Patrick v Capital Finance Pty Ltd

REASONS FOR JUDGMENT 1 The applicant has applied to further amend the detailed pleadings in this matter by way of a Fourth Further Amended Statement of Claim. On the second day of the hearing I decided to allow the amendments and I now briefly set out my reasons for so doing and confirm the orders which I have made. 2 The gist of the amendments sought by the applicant relates to allegations that the first, second, fourth, fifth and sixth respondents had knowledge of an agreement of 9 April 1996 between Phillip Emanuel Productions Pty Limited ("the Management Company"), Adelaide Festival Centre Trust ("the Trust") and Gordon Frost Attractions Pty Limited ("Frost") under which the Management Company was obliged to invest only $1 million and not $5.5 million as referred to in the Prospectus for the "Crazy For You" stage production. Some particulars are given as to the way in which such knowledge is attributed. There are also amendments which assert that the sixth respondent, Christopher Coote, ("the representative") paid money to the Management Company knowing that it was intended not to utilise the money for the presentation of the stage production. The allegations rely on knowledge said to be attributed to the representative as providing a basis for the claim of misleading and deceptive conduct. As against the other respondents the knowledge of such an agreement is said to be one of the grounds for claims of liability against them as accessories and for receiving funds with knowledge of the breaches by the representative. 3 The amendments were opposed by all respondents who appeared on the hearing, on the basis that they raise for the first time new allegations of knowledge in relation to the agreement of 9 April 1996 against the relevant parties. 4 Counsel for the applicant says that the substance of the charges now sought to be made, which involve serious allegations of dishonesty, was alleged in the Third Further Amended Statement of Claim as allowed by Heerey J against the objecting parties. There is also an allegation sought to be made that the respondents knew that a large portion of the money advanced by the fifth respondent ("OCBC") would be used to pay for the issue of term bonds by it. 5 Declarations are sought as against the fourth respondent, Mr Park and the first, second and third respondents (collectively "Capital"), of which he is said to be the controlling entity, that they knowingly received Trust property that belonged to the applicant and were accessory to a breach by the representative of fiduciary and trustee duties. As against OCBC, a declaration is sought that it knowingly received Trust property that belonged to the applicant and was an accessory to a breach of fiduciary and trustee duties owed by the representative and an order is sought for consequential relief that OCBC should pay such amount as the Court considers appropriate. Although deceit by OCBC in accepting payments was squarely alleged previously (in par 68N as it stood in its earlier form in the Third Further Amended Statement of Claim), the allegations that the true extent of the Management Company's investment obligations were not disclosed and that the Management Company only invested $1 million in the production was not relied on as an element in that version of par 68N. Fraud has also been alleged previously against the first, second and fourth respondents (in par 67 of the Third Further Amended Statement of Claim). 6 Counsel for the applicant made a number of submissions in support of the amendments sought. They can be summarised as follow. 7 First, it is said that there is a need to ventilate all the issues and decide the real questions between the parties and to make all proper orders: see ss 22, 23 of the Federal Court of Australia Act 1976 (Cth) ("FCA"); O 13 r 2(2) of the Federal Court Rules ("FCR"). Section 22 of the FCA makes it clear that the mandate of the Court is to decide completely and finally all matters in controversy between the parties and to avoid multiplicity of proceedings: see St George Ltd v M J K Pty Ltd [1999] FCA 1752. Counsel refers to the fact that fraud and intent have already been alleged in substance and the grave charges are not entirely new allegations. It is also pointed out that new counsel has been appointed and the case has been advanced from a different perspective. This, of course, is not a reason to grant leave to amend, but it explains how the amendments came about. This is a representative proceeding and it is important that all real issues be properly ventilated because other parties may be bound by the ruling on the common questions of fact and law: see s 33ZB(b) of the FCA; also Jenkins v NZI Securities Australia Ltd (1994) 52 FCR 572. Reliance is placed on the fact that the hearing will extend over a number of days and it will be possible to adjust the conduct of the proceedings to prevent prejudice. There were general assertions of prejudice on behalf of the respondents but no specific evidence of irreparable difficulty relating to the further conduct of the case or costs was referred to. Finally, the number of persons who may be adversely affected if the amendment is disallowed is significant. 8 In support of their opposition to the proposed amendments the respondents point to the following considerations. First the agreement of 9 April now alleged to be evidence of objective dishonesty is between entities who are not parties to the proceeding and there is a need to prepare to meet this new allegation. For example, it is said there will be a need to interview prospective witnesses and to obtain detailed instructions and to issue subpoenas in order to properly prepare cross-examination and the respondents' case in relation to these new matters. Second, it is pointed out that these grave additional allegations have been raised at the last moment shortly before the first day of the hearing and it is not possible to fairly remedy the prejudice that arises because it would be unfair to again adjourn the proceeding especially since it has previously been adjourned on extremely short notice. No party seeks to have any further adjournment of the proceeding. Third, the respondents submit that many of the matters sought to be raised are unclear to them from the particulars given in relation to the allegations sought to be raised. For example, particulars are needed to clarify such questions as to who, specifically, is accused of fraud on the part of the fifth respondent and the other parties, and what the specific allegations are against each identified person. It is said that in absence of particulars, the allegations are broad, general and unfair. Fourth, it is submitted that if the amendments sought are allowed, the orderly conduct of the case will be disrupted. The interests of justice, it is said, indicate that permission should not be given for the respondents to be charged with serious allegations of misconduct for the first time at the opening of the trial.