JUDGMENT NO. sam LDeSoud Zt. IN_THE FEDERAL COURT OF AUSTRALIA ) NG 153 of 1994 NEW SOUTH WALES DISTRICT REGISTRY ) NG 154 of 1994 GENERAL DIVISION ) NG 153 of 1994 BETWEEN: AUSTRALIAN INDEPENDENT NEWSPAPERS LIMITED Applicant AND: JOHN FAIRFAX HOLDINGS LTD (FORMERLY TOURANG LTD) AND OTHERS Respondents NG 154 of 1994 BETWEEN: Applicants AND: D Respondents CORAM: Sheppard J PLACE: Sydney 15 DEC 1994 FEDERAL IF DATE: 12 December 1994 nk COURT O} PRINCIPAL REGISTRY REASONS FOR JUDGMENT HIS HONOUR: By their notices of motion filed in these matters on 7 December, the applicants in each case seek to add further respondents to the proceedings. The parties whom they wish to join are Citisecurities Limited and five banks designated in the notices of motion. These companies are already parties to the proceedings. Earlier in the year they were joined as cross-respondents by a number of _ the respondents sued by the applicants. I shall refer to the parties the applicants wish to join as "the Banks". The Banks oppose their joinder. All other parties either consent or support the joinder subject to the qualification that the third respondent would oppose the joinder if the consequence was the adjournment of the proceedings which have been fixed for hearing on 14 February next. In the last few weeks affidavits to be relied upon by the respondents at the trial have been served. Mr K.J. Searle, the solicitor for the applicants, has sworn an affidavit in support of the notices of motion. Amongst other things he has said: "2. On 25 November 1994 the applicants were served with copies of the affidavit of Mark Douglas Irving Burrows sworn 24 November 1994 and the affidavit of Peter Craig Llewellyn Breese sworn 25 November 1994, Copies of the exhibits to those affidavits were served on 30 November 1994. 3. On 2 December 1994 the applicants were served with a copy of the affidavit of Jeffrey Stephen White sworn that day. As at the date of swearing this affidavit copies of the exhibits to Mr White's affidavit have not been served. 4. Io am advised by senior counsel and verily believe that if the applicants are to make claims against Citisecurities Limited and the five financiers referred to in the applicants' notice of motion dated 7 December 1994 ("the Banks"), such claims must be made by the 15 December 1994. 5. I am instructed by the applicants in these proceedings and the applicant in proceedings No. G153 of 1994 to make claims against the Banks substantially in the form as set out in Schedule "B" to the notice of motion." Mr Searle was not cross-examined. The tenor of the affidavit suggests that the reason for the application being made at this time is the imminent expiry of the period of limitation which the applicants have been advised may be applicable to their proposed causes of action against the Banks. The other matter about the affidavit which should be noticed is that it suggests that the only reason for the joinder was the evidence referred to by Mr Searle. I was not referred to this evidence by counsel for the applicants. It seems clear that until recently the applicants had made a conscious decision not to join the Banks. Close attention must have been given the question of parties when Baring Brothers Burrows and Company Limited and Mr Burrows were earlier joined as the 4th and 5th respondents. The question whether the Banks would be joined by the applicants was plainly present to the minds of those advising the applicants on 31 October last. During the course of submissions made in relation to applications made by some of the respondents for orders for security for costs, the undermentioned discussion ensued. I should preface my account of what is to follow by saying that the discussion concerned which of the respondents were seeking the orders for security. Mr Ellicott, senior counsel for the applicants said: "So it is the receivers, Barings and Ord Minnett." The discussion between Mr Ellicott and myself proceeded as follows: "HIS HONOUR: What about the Banks? MR ELLICOTT: We do not acknowledge the Banks, your Honour, except as the ultimate bearers of the burden. HIS HONOUR: Have you not sued the Banks, I cannot remember. MR ELLICOTT: We have not sued them. HIS HONOUR: I see, so it is three--- MR ELLICOTT: I have not yet added the word "yet". HIS HONOUR: Well, now is the time." And the discussion then proceeded to deal with matters associated with the applications for security. That discussion took place at a time when it was clear that the matter was to proceed on 14 February next. Previously it had been hoped that it would proceed on 31 October last, but it was found that the parties could not be ready for that date and the matter was adjourned and refixed. The nature, the extent and the history of this litigation are well known to the parties and to the Court. It is unnecessary to refer to the detail of it. It is complex in a high degree. It involves claims for damages for many hundreds of millions of dollars, not only by the applicants but also by the first respondent. Some of the respondents seek indemnity or contribution from the Banks for all or part of any liability they may have to the applicants or the first respondent. They rely for that purpose on numbers of causes of action. The Banks were joined as cross-respondents only comparatively recently. The litigation has been on foot for approximately three