New South Wales Supreme Court CITATION : Ingot Capital Investments & Ors v Macquarie Equity Capital Markets & Ors [2003] NSWSC 1012 HEARING DATE(S) : 7 & 8 October 2003 JUDGMENT DATE : 7 November 2003 JUDGMENT OF : McDougall J at 1 DECISION : See paras 58-59 of judgment CATCHWORDS : PRACTICE AND PROCEDURE - application to further amend summons - whether s 51AF of the Trade Practices Act applies - "Financial Service" as defined in Div 2 Pt 2 Australian Securities and Investments Commission Act 2001 - costs Australian Securities and Investments Commission Act 2001 Australian Securities and Investments Commission Act 1989 LEGISLATION CITED : Corporations (Repeals Consequential and Transitional) Act 2001 Fair Trading Act 1987 Judiciary Act 1903 Trade Practices Act 1974 Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349, 369 Australia and New Zealand Banking Group Ltd v Larcos (1987) 13 NSWLR 286, 295 Black v City of South Melbourne (1964) 38 ALJR 309, 310 BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20, 26 British American Tobacco Australia Ltd v State of Western Australia [2003] HCA 47 Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 449-450 Castlemaine Tooheys Ltd v Carlton & United Breweries (1987) 10 NSWLR 468, 492 Cleary v Australian Co-operative Foods Ltd (No 2) (1999) 32 ACSR 701 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 347 CASES CITED : Hall v National & General Insurance Co Ltd [1967] VR 355, 366 Harris v Western Australian Exim Corporation (1994) 56 FCR 1, 9-10 Jennings v Credit Corporation Australia Pty Ltd (2000) 48 NSWLR 709, 720-721 Maxwell v Murphy (1957) 96 CLR 261 Northern Territory v GPAO (1999) 196 CLR 553 Proctor v Jetway Aviation Pty Ltd (1984) 1 NSWLR 166, 183 Rodgers v Commissioner of Taxation (1998) 88 FCR 61 South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611, [426] (citing Tymshare Inc v Covell 727F 2d 1145, 1152 (1984) Stock Motor Ploughs Ltd v Forsyth (1932) 48 CLR 128, 136 Wickstead v Browne (1993) 10 Leg Rep SL 2 Ingot Capital Investments Pty Ltd AOIT Ltd ASC Pty Ltd Australian Opportunities Investment Trust PLC Eastern States Securities Ltd and Ingot Capital Management Pty Ltd v Macquarie Equity Capital Markets Ltd Macquarie Equities Ltd Macquarie Bank Ltd PARTIES : Udayan Daniel Ghose Jonathan Paul Beach Azmin Firoz Daya Craig Deery Michael J Morrisey William Peck Paul Laurence Williams Peter Aroney John Trowbridge Consulting Pty Ltd Patrick Murray and the persons listed in Schedule "B" to the summons and New Cap Reinsurance Corporation Holdings Ltd (in Liq) FILE NUMBER(S) : SC 50169/01 F M Douglas QC/B Katekar (Plaintiffs) A S Bell (Defendants 1-3) P M Wood (Defendant 4) I Pike/N Har (Defendants 5, 7 and 8) A McLennan (Defendant 6) COUNSEL : R Taylor (Defendant 9) W Jacobs (Defendant 10) L F Harris (Defendant 11) S A Goodman (Defendant 12) P J Brereton (Defendant 13) J T Gleeson SC/R A Dick (Defendant 14) Deacons (Plaintiffs) Mallesons Stephen Jaques (Defendants 1-3) Atanaskovic Hartnell (Defendant 4) Colin Biggers & Paisley (Defendants 5, 7 & 8) Sparke Helmore (Defendant 6) SOLICITORS : Gilbert Tobin (Defendant 9) Dibbs Barker Gosling (Defendant 10) M D Nicolaidis (Defendant 11) Minter Ellison (Defendant 12) Blake Dawson Waldron (Defendant 13) Freehills (Defendant 14) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST McDOUGALL J 7 November 2003 50169/01 INGOT CAPITAL INVESTMENTS PTY LTD & ORS v MACQUARIE EQUITY CAPITAL MARKETS LTD & ORS JUDGMENT Introduction 1 This is an application by the plaintiffs further to amend their summons, by the filing of a fifth further amended summons. The background, and the fundamental issues in the proceedings, are set out in the judgment given by McClellan J on 6 December 2002 ([2002] NSW SC 1129) on the plaintiffs' previous application further to amend their summons. 2 The draft fifth further amended summons was itself substantially redrafted after the conclusion, on 8 October 2003, of the oral argument before me. It is with that redrafted version of the draft fifth further amended summons that I am now concerned, and it is to that redrafted version that (as "5 FAS") I shall refer in these reasons. 