OCBC
23 The amendments sought to be made against the fifth respondent ("OCBC") include the deletion of a number of matters in respect of which the applicant concedes that no case has been made out on the evidence. Counsel for OCBC does not consent to these deletions and seeks a favourable ruling on them because in some instances they raise allegations of a grave nature, including fraud against the Bank which reflect adversely on some of its officers. I think it is appropriate for those claims to remain in the pleading so that they can be determined in the judgment of the Court. This will serve to alleviate any suggestion or taint of impropriety in respect of those abandoned claims.
24 OCBC contends that two new areas of allegations are now sought to be made against it which were not previously raised.
25 The first of these are the allegations relating to accessorial liability for breach of trust. It is said that this amendment is futile in view of other amendments proposed to the pleadings which make it clear that the applicant's case, on the evidence, now is that it was not the sixth respondent (Mr Coote) who made the payments for the term bonds as security, but the Gordon Frost Organisation Pty Limited ("GFO"): see par 37(d) of the proposed Fifth Further Amended Statement of Claim. The amended claim is that in respect of the three "finance" settlements:
"OCBC disregarded or had wilfully and recklessly failed to make enquiries of the fact that the payments which were made out of the Crazy For You Fund … were made in breach of the Representative's fiduciary and trustee duties." (Emphasis added)
26 It is said that in view of the variation with respect to GFO it is futile to permit this amendment, because the payments are now said to have been made by GFO and not the Representative. I consider that this amendment should be allowed because it continues to rely on the allegation that there has been a breach of the fiduciary duty of the Representative. The contention may not succeed but this of itself is not a sufficient ground to disallow this amendment.
27 The principal concern of OCBC is with the recasting of the claim in respect of misleading and deceptive conduct as set out in new pars 68AA- 68AE of the proposed Fifth Further Amended Statement of Claim. This amendment raises for the first time the allegation that OCBC was a direct participant rather than an accessory to the misleading and deceptive conduct by "adopting" misleading representations in the "Crazy For You" Prospectus ("the Prospectus"). Previously, the allegation had been put on the basis that OCBC knew that there were misleading and deceptive statements in the Prospectus and this allegation of knowledge has been removed by the new claims in view of the evidence.
28 Three objections are raised by OCBC in relation to this amendment. It is said that the new claim would be statute barred, it would be futile and that it would give rise to prejudice which cannot be remedied.
29 I do not accept that the grounds of futility or the limitation argument raised by OCBC are sufficient to warrant refusal of leave. However, I am persuaded that the ground of irremediable prejudice has been made out. The futility ground and the limitation ground raise matters which can be addressed in submissions on the evidence but the question of prejudice is more fundamental.
30 OCBC submits that the amendments in pars 68AA - 68AE raise new areas of factual inquiry, particularly in relation to the allegation that OCBC was a participant in the misrepresentation because it "adopted" the Prospectus representations and participated in the misleading conduct as a consequence of the issue and circulation of the Prospectus. OCBC says that its evidence has not addressed these issues because they were not pleaded.
31 OCBC further submits that it has not had an opportunity to confront such a case in cross-examination or by adducing appropriate evidence to meet the new allegations either in documentary form or by testimony.
32 Senior counsel for OCBC states that the case would have been conducted differently if the allegations now sought to be raised had been raised originally. OCBC, it is said, would have sought to cross-examine witnesses differently and would have probably sought to adduce evidence as to whether Dr Patrick or other witnesses would have considered that a lender, such as OCBC, in the present circumstances was adopting or endorsing the representations in the Prospectus as its own statements. In addition, OCBC argues that it would have probably adduced evidence from financial advisers in relation to whether intending investors regard a potential lender as endorsing representations in a prospectus. Expert marketing evidence as to the perceptions of relevant members of the public is not unusual in this court: see R & C Products v S C Johnson (1993) 42 FCR 188 at 192; Koninklijke Philips v Remington (1999) 91 FCR 167 at 206; Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd [2001] FCA 1228; Twentieth Century Fox v S A Brewery (1996) 66 FCR 451and Simplot Australia Pty Ltd v McCain Foods (Aust) Pty Ltd [2001] FCA 518.
33 The prejudice caused by the inability to remedy this position or pursue any appropriate further cross-examination is not now capable of being effectively remedied. Nor can it be rectified by orders for costs or an adjournment. I consider this detriment sufficient to warrant refusal of the recasting by the applicant of the case as it is has been conducted and on the basis of which the hearing took place over many days.
34 Counsel for the applicant contends that any evidence of a marketing expert, for example, which might have been called by OCBC in respect of the amendment would not be relevant. He says such evidence, even if allowed, could not have made any difference to the actual proceeding and that it is wrong to suggest that any alleged prejudice of this nature is sufficient to justify refusal of the amendment. However, on an amendment application, the Court is not concerned with making a finding as to the ultimate outcome of any such evidence but rather, with the question whether it might reasonably have been adduced and arguably have affected the outcome of the proceeding. In addition to calling witnesses to give expert evidence, OCBC contends that it would have been possible to challenge the witnesses for the applicant in respect of the proposed allegations, if these had been made at the outset of the proceeding. The matter has now progressed to a stage where this is not practicable. Instructions could have been obtained by counsel for OCBC in respect of the cross-examination of witnesses to challenge the evidence and this course is not now possible. Costs cannot remedy the situation nor will an adjournment. Accordingly, I do not accept these arguments advanced by the applicant to the effect that no injustice would ensue if the amendments were permitted.
35 Because in conducting a case such as the present important tactical decisions have to be made as to the way in which the case should be run, a substantial change in the nature of the case at the close of the evidence can clearly give rise to, and in the present case does give rise to, prejudice. Because the evidence referred to by counsel for OCBC was not called and because the view was formed that it was not then necessary or relevant, there has been no opportunity to deal with the amended allegation and it would be unjust to require OCBC at this stage to address on the basis of issues which had not been clearly indicated. In my view, there is substance in the contention of OCBC in relation to these amendments and I reject the application to amend the claims of misleading and deceptive conduct on the part of OCBC for this reason.