FEDERAL COURT OF AUSTRALIA Hopkins v AECOM Australia Pty Ltd (No 6) [2015] FCA 1442 Citation: Hopkins v AECOM Australia Pty Ltd (No 6) [2015] FCA 1442 Parties: STEPHEN HOPKINS AS TRUSTEE FOR THE HOPKINS SUPERANNUATION FUND and KIM DENISE HOPKINS AS TRUSTEE FOR THE HOPKINS SUPERANNUATION FUND v AECOM AUSTRALIA PTY LTD ACN 093 846 925, RIVERCITY MOTORWAY MANAGEMENT LTD (IN LIQUIDATION) ACN 117 343 361 and RIVERCITY MOTORWAY SERVICES PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 117 139 992; AECOM AUSTRALIA PTY LTD ACN 093 846 925 v PARTIES IN ATTACHED SCHEDULE File number: NSD 757 of 2012 Judge: NICHOLAS J Date of judgment: 16 December 2015 Cases cited: Hopkins v AECOM Australia Pty Ltd (No 3) [2014] FCA 1043 Hopkins v AECOM Australia Pty Ltd (No 5) [2015] FCA 1228 Date of hearing: 10 December 2015 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 14 Counsel for the Applicants: Mr M Pesman SC and Mr W Edwards and Ms Z Hillman Solicitor for the Applicants: Maurice Blackburn Counsel for the First Respondent: Mr M Steele SC Solicitor for the First Respondent: Baker & McKenzie Counsel for the Second Respondent: Mr A O'Brien Solicitor for the Second Respondent: Johnson Winter & Slattery Counsel for the Third Respondent: Mr N Owens and Ms F Roughley Solicitor for the Third Respondent: Gilbert + Tobin Cross-Respondents: Counsel for National Institute of Economic and Industry Research Pty Ltd: Ms EA Collins SC Solicitor for National Institute of Economic and Industry Research Pty Ltd: Kennedys Lawyers Counsel for Peter Jeremy Hicks and Leighton Contractors Pty Ltd: Mr R Smith SC and Mr M Elliott Solicitor for Peter Jeremy Hicks and Leighton Contractors Pty Ltd: Corrs Chambers Westgarth Counsel for RBS Group (Australia) Pty Ltd and Malcolm Coleman: Mr R McHugh SC and Mr J Hutton Solicitor for RBS Group (Australia) Pty Ltd and Malcolm Coleman: Ashurst Counsel for Bilfinger Re Asset Management Pty Limited, Lend Lease Building Contractors Pty Ltd and Charles Mott: Mr A Hochroth Solicitor for Bilfinger Re Asset Management Pty Limited, Lend Lease Building Contractors Pty Ltd and Charles Mott: Herbert Smith Freehills Counsel for BECA Pty Ltd: Mr A Abadee Solicitor for BECA Pty Ltd: Schweikert Harris Counsel for Mallesons Stephen Jaques: Mr J Williams Solicitor for Mallesons Stephen Jaques: Colin Biggers & Paisley IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 757 of 2012 BETWEEN: STEPHEN HOPKINS AS TRUSTEE FOR THE HOPKINS SUPERANNUATION FUND First Applicant KIM DENISE HOPKINS AS TRUSTEE FOR THE HOPKINS SUPERANNUATION FUND Second Applicant AND: AECOM AUSTRALIA PTY LTD ACN 093 846 925 First Respondent RIVERCITY MOTORWAY MANAGEMENT LTD (IN LIQUIDATION) ACN 117 343 361 Second Respondent RIVERCITY MOTORWAY SERVICES PTY LTD (IN LIQUIDATION) (RECEIVERS & MANAGERS APPOINTED) ACN 117 139 992 Third Respondent AND BETWEEN: AECOM AUSTRALIA PTY LTD ACN 093 846 925 Cross-Claimant AND: PARTIES IN ATTACHED SCHEDULE Cross-Respondents JUDGE: NICHOLAS J DATE OF ORDER: 16 December 2015 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The cross-claimant (AECOM) have leave to rely upon the affidavit and expert report of James Lonie dated 26 November 2015 at the trial. 2. Any application by the cross-respondent to the tenth cross-claim (Mallesons) for leave to file any cross-claim is to be made by interlocutory application: (a) to be made returnable at 10.15am on 19 February 2016; and (b) to be filed and served (together with any affidavit in support) by 12 February 2016. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 757 of 2012 BETWEEN: STEPHEN HOPKINS AS TRUSTEE FOR THE HOPKINS SUPERANNUATION FUND First Applicant KIM DENISE HOPKINS AS TRUSTEE FOR THE HOPKINS SUPERANNUATION FUND Second Applicant AND: AECOM AUSTRALIA PTY LTD ACN 093 846 925 First Respondent RIVERCITY MOTORWAY MANAGEMENT LTD (IN LIQUIDATION) ACN 117 343 361 Second Respondent RIVERCITY MOTORWAY SERVICES PTY LTD (IN LIQUIDATION) (RECEIVERS & MANAGERS APPOINTED) ACN 117 139 992 Third Respondent AND BETWEEN: AECOM AUSTRALIA PTY LTD ACN 093 846 925 Cross-Claimant AND: PARTIES IN ATTACHED SCHEDULE Cross-Respondents JUDGE: NICHOLAS J DATE: 16 Decemebr 2015 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The issue with which I am now concerned relates to an affidavit and expert's report made by Mr James Lonie dated 26 November 2015 ("the Lonie report") recently served by the cross-claimant ("AECOM") on the tenth cross-respondent ("Mallesons"). Mr Lonie is a solicitor and partner of the law firm Holding Redlich. 2 The background to the proceeding is set out in previous interlocutory judgments including, in particular, Hopkins v AECOM Australia Pty Ltd (No 5) [2015] FCA 1228 ("Hopkins No 5") at [4]-[17]. Further background relevant to AECOM's cross-claim against Mallesons appears in Hopkins v AECOM Australia Pty Ltd (No 3) [2014] FCA 1043 ("Hopkins No 3"). In these reasons I have used the same defined terms that are used in Hopkins No 5. 3 The hearing of the proceeding is scheduled to commence in September 2016. Previous orders made in relation to AECOM's evidence required AECOM to file and serve its affidavit evidence (including any expert reports) by 27 March 2015. AECOM accepts that the Lonie report cannot be relied upon without leave, and it now applies for such leave. In support of its application, it relies upon an affidavit of its solicitor, Mr Chapple, made on 9 December 2015. There was no objection to Mr Chapple's affidavit and he was not cross-examined. 4 AECOM's application is opposed by Mallesons. Mr Williams, who appeared for Mallesons, submitted that: The Lonie report was served very late, and long after AECOM informed the Court of its decision not to serve any expert report in support of its case against Mallesons. The case against Mallesons articulated by AECOM through the Lonie report is "completely new" and outside the scope of the Amended Tenth Cross-Claim ("the Cross-Claim"). The Cross-Claim is deficient in that it does not include essential allegations that AECOM would have to make good at the trial if it was to succeed in its case against Mallesons. The late service of the Lonie report (assuming AECOM is given leave to rely upon it) may require Mallesons to file its own cross-claims against other persons who were represented on the Due Diligence Committee ("DDC") including, possibly, some who are not already party to this proceeding. 5 The Lonie report consists of the following five parts: Part 1, an introduction, including a record of Mr Lonie's instructions; Part 2, which sets out Mr Lonie's evidence as to why a due diligence process is typically undertaken in preparing a PDS; Part 3, in which Mr Lonie describes what he says was the usual due diligence process adopted for a PDS in May/June 2006; Part 4, in which Mr Lonie expresses opinions as to the role a reasonably skilful, careful and diligent solicitor (which he defines as "a Diligent Solicitor") would have typically played in the usual due diligence process in May/June 2006; Part 5, in which Mr Lonie expresses opinions as to what a Diligent Solicitor acting for RCM Management would have done when providing advice in relation to (inter alia) the disclosure of six specific matters which, broadly speaking, correspond to the matters identified by me in Hopkins No 5 at [12]. 6 The essence of the Lonie report is that a Diligent Solicitor advising the issuer of the PDS, and appointed to serve on the DDC, would: have taken care to ensure that they fully participated in the deliberations of the DDC, including by carefully reviewing all of the material provided to the DDC; given the importance of the traffic forecasts to the assessment of the viability of the NSBT project, paid careful attention to any material relating to those forecasts; undertaken some basic research on industry risks, risks associated with traffic forecasting, and recent traffic forecasting experience for the toll roads in Australia; questioned the traffic expert regarding forecast methodologies, assumptions and what degree of confidence the traffic expert had in its forecasts. 