years. There have been many directions hearings and many interlocutory applications concerning procedural steps including discovery, interrogatories, amendments to pleadings and the joinder of parties. At all times the applicants have expressed the wish for the trial to proceed expeditiously and for a date for hearing to be fixed as early as the exigencies of the case and the Court's commitments would allow. In this the applicants have consistently been supported by the third respondent. The Court has endeavoured to meet those parties in this respect. It is in these circumstances that the applications to join yet further respondents have been made some two months before the hearing is to commence. My impression is that the applicants made the applications thinking that there would be no question of their being refused. The Banks were already parties. They were not strangers to the litigation. Furthermore, it is common ground that they have monitored the litigation since its inception. Nevertheless, the applicants have not until now foreshadowed joining them in the proceedings, except perhaps to the extent of what was said during the discussion that ensued in the course of the applications for security for costs. In all these circumstances it may have been thought that any application to join a further respondent would have been accompanied by a clear and precise statement of the basis upon which the joinder was required. But, as will be seen, that is not the way matters proceeded. Each of the notices of motion contains a_ schedule, Schedule B, in which the proposed amendments to each statement of claim are stated. I do not refer to the detail of each. I take the motion filed in No. NG153 of 1994, that being the one dealt with by the parties in argument. I have assumed that the same considerations apply to the notice of motion filed in No. NG154 of 1994. It should be explained that each statement of claim is divided into four sections, sections I, II, III and IV. Schedule B of the motion filed in No. NG153 of 1994 foreshadows the following amendments. Firstly, there is an amendment to para. 2 so that it will read: "2. On or about 10th December 1990 the second respondents ("the Receivers") were appointed Receivers and Managers of Fairfax pursuant to certain charges in favour of Citisecurities Limited, as security trustee for CitiBank Limited, Australia and New Zealand Banking Group Limited, South Australian Asset Management Corporation, State Bank of New South Wales and Trust Bank, who were syndicated senior debt lenders to Fairfax ("the Banks" which expression where herein used includes Citisecurities Limited) (the Sixth Respondents). The Receivers were also appointed Receivers of the shares in Fairfax pursuant to certain charges in favour of Citisecurities Ltd as security trustee for the Banks." Then there are to be added two new paragraphs as follows: "6A. At all material times the Receivers were the agents of the Banks and their conduct referred to herein also constituted conduct for and on behalf of the Banks. 6B. At all material times Barings and Burrows were advisers to and agents of the Banks and their conduct referred to herein also constituted conduct for and on behalf of the Banks." There are proposed amendments to paras 56 and 57. I should explain that paras 56 and 57 plead a number of allegations in relation to the existing respondents. Paragraph 56 pleads a series of promises alleged to have been made by some of them. Paragraph 57 pleads the same material, not as promises, but as representations. The purpose of the amendments to paras 56 and 57 is to bring the Banks in as promisors in relation to para. 56 and representors in the case of para. 57. Particulars furnished in schedule B to the motion add to the particulars of para. 57 already provided. Those already provided simply say, "See the particulars to paragraph 56". fo be added to that statement in the particulars to para. 57 is the following: "In support of paragraphs 56 and 57 the applicant relies on all of the conversations and communications contained or referred to in affidavits filed on its behalf between the applicant and its advisers (namely Macquarie Bank Ltd, Arthur Robinson and Hedderwicks and Lazards) on the one hand and each of Barings and Burrows representatives, Mr Cohen of Shearman & Sterling, representatives of Morgan Stanley and Mallesons Stephen Jacques on the other hand. The applicant alleges that each of such persons acted as agent for and on behalf of Barings and Burrows and/or the Receivers and/or the Banks." There are then amendments to paras 58 to 63, 65 to 67, 69 to 71 all of which have the effect of adding the Banks into the allegations made in those paragraphs. The Banks are also added in to para. 111 which, if amended, will read: "Further and in the alternative on various dates after 16 July 1991 each of Burrows Barings, the receivers and the Banks represented to AIN, INP, members of the government and/or members of FIRB and potential investors that Tourang had a valid and enforceable agreement with the participating bond holders and or that there were no facts which supported any other conclusion." There are also amendments to paras 113, 119, 129, 133, 135 and 136. In each case the Banks are brought in as respondents affected by the allegations made in those various paragraphs. The paragraphs are all in either section