Plaintiff v Defendant

A & L Silvestri Pty Ltd v The CFM & U [2005] FCA 1658; (2005) 226 ALR 247

Bishopsgate Insurance Australia v Deloitte, Haskins and Sells [1999] 3 VR 863

Business and Professional Leasing Pty Ltd v Dannawi [2008] NSWSC 902

Commonwealth v Cockatoo Dockyard Pty Ltd [2003] NSWCA 192; (2003) 1 DDCR 1

Hughes Motor Service Pty Ltd v Wang Computer Ltd [1978] FCA 49; (1978) 35 FLR 346

Imaging Applications v Vero Insurance [2008] VSC 178

Kirby v Centro Properties Ltd [2008] FCA 1505

Main Road Property Group v Pelligra & Sons [2007] VSC 43

McMahon v Gould (1982) 7 ACLR 202

Re AWB Limited [2008] VSC 473; (2008) 68 ACSR 374

Silbermann v CGU Insurance [2003] NSWSC 795; (2003) 47 ACSR 21

Spitfire Nominees Ltd v Thompson & Hall [1999] VSC 12

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

1 On 19 December 2007, the Australian Securities Investment Commission commenced proceedings against the defendant Andrew Alexander Lindberg and five other senior officers of AWB Limited. ASIC seeks declarations, civil penalties and an injunction against each of the defendants alleging contravention of ss 180(1) and 181(1) of the Corporations Act 2001 whilst an officer of AWB by breaching his duties under the Corporations Act 2001 in relation to AWB's wheat sale contracts with Iraq under the United Nations Oil-for-Food Program.

2 After two directions hearings in February and April 2008, Mr Lindberg and the other defendants applied for a stay of the proceedings. The basis of the stay and further details of the claims against Mr Lindberg are to be found in my decision of 12 November 2008 in Re AWB Limited.[1] I stayed the proceedings against the other five defendants essentially because on the evidence before me, it was likely criminal proceedings would be brought against them.

3 During the hearing of the application before me, no evidence was tendered on the progress of the Oil-for-Food Taskforce or on whether or not Mr Lindberg and the other five defendants are any the wiser as to whether or not they are to be prosecuted.

4 The proceeding against Mr Lindberg was not stayed. On the basis of his effective exoneration by the 2006 report of the Hon. Terrance R H Cole (the Cole Report), I found it was unlikely criminal proceedings would be brought against him

5 The proceeding against Mr Lindberg has continued. On 21 November 2008, directions were made for the filing of a defence, discovery and the fixing of a trial to begin on 13 July 2009.

6 ASIC now applies for an order that the proceeding against Mr Lindberg be stayed until further order or alternatively for an order extending until 1 May 2009 the date by which ASIC must give discovery.

7 In support of the application, ASIC relies upon two affidavits sworn by Mr Martin Lockett, a lawyer employed by ASIC. I take the relevant facts from Mr Lockett's affidavits.

8 On 18 April 2008, ASIC filed and served an amended statement of claim in this proceeding. On or about the same date, ASIC filed and served an amended statement of claim in each of the related matters. On 12 December 2008, Mr Lindberg filed and served his defence in the proceedings.

9 Together with Ms Julienne Wight, a lawyer employed by ASIC, Mr Lockett has reviewed the defence filed by Mr Lindberg in the proceeding and the related proceedings to identify the matters in issue in this proceeding; identify the nature of evidence that ASIC is likely to be required to lead in respect of each matter in issue; and identify allegations pleaded in the related proceedings in respect of which ASIC may be required to lead substantially the same evidence as it is required to lead in the Lindberg proceeding. Mr Lockett identified from his review, which was summarised in a table he prepared, that there are 52 allegations in the Lindberg proceeding that also give rise to a common issue in one or more of the related proceedings. Forty of those allegations give rise to a common issue in at least three of the related proceedings. Mr Lockett has only been able to identify one paragraph, paragraph 25 of the Lindberg claim, that will be the subject of evidence that will need to be led that does not give rise to a common issue in any of the related proceedings.

10 Mr Lockett anticipates ASIC is likely to be required to lead evidence from more than 30 witnesses. Each of the witnesses likely to give evidence in the Lindberg proceeding is likely to be required to give evidence in at least one, and in many cases, four or five of the related proceedings.

11 Mr Lockett believes that a significant majority of the time at the trial of Mr Lindberg's proceeding will be taken up by evidence which relates to common issues.

12 Eight witnesses proposed to be called by ASIC are located overseas and, subject to any concessions made by Mr Lindberg or order of the Court, are likely to be required to travel to Australia to give evidence in Mr Lindberg's proceeding. He says that each of those eight witnesses are likely to be required to give evidence in all five of the related proceedings. ASIC will be required to call evidence from a number of expert witnesses and, subject to any admissions that might be made, each of those expert witnesses are likely to be required to give evidence in all five of the related proceedings.

