B THE APPLICATION FOR LEAVE TO AMEND
6 The amended statement of claim has at its heart an allegation that as at 31 March 2013, the NAB knew that if administrators or liquidators had been appointed to the second and third respondents (Walton companies), a series of events would have occurred, by which the NAB would have become an unsecured creditor and limited to making a pari passu claim with other unsecured creditors.
7 Armed with that knowledge, it is said that the NAB knew of, and became involved in, what is described as a "scheme", by which it sought to limit its exposure to the Walton companies, which were said to be either insolvent or close to insolvent.
8 The proposed pleading raises two primary controversies. The first relates to an amendment to include a claim under s 588M(3) of the Corporations Act 2001 (Cth) (Act) against the NAB for liability as a shadow director of the Walton companies for trading while insolvent. Originally, it was said that this claim required leave to be sought by the Court, but, for reasons that I will come to, that contention is no longer pressed. The second relates to the amendment of the group definition.
9 As to the first issue, the chronology of relevant events can be set out as follows:
(1) on 3 October 2013, the Walton companies began to be wound up;
(2) relevantly for the purposes of s 588S of the Act, the six-month period after the commencement of winding up expired on 3 April 2014;
(3) on 18 September 2019, consent was obtained in respect of the applicant in its own right, pursuant to s 588R of the Act; and
(4) on 4 May 2022, the applicant sought the liquidator's consent to take proceedings from the liquidator on behalf of the Group Members pursuant to s 588S of the Act.
10 I am also told that there was an attempt to procure the liquidator's consent with respect to the Group Members in September 2019, but such a document is not in evidence. I will proceed on the basis that some form of consent (along the lines sought in May 2022) was sought at an earlier time.
11 In seeking the liquidator's consent as it did, the applicant was acting under a misapprehension. Part 5.7B of the Act provides for the recovery of property or compensation for the benefit of creditors of an insolvent company. Division 4, Subdiv B provides a mechanism whereby proceedings can be commenced by a creditor with the consent of a liquidator, which may be sought after the end of the six month period beginning when a company begins to be wound up: ss 588R, 588S. If such consent is not given, the creditor can approach the Court for leave following the expiry of a period of three months: s 588T.
12 The group members have not commenced such a proceeding. They are not parties to this class action. The only proceeding that is on foot has been brought on behalf of the representative applicant. If a group member was to seek leave to bring a proceeding (for example, after the class action had been declassed), it would be necessary for such a group member to obtain the leave of the Court.
13 The proposed pleading proceeds on the basis that the insolvent trading claim is brought in a representative rather than individual capacity. For this reason alone, amendment to include this aspect of claim should be refused.
14 Further, the delay has been extraordinary and is largely unexplained, save for the suggestion that there has been a difficulty obtaining funding. Even if one assumed (without deciding) that it is correct to characterise this claim as arising out of the same facts, or substantially the same facts, as those already pleaded to support an existing claim for relief, I would, in any event, refuse leave to advance this proposed claim for the two reasons indicated.
15 The second controversial issue is the group member definition. The proposed definition seeks to refine the identification of group members. As I expressed to counsel, I was initially somewhat concerned that this might have the effect of excluding current group members from advancing claims which would otherwise be out of time, but were saved by reason of those persons being group members. I am told, however, that no such potentially excluded claims on behalf of group members are viable.
16 The opposition to the amendment to the group member definition was premised on the basis that the criteria in the definition were phrased in such a way as to include people who may not have suffered loss and damage. Even assuming that this was the case, this is not a valid objection to the question of how the group is defined. I have repeatedly said that a group member definition merely gives rise to a notional list of persons. Whether those persons in truth have claims (and whether they can successfully advance those claims) is a matter for another day.
17 It is well in closing to say something of a final matter, which may also be left for another day. It seems to me that the current iteration of the pleading is overly complex. I made clear to the applicant that it may be possible to simplify the case greatly, in accordance with the overarching purpose of civil litigation in this Court.