II or section IV of the statement of claim. The paragraphs which give rise to particular problems are paras 57, 111, 6A and 6B. I have already referred to the fact that para. 56 sets out a number of promises and to the fact that to a number of these paragraphs the proposed amendments would seek to add the words "and the Banks", thus indicating that the Banks are alleged to have made some of the promises alleged against some of the existing respondents in para. 56. Paragraph 57 is similarly to be amended so as to allege that the Banks, amongst others, made the representations there relied upon. Two matters concern me about what is proposed to be added to the particulars to para. 57. The principal of these is that, not only Barings and Burrows' representatives are alleged to have acted as agents amongst others for the Banks; others are alleged to have done so as well, namely Mr Cohen of Shearman & Sterling, representatives of Morgan Stanley, and Mallesons Stephen Jaques. As counsel for the Banks noted, that allegation should have been set out in a pleading in which there were precise allegations made of the facts and circumstances which were relied upon to establish that each of those persons or organisations was the agent of the Banks. Particulars are not the vehicle for such an allegation because the allegations need to be pleaded to. Furthermore, although there is today a fine line between allegations in pleadings and allegations in particulars and courts are increasingly less insistent on matters being in pleadings so long as they are particularised, the allegations concerning the agency are not particulars of anything but the mere statement of the allegation. They tell one nothing of how and in what circumstances the various persons referred to came to be the Banks' agents. The other vice concerns the way in which the Banks are informed of the conversations in which they are alleged to have made promises and representations which are to be relied upon. This is a quite inappropriate way of furnishing particulars of anything. Counsel for the applicants acknowledged this and said that the matter could be corrected. But in the way that the statement is drawn at the moment the Banks are left in a situation where they have to search through large numbers of documents to find out which of the conversations are the relevant ones. They are called upon to make a judgment about the matter. They should not be placed in that position. Paragraph 111 does not have particulars appended to it. It may be that that matter has been attended to as between the applicants and the existing respondents by requests for particulars sent in the normal course, but I am dealing with this matter as it now is. I am dealing with it in the context of a case which is to come on in two months' time and on the basis that the Banks are to be joined on a statement of claim which contains a paragraph such as para 111. It seems to me that it behoved the applicants, if they wished the application to be dealt with on a proper basis, to provide to the Banks in advance of this application coming on for hearing clear particulars of what would be alleged, at least against the Banks, in relation to the matters relied upon in para. 111. Counsel then referred to paras 6A and 6B. These are general paragraphs and perhaps it may be thought do not have the same problems about them as those to which I have referred in relation to paras 56, 57 and 111. But again they are general allegations and do not tell the Banks in what circumstances the receivers are said to have been the agents of the Banks. Counsel said that the Banks had appointed the receivers and thus the receivers were plainly their agents but that is an oversimplification, so far as I can tell, of the law on the matter. In some circumstances receivers will be the agent of the company. In some circumstances they will be acting on their own behalf; and in other circumstances they will in truth be the agents of those who have appointed them. One cannot tell what the position will be until one looks at the facts and circumstances of a given case and the purpose for which the inquiry is being made. It may be that in some cases they will be agents for both the persons appointing them and the company itself. In other cases that will not be so. So the allegations, like the allegations of agency in the particulars appended to para. 57, are simply assertions and thus not properly pleaded. A matter which should be mentioned at this point is that reference to the receivers being the Banks' agents by operation of the general law, tends to suggest that the affidavits referred to in Mr Searle's affidavit were not the only reason for the proposed joinder. If the general law is to be relied upon, recent affidavits would not provide the only reason for the joinder. The basis for the joinder must have been present all along. That was not a matter discussed with counsel during the course of the submissions. But, if it be right to say that it is the recent affidavits which have given rise to the application, it may be that the intention was to allege agency on a much more restricted basis. My problem is that I do not understand that to be what the pleading and particulars are saying in their present form. If the general law is to be relied on the matter is at large. Counsel for the Banks expressed concern about the ambit