Allstate Life Insurance Co & Ors v Australia & New Zealand Banking Group Ltd & Ors [1995] FCA 189

IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G381 of 1994 ) GENERAL DIVISION )

BETWEEN: ALLSTATE LIFE INSURANCE CO. & OTHERS Applicant AND AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED & OTHERS Respondent

CORAM: Beaumont J. DATE: 22 March 1995 REASONS FOR JUDGMENT (No. 9) (On application to amend statement of claim) The applicants have sought leave to further amend their statement of claim in the terms of the document, which I had marked "1" for identification, which is entitled "Second Further Amended Statement of Claim" and which was filed in Court on 20 March 1995. There is opposition to the application in several respects, but I heard argument today on one aspect only and it is convenient to deal with it separately. The particular matter is a claim made at pp.102- 103 of the proposed pleading under the heading "Estoppel". The allegations in question are contained in paras.173-177 inclusive. In the course of argument in the matter the applicants foreshadowed a further amendment to para.174 and that further proposed amendment has been noted in the document MFI "1". In addition, in the course of argument the

applicants have foreshadowed further amendments to other parts of their pleading, which parts they say are related to the allegations made in the present connection. The amendment proposed to be made to para.174 picks up para.74(e) of the proposed pleading. It is there alleged that in the premises each of the initial participant banks, in particular by the conduct alleged in paras.31-34, 37-40, 43, 51, 53 and 55-57 has aided, abetted, counselled or procured the contravention of s.52 of the Act by Linter Textiles, or alternatively were, directly or indirectly, knowingly concerned in, or a party to, the contravention. In MFI "68" further amendments were proposed and are now annexed. At the conclusion of MFI "1" it is stated that the applicants claim the relief specified in the further amended application. Reference should be made to MFI "1" in one particular respect for present purposes. As has been noted, by para.177 of MFI "1", it is claimed that the initial participant banks are estopped from asserting that any indebtedness of Linter Textiles or the subsidiaries, consisting of a liability under any of the unlawful guarantees, comprises "Senior Indebtedness". By a proposed amendment to the application, annexed to the affidavit of John Frederick Warburton, the applicant's solicitor sworn 14 March 1995 and MFI "1A", notice was given of proposed amendment of the application. MFI "1A" is now annexed to these reasons. The application to amend the pleading by adding the allegations under the heading, "Estoppel" are opposed. The reasons for that opposition are set out in the document MFI "67", being a submission made on behalf of Citibank. It is noted that there is no express representation alleged against the initial participant banks and it is said that within the principles of estoppel by silence discussed in the authorities there can only be estoppel by silence where the relationship between the parties is such that it is reasonable to expect that the person who has remained silent would disclose the relevant facts (see Pacol Ltd. v Trade Lines Ltd (The "Henrik Sif") [1982] 1 Lloyds Rep 456. at 465, per Webster J; Trenovden v Martin [1934] SASR 340 at 344; China Ocean Shipping v P.S. Chelleram [1990] 28 NSWLR 355, at p.385 per Kirby P.; The Commonwealth of Australia v Verwayen (1990) 170 CLR 394, at pp.444-445, per Deane J.). It is further submitted on behalf of Citibank that the proposed pleading does not allege any business or other relevant relationship between potential bond holders and the banks or that there was any relevant contact between those parties. On behalf of the applicants it is contended that, at the arguable level at least, a cause of action has been alleged of the kind discussed by Dixon J in Grundt v Great Boulder Proprietary Gold Mines Limited (1938) 59 CLR 641 at 674. His Honour there said: "The principle upon which estoppel in pais is founded is that the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations. This is, of course, a very general statement. But it is the basis of the rules governing estoppel. Those rules work out the more precise grounds upon which the law holds a party disentitled to depart from an assumption in the assertion of rights against another."