3 Many of the objections taken by the defendants to the proposed amendments have been resolved. Two events have contributed to that resolution: (1) Firstly, the redraft that was undertaken after 8 October 2003 removed some of the more contentious paragraphs; and (2) Secondly, during the course of the hearing, the parties were able to agree that, if leave were to be granted, it should be on conditions that would reserve to the trial judge the question whether the amendments should take effect from the date of amendment or from any earlier date. 4 At the hearing before me, the principal submissions came from the first, second and third defendants ("the Macquarie parties") and the fourteenth defendants ("Phillips Fox"). The supplementary submissions put on by the defendants after the oral hearing, pursuant to directions given by me, followed the same pattern. It is now only the Macquarie parties who say that leave should not be granted – and that, only as to certain paragraphs. Otherwise, the remaining issues relate to costs. Claims against the Macquarie parties under the TP Act 5 The claims under s 52 of the Trade Practices Act ("the TP Act") are not sought to be introduced by the amendments. But the Macquarie parties submit that those claims should be excluded from 5 FAS (if filed) because they are not maintainable. They rely on s 51AF of the TP Act. The effect of that section is that the provisions of Pt V of that Act do not apply to the supply, or possible supply, of financial services or to conduct engaged in in relation to financial services. The Macquarie parties rely on the decision of Austin J in Cleary v Australian Co-operative Foods Ltd (No 2) (1999) 32 ACSR 701. 6 Section 4(1) of the TP Act provides that "Financial Service" has the same meaning as in Div 2 of Pt 2 of the Australian Securities and Investments Commission Act 2001 ("the 2001 ASIC Act"). That would appear, in context, to be a reference to s 12BAB of the 2001 ASIC Act. 7 To understand the argument, it is necessary to look at the nature of the claims made against the Macquarie parties. Briefly: 1. The claim relates to a capital raising undertaken, through the issue of converting notes, by New Cap Reinsurance Corporation Holdings Ltd ("NCRH") in late 1998 and early 1999. 2. The capital raising was undertaken pursuant to a prospectus issued on 18 November 1998. 3. One or other of the Macquarie parties (it is not necessary, for present purposes, to distinguish between them) was, or was said to have been, retained to advise on the structure of the capital raising and to act as lead manager and underwriter for the capital raising. 4. The Macquarie parties sought, or are said to have sought, the participation of the plaintiffs and others as sub underwriters to the issue and in other respects. 5. The capital raising was completed in about 12 January 1999, when the converting notes were issued. 6. NCRH went into provisional liquidation (in New South Wales) on 19 May 1999 and was ordered to be wound up on 9 November 1999. It is said that "[i]t is unlikely that there will be any return to creditors or shareholders from the liquidation of NCRH" (5 FAS, para 20). 8 Against that background, the allegations against the Macquarie parties are that they made a number of representations to one Saville on behalf of the plaintiffs. The representations are set out in 5 FAS (paras 46, 48, 50 - I interpose that it is said that the representations alleged in para 50 were made to Saville through the agency of one Bloch - and 55). The representations alleged in paras 50 and 55 are stated explicitly to relate to the converting notes. But it must also be the case, I think, that the representations alleged in paras 46 and 48 are said to relate to the converting notes. Thus, the representations in para 46 are said to have been made in pursuance of an approach by the Macquarie parties to Saville for the purpose of soliciting the participation of the plaintiffs as sub underwriters of the issue and in other respects; the representations alleged in para 48 are clearly part of the same alleged course of conduct; and all the representations are said to have been made for the purpose of inducing Saville to seek to persuade the plaintiffs to participate in the way already referred to (see para 56, and compare paras 60, 63 and 67). 9 By s 12BAB(1) of the 2001 ASIC Act, a person provides a "financial service" if the person provides financial product advice. By s 12BAB(5), financial product advice means a recommendation or a statement of opinion that it is intended to influence a person or persons making a decision in relation to a particular financial product or a class of financial products, or that could reasonably be regarded as intended to have such an influence. 10 "Financial product" is defined in s 12BAA of the 2001 ASIC Act. There is a general definition in sub s (1) and a specific definition in sub s (7) (subject to the exclusions in sub s (8)). Those definitions direct attention to the concepts of "security" and "excluded security". Those expressions have the meanings ascribed to them by, respectively, ss 761A and 92 of the Corporations Act (see, respectively, ss 5(2)(a) and 5(2)(b) of the 2001 ASIC Act). 