13 In relation to the discovery application, Mr Lockett has identified approximately 657,000 documents in ASIC's possession which might potentially be relevant to the facts in issue in the Lindberg proceeding. The majority of these documents comprised PDF or TIF image documents that were provided in bulk by AWB Limited and the Departments of Primary Industry and Prime Minister & Cabinet, following the Cole Inquiry, and that while these documents can be searched by using key-word searches, they are not organised in a manner that would allow ASIC to properly extract all documents falling within any precise category.

14 In light of the very significant number of documents identified by the discovery review, and the fact that most of those documents are held by ASIC in electronic form, Mr Lockett formed the view that it would be appropriate to focus ASIC's review of documents for discovery using electronic searches to identify potentially discoverable documents. He considers any electronic searches or other limits on discovery should be defined, if possible, by agreement with Mr Lindberg and his representatives.

15 Mr Lockett has attempted to reach agreement with Mr Lindberg's solicitors, but at this stage no agreement has been reached between the parties as to the manner in which ASIC's discovery searches and/or categories of discovered documents will be limited. Mr Lockett has undertaken some detailed electronic searches of ASIC's documents in order to identify the approximate quantum of documents that ASIC's legal representatives are likely to be required to review in order to give discovery in this proceeding. He has identified just under 200,000 documents comprising around 800,000 pages that will need to be individually reviewed by ASIC's legal representatives in order for ASIC to give discovery in this proceeding.

16 The cost of reviewing the documents for discovery will be substantial. The review will be taken with the assistance of an external law firm. The time taken for that means that ASIC will not be in a position to file and serve its affidavit of discovery before 1 May 2009.

17 As indicated above, no evidence was tendered as to the Taskforce's progress in investigating whether or not criminal charges are to be brought against Mr Lindberg or any of the defendants in the related proceedings. I will proceed, therefore, on the same basis as I did in my November decision: that is criminal proceedings against the defendants other than Mr Lindberg are "on the cards."

18 ASIC contends that there are numerous common issues of fact and law in Mr Lindberg's proceeding and the related proceedings and that accordingly, this proceeding should be stayed to enable those common issues to be heard jointly.

19 Mr Norman O'Bryan SC, senior counsel for ASIC, informed the Court that ASIC's present intention is to seek to have the common issues between the respective proceedings determined by the one judge in the one trial. He said the Court would then hear seriatim each of the proceedings separately.

20 ASIC refers to and relies on s 29(2) of the Supreme Court Act 1986 which relevantly provides the Court 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." In Main Road Property Group v Pelligra & Sons[2], Bell J said that s 29(2) of the Supreme Court Act 1986 gives effect to the public policy of avoiding multiplicity of proceedings and promoting finality of litigation.[3]

21 Order 9.12 of the Supreme Court (General Civil Procedure) Rules 2005 relevantly provides that where common questions of law and fact arise in two or more proceedings "the Court may order the proceedings to be consolidated, or be tried at the same time or one immediately after the other, or may order any of them to be stayed until after the determination of any other of them."

22 ASIC contends that the purpose of this rule is to promote efficiency and economy in the conduct of litigation and thereby to save public and private resources, time and cost. ASIC contends that the Courts have consistently said that so far as possible issues that have already been determined by the court should not be re-litigated. It says that consistently with this principle, the courts strive to ensure that multiple proceedings raising the same or similar issues are not tried separately since this could lead to inconsistent decisions and the waste of scarce public and private resources. As authority for these propositions, ASIC refers to and relies upon: Kirby v Centro Properties Ltd;[4] Hughes Motor Service Pty Ltd v Wang Computer Ltd;[5] Commonwealth v Cockatoo Dockyard Pty Ltd;[6] Silbermann v CGU Insurance;[7] A & L Silvestri Pty Ltd v The Construction, Forestry, Mining & Energy Union;[8] Business and Professional Leasing Pty Ltd v Dannawi;[9] McMahon v Gould[10]; and Spitfire Nominees Ltd v Thompson & Hall.[11]

23 ASIC contends that its affidavit material discloses:

(a) a substantial degree of overlap in issues in this proceeding and in the related proceedings;

(b) there is only one identifiable allegation in these proceedings that will be the subject of evidence that does not give rise to a common issue in any of the related proceedings;

(c) that in excess of 30 witnesses will likely be required to give evidence in this proceeding and that each of these witnesses are likely to give evidence in at least one of the other related proceedings;

(d) that a significant majority of the time at trial of this proceeding will be taken up by evidence which relates to common issues;

(e) that eight witnesses proposed to be called by the plaintiff reside, or are currently based, overseas and each of these witness will be required to give evidence in this proceeding and in all five of the related proceedings;

(f) that discovery by ASIC in this proceeding, even if limited by agreement between the parties, is likely to take several months and be extremely expensive; and

(g) the defendants in two of the related proceedings have expressed concerns about the impact of the trial and determination of the common issues in this proceeding on their respective proceedings.

