Plaintiff v ANDREW ALEXANDER LINDBERG

Supreme Court of Victoria|2009-05-28|Before: ROBSON J

CORPORATIONS - Civil penalty proceedings - Application to further amend amended statement of claim - Application would lead to vacation of trial date - Prejudice to defendant - Application refused - Relevance of Queensland v J L Holdings Pty Limited [1997] HCA 1; (1997) 189 CLR 146.

PRACTICE AND PROCEDURE - Application to further amend amended statement of claim - Civil penalty procedure - Relevant factors - Relevance of Queensland v J L Holdings Pty Limited [1997] HCA 1; (1997) 189 CLR 146 - Rule 36.01 of Supreme Court (General Civil Procedure ) Rules 2005.

Mr N J O'Bryan SC with Mr P D Crutchfield & Mr C H Truong

The Australian Securities and Investments Commission

Mr D G Collins SC with Mr G P Mullaly & Ms M Tittensor

ACCC v Emerald Ocean Distributors Pty Ltd [2004] FCA 949

ACCC v Pacific Dunlop Ltd [2001] FCA 740

ACCC v Trading Post Australia Pty Ltd [2008] FCA 1298

ASIC v Fortescue Metals Group Ltd [No 3] [2009] FCA 430

ASIC v Rich [2005] NSWSC 940

ASIC v Sydney Investment House Equities Pty Ltd [2007] NSWSC 1456

Black & Decker (Australasia) Pty Ltd v GMCA Pty Ltd [2007] FCQA 1623

Bomanite Pty Ltd v Slatex Corporation Australia Pty Ltd [1991] FCA 536; (1991) 32 FCR 379

Chameleon Mining NL v Murchison Metal Ltd [2009] FCA 137

Equuscorp Pty Ltd v Wilmoth Field Warne [2007] VSCA 280; (2007) 18 VR 250

Ketteman v Hansel Properties Limited [1987] AC 198

Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274

Queensland v J L Holdings Pty Limited [1997] HCA 1; (1997) 189 CLR 146

Winn v Brahe [2009] VSC 93

1 In this proceeding, the Australian Securities and Investments Commission (ASIC) seeks declarations, civil penalties and injunctions against Andrew Alexander Lindberg. ASIC alleges that, whilst Mr Lindberg was the managing director of AWB Limited (AWB), his conduct in relation to AWB's wheat sale contracts with Iraq under the United Nations Oil-for-Food Program breached his duties in contravention of ss 180(1) and 181(1) of the Corporations Act 2001.

2 The proceeding has been set down for trial on 13 July 2009. However, ASIC seeks to obtain third party discovery from AWB which, if ordered, cannot be properly obtained and digested in time for the commencement of the trial. ASIC also sought to further amend its amended statement of claim. On 7 May 2009, I refused the application to further amend primarily to avoid the trial date being vacated. I also refused an application to vacate the trial date and the date for the filing of statements of evidence. I reserved my reasons for refusing the application to amend and the application to vacate the trial date and the date for filing statements of evidence.

3 On 14 May 2009, the application for non-party discovery against AWB came before me again. On this occasion, ASIC sought to adjourn the application for non-party discovery. Mr Lindberg contends that the application for an adjournment should be refused and instead the application should be dismissed. I reserved my decision.

4 These reasons give my reasons for refusing ASIC's application to further amend its amended statement of claim , and refusing the application of ASIC to vacate the trial date and the date for filing statements of evidence. These reasons also contain my decision and reasons on the application to adjourn the further hearing of the discovery application and the application by Mr Lindberg to dismiss ASIC's discovery application.

5 I have decided to grant ASIC's application to adjourn its application for non-party discovery against AWB. I have decided not to dismiss ASIC's application for non-party discovery. ASIC has now renewed its application to vacate the trial date. I am prepared to hear that application as soon as it is convenient. I have also decided that if ASIC's application is successful, I will further entertain ASIC's application to further amend the amended statement of claim, if it is so minded to pursue the amendments.

6 Although I have previously described the proceedings, it is necessary to do so again.[1] The proceedings were commenced on 19 December 2007 along with proceedings against five other former senior officers of AWB: Messrs Flugge, Ingelby, Stott, Geary and Long. ASIC's case against Mr Lindberg may be summarised as follows.[2]

7 Between 1996 and 2003, the United Nations operated the Oil-for-Food Program whereby proceeds from Iraq's oil imports were held in a UN Escrow Account and, where authorised by the UN, used by Iraq to buy humanitarian goods. During this period, relevant UN resolutions otherwise prohibited the provision of any financial or economic benefit to Iraq , including hard currency.

8 Between 1996 and 2003, AWB sold bulk wheat to the Iraqi Grain Board (IGB) under the Oil-for-Food Program.

9 Between 1999 and 2003, Iraq imposed, and AWB paid, a purported inland transportation fee in connection with all AWB shipments of wheat to Iraq. The fee was paid by AWB in hard currency to the IGB, via a Jordanian company, Alia, which was part-owned by the government of Iraq.

10 From 1999, each AWB contract with Iraq was inflated by the amount of the purported inland transportation fee, and this amount, having been paid to Alia by AWB, was later obtained by AWB from the UN Escrow Account.

11 The inland transportation fee was a sham. Neither AWB nor Alia in fact organised or provided transportation of wheat inside Iraq. The purpose of the sham fee was to provide the government of Iraq with a flow of hard currency, which the UN resolutions establishing the Oil-for-Food Program had forbidden. In an effort to evade detection of AWB's payment of the sham fees and their recovery from the UN Escrow account:

(a) the sham fees were not referred to in the contracts submitted by AWB to the UN for approval. Instead, the sham fees were incorporated into the total sale price per tonne of wheat;

(b) contracts submitted to the UN by AWB referred to meaningless or sham trade terms (for example, "CIF Free in Truck to All Governates of Iraq"); and

12 Each payment to Alia was contrary to relevant UN sanctions because it resulted in the government of Iraq obtaining hard currency. The recovery of each payment from the UN Escrow Account was not made for legitimate humanitarian purposes and accordingly, was contrary to relevant UN sanctions.

13 Further allegations are made about the misuse of the UN Escrow Account in relation to what is called "the Tigress debt."

14 All these matters were well known to AWB. By virtue of his position as managing director of AWB, his personal involvement in some of these matters, and his receipt of key communications, each of these matters became known to Mr Lindberg at various times between 2000 and 2003.

15 The revelation of these matters caused substantial damage to AWB.

16 Mr Lindberg knew or ought to have known that the revelation of AWB's conduct was likely to cause substantial and irreparable harm to AWB, including the loss of the single desk, which was of great financial and commercial value to AWB.

17 Mr Lindberg, as managing director, was responsible to report these matters to the board and for taking reasonable steps to investigate and prevent AWB from engaging in conduct contrary to UN resolutions.

18 Mr Lindberg is alleged to have breached his duties under ss 180(1) and s181(1) of the Corporations Act by failing to take adequate steps to:

(a) follow up serious matters of concern in relation to the payment of purported inland transportation fees, raised with Mr Lindberg in late 2000 or early 2001 by Arthur Andersen;

(b) prevent AWB from entering into wheat contracts which provided for the payment and recovery of sham fees;

(d) make enquiries with relevant AWB employees concerning the true commercial characteristics of certain wheat contracts;

(f) ensure that AWB complied with relevant UN Resolutions;

and by permitting AWB to enter into the contracts including the sham fees.

19 It can therefore be seen that the critical issue in these proceedings is Mr Lindberg's knowledge of the sham fees, particularly that the payment of these sham fees was in breach of UN resolutions and that disclosure of these payments would have been likely to cause substantial and irreparable damage to AWB. The amended statement of claim alleges that Mr Lindberg knew or ought to have known of these matters.[3] The proposed further amended statement of claim seeks to further amend the allegation of his knowledge to include that he "knew facts that ought to have put him on a train of inquiry that would have disclosed" the sham payments.[4]

20 After two directions hearings in February and April 2008, Mr Lindberg and the other defendants applied for a stay of the proceedings against each of them. In November 2008, I stayed the proceedings against the other five defendants but not against Mr Lindberg. The basis of the stay application and my reasons may be found in Re AWB Limited (No 1) which I delivered on 12 November 2008.[5] In substance I found that, on the evidence before me, criminal proceedings were likely to be instituted against the five other defendants and unlikely to be instituted against Mr Lindberg. I came to that conclusion not through any examination of the strength or weakness of the case against the defendants, but solely on the observations of the Royal Commissioner, the Honourable Terrance R H Cole QC, and on evidence of statements made by officers of the Oil-for-Food Task Force established by the Commonwealth Government to pursue recommendations of the Royal Commissioner.

21 Following my judgement on the stay application, on 21 November 2008, directions were made for the hearing of the proceedings against Mr Lindberg. Orders were made for the filing of a defence by 12 December 2008. The defence was excused from complying with certain rules relating to pleadings, but at a minimum was to: (a) indicate which matters alleged in the amended statement of claim were admitted, denied or not admitted; and (b) identify the nature of any positive defence or statutory defence relied on. Mr Lindberg consented to this order.

22 ASIC was to file and serve a list of documents upon which it proposed to rely at trial on or before 30 January 2009. ASIC proposed this order.[6] ASIC was to file and serve an affidavit of documents by 27 February 2009. At ASIC's request, an order was made that Mr Lindberg may, if he wished, identify to ASIC those documents in ASIC's list that were disputed by Mr Lindberg (whether as to relevance, authenticity or otherwise) on or before 23 February 2009.

23 An order was made, that all applications in connection with subpoenas, discovery, privilege and third party confidentiality issues were to be brought on or before 27 March 2009. ASIC was ordered to file and serve a statement of the evidence of any witness upon which it proposed to rely on or before 1 May 2009, including the evidence of any expert it intended to call. The matter was set down for trial commencing 13 July 2009.

24 I have set out the full extent of the orders because ASIC bases, in part, its application for non-party discovery on the failure of Mr Lindberg to identify which of the documents ASIC intends to rely on at the trial are disputed. The orders did contemplate, that ASIC would list all documents it proposed to rely on at the trial. As will be discussed below, it now appears that ASIC wishes to obtain discovery of further documents that are not in its list for use at the trial. On 21 November 2008, ASIC indicated it would prefer to proceed against Mr Lindberg at the same time as the civil proceedings against the other defendants were heard. ASIC did not otherwise oppose the matter being set down for trial.

25 On 12 December 2008, Mr Lindberg filed his defence.

26 On 21 January 2009, ASIC applied for an order that the proceeding be stayed until further order, on the ground that issues raised in the case against Mr Lindberg were common to issues raised in the civil penalty proceedings against the other defendants and these common issues should be heard together. ASIC in the alternative, sought an order extending until 1 May 2009 the date by which ASIC must give discovery. Previously, ASIC had until 27 February 2009. Despite having Mr Lindberg's defence, no application was made at that time by ASIC for non-party discovery or for an extension of time to file the notice of the documents ASIC intended to rely on at the trial which was due to be filed and served by 30 January 2009.

27 On 10 February 2009, ASIC filed and served a document headed "Notice Seeking Admissions", which it stated was in accordance with my orders and directions of 21 November 2008. On 27 March 2009, Mr Martin Lockett, a lawyer for ASIC, deposed that the notice lists the documents upon which ASIC proposes to rely upon at the trial of this matter.[7] He did not suggest that ASIC may seek to rely on further documents not in the list.

28 The application for a stay was heard on 19 February 2009 and dismissed on 24 February 2009.[8] I did, however, grant the extension of time to make discovery to 1 May 2009.

29 On 27 February 2009, ASIC served a second notice seeking admissions by Mr Lindberg.

30 On 27 March 2009, ASIC sought an order that AWB provide discovery of the documents described in a list that went for some sixty pages and of documents relating to certain topics in nine further categories. The application came before me on 24 April 2009. On that day, ASIC informed me that the documents sought to be discovered in categories two to nine were particularly relevant to the allegations that now found their place in a further amended statement of claim.

31 ASIC informed me that it was impossible for it to file its evidence by 1 May 2009. ASIC sought to vacate the date for the filing of statements of evidence. ASIC also informed me that the anticipated commencement date of 13 July 2009 was "at very serious risk of not being achieved" because ASIC needed to get hold of the documents they sought from AWB. ASIC said it needed to put those documents to their witnesses and prospective witnesses.[9] ASIC did not explain why it could not use, for that purpose, the documents that it had listed as those it intended to rely on at the trial.

32 ASIC also tendered to the Court a proposed Further Amended Statement of Claim (draft 22 April 2009) which had been served on Mr Lindberg's solicitors on Wednesday 22 April 2009. The amendments include further allegations about the source of Mr Lindberg's alleged knowledge of the alleged sham transport payments. ASIC said that a large proportion of the documents sought from AWB are relevant to these fresh allegations. ASIC also said that it would prefer to have made the amendments after obtaining discovery from AWB as it "lacked sources of information which might enable this to be improved further."[10]

33 ASIC was not able to say when it would be able to file its statements of evidence. I declined to vacate the order for filing statements of evidence without further submissions. I directed that any application to further amend the statement of claim be made with supporting material by 1 May 2009. I adjourned the summons seeking discovery from AWB and any further consideration of the application to vacate the dates for statements of evidence and the commencement of the trial to 7 May 2009.

34 On 7 May 2009, I heard the application to further amend the amended statement of claim. I also heard ASIC's application to vacate the dates for statements of evidence and the commencement of the trial. I refused the application and reserved my reasons. Senior counsel for Mr Lindberg informed me that Mr Lindberg had objections to the form of the amendments. I did not hear argument on those objections. I adjourned the further hearing of the summons for discovery by AWB to 14 May 2009.

35 In support of the summons for discovery, ASIC relied on the affidavits of Martin Lockett of 27 March 2009 and 1 May 2009. ASIC sought discovery of the documents listed in ten categories. Category one related to the originals of documents to be relied on by ASIC at the trial. Category two were "The 'Iraq", "Volcker Inquiry" and "Tigris" files maintained by or at the direction of Mr Lindberg during his period as Managing Director of AWB. Category three were -"All documents relating to the resignation, termination or redundancy" of Messrs Lindberg, Stott, Ingleby, Cooper, Geary and Fuller. Category four were "Minutes of all meetings in the period between April 2000 and February 2006 in respect of the following committees:

(b) the sub-committee of the Executive Leadership Group known as the Iraq Emergency Response Team."

Category five is "Email logs for Lindberg and each of his personal assistants." I refer to, without setting out, the other five categories.

36 Mr Lockett addresses the relevance of the categories two to ten. As to category two, he points to evidence which supports the existence of the 'Iraq', 'Tigris' and 'Volcker Inquiry' folders. He says they are likely to contain documents that were provided to, or created by Mr Lindberg in relation to:

(a) AWB's trade with Iraq under the Oil-for-Food Program;

37 Mr Lockett deposes that Mr Lindberg's knowledge of theses matters are in issue in this proceeding. He says that he is aware, from his review of correspondence passing between AWB and Volcker Inquiry and relevant parts of the reports of the Volcker Inquiry, that the allegation and findings made by the Volcker Inquiry include the payment of sham inland transportation fees and sham service fees by AWB to the Iraqi government via Alia. He says that those matters are also in issue in the proceeding.[11]

38 Similar observations are made by Mr Lockett in relation to the other eight categories.

39 Mr Lockett also deposes that ASIC obtained from AWB, during the period of August 2007 to December 2007, between 500,000 and 1,000,000 documents arising from service of various notices upon AWB and from other sources.[12] Subsequently, between August 2008 and April 2009, ASIC has sought further documents from AWB.[13]

40 As to the proposed further amended statement of claim, Mr Lockett says that he reviewed the documents that ASIC gave notice it intends to rely on at the trial and further documents that had come to the attention of ASIC in the course of ASIC's investigations . He says that as result, ASIC began to form the view that:

(a) some additional documents ought to be included in the notices seeking admissions;

(b) in some instances, the additional documents ought properly to be separately alleged and/or particularised in ASIC's pleading; and

(c) Mr Lindberg may have committed additional contraventions of sections 180 and 181 of the Corporations Act as a result of matters set out in, or evidenced, by the additional documents.[14]

41 Mr Lockett says that ASIC formed the view that there may be sufficient evidence to found allegations concerning instances where Mr Lindberg either omitted to give material information to the AWB board and/or its directors or gave material information that was false or misleading.[15] These allegations open up an entirely new case against Mr Lindberg.

42 The proposed amendments in the Further Amended Statement of Claim (draft 1 May 2009) are extensive. They seek to allege additional facts concerning, inter alia, the trucking fees, Mr Lindberg's knowledge of the Arthur Andersen Report, the Ernst & Young Fraud Risk Assessment, Project Rose, the Independent Inquiry Committee into the United Nations Oil-for-Food Program (the Volcker Inquiry), the Tigris Agreement and the damage to AWB. Importantly, it is now alleged that not only did Mr Lindberg fail to warn the board about the sham transactions, but that he misinformed and allowed others to misinform the board.

43 On the evidence before me, I was satisfied that the proposed amendments would have led to the vacation of the trial date. No satisfactory explanation was provided by Mr Lockett, who swore his affidavit of 1 May 2009 in support of the application to amend, for ASIC not having raised these allegations earlier to avoid the trial date being vacated. ASIC had obtained between 500,000 and 1,000,000 documents from AWB in 2007. There was no evidence before me to establish the matters that it now seeks to plead were not known to ASIC, or ought not to have been known, earlier to avoid the trial date being vacated. In my view, I have to do justice to both parties. ASIC has had the full weight of the state to enable it to frame and launch its case against Mr Lindberg. Some sixteen months after the proceedings were commenced, when the hearing was just some two months off, ASIC seeks to make extensive and substantial amendments which will lead to a vacating of the trial date. Many of the documents sought from AWB are required to support the amendments. ASIC says it needs to obtain them, show them to witnesses and incorporate them into witness statements and then disclose the documents to Mr Lindberg. It cannot do those things without vacating the trial date.

44 Such amendments may be made in a commercial dispute where parties can be compensated by the appropriate order as to costs or an adjournment. In a matter as serious as a civil penalty proceeding, different considerations apply. It is now some nine years since many of the matters complained of happened. Mr Lindberg is to be called on to meet allegations about meetings and what was said nine or so years ago. It goes without saying that memories will be stretched to accurately and fairly recall what was or was not said. In my opinion, the further delay of these proceedings will unfairly prejudice Mr Lindberg in the conduct of his defence. Such prejudice exists in the context where his professional reputation and character is at risk. Such prejudice cannot be compensated for by an order as to costs.

45 Mr Lindberg relies on Re AWB Limited (No 2)[16] where I considered the issue of prejudice to Mr Lindberg arising from a delay of this proceeding. I said:

28. Finally, Mr Lindberg contends it is unfair and unjust that he be subject to further delay where his reputation, competence and probity are challenged by ASIC. In Spitfire Nominees Pty Ltd v Thompson & Hall,[17] Warren J referred to the burden and prejudice suffered by a defendant where the hearing of allegations are delayed that go to his or her professional reputation, competence or probity. Quoting from the Appeal Division in Bishopsgate Insurance Australia v Deloitte, Haskins & Sell,[18] she said:

Where a claim is made against individuals relating to their probity, or their competence, especially their professional competence, and the claim is for many millions of dollars, then it is not hard to infer that defendants against whom such allegations are made are under a heavy burden. When that burden is not merely deferred, but then unjustifiably drawn out over many years, it is easier still to infer serious prejudice of the relevant kind to a defendant.[19]

29. It is often said justice delayed is justice denied. In Imaging Applications v Vero Insurance[20] Vickery J elaborates on and confirms the legal significance of the principle.

30. If the proceeding against Mr Lindberg is stayed, it is likely the proceeding will be delayed for at least a year. If the stay were lifted on the related proceedings, then necessary interlocutory steps would need to be taken before they are ready for trial.

31. In this case, Mr Lindberg is alleged, inter alia, to have known or ought to have known about the allegedly improper inland transportation fees being paid by AWB to agencies of the Iraqi Government by a briefing given to him and others by Arthur Anderson on 23 February 2001. Mr Lindberg disputes what was allegedly said at the briefing. By next year, some nine years will have elapsed before witnesses will be expected to recall what was said at this important meeting. Other instances where recollections of what was said around 2001 will be relevant can be found in the pleadings.

Those observations are equally applicable to this application.

46 Mr Lindberg further contends that, in dealing with applications which would delay the trial of a proceeding, a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues and the raising of false hopes. He submits that Courts now take into account the strain which litigation may place upon those involved and the natural desire of most litigants to be freed, as quickly as possible, from the anxiety, distraction and disruption which litigation causes.[21] Mr Lindberg refers to and relies on Queensland v J L Holdings Pty Limited,[22] Ketteman v Hansel Properties Limited,[23] Bomanite Pty Ltd v Slatex Corporation Australia Pty Ltd,[24] Micallef v ICI Australia Operations Pty Ltd,[25] Black & Decker (Australasia) Pty Ltd v GMCA Pty Ltd,[26] Winn v Brahe[27] and Chameleon Mining NL v Murchison Metal Ltd.[28]

47 Senior counsel for ASIC contended that I was bound by the decision of the High Court in Queensland v J L Holdings Pty Limited[29] to grant the amendment. JL Holdings dealt with a case which is of a commercial nature.[30] Dawson, Gaudron and McHugh JJ said:

In this case, which is of a commercial nature, the litigants are on the one side a developer and on the other side government, and there is nothing which would indicate any personal strain which would justify the conclusion that costs are not an adequate remedy for prejudice caused by the amendment sought to the pleadings.

In our view, the matters referred to by the primary judge were insufficient to justify her Honour's refusal of the application by the applicants to amend their defence and nothing has been made to appear before us which would otherwise support that refusal. Justice is the paramount consideration in determining an application such as the one in question. Save and in so far as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application. Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties. In taking an opposite view, the primary judge was, in our view, in error in the exercise of her discretion.[31]

48 I accept, as senior counsel for ASIC contends, that I am bound by JL Holdings but it does not follow I must, in my discretion, allow the amendment. I accept that justice is the paramount consideration. However, in this case, costs or an adjournment are not an adequate remedy for the prejudice likely to be caused to Mr Lindberg. My decision on this issue is not motivated by any desire to punish ASIC for its mistakes and failures. In fact, I make no such findings against ASIC. Rather, as explained above, I am primarily concerned by the prejudice to Mr Lindberg through the effluxion of time between the time of the alleged conduct and the trial and the delay in hearing allegations that go to his professional reputation, competence and probity.

49 ASIC accepts that it is in the discretion of the court whether to allow an amendment.[32] ASIC relies on Equuscorp Pty Ltd v Wilmoth Field Warne,[33] a decision of the Court of Appeal where Buchanan, Ashley and Neave JJA said:

A party will normally be given leave to make amendments to pleadings necessary to enable the real questions in controversy between the parties to be determined, provided that any consequential prejudice to the other party can be compensated by the imposition of terms, such as an adjournment or costs orders.[34]

50 ASIC contends that the starting point is that all such amendments should be made as they are necessary to enable the real questions in controversy between the parties to be decided. ASIC also contends that an amendment will ordinarily be allowed provided that any harm or prejudice to the other party can be ameliorated, for example by an adjournment.

51 ASIC submits that any prejudice suffered by Mr Lindberg by reason of the amendment can be adequately addressed by an order for costs thrown away be reason of the amendment, by vacating the current trial date and by extending the time by which further interlocutory steps are to be completed.[35]

52 In my opinion, the prejudice to Mr Lindberg can not be adequately addressed by an order for costs thrown away. The prejudice to him is not just financial. Further, the prejudice cannot be addressed by vacating the trial date. The fact that the trial date will be vacated if the amendment is allowed is the main prejudice to Mr Lindberg.

53 ASIC also referred me to ACCC v Trading Post Australia Pty Ltd,[36] ASIC v Sydney Investment House Equities Pty Ltd,[37] ASIC v Fortescue Metals Group Ltd [No 3],[38] ASIC v Rich,[39] ACCC v Emerald Ocean Distributors Pty Ltd.[40] and ACCC v Pacific Dunlop Ltd.[41] None of those cases suggest that any different principle should be applied other than that referred to in the authorities cited earlier.

54 In JL Holdings, Kirby J referred to considerations which tend to argue against the grant of an indulgence to amend a pleading. His Honour said, "Courts now take into account the strain which litigation may place upon those involved and the natural desire of most litigants to be freed, as quickly as possible, from the anxiety, distraction and disruption which litigation causes (references omitted)."[42] Of course these factors are relevant to this application. Nevertheless, my primary concern is the prejudice to Mr Lindberg in the conduct of his defence to the penalty proceedings and the delay in hearing allegations that go to his professional reputation, competence and probity which cannot be compensated for by the imposition of any terms. For these reasons, I refused the application to amend.

55 If, on the other hand, ASIC is successful in its application to vacate the trial date, then the main reason for refusing the application will no longer apply. In those circumstances, I would entertain an application to further amend the amended statement of claim as sought.

56 I turn now to the discovery issue. On 14 May 2009, I was informed that ASIC and the AWB had come to an agreement concerning discovery. Senior counsel for AWB informed the Court that AWB would not consent to an order to make discovery but it would not oppose the making of such an order, provided ASIC agreed to reimburse AWB for its costs on a solicitor-client basis and allow AWB appropriate time to make such discovery.[43]

57 There were significant differences of views as to the time AWB would need to provide discovery. For example, ASIC asserts that discovery of categories 2, 3, 4, 7-10 may take as little as 3.68 days. AWB claims ASIC has misread Elizabeth Seddon's affidavit of 14 May 2009 where she deposes as to the estimated times of discovering the requested documents. AWB says the minimum is 198 days.

58 ASIC asserts that it had a binding agreement with AWB to give discovery that was enforceable. AWB says that it would not give ASIC access to the requested documents until the appropriate order was made. ASIC asserts that it did not need the order as it had the agreement.

59 ASIC seeks a two-week adjournment to ascertain the time it will take for it to obtain discovery of the documents it seeks from AWB, to consider the consequences of the documents for completing its statements of evidence and to be prepared for trial.

60 Mr Lindberg opposes the application for an adjournment and submits the application for discovery ought to be dismissed.

61 Mr Lindberg submits that an order for AWB to give discovery will be futile. He says that such discovery cannot be obtained, digested by ASIC and the documents also made available to Mr Lindberg in time for the trial. In those circumstances, it would be futile to order discovery. Further, he submits that the failure of ASIC to obtain non-discovery is unexplained. He contends that ASIC has known that Mr Lindberg denies receiving or reading most emails relied upon by ASIC. Mr Lindberg relies on grounds for each of the ten categories, which essentially challenge their relevancy or assert ASIC's knowledge of their relevance from the start of the proceedings.

62 I reserved my decision on the application to adjourn and Mr Lindberg's application to dismiss the discovery application. Since the hearing, with leave, ASIC has relied on the written submissions of 19 May 2009. Those submissions disclose that on 18 May 2009, Mr Lindberg served responses to ASIC's notices to admit in February. The submission states that ASIC is currently assessing the impact of these responses upon its non-discovery application and will advise Mr Lindberg, AWB and the Court when its assessment is complete.

63 The submission responds to Mr Lindberg's futility submission and the contention that ASIC has unduly delayed the bringing of its application. ASIC contends that the application is not futile. ASIC says that the trial date is not immovable, irrespective of how discovery impacts the parties' preparation for trial.

64 ASIC also criticises AWB's conduct and asserts that AWB has an interest in delaying or preventing ASIC from obtaining discovery from it and says that AWB and Mr Lindberg should be seen as being in the same camp. This attack on AWB has brought forth a submission in response from AWB, dated 22 May 2009, refuting ASIC's attack on AWB.

65 ASIC submits that the Court should order that AWB provide discovery as contemplated by the agreement and vary the orders made on 21 November 2008 accordingly, including by extending the time by which ASIC's outlines of evidence are to be provided and by postponing the trial commencement date by such time as is required for AWB to provide discovery to ASIC and for ASIC to complete the preparation of its evidence-in-chief.

66 ASIC says that it is likely to apply for an order vacating the trial date as soon as the time frame within which AWB is able to provide discovery has been made clear, so as to allow for the inspection of AWB's discovered documents and for both parties to take account of those documents in preparation for trial. ASIC has now made such an application.[44]

67 Mr Lindberg, in response, contends that the Court has already heard and determined ASIC's application dated 1 May 2009 to vacate the orders made on 21 November 2008 that ASIC file witness statements by 1 May and that the trial be fixed for 13 July 2009.[45] Mr Lindberg contends that ASIC does not explain why the application for discovery was not brought until 27 March 2009. Mr Lindberg submits that ASIC does not contend that it only recently became aware of the relevance of the categories of documents now sought. He says that ASIC could not do so in light of the Cole Report.

68 Mr Lindberg submits that, given the nature and history of the allegations ASIC makes (and the publicity surrounding them), further delay will result in additional prejudice to Mr Lindberg which cannot be compensated by an order for costs. Mr Lindberg also contends that the Evidence Bill 2008, which is anticipated to come into effect later this year, might also be a significant prejudice to Mr Lindberg if the trial is delayed.[46]

69 Mr Lindberg contends that ASIC has always known that the key issue in the proceedings was Mr Lindberg's knowledge of the facts alleged.

70 At this stage I have not heard any argument from AWB or Mr Lindberg on the appropriateness of AWB giving discovery of the particular documents ASIC seeks discovery of. Accordingly, any observations I make are only preliminary and do not reflect any concluded view.

71 Subject to those qualifications, in my opinion, the fact that the documents may be relevant to the issues in the proceeding is not sufficient, by itself, to warrant non- party discovery in this case and at this point of the proceedings, especially where discovery may lead to the vacating of the trial date. The case has proceeded on the basis, similar to a criminal trial, that Mr Lindberg should be given full notice of the case against him. A statement of claim with particulars has been given. That statement of claim and particulars give full particulars of the basis upon which Mr Lindberg is alleged to have knowledge of the matters alleged. ASIC proposed and I so ordered that it gives Mr Lindberg a list of the documents it intends to rely on at the trial. In those circumstances, I see no proper purpose in ASIC seeking to obtain third party discovery documents, that it does not intend to rely on at the trial, unless those documents are necessary to meet a defence raised by Mr Lindberg. At this stage, ASIC has not sought to justify discovery of the categories on the basis that it is meeting a specific defence raised by Mr Lindberg. I do not consider it proper for ASIC to say that Mr Lindberg has denied knowledge of the alleged sham payments and therefore any document going to that issue can now be put against him. ASIC's case is that Mr Lindberg knew of the alleged sham payments. Mr Lindberg's denial that he did have that knowledge does not justify ASIC now seeking to rely on documents that it did not identify in the list of those that it intends to rely on at the trial. Even if Mr Lindberg's defence would justify such an approach, ASIC had Mr Lindberg's defence, and had had it for two months, when it served its lists.

72 On the other hand, ASIC may be able to establish that discovery of some documents that it seeks may be otherwise relevant to the defence.

73 Although these proceedings are civil proceedings, they seek to impose a penalty. In those circumstances, I must assume that, without evidence that supported the allegations, ASIC did not make the allegations that it did against Mr Lindberg. The directions for trial assumed and proceeded on the basis that ASIC had in its possession the documents that it intended to rely on to prove its case. It was ordered to provide a list of those documents by 30 January 2009. It provided two lists in purported compliance with that order on 10 February and 27 February 2009.