11 It would seem to be the case that the representations alleged against the Macquarie parties that I have referred to in para [8] above fall within ss 12BAB(1)(a) and (5) of the 2001 ASIC Act because they relate to a "financial product" both within the general definition in s 12BAA(1) and within the specific definition in s 12BAA(7)) and, in the latter case, are not excluded by sub s (8). However, the plaintiffs wish to contest this, and to argue against the correctness or applicability of the decision in Cleary. Claims against the Macquarie parties under the 1989 ASIC Act 12 The Macquarie parties seek a similar order (to that referred to in para [5] above) in relation to the claims under the Australian Securities and Investments Commission Act 1989 ("1989 ASIC Act"). (As with the TP Act claims, those claims are not sought to be introduced by the amendment.) The Macquarie parties submit, correctly, that the 1989 ASIC Act was repealed with effect from 15 July 2001 (see s 3 of the Corporations (Repeals Consequential and Transitional) Act 2001). That was some four months before these proceedings were commenced. 13 Section 277(4) of the 2001 ASIC Act would seem to have the effect that causes of action available under the 1989 ASIC Act became, in effect, causes of action under the 2001 ASIC Act. By s 278 of the 2001 ASIC Act, the time limits under the 1989 Act were preserved. In this case, the time limit under the 1989 ASIC Act would have been three years from the accrual of the cause of action (s 12GF(2)). 14 Section 12GF(2) of the 2001 ASIC Act extended the limitation period to six years. However, by the time that sub section came into effect on 11 March 2002, the cause of action under the 1989 ASIC Act was statute barred and would not have been revived: Maxwell v Murphy (1957) 96 CLR 261. Claims against the Macquarie parties under the FT Act and the 2001 ASIC Act 15 No doubt to meet the objections to the claims under the TP Act and the 1989 ASIC Act that I have referred to above, the redraft of 5 FAS included, among other things, alternative claims (based on the same material facts) under s 42 of the Fair Trading Act 1987 ("FT Act") and s 12DA of the 2001 ASIC Act. 16 The Macquarie parties were content, subject to their specific pleading objections, for these claims to go forward on the basis referred to in para 3(2) above. The claims should stand 17 It is necessary to consider those paragraphs of 5 FAS that, as was put in the written submissions for the Macquarie parties, "seek to tie together the various misleading or deceptive conduct claims sought to be made by the Plaintiffs against the Macquarie Parties". Those paragraphs are now paras 82-84 of 5 FAS (in the draft that was initially propounded, they were paras 83-85; they have been amended in substance as well as in number). In their present form, those paragraphs assert that: (1) The conduct of the Macquarie parties, referred to in a number of identified paragraphs, was conduct in trade or commerce under s 52 of the TP Act, conduct in connection with a dealing or dealings in securities under s 995 of the Corporations Law, conduct in trade or commerce under s 42 of the Fair Trading Act 1987 , and conduct in relation to financial services, under s 12DA of the 1989 ASIC Act and/or s 12DA of the 2001 ASIC Act (para 82); (2) By reason of matters earlier pleaded, the Macquarie parties breached s 52 of the TP Act, s 995 of the Corporations Law, s 12DA of the 1989 ASIC Act and/or s 12DA of the 2001 ASIC Act and s 42 of the FT Act (para 83); and (3) The plaintiff suffered damages accordingly (para 84). 18 The material that I have emphasised in bold was not in the version of the fifth further amended summons that was originally propounded but is now included. 19 I have referred in para [8] above to those paragraphs of 5 FAS that allege the representations said to have been made by Macquarie (directly or indirectly) to the plaintiffs. The scheme of the pleading is not unfamiliar. Various allegations are pleaded in relation to the representations, including their purpose (para 56); that they were made with respect to future matters (para 57); and that each of the plaintiffs relied upon them to enter into its contractual engagements with the Macquarie parties (paras 60-66, and see paras 68 and 69). It is alleged that the Macquarie parties intended and knew, or ought to have known, that this would happen (para 67). It is alleged that the relevant representations were false at various times (paras 70-77), or that they were rendered false (para 79). Further, it is alleged that, by particular times, the Macquarie parties had no reasonable basis for thinking that certain of the representations were true in so far as they related to future matters (para 80). 