Supreme Court New South Wales Medium Neutral Citation: Denis Cassegrain & Ors v Gerard Cassegrain & Co Pty Limited (in Liquidation) & Ors [2014] NSWSC 411 Decision date: 10 April 2014 Jurisdiction: Equity Division Before: Bergin CJ in Eq Decision: Leave granted to amend pleading Catchwords: [PRACTICE & PROCEDURE] - application to amend pleading as remitted by Court of Appeal - where issue whether parties proceeded at first instance on basis of a claim for equitable compensation although not in pleading [ORDERS] - where the successful party in the Court of Appeal claims orders including for remitter of application to amend pleading after trial and appeal do not reflect Court of Appeal intention - appropriate procedure in the circumstances. Legislation Cited: Civil Procedure Act 2005 Conveyancing Act 1919 Corporations Act 2001 (Cth) Uniform Civil Procedure Rules 2005 Cases Cited: Denis Cassegrain & Ors v Gerard Cassegrain & Co Pty Ltd & Ors [2012] NSWSC 403 Denis Cassegrain & Ors v Gerard Cassegrain & Co Pty Ltd & Ors (Final Orders) [2012] NSWSC 834 Gerard Cassegrain & Co Pty Limited v Cassegrain; Cassegrain v Gerard Cassegrain and Co [2010] NSWSC 91 Gerard Cassegrain & Co Pty Ltd (in liquidation) v Cassegrain [2013] NSWCA 455 Gould and Birkbeck and Bacon v Mount Oxide Mines Ltd (in liquidation) & Ors (1916) 22 CLR 490 Water Board v Moustakas (1988) 180 CLR 491 Category: Interlocutory applications Parties: Denis Cassegrain (First Plaintiff/Applicant) Catherine Dunn (Second Plaintiff/Applicant) Patrick Cassegrain (Third Plaintiff/Applicant) John Cassegrain (Fourth Plaintiff/Applicant) Gerard Cassegrain & Co Pty Limited (in Liquidation (First Defendant) Claude Cassegrain (Second Defendant) Felicity Cassegrain (Third Defendant/Respondent) Anthony Blake Sarks (Fourth Defendant) Representation: Counsel: M Ashhurst SC/G Colyer (Plaintiffs and Administrator) JJ Garnsey QC/R Raffell (Third Defendant) Solicitors: File Number(s): 2008/281625 Publication restriction: Nil Judgment 1These proceedings were heard over six days in 2011 (10 to 14 October 2011 and 7 December 2011). Judgment was delivered on 27 April 2012: Denis Cassegrain & Ors v Gerard Cassegrain & Co Pty Ltd & Ors [2012] NSWSC 403 (the Judgment). A further hearing took place on 12 June 2012 in respect of the orders to be made consequent upon the Judgment (the June 2012 hearing) and judgment was delivered on 24 July 2012: Denis Cassegrain & Ors v Gerard Cassegrain & Co Pty Ltd & Ors (Final Orders) [2012] NSWSC 834 (the July Judgment). Declarations and orders were made and entered on 24 July 2012 (the Orders). The Judgment and the July Judgment should be read in conjunction with these reasons in which the same nomenclature for the parties will be adopted. 2The declarations as entered on 24 July 2012 included declarations that Felicity acquired the shares, the subject of the litigation, with knowledge of the breaches by Claude and Mr Sarks of their fiduciary duties (Declarations 7 and 8). There was also a declaration that Felicity was jointly and severally liable with Claude and Mr Sarks to compensate GC & Co for any loss arising from the transfer of the shares to Felicity (Declaration 10). An order was made for an inquiry to be held for the purpose of making orders for equitable compensation to be paid by Claude, Mr Sarks and Felicity to GC & Co (Order 17). 3The defendants' appeals were heard on 26 and 27 June 2013. The Court of Appeal delivered judgment on 20 December 2013: Gerard Cassegrain & Co Pty Ltd (in liquidation) v Cassegrain [2013] NSWCA 455 (the CA Judgment). 4The appeals by Claude and Mr Sarks were dismissed. Felicity appealed on two issues separately from the issues raised in the appeals by Claude and Mr Sarks. Those issues were referred to in the CA Judgment as "the Knowledge Issue" and "the Pleading Issue". The Knowledge Issue involved a claim by Felicity that there had been error at first instance in the findings that she knowingly participated in the breaches of fiduciary duties by Claude and Mr Sarks in transferring the subject shares to her. Felicity's appeal on the Knowledge Issue failed. The appeal on the Pleading Issue was successful. The grounds of appeal on the Pleading Issue were (CA Judgment [66]): The primary judge erred in finding and declaring that Felicity was jointly and severally liable with Claude and Anthony [Mr Sarks] to compensate the company for any loss arising from the transfer of the Shares and, in particular, by reason of the following: (a) No such relief was sought against Felicity in the Statement of Claim or in any version of it. (b) Such relief was sought against Felicity only in the plaintiffs' written submissions filed on 18 June 2012 and the reasons of 24 July 2012 were delivered without Felicity being heard in that respect, despite a request to that effect. (c) Such relief against Felicity should have been refused as a matter of discretion. (d) The only relief that should have been ordered against Felicity was that she retransfer the Shares to the Company, subject to compensation for or restitution of the moneys paid as consideration for the transfers, in such amount as the Court should find just and equitable. 5The CA Judgment (Emmett JA, with whom Meagher and Ward JJA agreed) included the following in respect of the Pleading Issue: 93. It is true that it was not until the heel of the hunt that Felicity complained that compensation was never claimed against her in any iteration of the Statement of Claim. However, a fair reading of it discloses no intention on the part of the plaintiffs to seek any such relief from her. True, there were suggestions in the course of argument that the claims for compensation made by the plaintiffs might extend to her, as well as to Claude and Anthony. Further, in arguing that compensation should not be ordered against Felicity because she was no more than a third party to the breaches, counsel for Felicity could be taken, at least implicitly, to have accepted that compensation could, be ordered against her. On the other hand, any failure by counsel for Felicity to respond to suggestions that the claims for compensation might extend to her must be considered in the context of the complete absence of any suggestion in the Statement of Claim, or any version of it, that such relief was being sought against Felicity. ... 100. It appears that the plaintiffs first made their claim for damages and compensation against Felicity in their written submissions after the evidence was complete. They did not ask the primary judge for leave to amend their prayers for relief to include claims for equitable damages or statutory compensation against Felicity. As I have indicated above, her Honour did not deal with Felicity's complaint that no such claim for relief was made against her, and it is not entirely clear why her Honour did not address that question. 101 In this Court, the plaintiffs proffered an amendment to the Statement of Claim, whereby they sought the relief granted by the primary judge. Had that amendment been proffered to her Honour, it may well have been open to her Honour to grant leave to amend, on the ground that the amended pleading more fairly reflected the basis upon which the proceedings had been conducted. However, I am not persuaded that the proceedings were conducted on a basis different from that expressed in clear and unequivocal terms in the Statement of Claim. 102 On the other hand, an appellate court is not in as favourable a position as the trial court when such questions arise. It is not always possible for an appellate court to perceive the nuances of the parties' conduct in a long trial in a way that would be apparent to a trial judge. While I do not consider that it was open to the primary judge to grant the relief on the basis of the pleadings as they stood, the tardiness of Felicity's complaint creates some disquiet. Clearly, the primary judge would be in a better position than this Court to determine whether leave should be granted to the plaintiffs to amend the Statement of Claim 103. In the circumstances, I consider that the order for an enquiry as to the existence and quantum of any loss to the Company should be set aside, insofar as it is for the purposes of making orders for equitable damages or statutory compensation to be paid by Felicity. The matter should be remitted to the primary judge for the purpose of considering any application for leave to amend that may be made on behalf of the plaintiffs. If leave to amend be refused, it would follow that there should be no order against Felicity for the payment of damages or compensation. If leave to amend were to be granted, it would then be open to the primary judge to make a further order for Felicity to pay equitable damages or statutory compensation, following an enquiry. Any further question as to the costs of the proceedings at first instance would be a matter for her Honour. ... 