24 ASIC submits that a stay of this proceeding would:

(a) avoid re-litigation in the related proceedings of issues already determined by the court;

(b) avoid consistency in the administration of justice being undermined by the potential for inconsistent decisions and separate appeals on common issues;

(c) avoid wasting valuable court resources, and reduce the number and cost of interlocutory steps;

(d) allow discovery categories to be agreed between ASIC and all six defendants, and thus avoid the repetition of a lengthy and costly discovery exercise;

(e) avoid the substantial inconvenience to witnesses of having to give evidence and be cross-examined on multiple occasions;

(f) avoid the potential for substantial prejudice to be caused to the plaintiff's cases should overseas witnesses (who cannot be compelled to attend and give evidence) refuse travel repeatedly to Australia to give substantially the same evidence; and

(g) avoid significant waste of public monies in requiring many witnesses to travel from interstate for multiple hearings.

25 I accept there is much weight in these submissions. Mr Lindberg, however, disputes the extent of the overlap of issues between his proceeding and the related proceedings. There is no need for me to decide this dispute as there is a more fundamental objection to ASIC's contentions.

26 Each of ASIC's submissions relies on the assumption that one or more of the five related proceedings will continue and common issues with Mr Lindberg's proceeding will be able to be tried at the same time. This assumption is unlikely. There is no more than a possibility that the stay of the related proceedings will cease and that those proceedings will be able to be resumed. As indicated earlier, I found that it is "on the cards" that the defendants in the related proceedings will be charged with criminal offences arising out of the matters, the subject of the related proceedings. If, as is likely, the defendants in the related proceedings are charged with criminal offences, the related proceedings will continue to be stayed until the criminal proceedings are concluded: s 1317N Corporations Act 2001. If the defendants in the related proceedings are charged with criminal offences and convicted, the related proceedings must be dismissed: s 1317N(2) Corporations Act 2001. An application for the hearing and determination of any of the related proceedings and this proceeding at the one trial, or "common questions" in those proceedings to be determined at the one trial, will only be able to be made if and when:

(a) it is decided not to charge a defendant in the related proceedings with criminal offences; or

(b) a defendant in the related proceedings has been charged with criminal offences and is acquitted.

27 Further, Mr Lindberg contends that without hearing the other defendants on the issue of whether there are common issues that should be tried together, it is no more than a possibility that common issues could be heard and determined together, even if the related proceedings resume. This may be the case but it is not necessary for me to decide this issue.

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,[12] 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[13], 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.[14]

29 It is often said justice delayed is justice denied. In Imaging Applications v Vero Insurance[15] 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.

32 In McMahon v Gould[16], Wootten J confirmed that the court has an extensive jurisdiction to stay proceedings but that the overriding consideration is what is required "in the interests of justice."[17]

33 In view of the fact that it is unlikely that any proceeding will be able to be heard in common with Mr Lindberg's proceeding in the foreseeable future, if ever; in view of the prejudice being suffered by Mr Lindberg through the delay in these proceedings; and bearing in mind and giving full weight to all the matters put before me by ASIC, I consider that the interests of justice would not be served by a stay.

34 Accordingly I refuse the application for a stay.

35 The evidence of Mr Lockett satisfies me of the burden and difficulties that ASIC faces in providing full discovery. ASIC has already given Mr Lindberg a list of the documents ASIC intends to rely upon in the proceedings against him. If time to give full discovery is extended until 1 May 2009 as requested by ASIC, Mr Lindberg will still have some 2 ½ months to review the discovered documents. In all the circumstances I am prepared to extend the time for discovery to 1 May 2009.

[1] [2008] VSC 473; (2008) 68 ACSR 374.

[2] [2007] VSC 43 at 21.

[4] [2008] FCA 1505 per Finkelstein J at [9], [10], [16].

[5] [1978] FCA 49; (1978) 35 FLR 346 per Bowen CJ at 354 - 355.

[6] [2003] NSWCA 192; (2003) 1 DDCR 1 per Hodgson JA, with whom Santow JA agreed, at [32].

[7] [2003] NSWSC 795; (2003) 47 ACSR 21 per Bergin J at [33].

[8] [2005] FCA 1658; (2005) 226 ALR 247 per Gyles J at [8].

[9] [2008] NSWSC 902 per Young CJ at [22].

[10] (1982) 7 ACLR 202.

[11] [1999] VSC 12.

[12] [1999] VSC 12.

[13] [1999] 3 VR 863

[15] [2008] VSC 178 at [29]- [31].

[16] (1982) 7 ACLR 202.