20 It is the representations (pleaded in the paragraphs referred to in para [8] above), and the matters very briefly summarised in the preceding paragraph, that are "tied together" in paras 82-84 of 5 FAS. 21 Many of the material facts that are referred to in, or tied together by, paras 82 and 83 of 5 FAS have been alleged, although in differing formulations, since the summons was filed in its original form on 16 November 2001. The formulation of some allegations of material fact has changed over the course of amendments to the summons, and some of the material facts referred to in paras 82 and 83 have been alleged for the first time in the course of those amendments. 22 The relevant question, in relation to limitation, is whether the material facts that ground the cause of action were pleaded at a time before the cause of action became statute barred, so that the amendment can be properly characterised as "the particularising of the facts" already pleaded: Black v City of South Melbourne (1964) 38 ALJR 309, 310 (Barwick CJ). Alternatively, if what is proposed is sufficiently closely related to what is already alleged that it would not be unfair to treat it as another way of putting the same claim, then it should be allowed, notwithstanding the intervening expiry of a limitation period: Hall v National & General Insurance Co Ltd [1967] VR 355, 366 (Gowans J). 23 To see whether the amendments for which leave is now sought fall within the principle expressed by Barwick CJ in Black, or by Gowans J in Hall, it would be necessary to undertake a detailed analysis of the summons as it has stood in its various incarnations. I do not propose to undertake that exercise, because I think that it is one best undertaken at the hearing with a fuller appreciation of what are the facts material to each cause of action pleaded. The position of the Macquarie parties (indeed, of the defendants generally) will be adequately protected, in relation to any truly new allegation of material fact or truly new cause of action, by the condition referred to in para 3(2) above. 24 For those reasons, I do not think that it is appropriate to condition the grant of leave by requiring that the plaintiffs not maintain their claims under the TP Act or the 1989 ASIC Act. There is however another consideration that seems to me to lead to the same conclusion. 25 The material facts relating to the TP Act claims, and the ASIC Acts claims, will be litigated on the final hearing both because of the claim under s 995 of the Corporations Law (to which no present objection is taken) and because of the order that I propose to make in relation to the amendment to include the claim under the FT Act. It therefore seems to me that there would be no utility in granting leave to amend only on condition that claims under the TP Act and the 2001 ASIC Act were not maintained. I think that this approach is consistent with that sanctioned by the High Court in Wickstead v Browne (1993) 10 Leg Rep SL 2. 26 Whilst it may be thought that the claim under the 1989 ASIC Act falls into a slightly different category, I see no practical utility in, as it were, excising only that claim. 27 I therefore conclude that, in principle, the amendments, to introduce allegations of conduct under and contravention of the FT Act and the 2001 ASIC Act should be allowed to go forward. I do not regard it as appropriate to impose a condition that the claims under the TP Act or the 1989 ASIC Act be not maintained. I do, however, regard it as appropriate to impose the condition that the parties have agreed upon, the effect of which will be to reserve to the judge who hears the case the question of the date from which the amendments should take effect. The operation of Part 20 rule 4 28 Dr A S Bell, who appeared for the Macquarie parties, submitted that Pt 20 rr 4 (5A) and (6) did not apply in the circumstances of the present case. His argument was that, because the plaintiff invoked the 2001 ASIC Act and the TP Act, the Court was (or would be) exercising Federal jurisdiction: see, for example, British American Tobacco Australia Ltd v State of Western Australia [2003] HCA 47. He submitted that Pt 20 would only apply to the extent that it was picked up by s 79 of the Judiciary Act 1903 (Cth). That, he said, raised a critical question whether the limitation provisions of the ASIC Act and the TP Act "otherwise provided" so as to make Pt 20 rr 