexatious proceedings. With respect, it does not assist the present problem.
50 The respondent's further written submissions indicate that they are unable to find any cases directly on point and that the authorities referred to by the appellants were in the respondent's submissions of no assistance. I think this is right.
51 I have very great doubt as to whether the mere fact, if it be the fact, that there are inconsistent verdicts in NSW and London is sufficient to make out any case of abuse of process. However, I do not consider it appropriate to decide the point as Mr Lindsay said, it is not appropriate to do so at this stage, and practically speaking, I may be a member of the Court which deals with the point on a final basis after there has been opportunity for full argument on each side. The question arises, however, whether the amendment should be allowed because unless it is allowed, the case for the notice to produce is much weakened.
52 I did not have submissions on this point save that Mr Walton says the amendment is hopeless.
53 The classic law as to amendment is that all reasonable amendments should be allowed unless the party applying acts mala fide or the amendment would cause some injury to the opponent which could not be compensated for by costs or otherwise; see eg Cropper v Smith (1884) 26 Ch D 700, 710; Tildesley v Harper (1878) 10 Ch D 393, 396; Horton v Jones (No 2) (1939) 39 SR (NSW) 305, 309. However, useless amendments will not be allowed. The tests as to whether an amendment is useless is the same as the test for when a court would strike out a pleading.
54 In the present case there is no suggestion of prejudice. The only question is whether the amendment is so hopeless that it should be struck out and thus leave to amend should not be given.
55 I have already indicated my disquiet about the amendment. However, in the absence of authority I cannot say that it is so unlikely to succeed at the final hearing that it should be struck out.
56 Inconsistent verdicts do cause problems in the administration of justice. However, from time to time they are inevitable and even in the criminal area no final satisfactory solution has been found; see eg the discussion in MacKenzie v The Queen [1996] HCA 35; 190 CLR 348 at 366. Ordinarily, factual inconsistency is an inevitable risk of the trial system where there are separate trials and even where the accessories are convicted and the principal acquitted the verdict stands.
57 However in R v Rowley (Eli) [1948] 1 All ER 570 it was laid down that ordinarily there should not be prosecution of an accessory before prosecution of the alleged principal offender. If the principal offender is acquitted then a "no bill" might be filed against the alleged accessories: R v Breen (1990) 99 FLR 474 (NTSC).
58 I should note that the opposition to the notice for production on the grounds of confidentiality was abandoned. This was appropriate in view of the principles of discovery with respect to arbitrators discussed in Bray on Discovery (1885) p 52 and see Ponsford v Swaine (1861) 1 J & H 433; 70 ER 816.
59 As I have allowed the amendment, the notice to produce serves a legitimate forensic purpose in having the documents which would support the amended grounds of appeal. However, it seems to me that that is not the whole story. The document is also useful in support of the argument that the NSW court should have held back until London's proceedings were more advanced or finalised. Again, I am not completely convinced that this is a matter which must succeed because it is a sort of chicken and egg situation where one court or the other must go first, why should it not be our court? It may be because if the principal is found innocent the alleged accessory must succeed; see eg NSW Bar Association v Forbes Macfie Hansen Pty Ltd (1988) 18 FCR 378, 387; 82 ALR 431, 440. However, again the matter is fairly arguable.
60 However, the third point is far stronger in my view, even though there is no authority on it, and that is that if there is a verdict against people with accessorial liability under the principle in Barnes v Addy (1874) LR 9 Ch App 244, and it is held that there is no liability on the principal fraudster, then there can be no damages against the accessories. Again, whilst it is not an unassailable case, it seems to me a stronger point than some of the others raised by the appellants, though the fact that the order for payment of money is a "rolled up" order may be significant.
61 Accordingly, in my view, the three matters which I have mentioned in [59] and [60] justify it being said that there is a legitimate forensic purpose in allowing the notice to produce to prevail.
62 Thus, the respondent's motion to set aside the notice to produce is dismissed with the costs to be the appellants' costs in the appeal. The appellants have leave to amend the notice of appeal in accordance with the document referred to above, the costs of and occasioned by the amendment to be paid by the appellants.
63 I have made each cost order when dismissing a notice of motion costs in the appeal as the motions were a part of the case management process and it is of little use making orders which will cancel each other out. The ultimate successful party should get the benefit of these orders in due course.
64 Accordingly, the orders of the Court must be: