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[2009] VSC 413
procedural. ASIC was to file and serve by 4.15 pm on 25 September 2009 a further proposed amended statement of claim complying with the reasons; the further hearing of its amendment application was adjourned...
This was a procedural ruling about the scope of ASIC's proposed changes to its case against Andrew Lindberg, not a decision on whether the allegations were proved. Robson J allowed amendments that clarified or developed the existing dispute about Lindberg's alleged knowledge and conduct before the Government of Iraq fell. The court refused amendments that would bring in distinct later allegations, including Project Rose, the IIC inquiry and misleading conduct concerning the Tigris Agreement. It also confined relevant knowledge and conduct allegations to the period before the end of March 2003, disallowed specified particulars, directed ASIC to prepare a revised pleading, and reserved costs.
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2,219 words · generated 29/09/2026
In this interlocutory decision, Robson J considered ASIC’s application for leave to further amend its statement of claim against Andrew Lindberg. The underlying proceeding was a civil penalty case. The application was not a trial of the allegations against Lindberg: the issue was which allegations and particulars ASIC could include in its pleading.
2 cited instruments linked from this judgment.
ASIC had amended its claim more than once. The history mattered because the proposed amendments came relatively late in the proceeding, with the trial then scheduled to begin on 19 October 2009. An earlier attempt to introduce amendments had been refused when it would have required the then trial date to be vacated. After third-party discovery against AWB and a change to the trial timetable, ASIC obtained leave in July 2009 to file a further amended statement of claim, but many substantive amendments were refused. ASIC then sought further leave on 6 August 2009, followed by a revised draft on 4 September 2009. [1]-[8]
The proposed amendments addressed several subjects: purported inland transportation and service fees, the Iron Filings Claim, the Tigris Debt, the Tigris Agreement, Project Rose, and the Independent Inquiry Committee into the UN Oil-for-Food Program. ASIC also proposed an alternative case that Lindberg had the means to know relevant matters, a duty to inform himself, and had failed to make inquiries. [33]-[40]
The court identified the central controversy as Lindberg’s alleged conduct before the fall of the Government of Iraq. It treated allegations about later conduct, including the handling of complaints and inquiries after payments had stopped and the Government had fallen, as potentially different issues rather than elaborations of the case already pleaded. [10], [92]-[105], [141]-[145]
The result was mixed. Some amendments that developed the existing case were permitted. Others were refused, including proposed amendments concerning the Tigris Agreement, Project Rose and the IIC inquiry. The court also disallowed specified particulars and directed ASIC to prepare another proposed pleading that complied with its reasons. The further hearing was adjourned and costs were reserved. [49]-[59], [66], [75], [80], [149], [155]-[159]
Robson J began with the Victorian statutory and rules framework. Section 29(2) of the Supreme Court Act 1986 (Vic) required the Court, as far as possible, to secure complete and final determination of matters in dispute and avoid multiplicity of proceedings. Rule 1.14 required the Court to endeavour to ensure that questions were determined effectively, completely, promptly and economically. Rule 36.01 allowed amendment for determining the real question in controversy, correcting a defect or error, or avoiding multiplicity. [13]-[16]
The judgment emphasised that the “real question in controversy” is assessed as it exists when the amendment application is made. It is not confined narrowly to the existing pleadings, because the controversy may extend beyond their wording. But it does not cover a new claim or issue merely because that claim arises from the same general subject matter. [18] Robson J treated the statutory and rules-based objectives as guiding the discretion under r 36.01, and considered case management, delay, prejudice, the explanation for seeking the amendment, and the strain of litigation on parties. [19]-[25]
That approach reflected the High Court’s recent decision in Aon Risk Services Australia Ltd v Australian National University, which Robson J said had clarified the relevant amendment principles. The judgment relied on Aon for the relevance of case management and the proposition that costs are not necessarily a complete answer to disruption or delay. It also noted that an explanation will generally be called for when a party seeks a discretionary advantage to the other party’s disadvantage. [6], [21]-[23]
The means-of-knowledge amendments were allowed because they remained tied to the existing issue: whether Lindberg should be responsible for failing to act in circumstances where he did not have actual knowledge but, on ASIC’s case, ought to have known the relevant matters. The proposed pleading added a specific allegation that he failed to inform himself through inquiries. The judge considered that a meaningful difference from the existing pleading, but still within the existing controversy. [33]-[40]
By contrast, the Tigris Agreement proposal would have introduced an issue about whether its terms were misleading and whether Lindberg should have told the AWB board. The existing pleading concerned whether he failed to prevent AWB entering into or giving effect to the agreement, and whether he failed to inform the board about it. The proposed allegation was therefore not simply a clarification of the existing issue. The judge also found no evidence that separate proceedings would be brought to resolve it. [60]-[66]
The Project Rose amendments were treated as still more distinct. The existing pleading alleged failures to inform the board about the purported fees and their alleged function. It did not allege that Lindberg knowingly misled the board about an investigation or about the true situation. The proposed changes would add that new allegation and could expand the trial, possibly requiring the trial date to be vacated. [67]-[75] The IIC amendments similarly concerned later failures to inform the board, after payments had ceased and the Government of Iraq had fallen. The court regarded that as raising different questions from the existing allegations about preventing payments and informing the board while the Government existed. [76]-[80]
The judgment’s account of the legal framework is specific to the amendment application before it. The governing provisions were s 29(2) of the Supreme Court Act 1986 (Vic), rr 1.14, 36.01 and 36.03 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic). [13]-[16] The court explained that r 36.01 was discretionary, while s 29(2) and r 1.14(1)(a) were expressed in mandatory terms. It held that those mandatory objectives guided how the discretionary amendment power should be exercised. [19]-[25]
The judgment described Aon as clarifying the principles relevant to amendments. Its practical emphasis was that a late amendment could not be evaluated solely by asking whether the other side could be compensated in costs. The court also had to consider the public administration of its lists, the effect on other litigants, delay, prejudice and the burden of continued litigation. [6], [21]-[23]
Robson J also considered whether r 36.03 independently empowered the Court to grant leave. He expressed doubt that it did. In his view, r 36.03 appeared to regulate when pleadings could be amended, including amendment once as of right before close of pleadings, while leave was likely to be granted under r 36.01. He regarded Etna v Arif as supporting that view, but framed the point cautiously rather than treating it as necessary to resolve every issue in the application. [26]-[27]
The supplied judgment does not set out later developments in the law or later judicial treatment of this decision. Accordingly, the “after” position that can be described from this source is the result in this proceeding: the court applied Aon’s case-management emphasis to the Victorian rules, assessed each amendment separately, and permitted amendments that fitted the existing controversy while refusing those that would introduce distinct or late issues. It would require later sources to describe any subsequent change or treatment.
At [18], Robson J said that the real question in controversy is the one that exists when leave to amend is sought. In plain English, the court assesses the proposed change against the dispute as it stands at that point, not simply against the original pleading. The controversy can be broader than the words already pleaded, but there must still be a genuine connection to the existing dispute.
At [25], the judge said that the discretion to amend must be exercised consistently with the objectives in s 29(2) and r 1.14. Put simply, the court must balance whether the amendment helps resolve the dispute fully against the need to do so promptly and economically, while avoiding unnecessary multiple proceedings.
At [40], the court allowed the “means of knowledge” alternative because it addressed the existing question of whether Lindberg should be held responsible for not acting on matters he ought to have known. The new allegation added a failure to inquire, but the judge considered it part of the same dispute about his responsibility for the relevant matters.
At [143], the judge described the real controversy as concerning Lindberg’s alleged knowledge of payments being made and the position concerning the Tigris Debt and Iron Filings Claim before the Government of Iraq fell. This passage is central to the ruling because it identifies the boundary used to assess the proposed amendments.
At [144], Robson J said that post-fall events would concern a “totally different issue” about how Lindberg handled the situation after the damage was done. In plain English, the court distinguished alleged failures to prevent or disclose payments while they were occurring from alleged failures to respond to later events.
This decision is relevant to pleading amendments where a party seeks to add allegations late in a proceeding and the court must decide whether they develop the existing controversy or introduce a new one. Its reasoning is especially tied to the Victorian provisions identified in the judgment, and to the interaction between the amendment rule, the court’s case-management responsibilities, and the need for prompt resolution. [13]-[27]
The decision illustrates that a different formulation may still fall within an existing controversy where it addresses the same underlying question. Here, the alternative allegation that Lindberg had means of knowledge and failed to inform himself was allowed because the proceeding already concerned what he knew or ought to have known and what he should have done. [33]-[40]
It also illustrates the contrary situation. A proposed amendment may be refused where it adds a distinct allegation, even if it concerns the same organisation or broad factual history. Allegations about misleading the board, the terms of the Tigris Agreement, or post-fall inquiries were treated as distinct from the pleaded case about preventing or disclosing payments before the Government fell. [61]-[80]
Timing is important in the court’s reasoning. The proceeding had been on foot for nearly two years, and the trial was close. The court considered the potential for a trial adjournment, the expansion of the factual issues, the absence of an explanation for a particular additional-contract amendment, and the strain on Lindberg. [46]-[48], [72]-[75] The decision does not establish that lateness alone bars an amendment; it shows that lateness was assessed alongside the amendment’s relationship to the controversy, explanation, prejudice and case-management consequences.
The supplied judgment identifies authorities that Robson J considered, but it does not contain decisions made after 18 September 2009. It therefore cannot establish how later courts treated Re AWB Ltd (No 7).
The authorities discussed within this judgment include Aon Risk Services Australia Ltd v Australian National University, which Robson J applied in formulating the relevant amendment principles; Etna v Arif, which the judge explained in relation to the meaning of the real controversy and the possible role of r 36.03; and Port of Melbourne Authority v Anshun Pty Ltd, which was considered in discussing whether separate proceedings might be barred by an Anshun point. [12], [18], [26], [71]
The judgment also cited Brisbane South Regional Health Authority v Taylor in connection with the submission about the onus on the party seeking a discretionary amendment, and referred to Perre v Apand Pty Ltd when discussing “means of knowledge”. [11], [36] It referred to ASIC v West in acknowledging ASIC’s public-interest role, while concluding that the proceeding’s existing issues and the need for prompt resolution remained important. [74]
Any account of later appellate consideration, adoption, limitation or criticism of Re AWB Ltd (No 7) would need later judgments or other legal sources not included here.
The judgment left the substantive civil penalty allegations undecided. It determined the permissible scope of the pleading, not whether Lindberg had the knowledge alleged, breached any duty, or was liable. Those matters remained for later determination in the proceeding. [1]-[10], [158]-[159]
The court expressed doubt about whether r 36.03 could itself be a source of power to permit amendment, but it did not need to resolve that question conclusively for every proposed amendment. It reasoned that r 36.03 appeared concerned with timing and amendment as of right, and that leave would ordinarily be granted under r 36.01. [26]-[27] The precise scope of r 36.03 is therefore not fully settled by this decision alone.
The decision’s temporal construction depended on the wording and structure of the particular claims. The court construed the references to continuing payments, preventing payments, and informing the board as directed to events before the Government of Iraq fell, around the end of March 2003. [98]-[105], [139]-[145] The reasons do not determine how differently worded allegations in another pleading would be construed.
Finally, the ruling was made in a specific procedural setting: a series of amendment applications, a trial date approaching, and proposed amendments of varying kinds. The decision explains how the court weighed those circumstances, but does not prescribe a fixed result for later applications with different timing, explanations, effects on the opposing party, or connections to the existing controversy.
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CORPORATIONS - civil penalty proceedings by ASIC - application to further amend the amended statement of claim - whether amendments necessary to determine the real question in controversy between the parties - whether amendments necessary to avoid multiplicity of proceedings - whether jurisdiction to amend enlivened under r 36.01- relevance of r 36.03 to amendment of pleadings - relevance of s 29(2) of the Supreme Court Act 1986 and r 1.14 of the Supreme Court (General Civil Procedure) Rules 2005 to the exercise of the court's power to amend under r 36.01 - section 29(2) of the Supreme Court Act 1986 and rr 1.14, 36.01(1), (2) and (3) and 36.03 of the Supreme Court (General Civil Procedure) Rules 2005.
PRACTICE AND PROCEDURE - amendment of pleadings - whether amendments necessary to determine the real question in controversy between the parties - whether amendments necessary to avoid multiplicity of proceedings - whether jurisdiction to amend enlivened under r 36.01- relevance of r 36.03 to amendment of pleadings - relevance of s 29(2) of the Supreme Court Act 1986 and r 1.14 of the Supreme Court (General Civil Procedure) Rules 2005 to the exercise of the court's power to amend under r 36.01 - section 29(2) of the Supreme Court Act 1986 and rr 1.14, 36.01(1), (2) and (3) and 36.03 of the Supreme Court (General Civil Procedure) Rules 2005.
The Australian Securities and Investments Commission
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27
Australian Securities and Investments Commission v West [2008] SASC 111
Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541
Etna v Arif [1999] VSCA 99; [1999] 2 VR 353
Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180
Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589
1 In this proceeding[1] ASIC has filed or sought to file the following claims:
(b) 18 April 2008 - amended statement of claim filed pursuant to rule 36.03(a);
(c) 1 May 2009 - proposed further amended statement of claim;
(c) 24 July 2009 - further amended statement of claim filed pursuant to order of Robson J made 17 July 2009;
(d) 6 August 2009 - proposed second further amended statement of claim;
(e) 4 September 2009 - proposed second further amended statement of claim, submitted as complying with preliminary decision of Robson J of 28 August 2009.
2 These reasons deal with the August and September claims. By interlocutory process filed on 6 August 2009, ASIC sought leave to file and serve a second further amended statement of claim ('the August claim'). The application was but one of a series of applications to amend the statement of claim since May 2009.
3 On 1 May 2009, ASIC sought leave to file a further amended statement of claim which had been served on Mr Lindberg on 22 April 2009 ('the May claim'). On 7 May 2009, the court refused ASIC's application to amend essentially on the ground that the amendments would lead to the vacation of the trial date which was then set for 13 July 2009.
4 On 4 June 2009, the court granted ASIC's application for third party discovery against AWB Limited and postponed the commencement of the trial to 19 October 2009 to permit AWB's discovery to occur. As the trial date was vacated, the court indicated that it was prepared to entertain ASIC's application to further amend the amended statement of claim as contained in the May claim. On 17 July 2009, the court granted ASIC's application to further amend the amended statement of claim, but the majority of the proposed substantive amendments were disallowed. On 24 July 2009, ASIC filed and served its further amended statement of claim ('FASOC') in accordance with the leave granted on 17 July 2009 ('the July claim').
5 The August claim seeks, inter alia, to amend the July claim to include those claims which the court disallowed on 17 July 2009 but in a repleaded form. The proposed August claim also completely rearranges the form of the pleadings. ASIC contends, however, that the proposed August claim contains the same proposed amendments that were in the May claim. Mr Lindberg opposes the application to amend the FASOC. Further, he says that if the amendments are allowed, it will be necessary to vacate the trial date to allow him to prepare to meet the amended claims.
6 Since my decisions of 7 May 2009 and 17 July 2009, the High Court of Australia has clarified the relevant principles to apply on an application to amend a statement of claim in Aon Risk Services Australia Ltd v Australian National University.[2]
7 On 28 August 2009, I indicated what orders I proposed to make on the application to amend and I gave preliminary reasons for the proposed orders. Mr Lindberg requested that I not make orders. Rather, he suggested that I should allow him to consider the proposed second further amended statement of claim that ASIC put forward as being in accordance with my reasons. I agreed with Mr Lindberg, in view of the extensive number of the amendments that were to be considered.
8 On 4 September 2009, ASIC served a proposed second further amended statement of claim ('the September claim'). Mr Lindberg has objected to amendments contained in the September claim. Essentially he relies on two grounds. Firstly, that the September claim does not comply with my preliminary reasons. Secondly, that during the hearing on 20 and 25 August 2009 on the August claim, Mr Lindberg did not understand the implications of the amendments sought to be made in relation to the plea that Mr Lindberg failed to investigate certain matters that is alleged would have disclosed the alleged sham inland transportation fees. Mr Lindberg sought to have these amendments disallowed in the orders that I am yet to make on ASIC's application of 6 August 2009 to amend the further amended statement of claim of the July claim.
9 I will first consider ASIC's application to amend the further amended statement of claim in the form of the August claim. I will then consider the September claim.
10 In summary I have decided as follows. After carefully reviewing the statement of claim, the amended statement of claim and the further amended statement of claim, I have come to the conclusion that the questions in controversy relate to Mr Lindberg's conduct prior to the fall of the Government of Iraq (that is the Government under the control of the Saddam Hussein).[3] In my view, the attempts by ASIC to extend its complaints to Mr Lindberg's conduct after the Government of Iraq had fallen, and to the alleged conduct of using bogus inland transportation fees to channel money to the former regime which had by necessity ceased, seeks to introduce different issues altogether which are not for the purpose of determining the real questions in controversy but rather raise new questions. In view of the short period until the trial begins, I have disallowed such amendments. As for the amendments sought to be made to the existing questions in controversy, I have generally allowed the amendments, save for some which I have previously disallowed. Accordingly, I have disallowed those claims relating to the Tigris Agreement, Project Rose and the IIC inquiry.
11 Mr Lindberg contends that ASIC bears the onus of persuading the court to exercise a discretion in its favour, citing Brisbane South Regional Health Authority v Taylor.[4] He submits that in the case of the discretion to grant an amendment, the court must be satisfied by the applicant that the amendment is necessary for the just resolution of the proceeding in light of the purposes and objectives of the Rules including that proceedings be promptly and economically determined. Mr Lindberg says that what is important is that the parties are given a proper opportunity to plead their case and relies on Aon Risk Services Australia Ltd v Australian National University.[5]
12 As indicated, the High Court recently examined the principles relevant to an amendment to a civil claim in AON Risk Services Australia Limited v ANU[6] The court placed considerable reliance on the particular rules which governed amendments in the Supreme Court of the ACT. Nevertheless, their observations have significant relevance to the rules and Act governing amendments in this court.
13 The relevant provisions and rules in this court are as follows.
Section 29(2) of the Supreme Court Act 1986 relevantly provides that the court :
...subject to the provisions of this or any other Act, must so exercise its
jurisdiction in every proceeding before it as to secure that, as far as
possible, all matters in dispute between the parties are completely and
finally determined, and all multiplicity of proceedings concerning any of
those matters is avoided.
14 Rule 1.14 of the Supreme Court (General Civil Procedure) Rules 2005 provides:
Exercise of power
(1) In exercising any power under these Rules the Court -
(a) shall endeavour to ensure that all questions in the proceeding are effectively, completely, promptly and economically determined;
(b) may give any direction or impose any term or condition it thinks fit.
(2) The Court may exercise any power under these Rules of its own motion or on the application of a party or of any person who has a sufficient interest.
15 Rule 36.01(1), (2) and (3) provides:
General
(1) For the purpose of -
(a) determining the real question in controversy between the parties to any proceeding; or
(b) correcting any defect or error in any proceeding; or
(c) avoiding multiplicity of proceedings -
the Court may, at any stage order that any document in the proceeding be amended or that any party have leave to amend any document in the proceeding.
(2) In this Order document includes originating process, an indorsement of claim on originating process and a pleading.
(3) An indorsement of claim or pleading may be amended under paragraph (1) notwithstanding that the effect is to add or substitute a cause of action arising after the commencement of the proceeding.
16 Rule 36.03 provides:
Amendment of pleading
A party may amend any pleading served by that party -
(a) once before the close of pleadings; or
(b) at any time, by leave of the Court or with the consent of all other parties.
17 Despite the difference in wording in the rules under consideration in AON Risk Services Australia Limited v ANU,[7]the following principles can be drawn from the decision.
18 The reference to "the real question in controversy" in r 36.01 refers to the real question in controversy that exists at the time of the application to amend.[8] It does not encompass a new claim or issue although it arises out of the same general matter being litigated. An unduly narrow approach should not be taken to what are the real issues in controversy.[9] They may extend beyond the existing pleadings.[10] In Etna v Arif,[11] Batt JA (with whom Charles and Callaway JJA agreed) said that r36.01(1) should "be read, and as, in substance, comprehending questions potentially within the ambit of the controversy or lis between the parties."[12]
19 A distinction should be drawn between those circumstances where the rules mandate that an amendment should be allowed and those where a discretion is granted to the court. Section 29(2) of the Supreme Court Act 1986 and r 1.14 (1)(a) are expressed in mandatory terms even though the power to allow an amendment under r 36.01 is expressed in discretionary terms.[13]
20 Where the court has a discretion to amend, the discretion is not at large but the objectives in rule 1.14 should be sought to be achieved through the exercise of the discretion.[14] Similarly, s 29(2) of the Supreme Court Act 1986 also guides the court in the exercise of its discretion.
21 The High Court in AON Risk Services Australia Limited v ANU[15] also accepted that issues of case management were relevant to the exercise of the discretion to allow an amendment. The court said that case management involved an acceptance "that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions in the court's lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard..."[16]
22 The court also accepted "that justice cannot always be measured in money and that the court is entitled to weigh in the balance the strain the litigation imposes upon litigants..."[17] In so doing, they rejected the notion that an award of costs is a complete panacea for any delay or disruption caused by an amendment.[18]
23 The court confirmed that the onus is on the party seeking the amendment and that "generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another , an explanation will be called for."[19]
24 The ACT rules include the objective of achieving a "just resolution of the real issues in civil proceedings." Although those words are not found in the Victorian equivalent, in my opinion, the same principle applies under our rules.
25 As mentioned above, the court's powers under r 36.01 are expressed to be discretionary. On the other hand, s 29(2) of the Act and r 1.14(1)(a) are expressed in mandatory terms. In my opinion, the direction to the court that it must exercise its jurisdiction in every proceeding before it so as to secure that, as far as possible, all matters in dispute between the parties are completely and finally determined and that all multiplicity of proceedings concerning any of those matters is avoided, requires the discretion in r 36.01 to be exercised accordingly. The mandatory direction in r 1.14 (1)(a) also governs the exercise of the discretion in a similar fashion.
26 ASIC submits that if the court's jurisdiction to amend is not enlivened under r 36.01, then the court has power under r 36.03 to allow the amendment. Mr Lindberg submits that r 36.03 is not available in this instance. He contends that r 36.03 is not a source of power to permit an amendment. In Etna v Arif,[20] Batt JA (with whom Charles and Callaway JJA agreed) discussed r 36.01 and its precursors at length. In that case, the trial judge had allowed an amendment of the statement of claim during a trial. The appellant submitted that the trial judge had no power to do so. Batt JA observed that the trial judge had relied on r 36.01 and added that it seemed to be the only relevant rule, thereby by implication rejecting r 36.03 as a possible source of power.[21] There is much to be said for such a view. If r 36.03 applied, what work would be left for r 36.01 in relation to pleadings? Secondly, on its face r 36.03 appears to deal with the time at which a pleading may be amended and circumstances where it may be done as of right. The reference to the leave of the Court would appear to refer to leave granted under r 36.01.
APPLYING THE PRINIPLES TO THE AMENDMENTS SOUGHT
27 Applying these principles to this case, it is necessary to ascertain whether any of the grounds referred to in r 36.01 are applicable. If the jurisdiction of the court is enlivened under r 36.01, then it is necessary to determine the factors relevant to the exercise of the discretion and make a decision accordingly. If the jurisdiction under r 36.01 is not enlivened and if, contrary to Mr Lindberg's submission, r 36.03 is available to be relied on (which in view of Etna v Arif[22] I doubt), then it is necessary to determine the factors relevant to that discretion and make a decision accordingly.
28 The material amendments appear to be as follows.
29 ASIC have amended the plea that paying the purported inland transportation fee and the purported after sales service fee was in contravention of UN resolutions, to plead that paying those fees constituted conduct that the UN had requested Australia to ensure Australian nationals did not engage in. In other words, that the payment of those fees constituted conduct the UN sought to prevent. That amendment is made in several places throughout the proposed pleading.
30 The main question raised in the existing proceedings (that is the July plea) is the allegation that Mr Lindberg knew that AWB was continuing to make bogus payments for the benefit of the Government of Iraq in breach of UN resolutions and that by engaging in such conduct AWB could suffer damage to its monopoly known as the "single desk." In my opinion, the thrust of this existing allegation is that the conduct could lead to damage to AWB, including the loss of its "single desk", and that the conduct was conduct that the UN had sought to prevent.
31 In my opinion, the amendment sought is for the purpose of determining the real question in controversy in the proceeding and accordingly my power to allow the amendment is enlivened.
32 As to my discretion whether or not to allow the amendment, the amendment should not lead to an adjournment or otherwise cause Mr Lindberg any material prejudice that can not be met by an appropriate order as to costs. Accordingly, I will allow this amendment.
33 The proposed amendments introduce an alternative plea that if Mr Lindberg did not know the matters that it is alleged he knew, that he had the means of gaining knowledge of each of those matters, a duty to inform himself of each of those matters using those means and therefore do what it is alleged he ought to have done if he had in fact known of those matters. It is then pleaded he breached his duties by failing to inform himself of those matters and by failing to do the matters that is alleged he ought to have done if he had in fact known of those matters. This plea appears as the alleged contraventions in relation to the purported inland transportation and service fees [43]-[44], the Iron Filings claim [54]-[55], the Tigris agreement [67]-[68], Project Rose [77]-[78] and ICC [86]-[87].
34 These pleas seek to replace the existing allegation that Mr Lindberg ought to have known certain matters or knew facts that ought to have put him on a train of enquiry that would have disclosed the matters.[23] The proposed amendments give rise to a fresh allegation of a breach of duty, this time a failure to inform himself, or as Mr Lindberg puts it, a failure to investigate.
35 Are these amendments for the purpose of determining the real question in controversy between the parties? The existing pleading seeks to rely not only on Mr Lindberg's actual knowledge but on what he ought to have known. It is said that he ought to have known of certain matters if he knew facts that ought to have put him on a train of enquiry that would have disclosed the matters. This raises an objective test of what a reasonable man would have done or known in the circumstance that Mr Lindberg was in.
36 Means of knowledge is an expression often used in the area of tort: Perre v Apand Pty Ltd.[24] In that case, Gleeson CJ referred to the "actual foresight of the possibility of harm, (or, what is the same thing, the foresight that a reasonable person would have).''[25] In my opinion, the expression "means of knowledge" incorporates no more than a reference to what a reasonable person would have known in the position of the person concerned.
37 Is there a material difference between an allegation that Mr Lindberg knew facts that ought to have put him on a train of enquiry that would have disclosed a fact and an allegation that he had the means of knowing a fact, the duty to inform himself and he breached that duty to inform himself?
38 In my view there is a difference. In the existing pleading , the alleged breach of duty is failing to do what he should have done assuming he had that knowledge. The amended plea retains that allegation, but also pleads a breach of his duty in not making the inquiries that it alleged he ought to have made.
39 In my opinion, however, the amendment is for the purpose of determining the real question in controversy, which is whether Mr Lindberg should be held responsible for his failure to act where he did not have actual knowledge of the matters alleged, but by reason of the facts he knew or had available, he ought to have known if he carried out his duties properly.
40 Accordingly, the jurisdiction to allow the amendment is enlivened and in my discretion the amendments ought to be allowed. I will have to come back to this point when I consider the subsequent submissions of Mr Lindberg on the September claim as Mr Lindberg submits that the duty to investigate is now sought to be extended beyond the fall of the Government of Iraq.
41 ASIC seek to amend paragraph 12E. Currently paragraph 12E of the July claim alleges that in the period between 2000 and March 2003, AWB made payments to Alia in respect of purported inland transportation fees (including service fees which were incorporated into the purported inland transportation fees) in connection with contracts with the IGB for the sale of wheat. The particulars refer to contracts A1111, A1112 and A1441. These are contracts entered into on 20 December 2001 and 22 June 2002. These are the contracts where it is alleged that Mr Lindberg took no steps or no reasonable steps to prevent AWB from entering into the contracts, when such contracts provided for the payment of purported inland transportation fees and purported service fees.[26]
42 The proposed amendment in the August claim also alleges that Mr Lindberg took no, or alternatively, no adequate, steps to prevent AWB from entering into Contracts A1111, A1112, A1441, A1670 or A1680 when each contract provided for the payment of purported inland transportation fees and purported after sales service fees.[27] Apart from the addition of the reference to Contracts A1670 and A1680 which involved the recovery of the Tigris Debt, the plea is similar to that in the existing July claim. There is no allegation that Mr Lindberg knew or ought to have known of the additional twenty eight contracts.
43 It is implicit in paragraph 35(a) of the July plea that Mr Lindberg knew that AWB had previously made purported transportation payments in connection with its trade with the IGB but no particulars were given of any particular contracts he knew of.
44 As it is not alleged that Mr Lindberg knew of these twenty eight contracts in the proposed August claim, it does not appear that the amendment is made for the purpose of determining the real question in controversy. I do not see how the omission of the plea would prejudice ASIC in the presentation of its case.
45 In my view, the amendments are not for the purpose of determining the existing real questions in controversy. If I am wrong about that then the court has a discretion under r 36.01 to allow the amendment. That discretion must be guided by the purpose for which the court's jurisdiction is exercised, as provided by s 29(2) of the Supreme Court Act 1986 and r 1.14.
46 Rule 1.14 directs that the court shall endeavour to ensure that the proceedings are determined promptly. It is now some two years since the proceedings were commenced and any further delay would run contrary to the direction in rule 1.14.
47 Does the justice of the situation otherwise require the amendment? In my view, it would be unfair at this late stage when the proceedings have been on foot for nearly two years to allow ASIC to raise the issue of the further twenty eight agreements. ASIC has given an explanation for the amendments supported by evidence of Mr Lockett. No explanation has been given for this particular proposed amendment.
48 In my view, if the discretion under r 36.03 is available to allow the amendment, it should not be exercised in favour of ASIC.
49 I disallow the proposed amendment in paragraph 21.
50 The proposed pleading rearranges and renumbers the existing pleas. Mr Lindberg objects to the proposed form. He says that he understands the existing pleading. In my opinion, the amendments are for the purpose of determining the real questions in controversy and accordingly my power to allow is enlivened. In my discretion the amendments should be allowed.
51 Mr Lindberg says that the allegation in paragraph 30(e) is not limited to conduct by AWB that involved improper conduct, such as deliberately deceiving the UN. He contends that the allegation is vague, meaningless and embarrassing. He says that it is framed in terms which would even include conduct which had been disclosed to the UN but nevertheless constituted conduct the UN sought to prevent.
52 Mr O'Bryan SC submits that the plea was not intended to encompass innocent transactions but the alleged sham transactions pleaded in the proposed paragraph 13. In my opinion, the amendment is for the purpose of determining the real question in controversy between the parties. In my discretion it should be allowed so long as it is expressed in a similar form to paragraph 13.
53 In my opinion the amendment proposed to paragraph 13 is for the purpose of determining the real question in controversy between the parties. I concede that further particulars may be sought. In my discretion I allow the amendment. It is important that Mr Lindberg knows precisely what is alleged against him and the proposed 13 enables that to be done.
Contraventions in relation to the purported inland transportation fees and service fees [39]-[46] of the August claim
54 Under this plea, ASIC alleges that Mr Lindberg knew of the purported inland transportation fees, that they were likely to result in payments to the Government of Iraq and that such conduct was conduct the UN sought to prevent. The material amendments are that Mr Lindberg was duty bound to prevent such conduct, inquire from employees whether such conduct was being engaged in and inform AWB's board, the CRRC and the audit committee of such matters (my emphasis). It should be noted that the allegation did not extend to conduct that had been engaged in.
55 The proposed paragraph 40(d) in the August plea repeats paragraph 35(c) of the July plea but deletes the word "illegitimately."
56 Mr O'Bryan says that there was an intention to plead that Mr Lindberg knew that the fees were a sham for the purpose pleaded in paragraph 13, that is that the function of the fee was to provide hard currency to the Government of Iraq. In my opinion, the purpose of the amendments is to determine the real question in controversy between the parties and my jurisdiction to allow the amendment is enlivened.
57 In my opinion, these amendments relate to the issues of Mr Lindberg's knowledge of the relevant conduct and his duty to stop it and disclose it to the relevant bodies in AWB. In exercising my discretion I should have regard to s 29(2) and r 1.14. In my opinion, they should be permitted unless justice dictates otherwise.
58 In my view, Mr Lindberg will not be prejudiced by these amendments. In my discretion, therefore, I will allow the amendments proposed in paragraphs [39]-[46] of the August claim on condition that the purpose of the alleged sham fees is made clear in the proposed paragraph 40(d).
59 Subject to the comments I make below arising out of the September claim, I decide as follows. Only immaterial amendments to those already discussed are proposed. In my opinion, their purpose is to determine the real question in controversy between the parties and my jurisdiction is enlivened. In my discretion, I will allow the amendments.
60 Mr Lindberg alleges that ASIC makes new allegations concerning the Tigris Agreement in paragraphs 61, 63(c), 64, 65(e), 65(f), 66(e) and 66(f) of the August claim. He says that these allegations introduce an entirely new claim against Mr Lindberg.
61 Para 63(c) of the August claim seeks to plead that the Tigris Agreement was misleading and that Mr Lindberg should have so informed the AWB board. In my opinion, that amendment is not for the purpose of determining the real question in controversy between the parties. The existing plea concerning the Tigris debt is that Mr Lindberg failed to take steps to prevent AWB from entering into the agreement or giving effect to it and Mr Lindberg failed to inform the AWB board about it. In my view, the purpose of the proposed amendment is not to determine those issues but to determine whether the terms of the Tigris agreement were misleading and deceptive and whether Mr Lindberg ought to have told the AWB board as much.
62 In my view, the proposed amendments are not necessary to correct any defect or error in the proceeding. Will they avoid a multiplicity of proceedings? There is no evidence before me to suggest that ASIC would seek to institute separate proceedings to resolve this issue or be able to do so. In my opinion, the power of the court to make this amendment is not enlivened.
63 If it is enlivened then the discretion to do so would be guided by the purpose for which the court's jurisdiction is exercised as provided by s 29(2) of the Supreme Court Act 1986 and r 1.14.
64 Rule 1.14 directs that the court shall endeavour to ensure that the proceedings are determined promptly. It is now some two years since the proceedings were commenced and any further delay would run contrary to the direction in rule 1.14.
65 Does the justice of the situation otherwise require the amendment? In my view, it would be unfair at this late stage when the proceedings have been on foot for nearly two years to allow ASIC to raise the issue of the Tigris Agreement. ASIC have given an explanation for the amendments supported by evidence of Mr Lockett. No explanation has been given for this particular proposed amendment.
66 In the circumstances, I disallow the proposed amendments.
67 The allegations concerning Project Rose are new, although they were foreshadowed in the May claim. Insofar as they allege that Mr Lindberg was informed of a complaint by the Americans that AWB was engaging in conduct the UN sought to prevent and that he purported to have that allegation investigated, but failed to inform the AWB, those allegations do not appear to be for the purpose of determining the real question in controversy between the parties to the proceeding.
68 As discussed below, the allegation that Mr Lindberg knew of certain conduct and failed to inform the board of it is already pleaded in the contravention pleas and is limited to his conduct (including his failure to do things) during the period prior to the collapse of the Government of Iraq.
69 As to the allegations that Mr Lindberg misled the AWB board about the investigation and the truth of the situation, that is an entirely new allegation.
70 There is no suggestion in the existing pleading that Mr Lindberg knowingly misled the board. It is alleged that he failed to tell the board about the purported inland transportation fees and that the fees were a means of the Government of Iraq obtaining hard currency, but not that he misled the board and particularly that he knowingly misled the board.
71 In my view, the amendments do not fall within r 36.01(1)(a) or (b). There is no evidence that ASIC will or could institute separate proceedings over this issue. In AON's case, the plurality considered this issue and referred to whether fresh proceedings might be met by the principle in Port of Melbourne Authority v Anshun Pty Ltd.[28] The High Court said it was sufficient for their purposes that ANU did not seek to show the court how it might have dealt with an Anshun point.[29] The same observation applies in this case.
72 Accordingly, I conclude that the court's discretion is not enlivened under r 36.01. If it was, then in my discretion I would not allow the amendments. ASIC led evidence which suggests that it did not discover that this plea was open until late February or early March of this year when it interviewed a board member. ASIC explained the history of the proceedings and how their investigative officers were originally helping the Commonwealth task force investigate the recommendations of the Cole inquiry. Be that as it may, the amendment seeks to add an entirely new question to the proceedings some two months before the trial starts.
73 The evidence of Mr Galbally in his affidavit of 17 August 2009 suggests that the amendment could lead to the trial date being vacated to allow Mr Lindberg to deal with this new case. ASIC concedes that it would open up the trial to the knowledge of the board members. The amendment would greatly increase the scope of the trial. In my view, any further delay would be unfair to Mr Lindberg. His career has been put on hold and the strain of these proceedings on him must be intolerable.
74 AISC refers to the important role it plays in protecting the public interest and cites the observations of Gray J in ASIC v West.[30] I accept entirely the importance of the duties ASIC performs in the public interest. However, the rules direct that the existing questions in controversy be heard promptly and the requirements of justice dictate that Mr Lindberg has the case against him resolved sooner rather than later.
75 If I had a discretion in the matter, I would not allow the amendments concerning Project Rose.
The Independent Inquiry Committee into the UN OFFP
76 These allegations are new. Insofar as they raise questions concerning Mr Lindberg's failure to inform the AWB, it appears to me that the amendments are not for the purpose of determining the real question in controversy between the parties.
77 As discussed below, Mr Lindberg's alleged failure to inform the board is already pleaded in proposed paragraphs 40, 41 and 42 of the August claim. These failures are pleaded along with allegations that he failed to take steps to prevent AWB from entering into contracts with the IGB that required the payment of inland transportation fees which enabled payments of hard currency to go to the Government of Iraq. This conduct is referable to the period prior to the fall of the Government of Iraq.
78 In my opinion, the failure of Mr Lindberg to do things after the payments had ceased and the Government of Iraq had fallen raises entirely different issues to those currently pleaded. In my opinion, the ICC amendments are not made for the purpose of determining the real question in controversy between the parties.
79 For the reasons given in relation to Project Rose, I do not consider that the court's power to allow this amendment is enlivened. If it was, then for similar reasons to that given in relation to Project Rose, I would not in my discretion allow the amendments.
80 Accordingly, I will not allow the amendments concerning the IIC inquiry.
81 In my preliminary reasons I said that the amendments to the particulars are, by their nature, amendments for the purpose of determining the real question in controversy between the parties. I said that I did not consider that Mr Lindberg will be prejudiced by the new particulars. I said that I would therefore allow the amended particulars.
82 In submissions on the August claim, Mr Collins contends that the particulars contain matters which should be disallowed to give effect to my decision on the Project Rose and IIC proposed amendments.
83 Mr Lindberg submits that many of the particulars of knowledge post-date the relevant dates when Mr Lindberg is said to have known something. ASIC submits that the relevant dates are merely dates from which certain matters are alleged to have been known by Mr Lindberg. ASIC alleges, therefore, that particulars of events that happened after the commencement date are relevant. I accept this submission so as far as it goes. As discussed below, however, submissions on the September plea disclosed, that the particulars go beyond the relevant times.
84 On 28 August 2009, I indicated that I would therefore grant leave to ASIC to file and serve a second further amended statement of claim substantially in the form of the draft of 6 August 2009 annexed to the application, save for the proposed amendments disallowed above. As indicated above, I was prevailed on not to make this order.
85 Mr Lindberg raises two issues with the September claim.
86 Mr Lindberg submits that the new alternative case based on Mr Lindberg's duty to inform himself raises the issues of whether Mr Lindberg adequately performed that duty by investigations and inquiries he caused to be undertaken. He submits that it raises the issue of the adequacy of Project Rose and the IIC investigations. Mr Lindberg contends that it also raises the issue of whether any inadequacy of Project Rose and the IIC investigation was caused by or known by Mr Lindberg.
87 Mr Lindberg says that the new alternative case is inconsistent with the court rulings that allegations concerning Project Rose and the IIC investigation should not be raised at this stage of the proceeding.
88 In my view, there are two parts to this objection. The first is to object to my preliminary decision to allow what are now paragraphs 35 - 36, 43-44, 54-55 and 67-68 of the September claim. Each involves an allegation that Mr Lindberg had the means of knowing what he previously had been alleged he knew, that he had a duty to inform himself of those matters using those means and that in breach of his duty he failed to do so. In my preliminary reasons, I approved the proposed amendment and do so again for the reasons set out above.
89 The second part of the objection raises issues concerning the matters sought to be pleaded relating to the complaint made by the US Wheat Associates in June 2003, as referred to in paragraph 71 and following of the August claim, and the investigation by the United Nations Oil-for-Food Program, as referred to in paragraph 81 and following of the August claim.
90 Mr Lindberg submits that he did not understand the construction that ASIC seeks to put on the pleading now appearing in paragraph 40 of the September claim. In particular, Mr Lindberg argues that he did not understand that ASIC contends that, on its proper construction, the plea that "at all material times from February 2001, Lindberg knew" certain things (including the inland transportation fees were a sham and a means for the Government of Iraq to obtain funds from the UN Escrow Account) extended up until Mr Lindberg left AWB in 2006.
