FEDERAL COURT OF AUSTRALIA Matland Holdings Pty Ltd v NTZ Pty Ltd [2002] FCA 1590 PRACTICE & PROCEDURE –sale of land upon which petrol station operated – principal proceedings concerning claims under Trade Practices Act 1974 – respondents' application to cross-claim against former legal advisers for breach of retainer and negligence – legal advisers not otherwise parties – whether proposed cross-claim part of the same "matter" – whether proposed cross-claim within the Court's accrued or associated jurisdiction – whether respondents should be granted leave to cross-claim – where proposed cross-claim insufficient to support a cause of action for breach of retainer and in negligence PRACTICE & PROCEDURE – application for leave to amend further amended defence and amended cross-claim – where applicants did not oppose application subject to an award of costs in their favour in respect of costs thrown away by reason of the amendments PRACTICE & PROCEDURE – admissions contained in pleadings – purported withdrawal of those admissions by amendment to pleadings – principles relevant to Court's discretion to grant leave to allow party to withdraw admissions PRACTICE & PROCEDURE – lawyer-client privilege – waiver – whether waiver established – where applicants sought access to legal advice provided to the respondents – where file note discovered by the respondents records the conclusion reached in advice – where affidavit filed by respondents referred to receipt of legal advice – whether unfair that privilege be maintained – relevance of advice where coercion is claimed COSTS – application for indemnity costs – principles applicable to an award of costs on an indemnity basis – whether applicants entitled to award on indemnity costs basis Federal Court of Australia Act 1976 (Cth), ss 32, 43 Trade Practices Act 1974 (Cth), ss 45(2)(a)(ii), 45(2)(b)(ii), 45B(2), 45C(2), 47, 51AA, 52, 53A, 53A(2) Fair Trading Act 1999 (Vic), s 9 Federal Court Rules 1979, O 5 r 1(2), O 5 r 1(3), O 5 r 8(1), O 15 r 11(1), O 22 r 4 Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 discussed Fencott v Muller (1983) 152 CLR 570 discussed Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261 referred Re Wakim; Ex parte McNally & Anor (1999) 198 CLR 511 followed Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 discussed Obacelo Pty Ltd v Taveraft Pty Ltd (1985) 5 FCR 210 distinguished Maisey v First Coast Pty Ltd (1984) 1 FCR 316 referred 163 Clarence Street Pty Ltd v New World Oil and Developments Pty Ltd (1994) ATPR 41-322 referred Re Ling; Ex parte Ling v Commonwealth of Australia (1995) 58 FCR 129 referred St George Bank Ltd v MJK Pty Ltd [1999] FCA 1752 referred Australian Competition and Consumer Commission v Emerald Ocean Distributors Pty Ltd [2002] FCA 402 referred Celestino v Celestino (unreported, Spender, Miles and von Doussa JJ, 16 August 1990) followed Londish v Gulf Pacific Pty Ltd (1993) 117 ALR 361 referred Murran Investments Pty Ltd v Aromatic Beauty Products Pty Ltd (2000) 191 ALR 579 discussed N T Power Generation Pty Ltd v Power and Water Authority [1999] FCA 1184 referred McKenzie v The Commonwealth [2001] VSC 361 referred Attorney-General (NT) v Maurice (1986) 161 CLR 475 followed Goldberg v Ng (1995) 185 CLR 83 referred Mann v Carnell (1999) 201 CLR 1 followed Garratt's Ltd v Thanga Thangathurai [2002] NSWSC 39 discussed Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152 referred Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd [1999] FCA 925 referred Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 discussed Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 referred Ruddock v Vadarlis (2002) 188 ALR 143 referred Hamod v State of New South Wales (2002) 188 ALR 659 referred Australian Competition and Consumer Commission v Australian Safeway Stores Pty Limited (No 3) [2002] FCA 1294 referred MATLAND HOLDINGS PTY LTD (ACN 005 558 912) & ANOR v NTZ PTY LTD (ACN 005 154 165) & ORS VG 581 of 1999 KENNY J MELBOURNE 18 DECEMBER 2002 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 581 OF 1999 BETWEEN: MATLAND HOLDINGS PTY LTD (ACN 005 558 912) First Applicant CALTEX AUSTRALIA PETROLEUM PTY LTD (ACN 000 032 128) Second Applicant AND: NTZ PTY LTD (ACN 005 154 165) First Respondent GEORGE NTZOUNAS Second Respondent HELCO PETROLEUM PTY LTD (ACN 080 758 738) Third Respondent JUDGE: KENNY J DATE OF ORDER: 18 DECEMBER 2002 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The respondents' motion, notice of which is dated 6 December 2002, be dismissed. 2. The respondents have leave to file and serve a second further amended defence and further amended cross-claim incorporating the amendments proposed in the respondents' solicitor's letter to the applicants' solicitors dated 9 December 2002, by 4.00pm on 20 December 2002. 3. The applicants file and serve a further reply and defence to the second further amended defence and further amended cross-claim by 4.00pm on 24 December 2002. 4. The respondents pay the applicants' costs thrown away by reason of the proposed amendments to the further amended defence and amended cross-claim dated 29 November 2002. 5. The respondents pay the applicants' costs of and incidental to the hearing on 22 November 2002, to be taxed and paid on an indemnity basis. 6. There be no order as to the costs of and incidental to the applications to the Court on 19 November 2002. 7. The respondents pay the applicants' costs of and incidental to the motion, notice of which is dated 6 December 2002, and of the other applications made to the Court on 12 December 2002 on a party-party basis. 8. The respondents be granted leave nunc pro tunc to make the amendments in pars 10, 11(b) and 14 of the further amended defence and amended cross-claim dated 29 November 2002. 9. The respondents pay the applicants' costs thrown away by reason of the amendments to pars 10, 11(b) and 14 of the further amended defence and amended cross-claim dated 29 November 2002. 10. The parties have liberty to apply to the Court on seven days' written notice. 11. A directions hearing be fixed for 5 February 2003 at 10.00 am. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 581 OF 1999 BETWEEN: MATLAND HOLDINGS PTY LTD (ACN 005 558 912) First Applicant CALTEX AUSTRALIA PETROLEUM PTY LTD (ACN 000 032 128) Second Applicant AND: NTZ PTY LTD (ACN 005 154 165) First Respondent GEORGE NTZOUNAS Second Respondent HELCO PETROLEUM PTY LTD (ACN 080 758 738) Third Respondent JUDGE: KENNY J DATE: 18 DECEMBER 2002 PLACE: MELBOURNE REASONS FOR JUDGMENT introduction 1 The Court has before it a number of interlocutory applications. The first is an application made by the first and second respondents for leave to file and serve a cross-claim in the proceeding against Michael David Norbury, John Philip Pereira and Christopher Wallis. This application is made by motion, notice of which is dated 6 December 2002. The second is an application, by all respondents, for leave to amend their further amended defence and amended cross-claim dated 29 November 2002. The third is the applicants' application that the respondents' amendments to paragraphs 10, 11(b) and 14 of the respondents' further amended defence and amended cross-claim dated 29 November 2002 be struck out. The fourth is the applicants' application for inspection of the memorandum of advice dated 27 November 1997, prepared by Mr Wallis of counsel. This advice is referred to in paragraph 3(a) of the further affidavit of documents sworn by the second respondent on 18 November 2002. There are also applications concerning costs. The applicants seek costs on an indemnity basis in respect of applications made to the Court on 19 and 22 November 2002, together with the costs of the directions hearing on 12 December 2002. Both parties have sought further directions for the future conduct of this proceeding. 2 I deal with each application in turn below. Before doing so, however, it may be helpful to discuss the procedural background which led to the interlocutory applications now being made. procedural background 3 On 19 November 2002, the Court gave the applicants leave to file and serve a second further amended statement of claim (in the form proposed at the hearing on that day). The respondents were given leave to file and serve a further amended defence and amended cross-claim. 4 Pursuant to leave, a second further amended statement of claim was filed in the Court on 21 November 2002, and a further amended defence and amended cross-claim on 29 November 2002. On 10 December 2002, the applicants filed a reply (dated 5 December 2002) in response to the respondents' further amended defence of 29 November 2002, as well as a defence to the respondents' amended cross-claim of that date. 5 Also on 19 November 2002, the Court ordered that the trial date of 25 November 2002, which had been fixed for the proceeding, be vacated. The Court accepted the respondents' submission that they should be given an opportunity to consider whether they might take third party proceedings against their former legal advisers in the event that the applicants were granted leave further to amend their statement of claim. In support of this submission, Mr Maurice Bernstein, principal of the firm Bernstein & Associates, solicitors for the respondents, deposed in an affidavit sworn on 18 November 2002 as follows: 3. I have been instructed by the respondents to oppose the applicants' application to amend the Further Amended Statement of Claim for the following reasons. 4. The Writ in this proceeding was issued in the Supreme Court of Victoria on 1 September 1998. … . … 6. On 5 October 1999 the Honourable Justice Warren ordered (inter alia) that pursuant to s 6(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987 the proceeding was to be transferred to the Melbourne Registry of the Federal Court of Australia as a 'special Federal matter'. … 13. At approximately 12.30pm on Friday, 15 November 2002 a copy of a proposed Second Further Amended Statement of Claim was faxed to my firm by the solicitors for the applicants. … 15. The proposed Second Further Amended Statement of Claim seeks to introduce into the pleading in paragraph 7A a cause of action based on an alleged breach of an alleged collateral contract. The alleged collateral contract is said to be constituted of the express terms that appear in clause 15 of contract of sale dated 12 November 1997. 16. Until the appearance of the proposed Second Further Amended Statement of Claim, the causes of action pleaded against the respondents rely on alleged representations and a different collateral contract that NTZ Pty Ltd would execute a Supply Agreement. However, it has not before been alleged that these representations were made ex contractu, but on the contrary, it has always been alleged that they were made subsequent to the execution of the contract. 17. The respondents deny making the representations and the 'initial' collateral agreement as have been pleaded. The presentation of the evidence for trial has always proceeded on the state of the pleadings. The cause of action that is now sought to be introduced relies in effect on the alleged breach of an express term of the contract, which has serious repercussions against the interests of the respondents. 18. I refer to paragraph 37 of the affidavit of George Ntzounas sworn 1 December 2000 wherein Mr Ntzounas has deposed that prior to the day of settlement of the Contract of Sale he had obtained legal advice in relation to whether or not he could be required to execute the supply agreement under the terms of the Contract of Sale. 19. I am further informed by Mr George Ntzounas and verily believe that prior to the day of settlement of the Contract of Sale he had sought legal advice from a member of the Victorian Bar, Mr Chris Wallis, in relation to the effect of clause 15 of the Contract of Sale of Real Estate between Matland Holdings Pty Ltd and NTZ Pty Ltd dated 12 November 1997. 20. If leave is granted by this Honourable Court to permit the applicants to further amend the Statement of Claim to include a cause of action against NTZ Pty Ltd for what in essence is a breach of a term of the said Contract of Sale, I will need to obtain instructions from Mr Ntzounas in order to be able to advise him as to whether he and/or NTZ Pty Ltd has any cause of action for negligent advice against Mr Wallis and/or the firm of Norbury Pereira, solicitors in allowing the Contract of Sale to be settled. The firm of Norbury Pereira acted for NTZ Pty Ltd in the purchase of the service station site at 1519 Dandenong Road, Oakleigh under the Contract of Sale between Matland Holdings Pty Ltd and NTZ Pty Ltd dated 12 November 1997. … 22. In my respectful submission, it is not open for the applicants to successfully contend that the proposed amendments to their statement of claim should be permitted and the hearing proceed as scheduled on the basis that the respondents could subsequently bring action against their previous legal advisers, if so advised. Due to the failure of the applicants until the present time to seek to rely upon what is essentially the alleged breach of the terms of the Contract of Sale, the position of the first and second respondents has been seriously prejudiced due to the lapse of five years since the relevant events occurred. The passage of time affects recollection and enables the possible destruction or loss of relevant documents. The respondents' prospects of success against the previous legal advisers are likely to be prejudiced as a result of the late application to amend the Statement of Claim. Also, had the proposed cause of action been relied upon earlier, the respondents' previous legal advisers might well have been already joined as third parties to this proceeding and taken part in the two mediations that have been held. … 24. Further, if this Honourable Court grants the application by the applicants to amend its Statement of Claim as proposed, I am instructed by the respondents to request this Honourable Court vacate the hearing date of this matter. The purpose of an adjournment of the trial is to consider the possibility of claims that NTZ Pty Ltd may have against its previous legal advisers for negligent advice in relation to the completion (i.e. the conveyancing settlement) of the Contract of Sale in the circumstances as deposed to by Mr Michael David Norbury in paragraphs 9 and 10 of his affidavit sworn 6 December 2000. 6 At the hearing on 19 November 2002, counsel for the respondents submitted that, prior to the applicants' proposed amendments to their statement of claim, the respondents' legal advisers had had no occasion to consider whether any of the respondents might have a claim for contribution or indemnity against their former legal advisers. Such a claim might arise, so the respondents submitted, from, amongst other things, the legal advice given to them about the effect of special condition 15 of the contract of sale (discussed below). They further submitted that, until the applicants' proposed amendments, the applicants had not alleged that special condition 15 had survived settlement as a collateral agreement. Further, counsel for the respondents stated that nothing was known about counsel's advice about special condition 15 and settlement. Specifically, the respondents' counsel stated: What I'm concerned about, your Honour, is that once you get into the situation where you have a claim arising from the contract … I have to now go back and have a look at what advice was given, if any, that allowed my client to settle the case, that is, to complete the conveyancing on that day. What was he told by the barrister who had given him some advice? That hasn't been an issue before. We don't know anything about it. There's been absolutely no reason to look at it on the state of the pleadings … . [Emphasis added] 7 The respondents' counsel noted that Mr Norbury, who had apparently acted for the first and second respondents on the conveyance, had sworn an affidavit in this proceeding on 6 December 2000, but that this affidavit did not address the substance of his conversations with any of the respondents on the day of settlement. These conversations were relevant, so he said, to his consideration of any third party proceedings. 8 As it turned out, however, on 18 November 2002, Mr Ntzounas had sworn a further affidavit of documents in the proceeding. This affidavit of documents included a reference to a memorandum of advice dated 27 November 1997 by Mr Wallis of counsel ("the advice"). The respondents have claimed legal professional privilege in respect of the advice, which apparently concerned the contract of sale. Upon receipt of this further affidavit of documents on 20 November 2002, the applicants' solicitors wrote to the respondents' solicitors, by letter dated 21 November 2002. In this letter, the applicants' solicitors said: We refer to the further affidavit of documents delivered 20 November 2002, our letter to you of the same date and the application heard before the Honourable Justice Kenny in the Federal Court on 19 November 2002. The fact that your client had sworn a further affidavit of documents on 18 November 2002 (before you) disclosing the existence of a written memorandum of advice from counsel, Mr Wallis, was a matter clearly relevant to the application heard by her Honour on the evening of 19 November 2002. That fact was not disclosed in either your affidavit sworn 18 November 2002 in opposition to our clients' application for leave to amend or by Counsel for the respondents. It was submitted for the respondents that nothing was known as to the advice previously given by counsel (see transcript page 14). The fact that you did not seek to serve the further affidavit of documents sworn 18 November 2002 until 20 November 2002 is also a matter of grave concern. We still have not heard from you in response to our request to inspect the advice that has now been discovered. Given what has transpired, we have asked to mention the matter again to her Honour on 9.00am on Friday 22 November 2002. 9 As the letter foreshadowed, the matter was mentioned in Court on 22 November 2002. Counsel for the applicants stated that the applicants were seeking indemnity costs in respect of the hearing on 19 November 2002 and the mention. The applicants' counsel also sought access to the advice, submitting that the respondents had, by their conduct, waived legal professional privilege in relation to it. 10 At the mention on 22 November 2002, the Court ordered that the applicants' costs of the day be reserved. The respondents' solicitors were directed to file and serve an affidavit explaining the lack of reference to the advice in the 18 November 2002 affidavit of Mr Bernstein and/or how it was that the further affidavit of documents was not filed or served until after the application on 19 November 2002. The matter was adjourned until Thursday, 12 December 2002, in order that the parties might consider their respective positions. The Court also indicated that it would hear further argument on the question of whether legal professional privilege had been waived over the advice on that date. 11 By an affidavit filed 6 December 2002, Mr Bernstein has deposed: 2. On Monday 18th November 2002 I swore my affidavit of that date and I served it by fax on the solicitors for the Applicants at 4.16pm on the same day. 3. On the same date I had a meeting with Mr George Ntzounas at which time Mr Ntzounas swore his Supplementary Affidavit of Documents before me. I had prepared this Supplementary Affidavit of Documents prior to my having received from the Solicitors for the Applicants the proposed 'Second Further Amended Statement of Claim' on the 15th day of November 2002. The Supplementary Affidavit of Documents was prepared as a matter of 'housekeeping' only and when it was prepared I did not consider the relevance of it to any proposed application by the Applicants. 4. The purpose of my meeting with Mr Ntzounas on the 18th November 2002 was to obtain his instructions in relation to the proposal of the Applicants to amend the Statement of Claim and I took the opportunity on the same day to have Mr Ntzounas swear his Supplementary Affidavit of Documents. 5. On the 18th day of November 2002 I served the Affidavit which has been sworn by me on the same date by fax as stated in paragraph 2 of this my Affidavit. This was done urgently in readiness for the hearing on 19th November 2002. On the same day I forwarded a further fax to the Solicitors for the Applicants in relation to a page missing from the Court Book. Now produced and shown to me and marked with the letters 'MB1' is a true copy of my facsimile transmission of 18 November 2002 to the Solicitors for the Applicants. On the same day I had a telephone conversation with Mr Chris Fenwick of Hall & Wilcox, the Solicitors for the Applicants, when he informed me that the missing page was in fact missing from the photocopy document that I had provided to him previously and that it was not his error. After this telephone conversation I immediately faxed to Mr Fenwick a copy of the missing page for inclusion in the Court Book. 6. During the afternoon of Monday 18th day of November 2002 I dictated on my dictaphone a letter to the Applicant's [sic] Solicitors enclosing by way of service a copy of the Supplementary Affidavit of Documents sworn by Mr Ntzounas on the same day but I omitted to inform my secretary that the forwarding of this Affidavit was urgent and accordingly my secretary dealt with other work on other files that I had informed her was necessary and the forwarding of the Supplementary Affidavit of Documents was delayed. This Affidavit was served by facsimile transmission on the Solicitors for the Applicants at 10.45am on the 20th day of November 2002. It was a complete oversight by me that this Affidavit had not been served by the 19th November 2002. 12 As already indicated, by their motion dated 6 December 2002, the first and second respondents seek leave to file and serve a cross-claim against their former solicitors and former counsel. In a further affidavit filed in the Court on 6 December 2002, in support of the motion, Mr Bernstein deposed that: By reason of the amendments made to the Second Further Amended Statement of Claim … I have advised the first and second respondents that they appear to have a claim to be indemnified by or to be entitled to contribution from their previous legal advisers by reason of negligent legal advice given to them at the time of the settlement of the contract of sale … . As already stated, these advisers were the firm of Norbury Pereira, which was a partnership between Messrs Norbury and Pereira, and Mr Wallis of the Victorian Bar. 13 The respondents have filed two affidavits of service that are to the effect that Messrs Norbury and Pereira have been served with copies of the notice of motion dated 6 December 2002, as well as Mr Bernstein's supporting affidavit and accompanying exhibits. Mr Wallis has not been served with copies of these documents. Messrs Norbury and Pereira did not appear on the motion on 12 December 2002. the applications Leave to file and serve a cross-claim 14 The leave sought in connection with the proposed cross-claim ("the cross-claim") will not be granted if the Court does not have the jurisdiction to hear and determine it. At the hearing on 12 December 2002, it was common ground that the cross-claim could not have been brought in this Court in a separate proceeding. The Court may, however, have jurisdiction over the cross-claim if the cross-claim might lie in the Court's "associated" or "accrued" jurisdiction. 15 Section 32 of the Federal Court of Australia Act 1976 (Cth) ("the Act") provides as follows: (1) To the extent that the Constitution permits, jurisdiction is conferred on the Court in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Court is invoked. (2) The jurisdiction conferred by sub-section (1) extends to jurisdiction to hear and determine an appeal from a judgment of a court so far as it relates to a matter that is associated with a matter in respect of which an appeal from that judgment, or another judgment of that court, is brought. The principles that govern the associated or accrued jurisdiction of the Court have been discussed by the High Court of Australia in a number of decisions, including Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 ("Philip Morris"), Fencott v Muller (1983) 152 CLR 570 ("Fencott"), Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261 ("Stack"), Re Wakim; Ex parte McNally & Anor (1999) 198 CLR 511 ("Re Wakim"), and Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 ("Edensor Nominees"). 16 Philip Morris established that, whether under s 32 of the Act, or under ss 75 or 76 of the Australian Constitution, this Court, in the exercise of its jurisdiction to determine a "matter" committed to it by statute, might determine a claim for relief not otherwise within its jurisdiction (including a claim which involved no federal element) providing the claim was part of the same "matter" over which the Court had jurisdiction. Barwick CJ said, at 474: Thus, there may be circumstances in which the matter does not in substance itself attract federal jurisdiction though that which attracts federal jurisdiction must in some way relate to the matter. Once federal jurisdiction is attracted, it is not lost because the claim or assertion which attracted it has not been substantiated or has been displaced by some countervailing fact. Once attracted, by whatever path attracted, the jurisdiction persists to enable the Court to resolve the matter. The jurisdiction to do so accrues to the Court because there is a matter, in relation to which federal jurisdiction has been attracted, to be resolved. The jurisdiction thus accrued is itself federal jurisdiction. But, of course, it is limited to the resolution of the matter in relation to which, but not necessarily by which, the federal jurisdiction was attracted in the first instance. But the jurisdiction will not extend to any other matter, though that other matter might in some sense be an allied or associated matter. To be outside the accrued jurisdiction, however, the other matter must be separate and disparate from the matter in relation to or in connexion with which federal jurisdiction has been attracted. The federal jurisdiction will not extend to enable the Court to resolve the further matter, being as I have said in substance a disparate and independent matter. But this does not involve any close confinement of the federal jurisdiction by too narrow a view of what is relevantly the matter. The emphasis on the disparate and independent nature of what is not part of or within the matter should ensure that no narrow view is taken of the parameters of the matter. (Emphasis added) 17 His Honour continued, at 475: It is settled doctrine in Australia that when a court which can exercise federal jurisdiction has its jurisdiction attracted in relation to a matter, that jurisdiction extends to the resolution of the whole matter. 18 In Fencott, Mason, Murphy, Brennan and Deane JJ, in a joint judgment, sought to clarify what would be considered a "separate and disparate" matter. At 607-608, their Honours observed: Perhaps it is not possible to devise so precise a formula that its application to the facts of any controversy would determine accurately what claims are disparate and what claims are not. Whatever formula be adopted as a guide – and the formula of 'common transactions and facts' is a sound guide for the purpose – it must result in leaving outside the ambit of a matter a 'completely disparate claim constituting in substance a separate proceeding' … a non-federal matter which is 'completely separate and distinct from the matter which attracted federal jurisdiction' … or 'some distinct and unrelated non-federal claim' … . Claims which are described by these or similar phrases cannot be determined by exercise of the judicial power referred to in s. 71 of the Constitution, for that power can be exercised only to determine those matters in which federal jurisdiction is or can be conferred under Ch. III of the Constitution. For precisely this reason, however, it is necessary to attribute to 'matter' in ss. 75 and 76 of the Constitution a connotation which does not deny to federal judicial power its primary character: that is, the power of a sovereign authority 'to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property' … . The unique and essential function of the judicial power is the quelling of such controversies by ascertainment of the facts, by application of the law and by exercise, where appropriate, of judicial discretion. In identifying a s. 76(ii) matter, it would be erroneous to exclude a substantial part of what is in truth a single justiciable controversy and thereby to preclude the exercise of judicial power to determine the whole of that controversy. What is and what is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships. The scope of a controversy which constitutes a matter is not ascertained merely by reference to the proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out. But in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter. (Citations omitted; emphasis added) 19 In Re Wakim, Gummow and Hayne JJ (with whom Gleeson CJ and Gaudron J generally agreed) noted, at 585-6: The references to 'impression' and 'practical judgment' [in Fencott] cannot be understood, however, as stating a test that is to be applied. Considerations of impression and practical judgment are relevant because the question of jurisdiction usually arises before evidence is adduced and often before the pleadings are complete. Necessarily, then, the question will have to be decided on limited information. But the question is not at large. What is a single controversy 'depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships'. There is but a single matter if different claims arise out of 'common transactions and facts' or 'a common substratum of facts', notwithstanding that the facts upon which the claims depend 'do not wholly coincide'. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are 'completely disparate', 'completely separate and distinct' or 'distinct and unrelated' are not part of the same matter. Often, the conclusion that, if proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings will indicate that there is a single matter. By contrast, if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter. (Citations omitted; emphasis added) 20 Their Honours continued, with remarks apposite to this case, at 587: As we have said, the bringing of separate proceedings and the joining of different parties will often be important facts in deciding whether there is a single justiciable controversy for the purposes of Ch III of the Australian Constitution. But there is no basis in principle for concluding that there can never be accrued jurisdiction where a new party is joined. To adopt such a rule would mean that third party proceedings could never be brought in a federal court unless those third party proceedings were founded in some federal claim. And that points to the underlying difficulty in principle. If the 'matter' is to be identified from what the parties allege and how they conduct the proceeding (as Fencott and Stack hold) and if the 'justiciable controversy' refers (in part, at least) to the factual dispute between them, there is no warrant for holding that federal jurisdiction ends as soon as a new party (against whom no federal claim is made) is added. 21 In Edensor Nominees, Gleeson CJ, Gaudron and Gummow JJ observed, at 585-586: The authorities in which [the] expression ["accrued jurisdiction"] was given currency by this Court were all cases in which the Federal Court was seised of jurisdiction in a matter which, within the meaning of s 76(ii) of the Constitution, was one arising under a law made by the Parliament. In [Philip Morris, Fencott and Stack], the federal law was the Trade Practices Act and claims also were made based on one or more of contract, tort and breach of fiduciary duty. These non-federal claims were elements in the one controversy constituting the relevant 'matter'. There is no harm in the continued use of the term 'accrued jurisdiction' in such situations provided several matters are borne in mind. First, while there are various claims, in these cases there is but one 'matter' in the constitutional sense and the court in question either does or does not have jurisdiction in respect of it. … . Ordinarily, questions of abuse of process, forum non conveniens and the like aside, jurisdiction conferred upon a court is to be exercised. (Citations omitted) 22 In short, this Court will have jurisdiction to hear and determine the cross-claim in this proceeding, even though it raises no federal claim, if it shares a "common substratum of facts" with the principal proceeding, or if the claims are related in the sense that the determination of one is essential for the determination of the other. 23 In the principal proceeding, the applicants have claimed damages pursuant to the Trade Practices Act 1974 (Cth) ("the TPA") and the Fair Trading Act 1999 (Vic) against the first and second respondents respectively. (They have also claimed payment of the amount of $29,087.54 by the third respondent, but, for present purposes, this claim can be put to one side.) Briefly, the applicants' claim is said to arise out of the first applicant's sale of land at Oakleigh in Victoria ("the Oakleigh land") to the first respondent pursuant to a contract for the sale of land dated 12 November 1997 ("the sale contract"). It is common ground that settlement took place on 28 November 1997. The applicants allege, however, that it was a term of the sale contract that "before or within three days after settlement the purchaser would execute … a supply agreement … under which the purchaser … would acquire all its supplies of petroleum products for re-sale at the service station on the Land from the first applicant for a term of five years". (I refer to this term above and below as "special condition 15".) The applicants have alleged that special condition 15 survived the settlement as part of an agreement collateral to the sale contract. They also allege that, on 19 November 1997, the first and second respondents, by their solicitors, represented and warranted that the first respondent would, in lieu of the supply agreement referred to in special condition 15 ("the supply agreement"), execute an "unbranded supply agreement." The applicants allege that, in breach of the collateral agreement, neither a supply agreement nor an unbranded supply agreement have been executed. Further, they allege that the first and second respondents, by their solicitors, represented and warranted to them that, in consideration of the first applicant completing the sale of the Oakleigh land under the sale contract and the second applicant being substituted for the first applicant as the supplier of petroleum products, the first respondent would execute the unbranded supply agreement. This was, so the applicants claim, a further agreement collateral to the sale contract. In reliance upon these collateral agreements and representations, the applicants allege that the first applicant settled the sale and purchase of the Oakleigh land, and the first respondent has wrongfully failed to execute an unbranded supply agreement as it had agreed and represented. (The second respondent, the applicants say, has wrongfully failed to cause the first respondent to execute such an agreement.) The applicants say that the first and second respondents' conduct amounted to a repudiation and breach of their obligations under the collateral agreements and that they have accepted that repudiation. Further, they allege that, in making the collateral agreements and representations, the first respondent contravened s 52 of the TPA and all respondents contravened s 9 of the Fair Trading Act 1999 (Vic). They also allege that the first and second respondents were negligent. 24 The respondents' defence is complex and, for present purposes, I note only the salient points. Whilst they admit that the first respondent has not executed any supply agreement as alleged by the applicants, they deny the existence of special condition 15 and, in particular, that any obligation to execute a contract for the supply of petroleum products survived settlement (whether as an agreement collateral to the sale contract or otherwise). They also deny each of the collateral agreements and representations alleged against them by the applicants and claim, in the alternative, that if these agreements or representations were made, then the applicants "have engaged in conduct that is unconscionable" in contravention of s 51AA of the TPA, or "used coercion in connection with the sale or possible sale of an interest in land" in contravention of s 53A of the TPA. 25 In denying the making of representations or agreements collateral to the sale contract, the respondents say, at par 11(b) of the further amended defence, that: … [O]n the morning of the settlement, but prior to the settlement taking place, the solicitor for the first respondent advised a representative of the second applicant that the purchaser would not be providing at settlement an executed supply agreement. Particulars The advice was wholly oral. On the morning of 28 November 1997 a telephone conversation took place between Mr Michael Norbury of Messrs. Norbury Pereira … the solicitors for the first respondent and Mr. Frank Cotronea, on behalf of the applicants, during which Mr. Norbury informed Mr. Cotronea that the first respondent would not provide an executed supply agreement. The supply agreement being referred to in this conversation was a form of an unbranded supply agreement which had been handed to the second respondent by Mr. Cotronea and which was still the subject of negotiation between Mr. Cotronea and the first respondent. 26 By way of particulars of the alleged breaches of ss 51AA and 53A of the TPA, the respondents say: The applicants confronted the first and second respondents with the choice of facing the prospect of losing their financial investment and businesses as set out in the particulars … unless they agreed to purchase the freehold of the premises and to bind themselves for a period of 5 years to purchase all of their supplies of petrol products for re-sale at the premises from the second applicant. 