4(5A) and (6) inconsistent: relying on Northern Territory v GPAO (1999) 196 CLR 553. He submitted that "viewed as a matter of substance, the effect of the operation of Pt 20 r 4(5A) … is to confer a discretionary ability to extend the limitation period in prescribed circumstances", which was "inconsistent with s 12GF(2) of the [2001] ASIC Act …". The submission was put, in the formulation of Dixon J in Stock Motor Ploughs Ltd v Forsyth (1932) 48 CLR 128, 136, that Pt 20 r 4(5A) would vary, detract from or impair the operation of s 12GF(2) of the 2001 ASIC Act. 29 In view of the agreement of the parties that the question of the time at which the amendments should take effect is to be reserved to the trial judge it is not, strictly, necessary to deal with this point. However, my present view is that the point is answered by the analysis of Rogers J in Australia and New Zealand Banking Group Ltd v Larcos (1987) 13 NSWLR 286, 295. 30 His Honour said this: "To find the true solution, it is necessary to go back to first principles. The cross-claim if amended is to be treated as having been in that form all along. If so treated, the proceedings have been commenced in time. The Court has always had the power to grant the relevant amendment. The rule in Weldon v Neal as to how the discretion in granting the relevant amendment should be exercised was formulated by the judges. That judge made rule directing the withholding of amendments is no longer to be treated as governing the exercise of discretion. In other words, whatever the practical effect may be, flowing from the accepted consequences of amending a pleading, Pt 20 r 4 did no more than bring about a change of practice. The subject matter of the rule was the exercise of discretion in granting amendments. It did not seek to, as indeed it could not, alter Commonwealth legislation providing for limitation of actions." 31 Rogers J then referred to the decision of Priestley JA in Proctor v Jetway Aviation Pty Ltd (1984) 1 NSWLR 166, 183 where his Honour had characterised Pt 20 r 4(5A) as bringing about "a change in the exercise of a power the Court had always had" so that "[w]hat would happen more frequently under the new practice [i.e., under Pt 20 r 4(5A)] would be that leave would be granted to include time expired causes of action in statements of claim …". 32 Building on that, Rogers J said: "It was submitted that Part 20 rule 4 was invalid to the extent that it was inconsistent with the limitations in s 82(2) of the [TP] Act. This result would have been demanded by the Constitution s 109, had there truly been an inconsistency. In my view, on the correct characterisation of the rule, there is no inconsistency. The rule accepts fully the dictate of the Commonwealth legislation that proceedings should be commenced within three years from accrual of the cause of action. The rule deals merely with the procedural matter which, as a matter of law, then has an impact on what is to be taken as the date of commencement of proceedings. The two regulatory provisions operate in different fields and are therefore not inconsistent." 33 In my opinion, his Honour's reasoning, although referable to the test of inconsistency under s 109 of the Constitution, is equally applicable to the issue posed by Dr Bell under s 79 of the Judiciary Act. 34 My present view is that, had the issue required decision, I would have followed the analysis of Rogers J. I note that an application for leave to appeal from his Honour's decision was dismissed. I note further that his Honour's approach was follow by Santow J in Jennings v Credit Corporation Australia Pty Ltd (2000) 48 NSWLR 709, 720-721, and by Hill J in Harris v Western Australian Exim Corporation (1994) 56 FCR 1, 9-10. In turn, the approach of Hill J was discussed, with apparent approval, by the Full Court in Rodgers v Commissioner of Taxation (1998) 88 FCR 61. If that approach be correct, then it would seem to dictate that s 79 of the Judiciary Act would not deny the power of the court to permit the amendment to have retrospective effect. 