Xe _ ~~ oF JUDGMENT Wo. 2 27 <7 IN THE FEDERAL COURT OF AUSTRALIA DISTRICT REGISTRY No. 248 of 1984 wer vwnry GENERAL DIVISION STATE BANK OF NEW SOUTH WALES Applicant COMMONWEALTH SAVINGS BANK OF AUSTRALIA Respondent COMMONWEALTH SAVINGS BANK OF AUSTRALIA Cross-Claimant STATE BANK OF NEW SOUTH WALES First Cross-Respondent STATE OF NEW SOUTH WALES Second Cross-Respondent 28 MAY 1985 REASONS FOR JUDGMENT LOCKHART J. On 23 April 1985 I delivered my reasons for judgment on certain questions of fact and law raised by the pleadings. Before remitting the matter to this Court the Chief Justice of the High Court had earlier directed that those questions. with one exception - question 14 - be tried before other questions in the case. Question 14 was later added by consent. I concluded my reasons for judgment by saying: "Before finally answering these questions or making any order or declarations I shall stand the matter over for a short period to enable the parties to consider my reasons for judgment and proposed answers ... I direct the applicant to bring in short minutes in' the meantime to give effect to my reasons for judgment." In the result, the matter was adjourned until yesterday. Since 23 April 1985 three notices of motion have been filed. The State Bank filed a notice of motion for an order that a judgment be entered in its favour in the sum of $13,779,801.13, and an order that judgment be entered in its favour being interest on that sum pursuant to s. 79 of the Judiciary Act and s. 94 of the Supreme Court Act 1979 (N.S.W.) or by way of damages. The State filed a notice of motion for an order that those paragraphs of the CSB's cross-claim, which I proposed to answer adversely to it, be struck out. CSB filed a notice of motion seeking the leave of the Court to amend its defence and cross-claim in the form of annexure "A" to that notice of motion. I turn first to the lastmentioned notice of motion. The principles governing application for leave to amend proceedings are well known and need no restatement. The first amendment which the CSB seeks to propound is the addition of eub-paragraphs 1(bl) and (b2) in these terms: "In answer to paragraph 6 of the statement of claim, the respondent: (bl) says that the said agreement was an agreement between the respondent on the one hand and the Government of New South Wales on the other and the applicant's predecessor 3. was a party thereto as agent and trustee for the Government of New South Wales. (b2) says that in entering into the said agreement the applicant did so as agent and trustee for the Government of New South Wales." Counsel for the CSB submitted that the point which those paragraphs seek to encapsulate is that, although the Commissioners were authorized by the Government Savings Bank Act 1906 (N.S.W.) to carry on their savings bank business, they had no authority to dispose of their assets, liabilities and their business. The source of their power to negotiate with the State and the State Bank for the transfer of their property and to enter into an agreement with respect thereto, which ultimately became The Agreement, was s. 3 of the Government Savings Bank (Amendment) Act 1931 (N.S.W.) which, so far as material, provided that the Commissioners may enter into an arrangement with the CSB for amalgamation and for the transfer to it upon such terms and conditions as are agreed upon between the Treasurer, the Commissioners and the CSB of the whole or any part of the assets, liabilities and business of the State Bank and that no such arrangement shall take effect until ratified by the Parliament of New South Wales. The source of the transfer of the Commissoners' property to the State Bank pursuant to the Agreement was, so it was submitted, not the Agreement itself but the Act. The Commissioners held all real and personal property whatsoever vested in them on behalf of the Government of New South Wales: s. 19 of the Government Savings Bank (Amendment) Act 1913 (Act No. 13 of 1913). Hence, so it was submitted, the Commissioners entered into and became a party to the Agreement as agent and trustee for the State. Counsel for the CSB accepted for present purposes that the Commissioners were not an agency or emanation of the Crown in right of the State. The High Court has on at least two occasions rejected that proposition; Bland Shire Council v. Rural Bank of New South Wales (1947) 74 C.L.R. at p. 417 and Rural Bank of New South Wales v. Hayes (1951) 84 C.L.R. 140 at p. 146. It was suggested by counsel for the CSB when this question was discussed late last year that the subsequent decision of the High Court in Inglis v. Commonwealth Trading Bank (1969) 119 C.L.R. 334, in effect overruled those earlier decisions or was at least inconsistent with them. If this be so then it is for the High Court to say so. This Court is bound by the judgments of the High Court in Bland and Hayes and counsel for the CSB did not contend otherwise. The second amendment sought by the CSB is to add to the defence