27 The respondents also allege contraventions of ss 45(2)(a)(ii), 45(2)(b)(ii), 45B(2), 45C(2) and 47 of the TPA. 28 As already noted, by the cross-claim, the respondents would seek indemnity or contribution from their former legal advisers. For these purposes only, they refer to the allegations pleaded against them in the statement of claim (concerning collateral agreements and representations) and plead the same against their legal advisers. In this context, they allege breaches of the terms of the retainer between them and their solicitors, and negligence on the part of their solicitors and counsel. The negligent acts were, so the respondents say, the advice that the first respondent should complete the purchase "pursuant to the contract of sale"; alternatively, in the case of counsel, the advice that "the property settlement should proceed and then to … negotiate changes to the supply agreement". 29 In the circumstances of this case does the cross-claim fall within the Court's associated or accrued jurisdiction? In Obacelo Pty Ltd v Taveraft Pty Ltd (1985) 5 FCR 210 ("Obacelo"), Wilcox J applied the principles set down in Philip Morris, Fencott, and Stack in holding that a cross-claim alleging negligence and breach of retainer against the solicitors who acted on behalf of the respondent-vendors lay outside the jurisdiction of the Federal Court. In the principal proceeding, the applicants, who had been the purchasers of property, claimed damages for contraventions of provisions in Part V of the TPA, as well as for breach of contract. Wilcox J stated, at 217: It seems to me to be clear that the matter sought to be litigated by the respondents in their cross-claim is separate and distinct from that which arises out of the claim in the principal proceedings. All issues in contention between the applicants and the respondents may be fully determined without reference to the issues raised by the cross-claim. All relief to which the applicants may be entitled may be granted in the absence of the cross-claim. It appears that the principal proceeding and the cross-claim will involve some mutually relevant evidence but the overlap will probably be minimal. It cannot be said that the two proceedings arise out of 'common transactions and facts'. The principal proceeding will depend upon evidence as to the making by the respondents of the alleged representations, as to the falsity of those representations and as to the damage thereby suffered by the applicants. The matters alleged in the cross-claim have no relevance to that matter. At the most, the respondents may need to prove, in connection with their cross-claim, some of the allegations proved against them in the principal proceedings. Wilcox J noted that Fitzgerald J had adopted a similar approach in Maisey v First Coast Pty Ltd (1984) 1 FCR 316. 30 In cases decided during the currency of the cross-vesting legislation and prior to Re Wakim, the decision in Obacelo was said to be of historical interest only because the cross-vesting legislation was thought to have resolved the jurisdictional difficulties: see 163 Clarence Street Pty Ltd v New World Oil and Developments Pty Ltd (1994) ATPR 41-322 per Einfeld J (appeal to Full Court upheld on a different point); and Re Ling; Ex parte Ling v Commonwealth of Australia (1995) 58 FCR 129, at 138 per Hill J. Following the decision in Re Wakim, however, Obacelo has regained practical significance. 31 Counsel for the applicants submitted that Obacelo was on "all fours" with the present case. Certainly the two cases are similar to one another in a number of respects. There are, however, differences. Some of them are important. 32 As already noted in their statement of claim, in the particulars sub-joined to par 8A, the applicants rely upon correspondence passing between their solicitors and Messrs Norbury Pereira. In giving particulars of an alleged collateral agreement and representation, the applicants also rely upon a conversation between Mr Norbury and a Mr Frank Cotronea (on behalf of the applicants) on 28 November 1997 (which was the settlement day). The respondents, in their defence, have made it clear that the substance of this conversation is disputed by them. 33 As this stage of the proceeding, it seems likely that the evidence concerning the communications between the respondents' legal advisers (and, in particular, Mr Norbury) and the applicants' representative or representatives will be important in the principal proceeding and in the cross-claim. Notwithstanding that Mr Norbury is apparently to be the respondents' witness in the principal proceeding (although he would be a cross-respondent in the cross-claim) there is a risk of inconsistent findings were the principal proceeding and the cross-claim to be heard by a different court. The principal proceeding and the cross-claim share a common, although not entirely coincident, substratum of facts. It is true, as counsel for the applicants noted, that the applicants are not concerned with the course of dealing between the respondents and their legal advisers. Counsel for the applicants submitted that this course of dealing constituted a transaction or transactions that was different from the transaction or transactions with which the principal proceeding is concerned. On a narrow view, this is correct: the principal proceeding is largely concerned with the respondents' liability to the applicants, whilst the cross-claim is concerned with the respondents' legal advisers' liability to the respondents. To say, however, that there is no substratum of facts common to the principal proceeding and the cross-claim would be to take too narrow a view. The pleadings show that the respondents' legal advisers were retained by the first and second respondents to act in the matter of the sale and conveyance of the Oakleigh land, and that this required them both to advise the respondents and to represent the respondents in dealing with the applicants and their representatives. The conduct of the respondents' legal advisers in November 1997 with respect to the sale contract and conveyance may properly be seen as constituting, in the circumstances of this case, a common substratum of fact. Indeed, other aspects of the respondents' defence illustrate the nature of a possible coincidence of evidence and facts in the principal proceeding and the cross-claim. As already noted, the respondents plead, by way of defence, coercion, contrary to s 53A(2) of the TPA, in relation to the sale of the Oakleigh land. As the applicants' counsel noted, although in a different context, the advice given to the respondents regarding the sale contract and settlement may bear upon the issue of coercion if the allegation of coercion is treated as one continuing from before entry into the sale contract until settlement. 34 In any event, whether or not the cross-claim is pursued depends upon the outcome of the principal proceeding. To adopt the language of Gummow and Hayne JJ in Re Wakim (at 585), citing Mason J in Philip Morris (at 512) the "different claims are so related that the determination of one is essential to the determination of the other". Accordingly, although the cross-claim raises no federal claim, it is sufficiently related to a non-colourable federal claim to fall within the associated or accrued jurisdiction of the Court. 35 Pursuant to O 5 r 1(2) of the Federal Court Rules 1979 ("the Rules"), a respondent may cross-claim against "any person whether another party or a third party for any relief which is related to or connected with the subject of the proceeding". A respondent may cross-claim for contribution or indemnity (O 5 r 1(3)). Order 5 rule 8(1) provides, however, that a respondent may not cross-claim against a third party without the leave of the Court. As to whether leave should be granted, counsel for the respondents referred to St George Bank Ltd v MJK Pty Ltd [1999] FCA 1752, at [23]-[25] per O'Loughlin J and Australian Competition and Consumer Commission v Emerald Ocean Distributors Pty Ltd [2002] FCA 402, at [5]-[9] and [17] per R D Nicholson J. 36 Counsel for the applicants submitted that, even if the Court has jurisdiction over the cross-claim, the Court should not grant leave pursuant to O 5 r 8 because the cross-claim did not disclose a tenable cause of action. 37 The applicants' counsel directed my attention to par 11 of the cross-claim. This reads as follows: On 27 November 1997, in circumstances where the third cross-respondent was made aware that neither NTZ Pty Ltd nor any associated party nominated by NTZ Pty Ltd was willing to execute the supply agreement in the form of the unbranded supply agreement referred to in paragraph 11 of Further Amended Defence and Amended Cross-claim dated 29 November 2002, he advised Norbury Pereira that NTZ Pty Ltd should complete the purchase of the petrol service station premises pursuant to the contract of sale referred to in paragraph 6 hereof. In this passage, the reference to the third cross-respondent is a reference to Mr Wallis of counsel. 38 The applicants' counsel then directed my attention to the terms of par 14 of the cross-claim, which reads as follows: In breach of the terms of the agreement referred to in paragraph 5 hereof: (a) the first and second cross-respondents failed to exercise all the care and skill of competent solicitors; (b) the first and second cross-respondents failed to properly advise NTZ Pty Ltd and George Ntzounas in relation to contractual obligations of NTZ Pty Ltd arising from the contract of sale entered into by NTZ Pty Ltd with Matland Holdings Pty Ltd in relation to the purchase of the petrol service station premises; (c) the first and second cross-respondents failed to be careful and diligent in purporting to protect the interests of NTZ Pty Ltd and George Ntzounas in connection with the purchase of the petrol service station premises; (d) the first and second cross-respondents failed to take all reasonable steps to ensure that NTZ Pty Ltd and George Ntzounas could not be successfully sued by the applicants by reason of the terms of the contract of sale or of any matter arising out of or connected with the completion of the purchase of the petrol service station premises. Particulars On or about 28 November 1997 the first cross-respondent advised NTZ Pty Ltd that it should complete the purchase of the service station premises pursuant to the contract of sale even though George Ntzounas had informed the first cross-respondent that neither NTZ Pty Ltd nor any associated party nominated by NTZ Pty Ltd was willing to execute the supply agreement in the form of the unbranded supply agreement referred to in paragraph 11 of Further Amended Defence and Amended Cross-claim dated 29 November 2002. The reference in this paragraph to the first cross-respondent is a reference to Mr Norbury of the firm Messrs Norbury Pereira. 39 I accept, as counsel for the applicants submitted, that an allegation that there was advice that the purchase of land should be completed "pursuant to the contract of sale" (without more) is insufficient to support a cause of action in negligence or for breach of retainer. 40 The particulars of loss and damage given under par 15 illustrate there are other difficulties with the pleading. The particulars are: By reason of the first and second cross-respondents' breaches of the terms of the retainer and of the duty owed by them to NTZ Pty Ltd and George Ntzounas, NTZ Pty Ltd and George Ntzounas have been exposed to civil liability arising from the completion of the purchase of the petrol service station premises pursuant to the contract of sale. The applicants have sued (inter alios) NTZ Pty Ltd and George Ntzounas in this proceeding as a result of matters arising from the terms of the contract of sale and the settlement of the purchase of the petrol service station premises. Let it be assumed that the respondents have incurred a civil liability "pursuant to the contract of sale". On the present pleading, this liability could only have arisen from the sale contract itself, and not from the performance of it. That is, the particulars disclose no loss and damage caused by negligence on the cross-respondents' part (or by breach of any retainer). 41 I would not, in this circumstance, grant the leave sought. Respondents' application for leave to amend their further amended defence and amended cross-claim 42 By letter dated 9 December 2002, the respondents' solicitors notified the applicants' solicitors that they were intending to seek leave to amend the respondents' further amended defence and amended cross-claim by inserting the following paragraphs: 7B. Further, there was no consideration to support the alleged so-called First Collateral Agreement. 7C Further, or in the alternative, the consideration for the alleged so-called First Collateral Agreement was a past consideration and is not sufficient in law to support the alleged agreement. The applicants indicated they would not object to the proposed amendments if the respondents paid the applicants' costs thrown away by reason of the amendments. This is, so it seems to me, a proper approach. Accordingly, I would grant the respondents leave to amend their further amended defence and amended cross-claim in the terms set out in the letter from Bernstein & Associates to Messrs Hall & Wilcox, which is dated 9 December 2002, upon the basis that the respondents pay the applicants' costs thrown away by reason of the amendments. Application to strike-out respondents' amendments to paragraphs 10, 11(b) and 14 of the respondents' further amended defence and amended cross-claim 43 As already noted, the respondents have filed and served a further amended defence and amended cross-claim pursuant to leave given on 19 November 2002. This leave was for the purpose of making amendments consequential upon the applicants' amendments to their statement of claim (which were the subject of leave on that day). Counsel for the applicants submitted that, under the guise of making amendments pursuant to the leave granted on 19 November 2002, the respondents had withdrawn admissions that they had previously made. It was part of this submission that the withdrawal of these admissions was not necessitated by the applicants' amendments to their statement of claim. 44 Order 22 rule 4 of the Rules provides: (1) A party raising any matter in a defence or subsequent pleading may withdraw that matter, at any time, by notice in accordance with Form 30. (2) Sub-rule (1) does not enable a party to withdraw, without the consent of another party or the leave of the Court, an admission or any other matter operating for the benefit of that other party. By letter dated 5 December 2002, the solicitors for the applicants drew the respondents' solicitors' attention to the need for leave where respondents seek to withdraw admissions made in a defence. 45 The relevant principles governing leave to withdraw admissions are well settled: see Celestino v Celestino (unreported, Spender, Miles and von Doussa JJ, 16 August 1990), which was referred to with approval by another Full Court of this Court in Londish v Gulf Pacific Pty Ltd (1993) 117 ALR 361, at 373 per Neaves, Burchett and Ryan JJ. 46 In Murran Investments Pty Ltd v Aromatic Beauty Products Pty Ltd (2000) 191 ALR 579, at 589, Mansfield J set out the general principles to be gleaned from the authorities as follows: In Celestino v Celestino … the Court had to consider an application made during the course of an assessment of damages that a written admission of liability be withdrawn. The Full Court quoted with approval the principle stated by Bowen LJ in Cropper v Smith (1884) 26 Ch D 700 at 710-11: … the object of Courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases … I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party … as soon as it appears that the way in which a party has framed his case will not lead to a decision of the real matter in controversy, it is as much a matter of right on his part to have it correct, if it can be done without injustice, as anything else in the case is a matter of right. That statement of principle was approved by the High Court in Clough and Rogers v Frog (1974) 4 ALR 615; 48 ALJR 481, and in [Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146, at 154]. It is therefore necessary, as their Honours point out in Celestino at pp 8-10, to be satisfied: · that an error or mistake by or behalf of the party seeking the amendment as been demonstrated; · that a sensible explanation for the making of the admission has been provided, based on evidence of a solid and substantial character; and · that no injustice would be occasioned to the other party by the withdrawal of the admission, other than hardship by delay or cost which can be accommodated by an appropriate order for costs. See also N T Power Generation Pty Ltd v Power and Water Authority [1999] FCA 1184, at [2] per Mansfield J. 47 In the context of the present application, I am mindful, too, of the observations of Gillard J in McKenzie v The Commonwealth [2001] VSC 361 at [44]-[45] to the following effect: I respectfully disagree with the Full Court of the Federal Court [in Celestino] if it was seeking to lay down any principle, that it is necessary to show that there was an error or mistake and that there was a reasonable explanation for making an admission, before a party was entitled to withdraw the admission in a pleading. It cannot be denied that the Court would expect some explanation of the change, but the absence of an explanation of what the Court considered was an adequate or reasonable explanation, could hardly be determinant of the application. In the end, it is a question of doing justice between the parties. 48 Let it be assumed, for present purposes, that the amendments that the respondents effected to pars 10, 11(b) and 14 of their defence constituted the withdrawal of admissions. At the hearing on 12 December 2002, the respondents' counsel in substance explained the making of the admissions and why it was that the amendments were made. 49 Neither party contended that the amendment to par 10 of the defence was significant. Par 10 formerly contained a statement that the respondents "admit that the first respondent did not execute at any time whatsoever any agreement with the applicants or either of them whereby the first respondent was restrained in any manner from choosing its fuel supply". As the applicants' counsel acknowledged, the scope of the admission was "difficult to define in some respects". The respondents' counsel said, at the hearing, that he did not "particularly mind if those words go back in". He submitted that the "admission" was not a true admission and, in any event, the respondents were at large to plead to the applicants' new pleading in par 10 of their amended statement of claim. In substance, counsel for the respondents submitted that the amendment was designed to state the respondents' case more clearly than before. 