Rothmore Farms Pty Ltd (in liq) v Belgravia Pty Ltd

HIS HONOUR: 1 At the commencement of this trial in the course of opening, counsel for the applicant sought leave to further amend the statement of claim as amended on 23 December 1998 by adding additional pleadings in effect alleging that Belgravia Pty Ltd, the first respondent ("Belgravia") owed a fiduciary duty to Rothmore Farms Pty Ltd, the applicant, and that each of the second, fourth, fifth and sixth respondents held any benefits obtained or proceeds from any property acquired as a result of participation in Belgravia's alleged breach of trust or alleged breach of fiduciary duty. Particulars are given of those allegations. In the case of the third respondent, there is a discrete paragraph invoking similar allegations but reflecting the fact that the third respondent was incorporated only after the transactions alleged took place. 2 Counsel for the applicant put that the proposed amendment simply identifies an additional cause of action, but that the material relied upon is the same material as that which is proposed to be relied upon under the existing pleadings, so that there will not be any extension of the evidence, nor in any significant way any new allegations made. 3 The amendment application is opposed on a number of grounds. 4 First, it is complained that the amendment identifies a new cause or causes of action. I do not think that is a sufficient reason not to allow the amendment in the present circumstances where the facts relied upon are, I am told, and I accept, the same facts as those relied upon for the existing causes of action as pleaded. I also note that under O 35 r 1 of the Federal Court Rules, the Court may, in the light of its findings of fact, grant such order by way of relief as the nature of the case requires, even though that order may not have been expressly sought in the proceeding. I do not consider that identifying another cause of action to which the existing facts alleged are said to give rise causes prejudice to the respondents in a way which warrants the refusal of the leave. I do not of course comment upon whether the proposed amendment to reflect the new cause of action is or is not likely to succeed at the end of the trial. I have no view on that one way or the other. 5 Secondly, it was put that the particular allegations now proposed to be made involve the respondents having to meet allegations of fraud and conspiracy, which they did not previously have to meet. I reject that submission. It seems to me plain enough that the primary conduct relied upon is that specified in pars 14, 21, 22 and 25 of the existing amended statement of claim. In respect of the conduct in par 14, par 28 of the existing amended statement of claim clearly alleges a fraudulent disposition of property undertaken with the express intent to defraud creditors, and pars 30 and 31 similarly allege that intent. In addition, the existing pleading alleges that each of the respondents conspired and combined amongst themselves to defraud and injure the applicant and alleges the overt acts giving rise to that allegation. There are other references in the existing pleading directed to the respondents (other than Belgravia) to the same general effect. I do not accept that there is any new factual allegation made in the proposed amendments which was not already made in the existing statement of claim. 6 Thirdly, it was put that the allegation significantly extends the nature of the causes of action alleged so as to constitute a form of criminal conspiracy, whereas previously the allegations did not do so. I do not consider that the proposed amendment makes any allegation of criminal conspiracy, or of any conspiracy beyond that which is already alleged. Indeed, when one reads the proposed amendment, apart from alleging the existence of a fiduciary duty on the part of Belgravia as against the individual respondents, the proposed claim is that those individuals held or may have held certain proceeds or property by reason of their knowing participation in the alleged breach of trust or in the proposed alleged breach of fiduciary duty or by reason of their knowledge of the intention to defraud creditors. Apart from the alleged participation in "breach of fiduciary duty", those matters have already been alleged. I can well understand the concern of a respondent if the proposed amendment did extend the allegations beyond those presently made in the way which is asserted. I do not consider that it does. Accordingly, I reject that submission also. 7 I note in particular par 40.3 of the proposed amended statement of claim. I will renumber the amendments when I allow them, so that that will become par 37B.3. It refers to the fourth respondent as not being a party to a bona fide purchase for value, and without notice. My attention has been drawn to the fact that that very issue, perhaps not explicitly pleaded as against the fourth respondent as compared to the respondents generally in the existing amended statement of claim, has been specifically pleaded by the fourth respondent in pars 28 and 30 of his defence. The allowing of the amendment in the form expressed cannot either take him by surprise or cause unfairness where he was seeking to ventilate in this proceeding that very point. 8 I was referred to an affidavit of Jillian Helen Cooper sworn on 24 March 1999. I have considered the material in that affidavit in so far as it relates to this application. In my view, it demonstrates an awareness on the part of that deponent of the sort of issues which are to be ventilated in this proceeding, and does not indicate any reason why the proposed amendment would lead to her being taken by surprise. 9 Reliance was also placed upon an affidavit of Peter David Kerin sworn on 24 March 1999 which demonstrates that the Commonwealth Bank of Australia in Supreme Court Action 241 of 1995 commenced proceedings against Belgravia, apparently in respect of the same debt to which reference has been made in the course of submissions as being owed by the applicant to the Commonwealth Bank of Australia. Those proceedings were commenced on 20 February 1995 and discontinued on 6 August 1998. I am not prepared to find, simply on those bald facts, that the Commonwealth Bank of Australia acquiesced in the conduct which is now the subject of these proceedings, nor, even if it did so, am I satisfied that its acquiescence is a reason for not allowing the proposed amendment. It may be, as counsel for the respondents contended, that some form of estoppel may arise against that bank. Again, I have no view one way or the other. I do not see that that matter, which is not presently pleaded and may not be able to be pleaded in this proceeding, is a reason not to allow the proposed amendment. 10 I therefore propose to grant leave to the applicant to amend the application in the form handed up to me today and which I now initial, and further to amend the amended statement of claim in the form handed up to me today and which I now initial. To avoid the need for the respondents to amend their defences, I propose to renumber the proposed par 35 as par 34A, the proposed par 39 as par 37A, the proposed par 40 as par 37B, the proposed par 41 as par 37C, the proposed par 42 as par 37D, the proposed par 43 as par 37E, and the proposed par 44 as par 37F. The proposed par 45 will therefore remain, as numbered, 38. 11 I direct that each of the respondents be taken to have denied the allegations in pars 34A and 37A to 37F without the need to file any defence in response to those amended allegations. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Decision herein of the Honourable Justice Mansfield.