a paragraph 16A in these terms: "16A. On the proper construction of the said agreement or alternatively it was a further implied term and condition of the said agreement that: (a) the continuance of rights and obligations thereunder of the respondent and the applicant inter se should be interdependent with or collateral to and dependent upon the continuance of the rights and obligations thereunder of the respondent and the State of New South Wales inter se; or (b) the performance by the respondent of its obligations thereunder should be dependent upon the performance by both the applicant and the State of New South Wales or their resepctive obligations thereunder." Counsel for the CSB said that this paragraph was consequential upon 1(bl) and 1(b2) and involved the same point; namely, that it was an implied term and condition of the agreement that the obligations of the State and the CSB inter se and -those of the State Bank and the CSB inter se are interdependent. such that, for example, a breach by the State of its obligations to the CSB under clause 17 of the Agreement would operate to permit the CSB to be freed of its obligations to the State Bank under clause 11. Counsel for the CSB also submitted that the paragraph could operate independently of the proposed paragraphs l(bl) and 1(b2). The third amendment sought by the CSB is the addition of paragraphs 19A and 19B in the following terms: "19A. Upon the termination or recission of the rights and obligations under the said agreement of the respondent and the State of New South Wales inter se the respondent ceased to be bound by the continuing obligations thereunder to the applicant. 19B. The State of New South Wales has ceased to perform its obligations under the said agreement by reason of the matters referred to in paragraph 18 whereupon the respondent ceased to be bound by its obligations thereunder to the applicant." Counsel for the CSB said that those paragraphs were consequential upon Paragraph 16A, so that, if they should fail, then so must paragraphs 19A and 19B fail. The final amendment to the defence sought by the CSB is the addition of paragraphs 722A, 22B and 22C and certain changes to Paragraph 23 in the following terms: "22A. Further or in the alternative the applicant has wrongfully induced, procured and participated in the aforesaid breaches by the State of New South Wales. 228. By reason of the matters referred to in paragraph 22A the respondent has suffered loss and damage and will continue to suffer loss and damages particulars whereof are referred to in paragraph 22. 22C. The applicant threatens and intends, unless restrained by this honourable court, to continue in the conduct referred to in paragraph 22A. 23. The respondent will seek to set off at law and in equity the loss and damage referred to in paragraph 22, or so much thereof as may be necessary in satisfaction of any amount to which the applicant may be found to be entitled." Counsel for the CSB submitted . that those paragraphs are intended to raise the tort of inducing, procuring and participating in breaches of contract. The CSB also seeks amendments to its cross-claim against the State Bank and the State by adding paragraphs 28A, 28B, 29, 36A, 39A, 39B, 42A, 42B and 42C which mirror the amendments sought to the defence, save for paragraph 23. In my opinion all amendments sought should be allowed. They raise I think reasonably arguable questions for determination. However, there is no evidence in support of the application for leave to amend and no particulars of any of the fresh allegations have been furnished. Counsel for the CSB informed the Court in general terms of the matters relied on in support of the paragraphs, but full and proper particulars must-be furnished by the CSB, although I realise that final particulars of paragraphs 22(a), 22(b), 22(c) and 23 as amended may have to await discovery, inspection and interrogatories. Also, the fresh allegations, except those in the paragraphs which I have most recently mentioned, could have been raised in the hearing last November and December before me. Another approach that could be made to the motion to amend by adding paragraphs 22B and 22C, raising the issue of inducement, would be to adjourn that motion and determine it later in the light of particulars to be furnished by the CSB and any evidence that may be adduced in support of it in the meantime. Although I recognise some force within this approach I think the preferable course to take is the one I have mentioned. It has the advantage of having all amendments to the defence and cross-claim made at the one time and will doubtless lead to all consequential amendments by the State Bank and the State to their pleadings also being made at the one time. If 'the particulars furnished by the CSB are inadequate or otherwise defective an application may be made to strike out the relevant paragraph of the defence and cross-claim. I have taken into account all the matters of hardship which counsel