180. Felicity's appeal should be allowed with costs. The first to fifth respondents should pay Felicity's costs of that appeal. The orders made against Felicity should be set aside. The matter should be remitted to the primary judge for the purpose of considering any application on behalf of the plaintiffs for leave to amend the Statement of Claim in terms of the draft pleading provided to this Court and for the making of appropriate orders depending upon the outcome of any such amendment application. The orders would deal with the following: any amendment application in relation to the relief claimed against Felicity; if the plaintiffs so elect, the retransfer by Felicity to the Company of the Shares, subject to appropriate compensation being paid by the Company to her in respect of the consideration paid by her; whether Felicity should pay damages or compensation; and costs, as between Felicity and the plaintiffs, of the proceedings at first instance. 6The orders of the Court of Appeal relevant to Felicity as entered on 23 December 2013 were in the following terms (the CA Orders): 1. The appeal by Felicity Cassegrain (CA 2012/253268) be allowed. 2. Order 17 of the orders made by the primary judge on 24 July 2012 in the proceedings at first instance (2008/281625) be set aside in relation to Felicity Cassegrain. 3. The matter be remitted to the primary judge for the purpose of considering any application on behalf of the plaintiffs for leave to amend their second further amended further statement of claim filed on 20 June 2011 in terms of the draft pleading provided to this Court and for the making of appropriate orders, dealing with the matters indicated in [180] of these reasons, depending upon the outcome of any such amendment application. 4. The first to fifth respondents in appeals CA 2012/253268 pay the appellant's costs of that appeal. 7The CA Orders as entered are only found in the Front Sheet of the CA Judgment in which there is no reference to the setting aside of Declaration 10 which declared Felicity jointly and severally liable with Claude and Mr Sarks to compensate GC & Co. Paragraph [180] of the CA Judgment includes the conclusion that the "orders made against Felicity should be set aside". Declaration 10 as entered on 24 July 2012 remains unaffected by the CA Orders. The only order made against Felicity that has been set aside is Order 17 for an inquiry to be held for the purpose of making orders for equitable compensation to be paid by Claude, Mr Sarks and Felicity to GC & Co. Order 16 in which Felicity was ordered to pay the plaintiffs' costs of the proceedings against her at first instance also remains in place notwithstanding the last bullet point of paragraph [180] of the CA judgment. History of the Pleadings 8It is appropriate at this stage to trace some of the history of the pleadings in the matter. On 18 November 2008 Denis Cassegrain, as the sole plaintiff, commenced the proceedings by the filing of an Originating Process. At that time the relief sought against Felicity was a declaration that she participated in, and benefited from, GC & Co's failure to obtain an up to date market appraisal of the value of the shares that were transferred to her and an order that, upon just terms, Felicity do all things necessary to transfer the shares to GC & Co. 9A Statement of Claim was filed on 28 January 2009 in which it was alleged that the failure to obtain an up to date market appraisal of the value of the subject shares (an omission in which it was alleged Felicity participated) was oppressive, unfairly prejudicial to, and unfairly discriminatory against the minority shareholders of GC & Co. 10By Motion heard on 20 November 2009, the plaintiff sought leave to amend the Statement of Claim. That amendment included the addition of a claim against Felicity pursuant to s 37A of the Conveyancing Act 1919 in respect of the transfer of the shares. The application to amend also included the joinder of Mr Sarks. It also sought a series of alternative declarations in respect of the conduct of Claude and Mr Sarks alleging contraventions of the provisions of the Corporations Act 2001 (Cth). Leave was sought (and granted) under s 237 of the Corporations Act to bring these claims on behalf of GC & Co. It included a claim that Felicity received the benefit of the breaches of fiduciary duty by Claude and Mr Sarks with actual knowledge of those breaches. There was also a claim that Felicity was involved in Claude's breaches of s 181 and s 182 of the Corporations Act by virtue of s 79(c) of the Corporations Act. 11The relief claimed also included declarations that Felicity held her shares on trust absolutely for GC & Co and the following two orders in paragraph 16 as follows: (xii) Order an enquiry to determine the amount of compensation payable by Claude Cassegrain, Felicity Cassegrain and Anthony Blake Sarks to GC & Co as a consequence of the foregoing contraventions of the Corporations Act. (xiii) Order Claude Cassegrain, Felicity Cassegrain and Anthony Blake Sarks to compensate GC & Co for damage suffered by it as a consequence of the foregoing contraventions of the Corporations Act. 12On 19 February 2010 Austin J refused to allow the claim of actual knowledge and required the plaintiffs to amend the claim to plead imputed knowledge. As a result of that change his Honour disallowed the claims under s 79(c) that Felicity was involved in the breaches of the Corporations Act by Claude and Mr Sarks: Gerard Cassegrain & Co Pty Limited v Cassegrain; Cassegrain v Gerard Cassegrain & Co [2010] NSWSC 91 at [102]-[103]. As a result of this ruling the plaintiffs deleted Felicity's name from the orders in paragraph 16 (xii) and (xiii) of the pleading. 13On 18 October 2010 the plaintiff filed a Further Amended Statement of Claim adding two additional claims in respect of Claude and Mr Sarks that they had placed themselves in positions of conflict between duty and interest in causing the disposition of the shares to Felicity without obtaining the full informed consent of the shareholders. No changes were made to the orders or declarations in the relief claimed in the previous pleading. 14The Further Amended Statement of Claim was the extant pleading when the matter was listed for trial for 10 days commencing on 6 June 2011. On the first day of that hearing the plaintiff made a further application to amend the pleading. This amendment was sought after there had been access to documents not previously available to the plaintiff which suggested that the minutes of the meeting purportedly held on 21 December 2004 were retrospectively created and did not reflect the reality of what had occurred in respect of the transfer of shares to Felicity. 15An adjournment was granted to 8 June 2011 with orders made for the service of a draft amended pleading on the defendants. On 8 June 2011 leave to file the Second Further Amended Statement of Claim was refused. Leave was granted to add additional parties who are now plaintiffs to the proceedings. An order was made for the service on the defendants of the proposed Second Further Amended Statement of Claim by no later than 10 June 2011. A regime was put in place to hear any objections to the proposed amendment and the trial dates were vacated. The trial was listed for 5 days commencing on 10 October 2011. 