35 If this analysis be correct, it provides an alternative ground for allowing the amendments, in that it suggests that the judge who decides the reserved question (see para [3(2)] above) might be able to conclude that the amendments should date back to the date of filing. Specific pleading issues 36 The first paragraph of 5 FAS of which specific complaint is made is para 83. I have summarised it above, but for this purpose it is necessary to look at its precise wording. It alleges: "83 By reason of the matters referred to in paragraphs 40 to 82, [the Macquarie parties have] breached … the relevant provisions of the TP Act, the Corporations Law, the two ASIC Acts and the FT Act." 37 It does not seem to me that para 83 adds anything to what precedes it. If the material facts that are alleged in paras 40-82 do not make out contravention of the relevant legislation, then para 83 will not assist. (In this context, I think, the allegation of contravention necessarily implies that the material facts both engage and demonstrate contravention of the relevant legislation.) Equally, if the material facts do make out contravention (in the sense just explained) of the relevant legislation, then para 83 does not change the case. Particularly having regard to the requirements of paragraph 6(2) of Practice Note 100, I do not think that the formulation of para 83 is a sufficient reason for refusing leave to amend. 38 Complaint is also made of para 96. That paragraph alleges that it was an implied term of each of the sub underwriting agreements that the relevant Macquarie party was to exercise its discretion, as to whether or not to terminate the underwriting agreement between it and NCRH, in good faith, having regard to the interests of the sub underwriters. That term is particularised as being one "implied by law". It is clear, in principle, that an obligation to exercise contractual rights in good faith may be implied into commercial contracts: Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349, 369 (Sheller JA). 39 The Macquarie parties submit that para 96 is defective because, so they say, the implied term that it alleges would contradict an express term of each sub underwriting agreement. 40 The express term that is relied upon includes the following: "If Macquarie elects to terminate or not to terminate the Underwriting Agreement, being entitled to do so, you will be bound by such election. … You acknowledge and agree that you accept the decisions and actions of Macquarie under or in respect of the Underwriting Agreement and Macquarie is not obliged to consult with you as to any such matter and nothing in this agreement qualifies the exercise or non exercise of the rights of Macquarie under the Underwriting Agreement in any way. Without limiting the foregoing, if Macquarie elects not to terminate the Underwriting Agreement, although entitled to do so, you will be bound by that election and obliged to fulfil your obligations as set out in this agreement and have no claim against Macquarie in respect thereof …". 41 It was not suggested in argument that this express term did not, or might not, form part of each sub underwriting agreement. 42 In general, whether an implied term is said to be implied in fact (i.e., as a matter of the assumed intention of the parties), or in law (i.e., as an incident of transactions of the kind in question), it can be implied only in the absence of an expression of a contrary contractual intention. See, as to the former category, BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20, 26 (cited, to give one only of innumerable references, by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 347); and, as to the latter class, Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 449-450 (McHugh and Gummow JJ). 43 On its face, the implied term that is sought to be alleged by para 96 is inconsistent with the express term that I have referred to in para [40] above. Firstly, that express term specifies that the relevant plaintiff will be bound by any decision of Macquarie to terminate or not to terminate the underwriting agreement. Secondly, the relevant plaintiff agrees to accept, among other things, any such decision. Thirdly, the relevant plaintiff acknowledges that Macquarie is not obliged to consult with it before making any such decision. Fourthly, it is stipulated that "nothing in this agreement qualifies the exercise or non exercise of the rights of Macquarie under the Underwriting Agreement in any way". The last matter by itself, and all those matters cumulatively, seem to be inconsistent with the proposition that, by reason of some obligation of good faith implied by law into the sub underwriting agreements, Macquarie was bound to have regard to the interests of the relevant plaintiff in making its decision whether or not to terminate, and was to make that decision in good faith having regard to those interests. 