91 Mr Lindberg says that on this construction, the new alternate plea in paragraphs 43 and 44 of the September claim extends to Mr Lindberg's alleged failure to investigate matters after the Government of Iraq fell, until Mr Lindberg left in February 2006, and includes Project Rose and the IIC inquiry.
92 In my opinion, on their proper construction, the August claim and even the September claim do not extend to such matters, despite the allegation of some particulars which raise matters that happened after the Government of Iraq fell.
93 For the reasons given below, in my opinion, the July, August and September claims limit "at all relevant times" to the times before the Government of Iraq fell.
94 After setting out certain matters, paragraph 35 of the July claim alleged that Mr Lindberg knew certain matters. I should add here that the alternate claim that Mr Lindberg ought to have known certain matters is merely that he ought to have known the very same matters. The proposed September plea that he should have known certain matters, as he was duty bound to investigate, is also limited to those matters that it is alleged he knew in the first place.
95 What matters is it alleged he knew? First, the July plea alleges that he knew that AWB was continuing to make purported inland transportation payments in connection with its trade with the IGB notwithstanding the concerns expressed in the Arthur Andersen Report in December 2000 and the trip report in February 2001 (my emphasis).
96 Secondly, that AWB was continuing to make payments of purported service fees in connection with its trade with the IGB notwithstanding the concerns that had been raised in the trip report in February 2001 (my emphasis).
97 The July claim alleges payment of purported service fees in three contracts: A1111, A1112 and A1441. Contracts A1670 and 1680 relate to the Tigris Debt which I will come to in a moment.
98 Contracts A1111 and A1112 were both allegedly entered into on 20 December 2001. It is alleged that they both made provision for the payment of purported inland transportation fees. The last payments of those fees was allegedly in November 2002.[31] Contract A1441 was allegedly entered into on 22 June 2002. It is alleged that it made provision for the payment of purported inland transportation fees. The last payment of inland transportation fees is alleged to have been on 24 March 2003, some four days after the coalition invasion of Iraq began.[32]
99 Paragraph 96A of the July claim alleges that Mr Lindberg should have informed the board that AWB's contracts for the sale of wheat to Iraq included purported inland transportation fees and service fees and that payment of those fees "were, or were likely to be" in breach of UN sanctions.[33] That is, Mr Lindberg should have informed the board about AWB's obligation in relation to current and expected payments, not past payments.
100 As alleged earlier, no such contract had been entered into since 22 June 2002. The July claim does not allege that Mr Lindberg knew that AWB had in the past made purported inland transportation payments in connection with its trade with the IGB. Rather, the alleged knowledge was of current conduct, that is "continuing to make purported inland transportation payments", that he should have informed the board that such fees "were, or were likely to be, paid to " the Government of Iraq and that he should have taken steps "to prevent" that conduct.[34] As stated above, the failure was a failure to tell the board of something that was happening or was likely to happen. The allegation was not that he failed to tell the board of something that had happened. Similarly, it is alleged that Mr Lindberg failed to prevent the conduct. Again, that allegation must relate to a time when he was able to do so, that is prior to 24 March 2003.
101 In my opinion, such a plea does not apply to events that happened after the payments ceased on 24 March 2003. In my opinion, there is no plea in the July plea (or for that matter, in the August or September pleas) that Mr Lindberg had some sort of obligation to inquire into what had happened in the past and report the same to the board after the payments stopped.
102 The allegations in paragraphs 12B, 13 and 14 of the September claim are all limited to events that allegedly happened before the fall of the Government of Iraq. The critical feature of the "purported inland transportation fee" was allegedly to allow the Government of Iraq to obtain internationally traded currency.[35] As discussed below, the Government of Iraq ceased to exist about the end of March 2003. In my opinion, under the existing pleas, the relevant failures to inquire ceased at the time the Government of Iraq ceased to exist.
103 In the September claim, the limit on the allegation is made clearer by the expression "had made and was continuing to make payments of purported inland transportation fees."[36] Each of these pleas makes it clear that the time being addressed is prior to the last payment on 24 March 2003. In any event, the Government of Iraq had fallen within a week or so of 20 March 2003.
104 Previously, I referred to particulars which raise allegations of conduct after the fall of the Government of Iraq and go beyond the allegations of the material facts. Para 34A of the July claim pleads many matters which are now in Schedule A to the September claim. Para 34A of the July claim alleges communications with Mr Lindberg from March to September 2003 (after the fall of the Government of Iraq), which are relied on in paragraph 35 of the July claim, alleging that Mr Lindberg knew that AWB was "continuing" to make purported inland transportation payments and that these payments "were or were likely to be" a contravention of UN sanctions in that they "resulted either directly or indirectly in the illegitimate payment of funds" to the Government of Iraq (my emphasis).[37] After March 2003, payments were not being made to the Government of Iraq to obtain internationally traded currency. The Government of Iraq no longer existed.
105 In my opinion, on their proper construction, the allegations in paragraph 35 of the July claim relate to knowledge allegedly held by Mr Lindberg before the Government of Iraq fell. The pleading of communications with Mr Lindberg after the Government of Iraq fell to establish that knowledge is therefore irrelevant to the allegations. In particular, the particulars in paragraphs 34A (a) to (g) onwards of the July claim raise matters which are irrelevant to the allegations made in paragraph 35(a) to (g) of the July claim that Mr Lindberg knew those matters or ought to have known of them.
106 I now turn to the Iron Filings Claim allegations and the Tigris Debt. Although I will examine the pleas in relation to the Iron Filings Claims that arose out the deliveries under contracts A1111 and A1112, it is useful first to explain the plea of the Tigris debt.
107 ASIC alleges that on or about 13 September 2000, BHP Petroleum Pty Ltd (BHP) assigned to the Tigris Petroleum Corporation Ltd (Tigris) all its interests in its Iraqi assets and liabilities, including all its rights to receive value from the IGB in relation to the cargo of grain delivered by AWB to the IGB in January 1996 on the MV Ikan Sepat.[38]
108 ASIC alleges that on 28 September 2000, Tigris requested AWB to assist in recovering the sum of US$8,052,550 ('the Tigris Debt'), the amount due to BHP in relation to delivery of the wheat on the MV Ikan Sepat.[39]
109 As to the Iron Filings Claim, the July claim alleges that in about July 2002, IGB asserted that wheat shipments (delivered pursuant to Contracts A1111 and A1112) were contaminated with iron filings.[40] ASIC alleges that in about August 2002, Mr Lindberg led an AWB delegation to Iraq, at least partly for the purposes of meeting with representatives of the IGB to discuss the Iron Filings Claim[41]. ASIC alleges that prior to the trip, Mr Lindberg received a briefing regarding issues in the Iraq market and discussed the purported inland transportation fee.[42] During the trip, Mr Lindberg is alleged to have discussed the Iron Filings Claim with the IGB and was a party to negotiations with the IGB which resulted in an agreement being reached pursuant to which AWB agreed to pay the IGB US$6.00 per tonne of wheat that was subject to the Iron Filings Claim by using the same payment mechanism used to pay the purported inland transportation fees.[43]
110 ASIC alleges that in or about August 2002 (and apparently prior to the trip), Mr Lindberg received an "Executive brief" which advised that AWB paid a fee to the Iraq Ministry of Transport for purported inland transportation fees and discharge costs. It is alleged the brief advised that one of the purposes of the August trip was to have the ships, the subject of the Iron Filings Claim, unloaded and a contract for 500,000 tonnes of AWB wheat re-instated.[44]
111 ASIC alleges that on 16 September 2002 (apparently after the Iraq trip), Mr Lindberg received a memorandum entitled "Iraq debt/BHP Tigris Petroleum" which advised that AWB had agreed to pay the IGB US$6.00 per tonne for approximately 300,000 tonnes of wheat delivered under AWB contracts A1111 and A1112 as settlement of the Iron Filings Claim and UN regulations prohibited the direct payment of funds to Iraq whilst Iraq was under UN sanctions.[45]
112 Again after the trip, ASIC alleges that on or about 6 November 2002, Mr Lindberg received an email from Michael Long which advised that IGB wanted to repay the Tigris Debt by "loading up" contracts with AWB.[46]
113 ASIC alleges that on or about 7 November 2002 (the next day), Mr Lindberg received an email and an attached trip report from Chris Whitwell that referred to a proposal by AWB to the IGB that AWB pay the Iron Filings Claim by offsetting the same against the Tigris Debt with the balance of the Tigris Debt to be recovered by "loading up" AWB contracts with IGB.[47]
114 ASIC alleges that on or around 10 February 2003, Mr Lindberg received a copy of a memorandum dated 7 February 2003, prepared by Chris Whitwell and signed by Michael Long, which advised that the delegation led by Mr Lindberg to Iraq agreed to settle the Iron Filings Claim, that the Minister of Trade for Iraq had insisted on payment of the Iron Filings Claim to the IGB by adding the amount of the claim to the purported inland transportation fees and had advised AWB that this was the Minister's understanding of the agreement reached with Mr Lindberg in August 2002, that there were possible corporate governance implications for AWB arising from the direct payment by AWB to a company with links to the Iraq regime which could be construed as a contravention of UN sanctions, that DFAT had advised that any repayment of a quality rebated (being the Iron Filings Claim) should be made by either making payment to the UN Escrow Account or by way of a contract price reduction, that AWB had agreed to allow a new contract with the IGB to be the conduit for a repayment of the Tigris Debt, and that AWB's International Sales and Marketing division insisted that Mr Lindberg be personally apprised of the situation.[48]
115 ASIC alleges that on or about 10 February 2003, Mr Lindberg received a file note from Peter Geary which enclosed the 7 February memorandum.[49]
116 Finally, ASIC alleges that during the period February 2001 to September 2003, Mr Lindberg received numerous other communications that referred to the fact that AWB "continued to pay the purported inland transportation fees" and the purported service fees and "was proposing to make payments" relating to the Iron Filings claim and the Tigris Debt (my emphasis).[50] As discussed above, the particulars allege communications with Mr Lindberg up to 25 March 2003[51] (which covers the period prior to the invasion of Iraq and some five days after the invasion began) and then communications from 28 May 2003 to 22 September 2003, including the complaints of the US Wheat Associates that gave rise to Project Rose.[52]