16The Second Further Amended Statement of Claim was filed on 20 June 2011. The pleading against Felicity was expanded to include her knowledge of the AAT dismissal of the objections raised by GC & Co to the amended tax assessments (at [127]). It was claimed that Felicity had executed the share transfers on 19 January 2005 and 20 January 2005 respectively and that at that time she had a loan with GC & Co that was not due to be repaid until 20 December 2005; that the loan was secured by a charge over the assets of GC & Co and; that the loan did not have as a condition any obligation on GC & Co to transfer to her any assets of GC & Co. It was further alleged that Felicity made no enquiries as to whether the minority shareholders had been notified of the transaction or whether they had consented to them. It was alleged that Felicity appointed Claude to advise her on the appropriate purchase price for the shares and that she had the "imputed knowledge" of the true value of the shares that Claude had, that the consideration was at a substantial underestimate of the value of the shares (at [130]-[133]). 17That pleading included the claim that Felicity was knowingly involved within the meaning of s 79(c) of the Corporations Act, in the breaches of statutory duty by Claude and Mr Sarks (155). This reintroduction of the claim of knowing involvement within the meaning of s 79(c) was the first time that this had occurred since Austin J refused to allow it in February 2010. The plaintiffs' solicitor, Mr Lacey, gave evidence on this application that when the amendment was made to reintroduce that claim, there was an "oversight" by him in failing to include Felicity's name in the paragraphs of the pleading in which an enquiry in respect of compensation was claimed and an order for payment of compensation was claimed: (par 13 (xii) and (xiii)) (tr 5; 25/02/14). Relevant procedural history 18The CA Judgment included the statement that "There was apparently no reference to Felicity paying either equitable or statutory compensation in the course of the trial": at [70]. It appears that the expression "in the course of the trial" may have been limited to the hearing prior to the delivery of the Judgment on 27 April 2012. 19In paragraph 4 of her written Outline of Submissions in Opening dated 6 October 2011, Felicity "repeats and adopts" the statement of the real issues in section 4 of the Outline Submissions for Claude and Mr Sarks. That Outline dated 5 October 2011 as repeated and adopted by Felicity included the following: [17] (j) If the Plaintiffs would otherwise be entitled to any relief, what is the nature of that relief and under what terms should any such relief be granted (bearing in mind the absence of any offer by or on behalf of GC & Co to effect restitution in favour of Felicity)? 20On the fourth day of the trial (13/10/11) in response to the question as to the relief sought by the plaintiffs if findings were made that the share transfers had occurred without notice or consent, Mr Ashhurst said (tr 321): We have two alternative forms of relief. Because your Honour may recall this is both a derivative proceeding and an oppression suit, one form of relief is we ask your Honour to make an order that the majority shareholders in GC&Co purchase the minority shareholders' shareholdings, but that those shares be valued immediately prior to the assets of the share in Endwise and the shares of OAL being transferred out of the company, that is back in January 2005. The alternative order, which is a derivative suit order, is that the defendants provide equitable compensation to GC&Co and that GC&Co be wound up. 21On the following day when final submissions were being made there was a statement by Mr Ashhurst that he was still awaiting final instructions, (before making submissions on relief) but that the expected position was that orders would be sought that "equitable compensation be paid by each of the defendants" (tr 354; 14/10/11). The Court of Appeal observed that the expression "each of the defendants" in this statement "would logically include Felicity" [74]. 22No suggestion was made on Felicity's behalf at the time Mr Ashhurst made these statements on either 13 or 14 October 2011 that there was no pleading against her seeking equitable compensation. 23The CA Judgment included a description of the procedural history between the delivery of judgment on 27 April 2012 and the making of final orders on 24 July 2012. The CA Judgment referred to the directions hearing on 17 May 2012 and the fact that although the plaintiffs and Claude and Mr Sarks had prepared draft orders, Felicity had not: at [76]. The draft orders that the plaintiffs propounded included an order that Claude, Mr Sarks and Felicity pay equitable compensation to GC & Co in the amount of $6,951,205. On 17 May 2012 Felicity was directed to prepare and circulate any draft orders that she proposed. 24It is apparent that the Court of Appeal was not provided with Felicity's proposed draft orders that were submitted to the Court by e-mail on 29 May 2012 and circulated to the other parties. That email was in the following terms: We attach Draft Orders sought by the Third Defendant in the above proceedings. We confirm that as directed by Her Honour Bergin C.J. on 17 May 2012 these Draft orders have been circulated today to solicitors for all the parties i.e. McCabe Terrill Lawyers; Oliveri Lawyers and Thomsons Lawyers 25Those Draft Orders included orders that Felicity re-transfer the subject shares to GC & Co but also included the following: 5. DECLARE that Claude, Mr Sarks and Felicity are liable in such proportions as the Court may upon enquiry determine to be just and equitable to compensate GC & Co for any loss to GC & Co arising from the transfer of GC & Co's shares in CaTTO and OAL to Felicity at an undervalue on or about 19 and 20 January 2005 respectively. 6. DIRECT that an Inquiry be held as to the existence, and quantum, of any such loss to GC & Co. 7. DIRECT that, on the conduct of such an Inquiry, such allowances as may be just be made in favour of Claude, Mr Sarks and Felicity or any of them. 8. RESERVE liberty to apply, including liberty to apply for directions in respect of allowances to be made in favour of Claude, Mr Sarks and Felicity in conduct of the Inquiry. 26Submissions and further draft orders were filed on behalf of Felicity on 11 June 2012. The orders that had been circulated on 29 May 2012 in paragraphs 5 to 8 as extracted above were amended to strike through the words "and Felicity" in each of the paragraphs 5, 7 and 8. 27The submissions that accompanied the draft orders included the contention that as there was no conduct on Felicity's part which affected the value of the shares before or after transfer, "the only appropriate order" in her case was for re-transfer of the shares. There was no suggestion that the claim was outside the pleadings or the manner in which the trial had been conducted. 28The written submissions included the following: Equitable Compensation 6. It is clearly established that compensation payable for breach of fiduciary duty is to be assessed as to the loss to be made good to the beneficiary by restoring assets of which the particular defaulting fiduciary has deprived the beneficiary, quantified at the date when recoupment is to be effected, whether the value has risen or fallen Re Dawson [1966] 2 NSWLR 211 at 216; Mcnalley v Harris (No.3) [2008] NSWSC 861 (White J) and the authorities discussed therein. 7. Unless the Plaintiffs presented a case and evidence that GC&Co would and could have realised the shares in OAL and CaTTO at or about the date of transfer at the value at that time or subsequently to date, the Plaintiffs are not entitled to and there is no basis for the declarations and orders in relevant respects sought by the Plaintiffs. 8. The Plaintiffs did not present any such case or adduce any such evidence and at best they are not entitled to any declaration in respect of the quantum of compensation and merely to an order for an enquiry based on the present value of the OAL and CaTTO shares and relevant ancillary orders. See Mcnalley v Harris (No.3) (Supra) and Cole & Anor v Manning [2002] NSWCA 150 at paras 63-67 (Spigelman CJ and Heydon JA), 80-84 (Hodgson JA). Section 1317H 9. There are no specific findings in relation to Felicity and section 79(c) of the Corporations Act. In respect of the declarations and orders sought by the Plaintiffs in relation to damages or compensation under section 1317H of the Corporations Act, the principles to be applied are the same as those in relation to equitable compensation (see Austin J in Shum Yip Properties Development Ltd v Chatswood Investment and Development Co Pty Ltd (2002) 40 ACSR 619 at para [254]). Consequently the quantification of damages or compensation under that section must be determined on enquiry in accordance with the principles discussed above. 