74 At no stage did ASIC indicate that it did not have in its possession the documents it intends to rely on. ASIC contends that on 21 November 2008, it had made it clear that it would probably be necessary to seek non-party discovery from AWB.[47] On 21 November 2008, senior counsel for ASIC informed the court that it was important for ASIC to know which documents that ASIC intended to rely on were disputed. He said that if certain documents were disputed, ASIC will need to call additional witnesses "whether AWB witnesses or possibly an expert witness in connection with email systems, and in particular, the AWB system to prove those things."

75 As to the order which provided for any applications in connection with subpoenas, discovery, privilege and third party confidentiality issues to be brought on or before 27 March 2009, senior counsel for ASIC did not refer to a possible application for non-party discovery against AWB. He referred to confidentiality issues arising out of documents obtained by ASIC in its investigations.[48] Later, senior counsel for Mr Lindberg said that he did not know what third party would be relevant to a confidentiality order.

76 As far as I am aware, the only reference to AWB on 21 November 2008 was to it providing potential witnesses depending on the defence filed by Mr Lindberg.

77 Mr Lindberg contends that ASIC has always known that he disputed the knowledge he is alleged to have had and that he would deny having obtained that information from the documents relied on by ASIC. ASIC, on the other hand, suggests that it was not until it failed to get a response to its notices to admit that it realised it would need to obtain the originals of the documents that it intended to rely on.

78 I have reservations about accepting ASIC's position. I will assume, however, that ASIC initially considered that it would conduct the case with the documents it had obtained from the Cole Royal Commission and through its own investigations. I will assume that it complied with the order of 21 November 2008 and gave a list to Mr Lindberg of the documents it intends to rely on at the trial. I will assume that earlier this year, in about March, ASIC came to the view that it required the originals of some or all of those documents for trial. If that is the case, I am uncertain why ASIC needs discovery from AWB, rather than AWB merely producing the originals of the documents that ASIC gave notice of to Mr Lindberg that it intended to rely on at the trial.

79 Nevertheless, ASIC has sought discovery of categories of documents which suggests that it is seeking to uncover presently unidentified documents in order to make out a case that it has not informed Mr Lindberg of. I have not heard an adequate explanation of why ASIC should be able to go beyond the documents it gave notice of to Mr Lindberg. Until that issue is resolved, however, I do not consider that the interests of justice will be served by dismissing ASIC's application for discovery. In my opinion, ASIC is entitled to pursue its application for discovery.

80 I will order the adjournment of ASIC's application for discovery to a date to be fixed as sought by ASIC. I will not grant Mr Lindberg's application to dismiss ASIC's application. I will hear, as soon as convenient, ASIC's renewed application to vacate the trial date and the date by which it should file statements of evidence. If ASIC's application to vacate the trial date is successful, I will entertain an application by ASIC to further amend the amended statement of claim as sought in its draft of 22 April 2009.

[1] Re AWB Limited (No 2) [2009] VSC 70.

[2] See key propositions sought to be advanced by ASIC tendered 7 May 2009.

[3] Amended statement of claim of 18 April 2008, [35]

[4] Proposed further amended statement of claim draft 22 April [35].

[6] Exhibit MTL-11 to the affidavit of Martin Lockett sworn 1 May 2009.

[7] Affidavit of Martin Lockett sworn 27 March 2009. [63]

[8] AWB Limited (No 2) [2009] VSC 70.

[9] Transcript 24 April 2009, 6 lines 18-20.

[11] Affidavit of Martin Lockett sworn 1 May 2009 [74]-[75].

[21] Defendant's Outline of Argument 7 May 2009.

[22] [1997] HCA 1; (1997) 189 CLR 146 at 155 per Dawson, Gaudron and McHugh JJ and at 170 per Kirby J.

[23] [1987] AC 198 at 220 per Lord Griffiths.

[24] [1991] FCA 536; (1991) 32 FCR 379 at 392 per French J.

[25] [2001] NSWSCA 274 at [63]-[64].

[32] Plaintiff's Outline of Submissions of 7 May 2009, [3].

[35] Plaintiff's Outline of submissions of 7 May 2009, [10].

[43] Affidavit of Michael von Schoenberg sworn 6 May 2009, [4]; transcript 14 May 2009, 272.

[44] Interlocutory process of 22 May 2009.

[45] Defendant's response to plaintiff's supplementary submissions for non-party discovery dated 25 May 2009.

Court (General Civil Procedure ) Rules 2005

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Judgment (154 paragraphs)

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