50 In connection with par 11(b) of the defence, the respondents' counsel stated (at transcript, p 36): The words 'or at all' are superfluous and are inconsistent with the particulars that were provided, and they are also not consistent with the evidence of Mr Michael Norbury in his affidavit that's been filed in this proceeding and is his proposed evidence. So therefore if an explanation was to be offered, it would be from the draftsperson who just slipped into the common phrase that lawyers use by adding 'or at all' in circumstances where it's not appropriate that that word be used. The evidence would be clear … from our side of the camp that the reason that the supply agreement wasn't being signed was because there was no agreement on price. 51 In connection with the amendment in par 14 of the defence, the respondents' counsel stated (at transcript, p 37): The purpose of the amendment … is that it's a situation in relation to the preposition 'an' unbranded supply agreement. What we're talking about is the unbranded supply agreement that was proffered as a result of the conversations that occurred in the days leading up to the settlement. All that we're seeking to do … is to just make it quite clear that the issue is that the unbranded supply agreement as proffered, without an agreed price, was not something that Mr Ntzounas was prepared to sign on behalf of NTZ Pty Ltd. 52 In the present case, bearing in mind the true object of pleadings and that the applicants do not assert that they will suffer any prejudice by reason of the amendments, I would grant leave nunc pro tunc to make the amendments in pars 10, 11(b) and 14, even though they may involve the withdrawal of admissions. The respondents will be ordered to pay the applicants' costs thrown away by reason of these amendments. Access to the advice of Mr Wallis of counsel 53 The applicants seek an order, pursuant to O 15 r 11(1) of the Rules, that the respondents produce the advice (referred to in the further affidavit of documents served on the applicants on 20 November 2002). They submit that, in the circumstances of the case, the respondents have waived legal professional privilege in respect of the advice. 54 Counsel for the applicants submitted, first, that the respondents had already made partial disclosure of the advice. The respondents have, it seems, discovered part of the file of Messrs Norbury Pereira. This included a file note which reads as follows: 10.00 26 Nov TF Chris Wallace Will supply advice today His view is let property settlement proceed Then try to negotiate changes 55 In an affidavit sworn by Mr Ntzounas on 1 December 2000, Mr Ntzounas deposed that he had a conversation with Mr Cotronea on the morning of 28 November 1997, prior to settlement, in which he said to Mr Cotronea that he had "obtained legal advice in relation to whether or not [he] could be required to execute the Supply Agreement and it was [his] understanding that [he] could not be forced to sign a Supply Agreement unless the seller was Matland Holdings Pty Ltd". 56 If, as appears likely, the advice mentioned in the file note and by Mr Ntzounas is the advice to which the applicants now seek access, then it seems to me that there has been at least an implied waiver of legal professional privilege because the contents of the advice are implicitly mentioned in the file note and by Mr Ntzounas in his affidavit. 57 It was common ground between the parties that the advice was, at its inception, the subject of legal professional privilege. It is, of course, true that a mere reference to legal advice would not amount to waiver of its contents. As Mason and Brennan JJ observed in Attorney-General (NT) v Maurice (1986) 161 CLR 475, at 487: The limiting effect of legal professional privilege on the availability of evidence otherwise relevant is confined, inter alia, by the doctrine of waiver. A litigant can of course waive his privilege directly through intentionally disclosing protected material. He can also lose that protection through a waiver by implication. An implied waiver occurs when, by reason of some conduct on the privilege holder's part, it becomes unfair to maintain the privilege. See also 493 per Deane J and 497 per Dawson J, and the decision in Goldberg v Ng (1995) 185 CLR 83, at 95-101 per Deane, Dawson and Gaudron JJ. In Mann v Carnell (1999) 201 CLR 1, at 13, Gleeson CJ, Gaudron, Gummow and Callinan JJ observed, in a joint judgment, that: Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is 'imputed by operation of law'. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. … . What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large. (Citations omitted; emphasis added) 58 In this case, the second respondent has deposed to the contents of legal advice which, it would seem, forms part of the advice to which the applicants seek access. Further, the respondents have given the applicants a copy of a file note which, it seems, also records the conclusion reached in that advice. In this circumstance, it seems to me, that the respondents cannot, consistently with this, maintain their claim for legal professional privilege over the advice. Providing the advice to which the applicants seek access is the advice referred to by the second respondent in his affidavit and foreshadowed in the file note, to maintain the confidentiality of that advice would work an unfairness to the applicants. 59 The alternative basis upon which the applicants submitted that privilege had been waived depended on the respondents' pleading at par 35 of their defence, that the applicants had used coercion in connection with the sale or possible sale of an interest in land in contravention of s 53A of the TPA. 60 In this connection, the applicants relied on the decision of Bergin J in Garratt's Ltd v Thanga Thangathurai [2002] NSWSC 39 ("Garratt's"). In this case, her Honour discussed the principal authorities, including Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152, at 168 per Branson and Lehane JJ and Perpetual Trustees (WA) Ltd v Equuscorp Pty Ltd [1999] FCA 925. At [66]-[69], Bergin J observed: In the present case the defendant complains that he relied upon the specified representations and that he would not have entered into the contract had the representations not been made … . He also claims by his economic duress defence that he was induced into the contract by the representations made by the plaintiff. He claims that the contract is voidable on the grounds of mistake, misrepresentation and economic duress. There is the 'added ingredient' of the documents … establishing that at the relevantly material time the defendant was allegedly induced into the contract by the economic duress and/or in reliance upon the representations made by the plaintiff he received legal advice in respect of the entry into the contract, … . In this case the defendant raises mistake and thereby claims that he, at least, had a particular legal understanding of the transaction. I am also satisfied that in this transaction Pasricha was providing legal advice at the time of the discussion. … … I am satisfied that the defendant's state of mind is very significant to the whole case – it is central to the defendant's defences to the plaintiff's claims and to the cross claim. I am also satisfied on the evidence before me, which excludes any reference to the defendant's statement, that it is probable that the legal advice given by P.K. Wong and Pasricha bears upon and is relevant to the defendant's state of mind. … . The evidence establishes that the defendant was receiving legal advice about the very matter of the entry into the contract at and around the time he claims the representations occurred and the illegitimate pressure was applied. Some of that advice has been disclosed … . I am satisfied that the pleading of the defences in this case amounts to 'consent' to the discovery of documents that are material to the defendant's state of mind in entering into the contract on 13 January 2001. 61 Counsel for the respondents did not dispute the principle applied by Bergin J in Garratt's and referred to by the applicants in this case. Rather, he contended that the coercion complained of in the defence occurred prior to the entry into the sale contract on 12 November 1997, rather than at the time of settlement on 28 November 1997. The advice, which was dated 27 November 1997 was not relevant, so he said, to the respondents' state of mind at the relevant time, i.e., on or about 12 November 1997. 62 As counsel for the applicants observed, it is not clear from the pleading in par 35 of the defence whether the alleged coercion was limited in time as the respondents now suggest, or is intended to be a continuing allegation of coercion up until the time of settlement. If the latter, then the claim for privilege in respect of the advice may well be unsustainable. Before reaching this conclusion, however, I would require the respondents to remove the doubt that has been raised as to the nature of the allegation at par 35 of the defence. In particular, the respondents should be required to state whether the allegation of coercion is a continuing one extending from some time prior to entry into the contract up until settlement, or limited to some other date or dates. 