44 Finally, the term adverts to a decision not to terminate, although an entitlement to do so has arisen. It provides that the relevant plaintiff will be bound by that decision but yet obliged to fulfil its obligations, and will have no claim against Macquarie. That seems to reinforce the clear impression from the earlier features that I have referred to. 45 However, the plaintiffs wish to argue that the obligation to act in good faith lies at the core of every contract (see the judgment of Finn J in South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611, [426] (citing Tymshare Inc v Covell 727F 2d 1145, 1152 (1984)). The plaintiffs also wish to argue that an implied term of this nature is incapable of exclusion, and that in at least some circumstances a clause in a contract that on its proper construction permitted a party to act in bad faith would be unenforceable as against public policy. There is academic support for this argument: see Seddon & Ellinghaus, Cheshire & Fifoot's Law of Contract (8th Australian edition, LexisNexis Butterworths, 2002) at para [10.49]. Those circumstances indicate to my mind that, notwithstanding the views I have expressed, the plaintiffs should not be precluded from advancing the argument to which paragraph 96 is the key. 46 I am also conscious of what Hope JA said in Castlemaine Tooheys Ltd v Carlton & United Breweries (1987) 10 NSWLR 468, 492 when his Honour, in considering whether an implied term was inconsistent with a term or the terms of the contract, said that "in some cases at least it would be appropriate also to have regard to the matrix of facts in which the transaction took place." 47 I am therefore of opinion that the amendment sought to be introduced by para 96 of 5 FAS should be permitted. As that paragraph is the key to the cause of action pleaded in paras 91-92, it follows that all of those paragraphs should stand (there being no separate objection to them). Particulars 48 On 8 October 2003, I indicated that the plaintiffs should file and serve a document that indicated all the particulars (that had been sought and given in respect of earlier versions of the summons) upon which they relied as supporting allegations made in 5 FAS. That has not yet been done. In my view, it ought to be done forthwith, and I propose to enforce that view by making it a condition of the leave that I propose to give. The position of Phillips Fox 49 It is fair to say, I think, that the principal objection of Phillips Fox to 5 FAS as originally drafted was based on a negligence claim that was sought to be alleged by paras 177-197 of that draft. The current version of 5 FAS deletes that negligence claim in its entirety. 50 Although Phillips Fox maintain that the remaining pleading against them does not disclose a proper cause of action, or that it is otherwise properly pleaded or particularised, they do not now oppose the granting of leave to the plaintiffs to amend in terms of the current draft of 5 FAS. Their remaining contentions relate to the question of costs. The position of the other defendants 51 The other defendants had either not opposed the grant of leave to amend (reserving their argument to the question of terms) or had opposed it on grounds advanced by the Macquarie parties. After 5 FAS was itself amended, into its current form, it was only the eleventh defendant who continued to oppose the grant of leave; and that opposition was limited to the argument raised by the Macquarie parties in relation to the current form of 5 FAS. 52 Otherwise, the remaining defendants confined their submissions to the issue of costs. Costs 53 Both in their notice of motion for leave to amend, and in their written submissions provided before the oral hearing, the plaintiffs contended that the costs of the application should be costs in the cause. However, in oral argument, Mr F M Douglas QC, who appeared with Mr B Katekar of Counsel for the plaintiffs, accepted that the costs thrown away by the amendment ought to be paid by the plaintiffs. 54 In my view, that concession was properly made. It is clear, and consistent with principle, that the costs of the application to amend, and the costs of and thrown away by the amendment, should be paid by the plaintiffs. The real question is whether those costs should be paid on an indemnity basis, as the defendants contend. 