that paras 6A and 6B might have and referred to paras 38 to 49 in section I and 107 to 108 in section III of the statement of claim. I expressed the view provisionally that it would be unlikely that the bare allegations in paras 6A and 6B would be allowed to permeate into these paragraphs of the statement of claim in which the Banks are not expressly mentioned and not intended to be mentioned by the amendments. But nevertheless one can understand counsel's concern because of the very width of the allegations in paras 6A and 6B. Counsel ought not to be left, nor should their clients, in the uncertain situation of not knowing precisely how the allegations in paras 6A and 6B are to be used or relied upon. I should mention at this point that there are on foot proceedings which the Banks themselves instituted (No. NG584 of 1994). The applicants are not parties to those proceedings. They have been brought by the Banks against some of the respondents and there are cross-claims in them. There are numerous allegations in the pleadings in that matter which contain allegations, so it was demonstrated to me by counsel, particularly for the first respondent, which appear in some of the paragraphs of the proposed amended statement of claim to be filed against the Banks. But so it seems to me, and counsel for the applicants did not appear to dispute this, the Banks should not have to, to use an expression, rat through pleadings in another matter to see whether the allegations in that proceeding are the same as the allegations in another one. In any event a party in that position could not be sure that the paragraphs, although similarly expressed, would be relied upon in precisely the same way in the new pleading as they might be relied upon by another party in an existing pleading. Counsel for the applicants urge on me the course that I should allow the applicants to join the Banks and that the problems about pleadings and particulars can be sorted out later on. That may have been a course open if there had been a joinder of the Banks at a much earlier stage when there was more time; but there is not. As I have said, two months remain before the hearing commences. The Banks have already had an unenviable task in preparing for the hearing as it is. If they are delayed in obtaining information they reasonably require in relation to the case to be brought against them by the applicants so that they do not have that information for some weeks, they will be further embarrassed and prejudiced. That is what I meant when I earlier said that I would have thought that an application of this kind would have been made carefully making due allowance for the fact that everything had to be told to the parties the applicants are seeking to join about the case which is intended to be brought against them. I think it fair to say that counsel for the applicants did not seek to defend the proposed amendment to _ the pleadings. I invited submissions on the various matters to which I have referred, but none was made except to the extent that I have indicated. Instead counsel resorted to the submission that I should simply allow the Banks to be joined and allow the pleadings and particulars to be fixed up later. In other circumstances I might have acceded to that course but, as I have indicated, because of the time factor I am not prepared to do so. The problem which the applicants may have in relation to the expiry of the limitation period can be overcome by an independent proceeding commenced before 15 December. That is the course which counsel for the applicants indicated would be taken. I agree with him that that is the downside of refusing the application for leave to amend. Desirably, if the Banks are to be joined, the proceedings should be constituted so as to enable the Court to deal comprehensively with all issues between all interested parties. Regrettably, that may not be practicable because of the belatedness of this application and its fundamental deficiencies to which I have referred. Frankly, I am at a loss to understand why it was apparently beyond the capacity of the four counsel who appear for the applicants and the half dozen or so solicitors who stand behind them to have directed sufficient time between Friday afternoon and this morning to undertake an exercise which, although tedious and painstaking, was of no more than moderate difficulty. However, that has not been done. Other interests have to be taken into account including those of the third respondent which, as I have said, has for so long pressed for the hearing of this matter to commence. I fear that if I were to take the course counsel for the applicants has urged on me, the consequence would undoubtedly be an adjournment of many months. I think that highly undesirable from the point of view of numbers of the existing parties and I think the appropriate course, although it has, as I have indicated the downside that I have mentioned, is to refuse this application and to let the matter proceed as it is. As appropriate the applicants can commence separate proceedings against the Banks which may have to be the subject of a separate hearing. In the result this application is refused. I order the applicants to pay the Banks' costs of it. I certify that this and the 15 preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice Sheppard. Associate Wb eon Dated+ 12 Xocmbey (954