Azmin Firoz Daya v CX Reinsurance Company Limited [2012] NSWSC 1620

Supreme Court New South Wales

Medium Neutral Citation: Azmin Firoz Daya v CX Reinsurance Company Limited [2012] NSWSC 1620 Hearing dates: 20 November 2012 Decision date: 20 November 2012 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Leave to amend granted Category: Procedural and other rulings Parties: Azmin Firoz Daya - Plaintiff CX Reinsurance Company Ltd (formerly CNA Reinsurance Ltd) - First Defendant GE Frankona Reinsurance Ltd (formerly Eagle Star Reinsurance Company Ltd) - Second Defendant Aviva Plc (formerly General Accident Fire & Life Assurance Corp plc) - Third Defendant Certain Underwriters at Lloyds (Contract No ENCDOPR98) - Fourth Defendant Royal & Sun Alliance plc - Fifth Defendant Certain Underwriters at Lloyds (Contract No ENCDOX598) - Sixth Defendant International Insurance Company of Hannover Ltd - Seventh Defendant Representation: Counsel: Dr Bell SC & Mr Williams - Plaintiff Mr Sexton SC, Mr Muston & Ms Callan - Defendants Solicitors: Sparke Helmore - Plaintiff HWL Ebsworth - Defendants File Number(s): 2004/ 175282

Judgment (ex tempore)

Leave to amend 1The plaintiff seeks leave to amend the Reply to the Further Amended Response filed on 5 October 2012, by filing an Amended Reply in a form which has been provided to the court, the effect of which is to substitute a plain admission of paragraph 27 of the Response for the traverse and elaboration that was previously contained in paragraph 10 of the Reply, and to substitute for the plain admissions of paragraphs 33 and 34 of the Response an admission of paragraph 33, 34(a) and 34(b), but a non admission of 34(c). The practical meaning of this is that, whereas previously the plaintiff admitted, and indeed asserted, that the net worth covenant for the 30 June 1998 period was reduced to $125 million at the election of NCRH during June 1998, with effect from 30 June 1998, the plaintiff would, (if this amendment be permitted) no longer admit that to be so. 2Counsel for the plaintiff has pointed to documentary evidence, on the face of which it is at least arguable that while such an amendment to the net worth covenant was proposed and under negotiation and in contemplation during and subsequent to June 1998, it had not been concluded at that stage, and when ultimately concluded in November 1998 was to the extent of $100 million as opposed to the $125 million referred to in the pleading and originally under contemplation. In both cases, this was in substitution for the original net worth covenant of $140 million. 3The defendant insurers, as I understand the position as outlined by counsel, do not object outright to the proposed amendment on the grounds of its lateness, but maintain that if allowed it will raise a new factual issue. That factual issue is, in essence, that it is anticipated the plaintiff's case will be that, in the absence of a concluded reduction in the amount of the net worth covenant to $125 million, it is made more likely that the alternative purpose of the two-legged transaction - or "smoothing cover" - at the centre of this case was not the deceit of Dresdner but other purposes. 4As it seems to me, at the moment the extent to which the proposed amendments raise a new issue in this respect is more a question of degree than one that can be described in black and white terms. The application being in the nature of one for leave to withdraw an admission, presumably solemnly made and verified, courts usually expect an adequate explanation of how the admission came to be made in the first place, as well as evidence that it was incorrectly made. In this case, I am satisfied that there is sufficient evidence that it was at least arguably incorrectly made. As to the explanation, in a case of this complexity and with the extent of documentation in question, it is regrettably sometimes the case that the true position emerges even to the parties only late in the course of preparation. On balance, it seems to me that if any prejudice to the defendants can be avoided, the interests of justice are that the plaintiff be permitted to advance what appears to be an arguable version of the facts in this respect. That conclusion is all the stronger where the argument appears to be one that turns on the effect of documents, and not on the assessment of oral evidence. 5As I understand the defendant's position, it is that any prejudice to them could be avoided by the permission to them of leave to amend to address the amendments and to call additional evidence. As I apprehend it, having heard from counsel, that additional evidence would be addressed to the question of reliance and whether, and to what extent, any assumption that the net worth covenant had been reduced to $125 million was fundamental to the courses of action and decisions which they say they would have made. 6While I am alert to the risk that this might unduly permit the evidence to be expanded, that can be controlled as the evidence is given, and bearing in mind that the plaintiff effectively requires an indulgence to withdraw an admission, it seems to me that that is a risk or difficulty which the plaintiff must bear.