29During the course of the 12 June 2012 hearing, Mr Garnsey indicated that the court had "a complete discretion" in respect of the appropriate relief to be granted (tr 6). The oral submissions included the following (tr 6-8): We submit that essentially retransfer with appropriate allowances to Felicity for the moneys she either paid or advanced and your Honour found that there was a secured loan by her to the company so obviously on a retransfer there should be allowance made for that, subject to any other matters which might be put before the Court to say that shouldn't happen but at the moment, with respect, there is nothing put before the Court to say that and not in my friend's submissions and not in the trial before your Honour. ... If there is to be an enquiry we submit it should be confined to Claude and Mr Sarks because they were the directors of the company, theirs was the breach of which your Honour held Felicity had knowledge. In other words she didn't effect the wrongful transaction in the first place. ... [W]e respectfully submit that on the facts on the case as presented, she should not be made a party to any inquiry for equitable compensation - if your Honour is minded to make orders for an inquiry, which are the primary submissions of Mr Lindsay and myself, your Honour should not, we respectfully submit. There should just be limit to re-transfer with allowances, if your Honour pleases. If your Honour is minded to make orders for an inquiry, then we make the same submissions as Mr Lindsay as to the nature of the inquiry and the date at which equitable compensation is to be determined. That is at the time at the end of the inquiry when the order is made. 30During the 12 June 2012 hearing a question arose in respect of the timing of an award of compensation under s 1317H of the Corporations Act. At the conclusion of the argument on this topic, leave was granted to the plaintiffs to file and serve a submission in relation to the relief sought under s 1317H of the Corporations Act by 5.00 pm on 13 June 2012. The defendants were to file and serve any submission in response by 5.00pm on 15 June 2012 (tr 25). Judgment was reserved. 31The plaintiffs filed a "Further Note on s 1317H of the Corporations Act" on 13 June 2012. The question that was addressed in that Note was whether the proper assessment of compensation under s 1317H of the Corporations Act involved a comparison of the value of the property transferred, as at the date of the transfer or whether it involved an assessment of the value of the property transferred as at the date of the trial. 32On 15 June 2012 Mr Garnsey filed with the Court in Chambers submissions for Felicity "On relief and Section 1317H" dated 14 June 2012. Those submissions included the following matters, some of which were outside the leave as granted: Generally 1. The plaintiffs are not entitled to the orders sought against the third defendant, Felicity, under section 1317H of the Corporations Act: (1) The only relevant issues in the proceedings and the only relevant orders sought against her were that she re-transfer the CaTTO and OAL shares "upon just terms". (2) No order for compensation, equitable or under section 1317H was ever sought against her nor litigated. (3) No order for compensation in any particular amount was ever sought or litigated, whether against her or the second or fourth defendants. ... Section 1317H - Construction ... 3. Likewise, in equity, for breach of fiduciary duty, where on the facts there is a difference between the conduct of those breaching duties as directors and a person involved in those contraventions, the Court has a discretion as to the relief and can, as submitted previously for the third defendant, decline to make an order for compensation in the case of one of those involved. There is no automatic joint and several liability, unlike trustees (See Jacobs Law of Trusts, 7th ed at para [2204]) because there is no trust binding all the trustees (see eg McNally v Harris (No 3) at paras [22]-[25]: here the only trust is a constructive trust binding upon the third defendant and arising at the time of the transfer of the shares. ... No issue and orders sought that the third defendant pay compensation. 8. There was no issue in the proceedings that any compensation or damages at all nor in any particular amount should be awarded or paid by the third defendant to GC & Co (Substituted Court Book page 42 para 13(xii) and (xiii)). 9. The Second Further Amended Statement of Claim sought as to the primary relief against the third defendant, an avoidance and retransfer of the CaTTO and OAL Shares "upon just terms" (Substituted Court Book page 41 paras 10 and 11), and "in the alternative" declarations that the third defendant held the shares on trust for GC & Co and an enquiry to determine the amount of compensation for the contraventions which should be paid not by the third defendant but only by the second and fourth defendants (substituted Court Book page 41 para 13(x), (xi) and (xii)). 10. There was no pleaded issue and the plaintiffs led no evidence to prove what GC & Co would have done with the two parcels of shares, for instance whether GC & Co would and could have disposed of them to someone or other at the values suggested at the date of the wrongful transfers in January 2005 (so far as the evidence at trial may is relevant, it suggests, by strong inference that there was no available market and a sale at any price would have been improbable) and invested or done something else with the proceeds of sale, or kept the parcels of shares, in which case events subsequent can establish as a matter of fact their present worth and the damage in fact suffered by GC & Co. 11. Consequently no order that the third defendant should pay compensation on any basis, equitable or under section 1317H of the Corporations Act, should be made. 12. Further, if an enquiry is necessary to establish the damage resulting in fact from the contraventions of the Corporations Act by the second and fourth defendants found for the purpose of section 1317 of the Corporations Act, as the plaintiffs failed to plead relevant issues and necessary evidence before the Court on at trial, and conduct the case accordingly, despite numerous amendments to the claim, they should be restricted at least as against the third defendant to orders for "re-transfer" of the two parcels of shares, subject to a lien for the moneys paid by the third defendant together with interest (Hewett v Court (1983) 149 CLR 639 at 663, 667-9; ACN 062 895 774 Pty Ltd v Tyndall [2007] NSWCA 64 at paras [38]-[39], [53]-[54]. 13. Moreover for those reasons, any further enquiry should be at the plaintiffs' cost in any event. 14. The third defendant should have her costs of the proceedings after judgment in relation to the hearings and submissions as to relief, as she at all times agreed to orders for retransfer. 33The plaintiffs filed an additional note in response on 18 June 2012 submitting that Felicity's submissions went beyond the leave granted. The plaintiffs submitted that if the submissions had been made "at the appropriate time" the plaintiffs would have responded by reliance upon s 90(1) of the Civil Procedure Act 2005, rule 36.1 of the Uniform Civil Procedure Rules 2005 (UCPR), an express claim in paragraph 155 of the Second Further Statement of Claim (that Felicity was knowingly involved in Claude and Mr Sark's breach of statutory duties within the meaning of s 79(c)) and prayer 14 of the Second Further Amended Statement of Claim seeking "[s]uch further or other order as the Court sees fit". No mention was made of any application to amend the pleading. 34On 18 June 2012 Mr Garnsey submitted an email to Chambers referring to the plaintiffs' note in response of 18 June 2012. That email included the following: The Plaintiffs appear to be seeking to have orders made on the basis of a proposed further amendment to the Second Further Amended Statement of Claim. Will you please bring to her Honour's attention that the Third Defendant seeks to be heard on any proposed further amendment in such manner and otherwise as the Court may direct (whether orally or in writing). 