117 ASIC do not allege that the Iron Filings Claim was paid.
118 These facts have all been pleaded as a basis to allege that Mr Lindberg knew certain matters about the Iron Filings Claim. Paragraph 35 alleges that from around November 2002, Mr Lindberg knew that AWB was proposing and had subsequently agreed to make payments to IGB in relation to the Iron Filings Claim by using the same mechanism used to make payments of the purported inland transportation fees.[53] ASIC alleges that accordingly, Mr Lindberg knew from around November 2002 that the payments made on account of the purported inland transportation fees (which as explained earlier, finished on 24 March 2003) and the purported service fees and the payments proposed to be made on account of the Iron Filings Claim "were, or were likely to be, funds being paid illegitimately to the IGB (my emphasis)."[54] It must be remembered that shortly after 24 March 2003, the IGB was in the hands of the coalition and moneys were not flowing through it to the Government of Iraq.
119 ASIC alleges that Mr Lindberg knew that, from around November 2002, the proposed payment on account of the Iron Filings Claim if actually made, would be or would likely to be a contravention of United Nations sanctions "in that it would have resulted, either directly or indirectly, in the illegitimate payment of funds to Iraq or its instrumentalities (my emphasis)."[55] That alleged payment again must be to the Government of Iraq and could not apply to the situation that pertained after the invasion of Iraq when the Government of Iraq fell and no longer existed. After March of 2003, Mr Lindberg could not have known that funds were or were likely to be paid to the Government of Iraq as the Government no longer existed.
120 ASIC alleges that from around November 2002, Mr Lindberg knew that DFAT and the UN would require the payment of the Iron Filings Claim to be made via the UN Escrow Account or by a price reduction for contracts between AWB and the IGB.[56] Again that allegation must be construed as a state of knowledge of Mr Lindberg that existed before the governing of Iraq was assumed by the Coalition Provisional Authority[57] led by the USA.
121 Finally, it is alleged that from around November 2002, Mr Lindberg knew that the payments obtained from the UN Escrow Account in respect of inland transportation fees, purported service fees and the Tigris Debt were not made to meet the humanitarian needs of the Iraqi population and were therefore contrary to United Nations resolutions.[58] Again, in the context of the whole of the statement of claim, the proper construction of that allegation must relate to Mr Lindberg's knowledge before the Government of Iraq fell and the administration of Iraq was assumed by the Coalition Provisional Authority led by the USA.
122 So far as the alleged breaches of duty are concerned, it is alleged that Mr Lindberg approved or permitted the mechanism for the payment of the Iron Filings Claim in circumstances where he knew or ought to have known that such payments if actually made "were or were likely to be paid either directly or indirectly, to the Government of Iraq and/or its instrumentalities" and would constitute a breach of Resolution 661 (my emphasis).[59] This allegation makes it quite clear that the alleged breach of duty by Mr Lindberg is alleged to have occurred whilst the Government of Iraq still existed.
123 As mentioned above, the allegation that Mr Lindberg ought to have known something is based in the alternative to the allegation that he knew it. In my view the existing plea in the July claim, limits Mr Lindberg's knowledge to matters that were relevant to the Government of Iraq at the time. In my view, the allegations do not raise the knowledge he obtained after the Government of Iraq fell and no longer existed. Thus the allegations that he ought to have known of these matters is similarly limited to what he ought to have known before the Government of Iraq fell. In my opinion, on its proper construction,the pleas in the particulars in paragraph 34A that relate to events that happened on 6 May 2003 and after are irrelevant to the allegations of Mr Lindberg's knowledge or what he ought to have known in paragraph 35 concerning the Iron Filings Claim . The alleged breach is also related to his conduct prior to the fall of the Government of Iraq.
124 Further, it goes without saying that the facts which ought to have put Mr Lindberg on a train of inquiry are also limited to facts that existed before the Government of Iraq fell.
125 The September claim introduces the words "at all material times" in qualifying the time "from November 2002" in the equivalent to paragraph 35. For the reasons given above, on its proper construction, the material times are those prior to the fall of the Government of Iraq.
126 The Tigris debt claim does not involve any payments of purported inland transportation fees to the IGB.
127 ASIC alleges that the Tigris Debt was sought to be recovered by inflating the price payable under contracts A1670 and A1680 which were alleged to have been entered into on 11 December 2002.[60] The last payments received from the UN Escrow Account on contract A1680 was in March 2004.[61] The final payment received from the UN Escrow Account on contract A1670 was in November 2004.[62]
128 As to Mr Lindberg's knowledge of these matters; paragraph 35 alleges that Mr Lindberg knew from around November 2002 that AWB was proposing and had subsequently agreed with the IGB to recover the Tigris Debt by loading up AWB contracts with IGB.[63] As indicated above, the contracts were entered into in December 2002. Again, the allegation is that Mr Lindberg knew these matters at the time they happened. Accordingly, the alternate plea that he ought to have known is also limited to inquires he could have made at the time.
129 Further, it is alleged that Mr Lindberg knew that the payments obtained from the UN Escrow Account of funds in respect of the inland transportation fees and the service fees and the Tigris debt were not made to meet the humanitarian needs of the Iraqi population and were therefore contrary to the UN resolutions. Previously, the plea had used the wording "not intended" rather than "made."
130 I assume the amendment from "intended" to "made" in the July claim has been made in an attempt to push the relevant dates to the period after the Government of Iraq ceased to exist.
131 When one looks to the alleged breaches of duty relating to the Tigris debt, which are discussed below, the breaches are all alleged to have occurred before the Government of Iraq fell.
132 Mr Lindberg is alleged to have made no enquiries of those employees who were responsible for the negotiations and administration of Contract 1670 as to, inter alia, the purported inland transportation fees that were being paid to the Government of Iraq.[64]
133 Mr Lindberg is alleged to have taken no reasonable steps to prevent AWB from entering into Contract 1670 (in December 2002).[65]
134 Mr Lindberg is alleged to have made no reasonable inquiries of those employees who were responsible for the negotiations and administration of Contract 1680 as to whether, inter alia, the purported inland transportation fees were being paid, directly or indirectly, to the IGB, the Government of Iraq and/or its instrumentalities.[66]
135 Mr Lindberg is alleged to have taken no reasonable steps to prevent AWB from entering into Contract A1680 (in December 2002).