55 In the course of argument, I indicated that submissions on costs should be made following publication of my judgment on the application for leave to amend. In those circumstances, although all parties have put submissions on costs, I think it appropriate to publish these reasons, and make orders consistent with them, and to give the parties a relatively brief opportunity to make such further submissions on costs as they may desire. Security for costs 56 The plaintiffs have given security for costs. The evidence of Messrs Black and Ramsay satisfies me that, as a result of the costs thrown away (and as a result of assessments that will take place in relation to the costs order that I am going to make) the amount of the security that has been given will be inadequate. I do not think that, at the conclusion of the hearing, the plaintiffs argued for a different view. 57 The orders that I make will provide for a mechanism for security applications to be brought and, if not agreed, decided. Orders 58 By reference to what was agreed and what I have decided, I will make orders as follows, subject to hearing the parties on dates: (1) Grant the plaintiffs leave further to amend their summons by filing a document in the form of the Fifth Further Amended Summons in the form submitted to my associate under cover of a letter dated 17 October 2003 from the plaintiffs' lawyers and initialled by me and dated 7 November 2003, which I shall place with the papers. (2) The Fifth Further Amended Summons is to be filed and served on or before [date]. (3) The grant of leave pursuant to order (1) is subject to the following conditions: (a) The plaintiffs file and serve on or before [date] a document that sets out all particulars sought and given in respect of earlier versions of the summons upon which the plaintiffs rely as supporting allegations made in the Fifth Further Amended Summons. That document is to be in the form of the Fifth Further Amended Summons with the particulars relied upon in relation to any paragraph appearing after that paragraph. (b) The amendments made by the Fifth Further Amended Summons relying on the 2001 ASIC Act, the TP Act and the FT Act ("Amendment") do not automatically relate back to the commencement of these proceedings. (c) The Amendments are allowed on terms that the question is reserved to the trial judge whether the Amendments should take effect from the date of amendment or any earlier date. (d) To this end, the trial judge shall have full power to determine whether Part 20 Rule 4 has application; if it does, what orders should be made under Part 20 Rules 4(5A) or (6); and if it does not, whether leave to make the Amendments should be revoked; and in any event what further or other orders should be made under the Supreme Court Act or the Rules or the inherent jurisdiction of the Court to ensure that no prejudice is suffered by any party by reason of the limitation questions raised on 7 and 8 October 2003 by some or all defendants but, by agreement, not determined, and to be reflected in defences to be pleaded to the Fifth Further Amended Summons should be deferred for consideration at the final hearing. (4) Direct the plaintiffs to file and serve on each defendant on or before [date] a list of all documents upon which they intend to rely in chief and, by the same date, to serve copies of all such documents on each defendant. (5) Direct any defendant seeking security or further security for costs to give written notice to the plaintiffs quantifying the amount of its claim on or before [date]. (6) Direct the plaintiffs on or before [date] to state to each defendant seeking security or further security for costs whether the plaintiffs are prepared to provide such security in the amount sought. (7) Direct any defendant that is unable to reach agreement with the plaintiffs on the question of security or further security for costs, and that wishes to pursue its application, to file a notice of motion for such security or further security for costs returnable on [date] , and to file and serve all affidavit evidence upon which it intends to rely in relation to such application, on or before [date]. (8) Direct the plaintiffs to file and serve any affidavit evidence in reply on or before [date]. (9) Order that the matter be listed for directions on [date] so that, if necessary, a hearing date can be allocated for any applications for security or further security for costs. (10) Reserve all questions of costs in relation to the plaintiffs' notice of motion filed 24 September 2003 for leave to amend and in relation to the amendments. (11) Direct any defendant that wishes to make further submissions on the question of the costs reserved by order (10) to file and serve those submissions on or before [date]. (12) Direct the plaintiffs to file and serve such further submissions (if any) as they wish to rely upon in relation to the questions of those costs on or before [date]. 59 I therefore stand the matter over to a date to be fixed by arrangement with my associate, but in any event no later than 14 November 2003, for the parties to bring in short minutes of order to reflect these reasons. ****** Last Modified: 12/01/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.