35Later on the same day a further email was sent to Chambers by Mr Garnsey which included the following: I should have added to the email below that the Third Defendant opposes orders being made as sought in the Plaintiffs' Submissions in Response on section 1317H of 18 June 2012. 36The July Judgment referred to the competing positions as between the plaintiffs (seeking an order that GC & Co be wound up) and the defendants (opposing that order and seeking orders that the shares be re-transferred to GC & Co). After dealing with that difference between the parties, the finding was made that the appropriate order to be made was for the winding up of GC & Co rather than the re-transfer of the shares to GC & Co: [6]. 37The July judgment included the following: 7. The next issue between the parties is the nature of the orders that should be made in respect of the compensation sought by the plaintiffs. There is no issue between the parties that consequent upon the judgment of 27 April 2012 an order for equitable compensation should be made. However the plaintiffs seek an order that the amount of equitable compensation be quantified immediately. It was submitted that it is a straightforward quantification of the difference between the amounts Felicity Cassegrain paid for the shares and the value of the shares recorded in the judgment. I am not satisfied that this is the appropriate way in which to proceed. Rather I agree with the defendants' submissions that there should be an inquiry in relation to the amount of compensation to be paid to GCC. Accordingly an order will be made for an inquiry in respect of the assessment of equitable compensation as against Claude Cassegrain, Felicity Cassegrain and Anthony Sarks. 8. There is an issue in relation to the compensation that is sought by the plaintiffs pursuant to s 1317H of the Corporations Act 2001. The plaintiffs claim compensation under s 1317H of the Corporations Act 2001 as against Claude Cassegrain, Felicity Cassegrain and Anthony Sarks. It was submitted on Felicity's behalf that there were no findings in respect of her liability under s 79(c) of the Corporations Act. I accept that submission notwithstanding that the plaintiffs have pointed to paragraphs [252]-[254] of the judgment to suggest otherwise. Accordingly the orders made in relation to this claim will not involve an order in respect of Felicity Cassegrain. 38The July Judgment made no mention of Felicity's submission that the order for compensation and/or an order for an enquiry in relation to equitable compensation should not be made because it was not pleaded. The CA Judgment included the very understandable observation that "it is not entirely clear why" Felicity's complaint that no claim for relief for equitable compensation was made against her was not addressed in the July Judgment: at [100]. No application was made to re-list the matter after the delivery of the July Judgment to request that the Court deal with the complaint about the lack of pleading or to set aside the orders under UCPR 36.15 on the basis of a failure to deal with the complaint about the lack of pleading. Rather Felicity chose to raise the matter on appeal as the Pleading Issue. Motion to Amend 39By Notice of Motion filed on 7 February 2014 the plaintiffs seek leave to file a Third Further Amended Statement of Claim (SOC). They contend that leave should be granted because it more fairly reflects the basis on which the proceedings were conducted at trial. 40The present application to amend the pleading is the matter remitted by the Court of Appeal. I should record that Mr Garnsey submitted that the CA Orders are "wrong" (tr 21) and that they were "correctable" under the Slip Rule (UCPR 36.17). This submission was made having regards to the curiosities identified in par [7] above. I indicated that it is a matter for the parties to approach the Court of Appeal with any relevant application in this regard. The application was heard on the basis that the Court of Appeal also intended to set aside Declaration 10 insofar at it related to Felicity. 41The amendments add Felicity into the claim for relief for an order that she (with Claude and Mr Sarks) jointly pay GC & Co such equitable compensation as the Court determines appropriate (11A); adding Felicity's name to the order for an enquiry to determine the amount of compensation payable as a consequence of the contraventions of the Corporations Act 2001 (Cth) as pleaded (13(xii)); and adding Felicity's name to the order to compensate GC & Co for damage suffered by it as a consequence of the contraventions of the Corporations Act 2001 (Cth) as pleaded (13(xiii)). 42The Notice of Motion was heard on 25 February 2014 when Mr MA Ashhurst SC leading Mr G Colyer, of counsel, appeared for the plaintiffs/applicants and the administrator and Mr JJ Garnsey QC leading Mr R Raffell, of counsel, appeared for Felicity. The plaintiffs relied upon the affidavit of their solicitor, Andrew Joseph James Lacey, sworn on 7 February 2014. Mr Lacey was cross-examined. No evidence was called on Felicity's behalf other than two documentary tenders. However during final submissions the following exchange took place with Mr Garnsey (tr 29): HER HONOUR: The other problem that you face, if I can raise this with you, is that Mr Ashhurst has focused quite squarely on the lack of any evidence. And we see these sorts of cases where people make cases on the basis where, had they known if they were facing a claim of X, they would have done Y. But there is nothing before me at the moment and, looking at the transaction, the transaction, as was presented at trial, was one recorded in minutes of 21 December which I found, to put it neutrally, did not reflect the reality. So it is not free from complexity but if you wish to make submissions that there were going to be steps or could be steps taken, then it seems that you would have to assist me as to why that is not necessary to put some evidence on. MR GARNSEY: I appreciate what your Honour says. We didn't approach it as a matter requiring evidence or needing evidence, but I accept what your Honour says as to the desirability of it. HER HONOUR: It was a point raised against you in Mr Ashhurst's submissions. MR GARNSEY: Might I have a short adjournment to obtain instructions? HER HONOUR: Certainly. 43Mr Garnsey made an application to call evidence from Mr Peter Condon, Felicity's solicitor. The plaintiffs did not object and leave was granted. Mr Condon gave oral evidence and was cross-examined. Evidence on the Motion 44Mr Lacey's affidavit evidence dealt with some of the relevant history to the proceedings including at trial and on appeal. He was cross-examined by Mr Garnsey in relation to the statement made by Mr Ashhurst on the fifth day of the trial, 14 October 2011, that he was awaiting instructions but that it was expected that orders would be sought that "equitable compensation be paid by each of the defendants to GC&Co". That evidence was as follows (tr 5-6): Q. Mr Lacey, you did not have instructions, at that stage, to amend the relief against Mrs Cassegrain to claim an enquiry for equitable compensation, did you? A. I don't know that I didn't. I just don't recall whether I had those specific instructions. Q. In your affidavit, you refer to the transcript and set it out in paragraph 10 of your affidavit, in which you refer to my learned friend Mr Ashhurst's statement to the court: What I have not deal dealt with is the relief that is actually sought. I am still awaiting instructions but I expect our position will be this: That we will seek the orders that equitable compensation be paid by each of the defendants to GC&Co. Do you see that? A. That is what Mr Ashhurst said and I accept that. Q. It was a correct statement? A. On his behalf absolutely, I am sure. Q. And the 14th October was the fifth day of the hearing after the evidence and the evidence at the time that statement was made was completed, was it not? A. I think that is correct, yes. 45There was no re-examination of Mr Lacey. 46In his evidence-in-chief, Mr Condon said that he did not understand that any claim for compensation was made against Felicity (tr 33). He also gave evidence that no counsel briefed in the matter informed him at any stage of the proceedings that a claim for compensation, equitable or statutory, was being made against Felicity (tr 33). During cross-examination Mr Condon was driven to admit that he did understand that at least a statutory claim for compensation was being made against Felicity (tr 36). 