63 Before leaving this subject, I note that the applicants' counsel submitted that privilege in respect of the advice would be waived if the cross-claim were pursued. For the reasons stated, it is, at present, unnecessary to deal with this submission (although there would appear to be merit in it). The applicants' counsel further submitted that privilege had been waived by reason of the respondents' conduct on 19 and 22 November 2002 (referred to below). It suffices to say that this conduct did not, in my opinion, amount to a waiver of the kind for which the applicants contend. Application for indemnity costs 64 The applicants seek an order that the respondents pay the applicants' costs of the hearings on 19 and 22 November 2002 and on 12 December 2002 on an indemnity basis. 65 The applicants' case was that the respondents misled the Court by failing to refer to the fact that they had in their possession counsel's written advice of 27 November 1997, which was pertinent to the sale contract and settlement. In his affidavit of 18 November 2002, which was sworn in opposition to the applicants' amendment application (see [3] above), Mr Bernstein, solicitor for the respondents, failed to mention the advice, notwithstanding that it was plainly relevant to the matters to which he deposed, and that he must have known of its existence at the time he made his affidavit: see pars [8] to [11] above. Further, statements by the respondents' counsel at the hearing (see [6] above) also contributed to the misleading impression conveyed to the Court that the respondents' legal advisers had no information concerning the advice given by the respondents' former solicitors and counsel. (I note that the applicants accepted that no blame attached to the respondents' counsel personally.) 66 The applicants contend that Mr Bernstein has failed to give an adequate explanation for his failure to mention the advice in his affidavit of 18 November 2002, and his failure to serve the respondents' further affidavit of documents (which referred to the advice) until after the hearing on 19 November 2002. In his affidavit of 6 December 2002, set out at [11] above, Mr Bernstein said in substance that, notwithstanding that he met with the second respondent (who swore his supplementary affidavit of documents before him) on 18 November 2002, i.e., on the same day that he swore his own affidavit, he did not appreciate that the existence of counsel's advice was relevant to the matters before the Court on 19 November 2002. He also said that his failure to ensure that the supplementary affidavit of documents was served on the applicants prior to or at the hearing on 19 November 2002 was a complete oversight by him. 67 The Court undoubtedly has power to make an order for costs on an indemnity basis: see Federal Court of Australia Act 1976 (Cth), s 43, and Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 ("Colgate-Palmolive") at 228 per Sheppard J and the cases there cited. The question is whether the Court should so exercise its discretion in this case. 68 In Colgate-Palmolive, at 232-4, Sheppard J set out some relevant principles concerning indemnity costs. As his Honour noted, costs ordinarily follow the event and are awarded on a party-party basis unless there are particular or special circumstances which warrant the Court departing from this practice and making some other order: see Colgate-Palmolive, at 232-3; Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151, at 152-3 per Black CJ and 156-8 per Cooper and Merkel JJ; Ruddock v Vadarlis (2002) 188 ALR 143, at 147 per Black CJ and French J; Hamod v State of New South Wales (2002) 188 ALR 659, at 664-5 per Gray J (with whom Carr and Goldberg JJ agreed); and Australian Competition and Consumer Commission v Australian Safeway Stores Pty Limited (No 3) [2002] FCA 1294, at [22] per Goldberg J. 69 In Colgate-Palmolive, at 233, Sheppard J set out some of the circumstances in which courts have ordered that costs be paid on an indemnity basis. His Honour's examples included the fact that the proceeding was commenced or continued in wilful disregard of known facts or clearly established law, the making of allegations which ought never to have been made, the undue prolongation of a case by groundless contentions and an imprudent refusal of an offer of compromise. Of course, the identification of these circumstances, although helpful, should not be regarded as definitive. Where an application for indemnity costs is made, the question is, in each case, whether the particular facts and circumstances before the Court warrant the making of an order for the payment of costs other than on the usual party-party basis. 70 In the ordinary course, where a party seeks leave to amend a pleading, the Court would order that that party pay at least the costs thrown away by other parties. In the present case, the amendments which the applicants proposed on 19 November 2002 were unexceptional. On one view, the proposed amendments did no more than make express a case that was probably implicit in the pleading in any event. It is true, as already noted, that the respondents said at the hearing on 19 November 2002 that they had not had occasion to consider whether they should cross-claim against their legal advisers until the amendments were made. Whether or not this was so, I accepted then that the respondents required an opportunity to consider their position vis-a-vis their former legal advisers and, in consequence, the trial date set for 25 November 2002 was vacated. Plainly enough, however, the respondents knew, on 19 November 2002, that they had in their possession the advice of counsel concerning the sale contract and the settlement. I accept that their failure to refer to the advice at the hearing on 19 November 2002, or to draw the applicants' attention to the existence of that advice prior to or at the hearing, was culpable. Mr Bernstein's explanation does not excuse the omission. The omission conveyed a misleading impression of the respondents' position to the Court. Statements were made that ought not to have been made and an impression conveyed that ought not to have been conveyed. Further, the respondents took no steps to rectify their omission by seeking to mention the matter after the hearing when their solicitor must have realised that the further affidavit of documents had not yet been served on the applicants' solicitors. Rather, the matter was mentioned to the Court at the request of the applicants. 71 In the circumstances of the case, I would order that the respondents pay the applicants' costs of the mention on 22 November 2002 on an indemnity basis. There will be no order as to the costs of the hearing held on 19 November 2002. The respondents will be ordered to pay the applicants' costs of the motion, notice of which is dated 6 December 2002, and of the other applications made at the hearing on 12 December 2002. (The applicants have substantially succeeded on these applications, including, practically speaking, their withdrawal of admissions submission, since the respondents' explanations were forthcoming only at the hearing.) The respondents will also be ordered to pay the applicants' costs thrown away by reason of the respondents' further amendments to their further amended defence. orders 72 In accordance with these reasons, the orders which I propose to make are: 1. The respondents' motion, notice of which is dated 6 December 2002, be dismissed. 2. The respondents have leave to file and serve a second further amended defence and further amended cross-claim incorporating the amendments proposed in the respondents' solicitor's letter to the applicants' solicitors dated 9 December 2002, by 4.00pm on 20 December 2002. 3. The applicants file and serve a further reply and defence to the second further amended defence and further amended cross-claim by 4.00pm on 24 December 2002. 4. The respondents pay the applicants' costs thrown away by reason of the proposed amendments to the further amended defence and amended cross-claim dated 29 November 2002. 5. The respondents pay the applicants' costs of and incidental to the hearing on 22 November 2002, to be taxed and paid on an indemnity basis. 6. There be no order as to the costs of and incidental to the applications to the Court on 19 November 2002. 7. The respondents pay the applicants' costs of and incidental to the motion, notice of which is dated 6 December 2002, and of the other applications made to the Court on 12 December 2002 on a party-party basis. 8. The respondents be granted leave nunc pro tunc to make the amendments in pars 10, 11(b) and 14 of the further amended defence and amended cross-claim dated 29 November 2002. 9. The respondents pay the applicants' costs thrown away by reason of the amendments to pars 10, 11(b) and 14 of the further amended defence and amended cross-claim dated 29 November 2002. 10. The parties have liberty to apply to the Court on seven days' written notice. 11. A directions hearing be fixed for 5 February 2003 at 10.00 am. 73 Subject to the matters referred to in [56] above, the applicants are entitled to inspect the memorandum of advice dated 27 November 1997 referred to in paragraph 3(a) of the further affidavit of documents sworn by the second respondent on 18 November 2002. I would afford the respondents an opportunity to consider whether this advice is indeed the advice referred to in the file note set out at [55] above and referred to in Mr Ntzounas' affidavit of 1 December 2000. If there is any doubt about this, the Court would exercise its power to inspect the advice. I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. Associate: Dated: 18 December 2002 Counsel for the Applicant: Mr M J Crennan SC with Mr P Corbett Solicitor for the Applicant: Hall & Wilcox Counsel for the Respondent: Mr C A Connor Solicitor for the Respondent: Bernstein & Associates Date of Hearing: 12 December 2002 Date of Judgment: 18 December 2002