136 Mr Lindberg is alleged to have failed to tell the AWB Board that AWB's contracts included purported inland transportation fees which were likely to be paid to the Government of Iraq.[67]
137 Mr Lindberg is alleged to have failed to any or any reasonable steps to ensure AWB complied with UN resolutions when selling wheat to Iraq. In the context, this must relate to the contracts the last of which was in December 2002.[68]
138 Mr Lindberg is alleged to have failed to take any or any reasonable steps to prevent AWB from making payments of the inland transportation fees (this must relate to the illegitimate ones where money was likely to go to the Government of Iraq)[69] and obtaining funds in respect of purported inland transportation fees and the Tigris debt (this must relate to funds that were obtained that were likely to go to the Government of Iraq).[70]
139 Accordingly, the relevant matters going to Mr Lindberg's knowledge of the Iron Filings Claim and the Tigris debt and his alleged breaches in relation to the Iron Filings Claim and the Tigris debt are all limited to those from around November 2002 to the fall of the Government of Iraq at about the end of March 2003.
140 I turn now to Mr Lindberg's concern that the proposed September claim seeks to include within the plea that "at all times from around November 2002" includes events after the Government of Iraq fell and ceased to exist, up until 2006 when Mr Lindberg left AWB. In my opinion, the critical words are "at all material times." For the reasons expressed above, in my opinion those words cover the period until the end of March 2003 and no further.
141 In my opinion, when one analyses the allegations made against Mr Lindberg in the original claim, the July claim (which contains the present pleading) and the proposed August claim, the allegations on their proper construction all relate to his knowledge and actions prior to the fall of the Government of Iraq.
142 If I am wrong about this construction of the August plea which contains the proposed amendments, it might be said that the purpose of the amendments to the July claim are to determine the real question in controversy between the parties. I do not agree. If the amendments of that sort are allowed, the allegations will extend beyond what Mr Lindberg knew or ought to have known when the inland transportation fees were being paid during the existence of the Government of Iraq.
143 In my opinion, the real question in controversy between the parties do not relate to matters that occurred after the Government of Iraq fell,after the allied invasion of Iraq. Rather, the real controversy is about Mr Lindberg's knowledge of payments of inland transportation fees that were being paid at the time and the position that had been reached on the repayment of the Tigris Debt and the Iron Filings claim from around November 2002 and prior to the fall of the Government of Iraq.
144 Even if the purpose of the amendments was to determine the real question in controversy, I would in my discretion not allow the amendments that seek to bring into the proceedings the events that followed the fall of the Government of Iraq. By that stage the damage was done, and it is a totally different issue as to how Mr Lindberg handled the situation.
145 I therefore find that the amendments to pleadings and the particulars thereto that seek to rely on events that happened after the fall of the Government of Iraq should be disallowed. Thus not only Project Rose pleadings and the IIC pleadings should be disallowed, but the particulars of Mr Lindberg's knowledge should not go beyond the end of March 2003. Matters that were formerly pleaded in paragraph 34A (G) of the July claim onwards are irrelevant and, if sought to be repleaded in the September claim, are disallowed.
146 Mr Lindberg submits that new particulars to paragraph 27 and in Schedule A should not be allowed. He says that many of them are in a form which has previously been rejected by me.
147 Mr Lindberg alleges that the September claim seeks to introduce particulars which I previously refused leave to ASIC to plead. In particular he says that paragraphs (D)(b), (F)(b)&(e), (HA), (I) and (IA) of the particulars to paragraph 27 of the September claim were rejected by me in my 17 July 2009 decision on ASIC's application to amend the May claim.
148 I have checked these particulars against particulars DA, F(e), GA, HA, I & IA of the May claim. In my view, they are the same or substantially the same. I disallowed those amendments on 17 July 2009. I am not convinced by ASIC that I should now allow them. In my view, it would open up multiple issues at this late stage and it would be unfair for Mr Lindberg to meet them.
149 In the September claim, I disallow the following particulars to paragraph 27: (D)(the introductory words), (D)(b), (F)(b) and (e), (HA), (I), and (IA).
150 Mr Lindberg objects to paragraph 7 of Schedule A of the September claim. He says that the particular is vague and embarrassing. Mr Lindberg submits that an amendment in almost identical form in paragraph 12I of the May claim was refused by me on 17 July 2009: at [53] to [57].
151 I disallowed paragraph 12I of the May claim as it was not pleaded as a material fact in the proper form. It is now pleaded as a particular. I will allow the amendment.
152 Mr Lindberg objects to paragraph 21 of the September claim. He says that an amendment in almost identical form (that is paragraph 22A of the May claim) was refused by me in my 17 July reasons: at [85] to [92]. He says that it is relied upon to support the allegation in paragraph 51(d) of the September claim. He contends that the particular does not support paragraph 51(d). Mr Lindberg contends that as a result, both paragraph 51(d) of the September claim and paragraph 21 of Schedule A should be disallowed.
153 Particular 21 is not an allegation of a material fact. It is a particular of an otherwise material fact. As such, it is not objectionable. As to Mr Lindberg's objection that it is in fact not a particular of paragraph 51(d) of the September claim, in my view, it is a proper particular of the allegation. The fact that the particular by itself may not establish the material fact pleaded in paragraph 51(d) is a matter yet to be determined at the trial.
154 Mr Lindberg objects to paragraphs 36, 37, 38, 41, 42, 43, 44, 45 and 46 of Schedule A of the September claim as they relate to Project Rose and the IIC investigation.
155 Paragraph 36 does relate to the US Wheat Associates complaint and for the reasons expressed earlier is disallowed.
156 Paragraph 37 relates to Project Rose and for the reasons expressed earlier is disallowed.
157 Paragraph 34(b), 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46 and 50 relate to matters after the fall of the Government of Iraq and do not involve admissions by Mr Lindberg of matters relating to the period before the Government of Iraq fell. These should all be disallowed.
158 I propose to order that if, as I assume, ASIC wishes to further amend its amended statement of claim in the form of its second further amended statement of claim proposed in September, then before 4.15 pm on Friday 25 September, ASIC should file and serve a further proposed second further amended statement of claim that complies with these reasons. I will adjourn the further hearing of ASIC's application to amend the further amended statement of claim of 24 July 2009 to a date to be fixed.
I certify that this and the 34 preceding pages are a true copy of the reasons for Judgment of Robson J of the Supreme Court of Victoria delivered on 18 September 2009.
[1] For nature of the proceeding, see Re AWB Ltd (No 1) [2008] VSC 69; Re AWB (No 3) [2009] VSC 209.
[2] [2009] HCA 27at 98.
[3] See reference to Saddam Hussein in [34A] of August claim.
[4] [1996] HCA 25; (1996) 186 CLR 541 at 547 per Toohey and Gummow JJ.
[5] [2009] HCA 27 at 98.
[8] Ibid at [71] per Gummow, Hayne, Crennan, Kiefel and Bell JJ; [31] per French CJ and [119] per Heydon J; a similar conclusion had been reached in this court in Etna v Arif [1999] VSCA 99; [1999] 2 VR 353.
[9] Ibid [83] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[10] Ibid [71] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[13] Ibid [67]-[85] per Gummow, Hayne, Crennan, Kiefel and Bell JJ; [31] per French CJ and [119] per Heydon J.
[14] Ibid [89]-[90] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[16] Ibid [93] per Gummow, Hayne, Crennan, Kiefel and Bell JJ citing with approval Toohey and Gaudron JJ in Sali v SPC Ltd (1993) 667 ALJR 841 at 849.
[17] Ibid [98] and [100]-[101] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[18] Ibid [100]-[101] per Gummow, Hayne, Crennan, Kiefel and Bell JJ and [25] per French CJ.
[19] Ibid [103] per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[29] [2009] HCA 27 at [86]- [87] per Gummow, Hayne, Crennan, Kiefel and Bell JJ; [32]-[34] per French CJ.
[30] [2008] SASC 111 at [6].
[31] Schedule B particular [8] and [16].
[34] [35(a) and(b)] and [97 (b) and (k)]of the July claim
[35] [13] of the August and September claims
[37] {35(a) and (d)] of the July claim
[51] [34A (a) (A)-(E)] of the July claim.
[52] [34A (a) (F)-(L)] of the July claim.
[60] [67] and [78] of the July claim.
Plaintiff
ANDREW ALEXANDER LINDBERG
(1996) 186 CLR 541
(1999) 198 CLR 180
(1981) 147 CLR 589
(1993) 667 ALJR 841
ASIC was to file and serve by 4.15 pm on 25 September 2009 a further proposed amended statement of claim complying with the reasons; the further hearing of its amendment application was adjourned to a date to be fixed, and costs were reserved.