7 I am not presently concerned with the admissibility of the Lonie report. To the extent that AECOM is given leave to rely upon the Lonie report, this will be subject to Mallesons' right to object to its admissibility in whole or part. 8 It is clear that the Lonie report is filed very late, and many months after AECOM informed the Court that it had decided it would not call expert evidence from a solicitor in support of its cross-claim against Mallesons. Mr Chapple's affidavit indicates that AECOM's position changed as a result of observations made by the Court and by counsel for Mallesons during subsequent directions hearings. I do not think this is a satisfactory explanation for a significant change in position by a well-resourced litigant which is represented by highly experienced counsel and solicitors. Be that as it may, the hearing of the proceeding is still more than nine months away and I am satisfied that Mallesons will have ample opportunity to respond to the Lonie report. 9 The case against Mallesons is pleaded very broadly: see in particular paragraphs 81, 223 and 229(g) and (h) of AECOM's Third Further Amended Defence (which allegations are repeated by AECOM for the purposes of its cross-claim), and the discussion of the scope of AECOM's case against Mallesons in Hopkins No 3 at [8]-[23]. I am not persuaded that the case which the Lonie report is directed at proving is outside the scope of AECOM's pleaded case against Mallesons. 10 Mr Williams contended that AECOM has not indicated in its pleading what would have happened if Mallesons had made inquiries of AECOM (as the Lonie report suggests a Diligent Solicitor would have done) in relation to the traffic forecasts including, for example, the risks associated with the use of AM Peak Modelling. In particular, Mr Williams says that AECOM does not allege what AECOM's traffic forecasters would have told Mallesons in the event any such inquiries were made of them. 11 Mr Williams' submission highlights one of many causation issues that may need to be addressed when deciding this case. However, in my view the difficulties confronting AECOM in proving causation do not justify a refusal of leave to rely on the Lonie report. 12 I have taken into account the possibility that Mallesons may wish to file cross-claims of its own against other parties even though it is not readily apparent to me why reliance by AECOM on the Lonie report should only now trigger the need for Mallesons to file cross-claims. Any application by Mallesons for leave to file any cross-claim will need to be considered on its merits. I propose to make orders aimed at ensuring that any such application is made promptly. 13 I will grant AECOM leave to rely upon the Lonie report at the trial. 14 Orders accordingly. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas. Associate: Dated: 16 December 2015 SCHEDULE FIRST Cross-Claim: NATIONAL INSTITUTE OF ECONOMIC AND INDUSTRY RESEARCH PTY LTD ACN 006 234 626 Cross-Respondent SECOND CROSS-CLAIM: PETER JEREMY HICKS Cross-Respondent THIRD CROSS-CLAIM: RIVERCITY MOTORWAY SERVICES PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 117 139 992 Cross-Respondent FOURTH Cross-Claim: RIVERCITY MOTORWAY MANAGEMENT LTD (IN LIQUIDATION) ACN 117 343 361 Cross-Respondent FIFTH Cross-claim: Leighton Contractors PTY LTD ACN 000 893 667 Cross-Respondent SIXTH CROSS-Claim: RBS Group (AustRALIA) PTY LTD acN 000 862 797 (formerly ABN AMRO AUSTRALIA LIMITED) Cross-Respondent SEVENTH CROSS-Claim: BILFINGER RE ASSET MANAGEMENT PTY LIMITED ACN 055 541 770 (FORMERLY BILFINGER BERGER CONCESSIONS PTY LTD) Cross-Respondent EIGHTH CROSS-Claim: LEND LEASE BUILDING CONTRACTORS PTY LTD acn 002 625 130 (FORMERLY Baulderstone HORNIBROOK Pty Ltd) Cross-Respondent NINTH CROSS-Claim: Beca Pty Ltd ACN 004 974 341 Cross-Respondent TENTH CROSS-CLAIM mallesons stephen jaques Cross-Respondent