for the State Bank and the State assert may be sustained if leave to amend is granted. I think the proper course for the Court to take is to give the same directions with respect to the questions raised by the new paragraphs as were made by the Chief Justice of the High Court on 8 December 1983 with respect to the other questions argued before me. This appraoch is, I think, consonant with the terms and spirit of the Chief Justice's order. Further, . any prejudice that may be sustained by the State Bank or the State by taking this course must be compensated for by the CSB. The costs of the application for leave to amend and the costs of and occasioned by the amendments and any additional costs caused by the separate hearing on these questions which will take place must be borne by the CSB in any event. Also, if the State Bank ultimately substantially succeeds in this case, the CSB should pay interest on the amount of the judgment to it at an appropriate commercial rate to be fixed by this Court covering the period of delay between 23 April 1985 (when I delivered my earlier reasons for judgment) and the date when my reasons for judgment with respect to the further questions of fact and law are delivered. There is, I realise, a certain arbitrariness in assessing that period, but I think in all the circumstances it is the fairest period to select. If counsel for the CSB informs the Court that his cliztnt is prepared to proffer an undertaking to that effect that will obviate the necessity of the Court imposing conditions. 9. Other questions may also have to be determined arising out of any amendments that may be made to the pleadings of the State Bank or the State consequent upon the amendments which I propose to allow the CSB to make to the defence and cross-claim, and, if it is appropriate that those questions also be determined on the next hearing, orders can be moulded to give effect to that circumstance. The answers to the fresh questions which arise from the amendments to the defence and cross-claim may relate to or affect the answers given by me to other questions which I answered in my April reasons for judgment, hence I shall not today answer any questions or make any declarations consequent upon those answers, but I shall consider this question upon the determination of the fresh questions. In the result, the State Bank's motion for judgment and the State's motion to strike out must abide the determination of the questions arising from the amendments to the defence and cross-clain. I shall indicate the undertakings and orders which appear appropriate to give effect to my reasons and then ask for comment upon them. Upon the CSB by its counsel undertaking to the Court: (a) That inthe event that the State Bank ultimately obtains judgment against the CSB substantially as sought in its statement of claim, the CSB shall pay to the State Bank interest at an appropriate commercial rate to be fixed by this Court on the amount for which the State Bank obtains judgment covering the period between 23 April 1985 10., and the date when the court's reasons for judgment are delivered with respect to the further questions of fact and law .raised by and consequent upon the amendments to the defence and cross-claim; and (b) that it will pay to the State Bank and the State their respective costs as agreed or, failing agreement, as taxed - (1) of the CSB's motion for leave to amend its defence and cross clain, (ii) of and occasioned by the amendments to its defence and cross claim, and (iii) any additional costs incurred by reason of the separate hearing on the questions raised by and consequent upon the amendments to the defence and cross claim. The court orders as follows: 1. That the CSB be granted leave to amend its defence and cross claim substantially in the form of the document annexed to the CSB's notice of motion fited on 20 May 1985 and marked "A", and that necessary amendments be made on or before a date to be fixed. a.m. ll. That the CSB furnish in writing on or before a date to be fixed particulars of the allegations made in the new or amended: paragraphs of the defence and cross clain. That the questions or issues of fact and law raised by paragraphs 1(bl) and (b2), 16A, 19A and 19B of the defence and paragraphs 28A, 28B, 36A, 39A and 39B of the cross-claim be tried before other questions and issues of fact and law and that the hearing be fixed for 17 June 1985. That each party be at liberty to apply on two days notice. That the matter be listed for directions on a date to be fixed. That the motion of the State Bank for judgment and the motion of the State to strike out be adjourned to the date of the hearing mentioned in order 3. The matter is adjourned to Monday next, 3 June 1985 at 9.15 so that the parties may consider my reasons for judgment and proposed orders in the meantime. | certify that this and the preceding pages are a true copy of the Reasons for Judgmert herein of his Honour Mr. Justice Lockhart. o CX Ke Associate