ok JUDGMENT No. wees?) IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G248 of 1984 wee ee GENERAL DIVISION STATE BANK OF NEW SOUTH WALES Applicant COMMONWEALTH SAVINGS BANK OF AUSTRALTA Respondent COMMCNWEALT SAVINGS BANK OF AUSTRALIA Cross-Claimant STATE BANK OF NEW SCUTH WALES First Cross-Respondent £ STATE OF NEW SOUTH WALES 5 June, 1985 REASONS FOR JUDGMENT LOCKHART J. On 28 May 1985 I indicated the undertakings and orders which appeared to be appropriate to give effect tc my reasons for judgment of 23 April 1985. When the matter was before me on 3 dune 1985 gq counsel for the Stete Eank of New South Wales ("the State Bank") said that his client wished to lead further evidence of prejudice which it was said the State Bank would sustain if the entry of judgment against che Commonwealth Savinos Bank ("th the matter until today at the request of counsel for the CSE so that proper consideration could be given by his client to that application on behalf of the State Bank to lead further evidence. Today I heard the further evidence which the State Bank sought to lead in the form of affidavits from Richard Louis Morath and John Anthony O'Neill, and there was oral evidence given by Mr. Morath. I need not refer to the evidence in detail; it may be briefly summarised by saying that the evidence was to the effect that if judgment were entered for the State Bank in the amount claimed of some $13,779,801.13, then the State Bank would either place those funds on deposit in the short-term money markets or repay borrowings by it from those markets in each case for a short term, and thereafter use the funds to facilitate loans and for other financial purposes to benefit customers. The State Bank's case is that it would lose the interest that it would otherwise earn from those moneys by placing them in the short-term money markets, or lose the saving that would accrue to it if it were to use the funds for repayment of borréwings from the short-term money markets. In addition, the evidence is to the effect that if the State Bank had access to the moneys claimed by it, this would enable it, in view of what are called the Reserve Bank of Australia's guidelines, to borrow or "gear" by a multiple of up to 19 times the capital base of the State Bank. which means for practical purposes that if the State 3. State Bank in consequence of its being denied the moneys claimed by it would mean that it would be deprived of the benefit of borrowing funds and eéarning assets to the value of some $262,000,000. This. of course, would be onthe evidence a detriment additional to the deprivation of the oppertunity to earn the interest on the investments in the short term. I have taken those matters into account but it does not lead me to take a different course to that which I foreshadowed on 26 May 1985. There has been discussion on short minutes of order which have been handed up by counsel for the State Bank. The discussion relates broadly to four main points. First, whether, as the State Bank urges, the application by the CSB to amend its defence and cross-claim by raising what I have described in my earlier reasons as the inducement argument should be deferred until 17 June this year; -second, whether an undertaking should be proffered by the CSB ora term imposed in effect requiring it to submit to an order that the Court may consider just for payment of compensation to the applicant of an amount to be assessed by the Court in consequence of the granting of leave tec amend the defence to raise a set-off if, notwithstanding that set-off, the State Bank ultimately obtains judgment against the CSB substantiall sought in the statement of KG ist uw claim; third, whether the CSB should be required not only to particularise its allegations but to furnish evidence in port of ww c ue] any issue of guantum; fourth, whether the case should be split on the 4, final hearing so that the issue of quantum of damage and quantum of set-off are deferred and all other prior issues are first determined both at first instance and, if necessary, on appeal. In my view, the course that I had earlier foreshadowed on 28 May 1985 of allowing all of the amendments sought should nevertheless be followed. I think it is fair that an undertaking be proffered or, failing that, a term be imposed relating to the payment of compensation along the lines to which I have referred. Further, I think it right that there be evidence from the CSB in support of the claim by it as to the quantum of damages recoverable by it for alleged inducement to breach of contract. The issue of a split trial is one that cannot be dealt with today for a variety of reasons which I need not traverse; naturally the CSB will need to consider it and to give its counsel instructions. It is a course which has some initial attraction although I must confess it is an application that I rarely favour. At first glance in acase such as this, there may be much to commend it, but I have no final view on the matter. The orders that I make are in accordance with the second set of short minutes that has been handed up. Upon the CSB by its counsel giving undertakings to the Court in terms of paragraphs (a), (b) and (c) of the short minutes of crder initialled by me and placed with the papers. the Court makes orders in accordance with paragraphs 1, 2, 3, 4, 5 and 6 of 5. those short minutes. That includes an order that 17 June this year be fixed for the various purposes referred to in thoseAccordingly, the matter is adjourned until that day. short minutes. | certify that this and the 4 preceding pages are a true copy cf the Reasons for Judgment herein cf his Honour Mr. Justice Lockha-5 Dated: 3 June "FPS"