47Mr Condon was cross-examined in relation to the draft orders that were circulated and delivered to the Court under cover of the email of 29 May 2012. Mr Condon said that the draft orders were sent to the junior counsel briefed for Felicity by senior counsel briefed for Claude and Mr Sarks (tr 37). He gave the following evidence (tr 37-40): Q. And you considered those draft orders to see if they agreed with your understanding of the relief, appropriate relief in respect of your client? A. Actually I didn't, I had some concern about it and went back and e-mailed, and Ms Gormly, the Junior Counsel and I e-mailed Mr Garnsey when he was overseas and there was some slight changes and I was having some concern that I was then seeing equitable compensation was actually being brought in against our client which I discussed with Junior Counsel at the time. And you may recall I was in Court also at a time when her Honour actually was making directions and I strenuously asked Junior Counsel to see if we could actually adjourn final decision on these orders because I thought this wasn't a direction that -- Q. I want to make sure I have got the sequence of events correct Mr Condon; you received these documents from Senior Counsel for the second and fourth defendants, you then provide a copy to your Junior Counsel and to your Senior Counsel, that is the third defendant's Junior Counsel and Senior Counsel? A. Yes. Q. You then take advice on these documents from the third defendant's Junior Counsel -- A. Junior Counsel. Q. And Senior Counsel? A. Mainly Junior Counsel. We were only e-mailing Senior Counsel when he was available, on e-mail. Q. So did you have a conference with Junior Counsel about these? A. Telephone conference. Q. And you had an e-mail exchange with Senior Counsel? A. Yes. Q. And the result of those conferences was that you proffered these orders as the appropriate orders to give effect to her Honour's reasons on liability? A. As draft orders prior to the next directions hearing. Q. And the real question I have for you Mr Condon is if at the time you received these draft orders you had understood, and indeed had conducted the defence for Felicity Casssegrain on the basis that there would be no equitable compensation orders against Felicity Cassegrain, why didn't you say to Junior Counsel or to Senior Counsel - look, this is different to what is being pleaded against us? A. Well as a matter of fact I did, to Junior Counsel. Q. And Junior Counsel said - no, this is all right, this is how we understand the proceedings are being conducted? A. Junior Counsel didn't say that. I recall it was actually agreed that we would - we wanted Mr Garnsey to come back to Australia and have an opportunity to look at all this. And that is what happened. And in fact her Honour, with submissions by our Junior Counsel, allowed time for us to have Mr Garnsey return. Q. And do you say that you brought to Mr Garnsey's attention your understanding that the relief that was sought was contrary to how the case had been pleaded? A. I did. Q. Can you explain then why it is Mr Condon that in submissions that accompany the next draft orders there is not a single reference to these orders being outside the terms of the pleaded case? Would you like to look at those submissions? They commence at page 185. Not a single reference to these orders that are sought being contrary to the pleaded case, is there? A. I recall I was focusing on 1317H issue at that time. Q. We will come back to that in a minute. Just on the question of equitable compensation, you will see that is dealt with implicitly in paragraphs 4 and 5 and explicitly in paragraphs 6, 7 and 8. Not a single reference to a claim for equitable, an order for equitable compensation being outside of the terms under which this case had been pleaded, is there? A. There's not, no. Q. Can you explain that Mr Condon, in circumstances where you claim that that was the issue that you had to speak to Mr Garnsey about and that you didn't put any submissions out until Mr Garnsey had returned to Australia so that he could deal with that issue? A. When the -- Q. Can you explain that Mr Condon. A. When the submissions were settled by Counsel, I mean, I was trying to understand where the equitable compensation was coming from when it wasn't pleaded, when it wasn't asked for in the relief. Q. I think you said earlier that you conducted the defence of Felicity Cassegrain on the basis that a 1317H statutory compensation claim was being made against her, that's correct? A. I understand that is correct. Q. But you say you draw a distinction between a section 1317H statutory compensation claim and an equitable compensation claim? A. Yes. Q. When you received the draft orders that were proposed by the plaintiff, did you at any time say to either Junior Counsel or Senior Counsel - but these orders are entirely contrary to how we have conducted the case? A. I did say they are entirely contrary to the relief sought. Q. No, that's not the question I asked? A. I know, and I will answer that and say no, I didn't say we conducted our case. We conducted our case with what we met. Q. Did anybody, either Senior or Junior Counsel say to you - look, these orders that we are seeking they are entirely different to how we conducted our case, that is when you were back in June 2012? A. I can't recall that I would have put it, we were focusing on the fact that relief was being given or sought, it wasn't requested. Q. If relief was sought that hadn't previously been requested, that is what you were focusing on? A. On the equitable compensation. Q. But in respect of the equitable compensation, if you were focusing on the fact that they were now seeking compensation that had previously never been sought, why didn't that appear anywhere in the submissions? A. I didn't make the submissions. I mean the submissions I think actually go to the point the fact that, which I was, in my mind was the fact that my client was not a director or an officer. And I would have thought that is how I -- Q. If a claim was being made that had never previously been pleaded against your client and which you understood was contrary to the way the plaintiff had previously run this case, why didn't you ask that to be included in the submissions? A. I thought the submissions actually met the issue. I had long discussions with the fact that the -- ... Q. You say you thought these submissions in fact addressed the fact that this was the first time the claim for equitable compensation -- A. No, I didn't say that and I will answer your question; I thought the submissions addressed the concern I had about the fact that equitable compensation was being claimed against my client under a breach of fiduciary duty, which I didn't think was actually, with the - sorry, with the aiding and abetting clause, I can't remember the one. 48In further cross-examination Mr Condon accepted that the draft orders were circulated on 29 May 2012 after he had raised his concerns with both senior and junior counsel (tr 41). He accepted that the written submissions that were produced on 11 June 2012 contained no reference to his concerns about the proposed orders being outside the terms of the relief available on the pleadings (tr 42). He also accepted that he could not proffer any explanation as to why there was no such reference (tr 42). Consideration 49The following matters are clearly established: Mr Ashhurst stated on the fourth day of the trial (13/10/11) that the plaintiffs were seeking an order that equitable compensation be paid to GC & Co by the defendants (tr 321); Mr Ashhurst stated on the fifth day of the trial (14/10/11) that he was still awaiting instructions (before making submissions on relief) but that he expected that the plaintiffs would seek orders that "equitable compensation be paid by each of the defendants to GC & Co" (tr 354); The plaintiffs did seek such orders in the draft orders as circulated and filed with the Court by 17 May 2012; Between 29 May 2011 and 11 June 2011 Felicity propounded draft orders consequent upon the Judgment that included: (1) a declaration that she with Claude and Mr Sarks "are liable in such proportions as the Court may upon enquiry determine to be just and equitable to compensate" GC & Co for any loss arising from the transfer of the shares at an undervalue; and (2) directions that an inquiry be held both in respect of the existence and quantum of GC & Co's loss and any allowances in favour of Felicity that may be just; No submission was made on Felicity's behalf at any time during the course of the trial after Mr Ashhurst announced in open court on 13 October 2011 that the plaintiffs were seeking an order for equitable compensation against the defendants that this was outside the pleadings or the way in which the trial had been conducted; No submission was made on Felicity's behalf during the 12 June 2012 hearing that the plaintiffs' claim for an order for equitable compensation was outside the pleadings; No evidence was called on Felicity's behalf during this application as to any prejudice that may be suffered by Felicity if the amendment were to be allowed (although Mr Garnsey made submissions in this regard), notwithstanding that at the heel of the hunt during final submissions, leave was granted to call such evidence on Felicity's behalf as the legal representatives thought fit; No evidence was called on Felicity's behalf during this application as to what steps may or would have been taken by Felicity and/or her legal representatives had an amendment application been made at an earlier time before the plaintiffs' case had closed or Felicity went into evidence (although Mr Garnsey made submissions in this regard). 50The plaintiffs submitted at the outset of this application that there was no evidence of any prejudice to Felicity should the amendment be allowed. The plaintiffs did not object to Felicity having an opportunity to call such evidence even though such application was not made until final submissions were being made on the application. When that opportunity was taken up there was no evidence of any prejudice to Felicity nor was there any evidence of what steps, if any, Felicity would have taken if the amendment had been allowed earlier. The plaintiffs submitted that in those circumstances the conclusion may be comfortably drawn that there is no prejudice to Felicity if leave is granted to amend the pleading. 51Mr Condon's evidence was that on 17 May 2012 he wished the proceedings to be adjourned so that Mr Garnsey could come back to Australia and "look at all this" (tr 38) - in particular the question of whether the claim for equitable compensation was contrary to the case that had been pleaded (the pleading point). Neither Mr Garnsey nor his junior on this application (a different junior counsel as briefed previously) made any submissions about Mr Condon's evidence that he raised the pleading point with both junior counsel then briefed and Mr Garnsey before the 12 June 2012 hearing. It is difficult to understand why the pleading point was not raised at the 12 June 2012 hearing if it had been raised with such very experienced trial counsel. However the plaintiffs submitted that it can be comfortably inferred that Felicity's counsel took the view as at 12 June 2012 that, although there was no specific pleading, all parties were on notice of, and the proceedings had been conducted on the basis that, an order for equitable compensation would be sought against Felicity. That seems the most probable conclusion in the circumstances. 52Although there was no evidence of prejudice or the steps that Felicity would have taken if the pleading had been amended earlier, Mr Garnsey made submissions in respect of what Felicity may have done. I will deal with those submissions although I am of the view that the absence of such evidence is an important factor to be taken into account on this application. 53Mr Garnsey candidly conceded that it would have been desirable for him in his submissions to "write as point 1: There is no pleading" (tr 19). Mr Garnsey said he would not "shrink from that but it is a long case with a lot of papers, a number of iterations of the statement of claim and things become clearer as the time proceeds with the submissions" (tr 19). 54Mr Garnsey submitted that had there been a claim for equitable compensation, consideration would have been given to whether the evidence Felicity gave was all the evidence that should have been given or whether there should have been further evidence and further investigations. It was submitted that there may have been some evidence by cross-examination or otherwise of Claude and/or Ms Gibson in relation to the transactions. 55The problem with that submission is that Claude, Mr Sarks and Felicity were all supporting Ms Gibson's evidence. Mr Garnsey submitted that Felicity could have advanced a case that she thought the minutes were accurate. The problem with that submission is that Felicity did advance such a case. However Mr Garnsey submitted that Felicity had a "certain degree of knowledge" and she could have considered further evidence as to whether she had any idea of the extent of the value of the shares or what they could be worth. The problem with that submission is that Felicity did propound a case that the book value was sufficient and that she relied on Claude in this regard. 56Mr Garnsey submitted that the opportunity has been lost to consider Felicity's evidence in the light of the additional matters of her relative culpability or blameworthiness compared to Claude in relation to the carrying out of the details of the transaction. The problem with that submission is that it is clear that this was a matter that was considered and run at trial. It was submitted that she was a "sometime reluctant lender" (Judgment [252] and [267]). This approach continued during the 12 June 2012 hearing when Mr Garnsey described Claude as the "evil genius" (tr 9). Far from losing the opportunity Felicity, through her senior counsel, took the opportunity to describe her relative culpability and blameworthiness. 57Mr Garnsey further submitted that Felicity could have at least considered through her legal advisers what further evidence should be adduced to persuade the Court as a matter of discretion not to order an inquiry against her or alternatively to make what Mr Garnsey described as a proportionate award as between Claude, Mr Sarks, and herself. The problem with that submission is that it was put by Felicity that she should only be ordered to retransfer the shares and not to have any orders or enquiry for compensation made. In any event this opportunity is not lost. Submissions may be made on the equitable compensation inquiry. 58Mr Garnsey submitted that because it was not until the fifth day of the trial that Mr Ashhurst said that he was awaiting instructions to make submissions on the relief seeking equitable compensation against Felicity, a finding could not be made that the trial was conducted on the understanding that an order for equitable compensation was to be sought. It must be remembered that this trial was conducted on the basis that the issue of liability would be decided before the question of relief (CA Judgment [75]). I am satisfied that on the fourth and fifth days of the trial Felicity was clearly on notice that, notwithstanding the absence of an express claim in the then extant pleading, a claim was to be made that she pay equitable compensation to GC & Co. 59It also should be remembered that the trial was then adjourned for two months, to enable the parties to give consideration to their detailed written submissions and to fix the time for oral submissions. Accordingly there was ample time to raise the pleading point. There was also ample time to seek either to call additional evidence or re-call witnesses for the purpose of putting further questions to them. None of this occurred. This is further evidence of the approach adopted by the parties that they would address on relief, including the plaintiffs' heralded claim for equitable compensation against Felicity, after delivery of the judgment on liability. 60It was also submitted that because adverse credit findings have been made against Felicity, it might be necessary for a different judicial officer to conduct any enquiry in respect of equitable compensation, if the amendment is permitted. It was submitted that this would extend the time and cost of any further hearing and increase the burden on the Court. Irrespective of the merits of such an application should it be made, I am satisfied that the prospect that such an application might be made is not a persuasive argument against the grant of leave to amend in this case. 61I am not sure why the proposed orders of 29 May 2012 were not provided to the Court of Appeal. That may have been an oversight. However I regard the propounding of orders containing the declaration in relation to compensation and reference to an inquiry to determine what was just and equitable in the circumstances as totally consistent with the way the parties approached the proceedings. That is, that the plaintiffs were and had been pursuing such a claim for equitable compensation against Felicity. 62The plaintiffs submitted that if, as claimed in her written submissions, Felicity's "defence, evidence, the conduct of her case including cross-examination at trial were all considered and determined in the light of the relief expressly sought against her" were correct, then it would be reasonable to expect that the first argument to have been raised when draft orders seeking equitable compensation were circulated in May 2012 and/or during the 12 June 2012 hearing would have been that such relief should not be allowed because Felicity had deliberately conducted her case on another basis. Instead what in fact happened was that Felicity initially accepted that an inquiry as to equitable compensation was appropriate (in her proposed orders of 29 May 2012) and then later opposed such an inquiry. That opposition was not said to be because her case had not been run on that basis but because the existing evidence demonstrated that her father and husband were responsible for any loss the company had suffered. The plaintiffs also submitted that the absence of any complaint about a lack of pleading leads to the inevitable conclusion that at all relevant times Felicity understood that a claim for equitable compensation was being made against her. 63The plaintiffs also submitted that there is a certain degree of artifice in Felicity's current position. Prior to the hearing commencing in 2011 Felicity argued that she had no actual or constructive knowledge of the breach of fiduciary duty committed by her husband and father, an argument that was maintained both during the liability hearing and Court of Appeal proceedings. Felicity now claims that she was deprived of the opportunity of exploring the question of her knowledge and involvement in the relevant events during the proceedings. Felicity also claims that she had been deprived of the opportunity of establishing that it was primarily her husband and father who were responsible for the breach of fiduciary duty that resulted in the shares being transferred to her. However this very argument was run at the hearing on 12 June 2012, without any complaint that she had been deprived of any opportunity to adduce this evidence during the hearing. 64It was not submitted on Felicity's behalf that, notwithstanding the order of the Court of Appeal, this Court was functus officio in respect of the amendments sought to claim the order for equitable compensation and the order for the inquiry in respect of equitable compensation. However a submission was made that notwithstanding the Court of Appeal's order, that this Court is functus officio in respect of the amendment relating to statutory compensation. The plaintiffs conceded that they are bound by the findings in respect of the claim for statutory compensation on which they failed at first instance. Accordingly they do not press the amendment in paragraphs 13 (xii) and (xiii). Mr Ashhurst explained that the only reason such amendments were included in the draft pleading was that the Court of Appeal directed that the plaintiffs seek leave to amend the pleading in the form presented to it. 65Courts are not imprisoned by pleadings: Water Board v Moustakas (1988) 180 CLR 491 at 497. However there is good reason for the rules of Court to require that a statement of claim must state the relief claimed for determination by the court: UCPR 6.12. Parties are entitled to know what case they are meeting so that they are able to make proper and informed forensic decisions about the conduct of the trial. After referring to these matters in Gould and Birkbeck and Bacon v Mount Oxide Mines Ltd (in liquidation) & Ors (1916) 22 CLR 490, Isaac and Rich JJ said at 517: But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest. 66This description is apt to the present proceedings. The breadth of s 90(1) of the Civil Procedure Act 2005 and UCPR 36.1 reflects this wisdom. 67Notwithstanding that the pleading point was raised in June 2012 I am satisfied that the parties proceeded on the basis that the plaintiffs were making the claim for equitable compensation against Felicity. I am also satisfied that there is no evidence of prejudice to Felicity if leave is granted to amend the pleading. 68I am satisfied that leave should be granted to the plaintiffs to amend their pleading to include paragraph 11A in the draft pleading. 69The plaintiffs submitted that the analysis of the pleading in the CA Judgment insofar as it contrasted the claims against Claude and Mr Sarks on the one hand and Felicity on the other in [99] requires critical consideration (tr 18). Although it was submitted that such a contrast was not justified, it is not necessary to deal with this matter any further having regard to the findings made above. 70The only basis upon which the Court of Appeal set aside Order 17 was the Pleading Issue. Order 17, as set aside by the Court of Appeal insofar as it related to Felicity, was for an inquiry "for the purpose of making orders for equitable compensation to be paid" to GC & Co. It follows from the result on this application that such an order should be made for that purpose but excluding Felicity from any inquiry as it relates to compensation payable as a result of breaches of the Corporations Act. The only inquiry that will involve Felicity is the amount of any equitable compensation in respect of the loss suffered by GC & Co as a result of the breaches of fiduciary duty by Claude and Mr Sarks in transferring the shares to Felicity. 71I have not been informed whether the parties have approached the Court of Appeal to correct its orders. I will assume that Declaration 10 remains in place that Felicity is jointly liable to pay compensation. However this requires clarification when the matter is next listed. 72Although the Court of Appeal suggested that the plaintiffs were to make an election in relation to the retransfer of shares (at [180]), the first plaintiff had been granted leave to bring the derivative proceedings on GC & Co's behalf and I think such election was made during the 12 June 2012 hearing. However it appears that the Court of Appeal had in mind that the liquidator of GC & Co might make the election. For abundant caution I will invite the parties to confirm their understanding of the position when the matter is next listed. 73The other matter with which the Court of Appeal suggested this court should deal was the order as to costs of the proceedings at first instance as between the plaintiffs and Felicity. Although the Court of Appeal has not set aside Order 16 I will proceed on the basis that it was intended that, insofar as this order affected Felicity, it was to be set aside. I will hear the parties further on this aspect of the matter when they bring in Short Minutes of Order. It will also be necessary to clarify the position as to what is intended, if anything, by way of application to the Court of Appeal to adjust its orders before orders are made in these proceedings reflecting the leave granted to amend the pleading, for the inquiry referred to above, and orders in respect of the costs of the trial. Conclusion 74Leave is to be granted to the plaintiffs to amend their pleading by the inclusion of paragraph 11A of the relief claimed in the draft pleading. I will hear the parties further, including on the costs of this application, when the matter is listed for the making of the orders and for clarification of whether the parties have approached the Court of Appeal in respect of the orders it made on 20 December 2013. The matter is listed at 9.45am on 29 April 2014 for any further applications and directions. ****************** 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. Decision last updated: 10 April 2014