Supreme Court New South Wales

• Medium Neutral Citation: Weston v Publishing and Broadcasting Ltd [2011] NSWSC 433
• Hearing dates: 15 -18 February 2011
• Decision date: 13 May 2011
• Jurisdiction: Equity Division - Corporations List
• Before: Ward J

Decision

Applications to discharge orders extending time for service of Statement of Claim upheld. Proceedings dismissed.

• Catchwords: CIVIL PROCEDURE - applications by defendants pursuant to Rule 12.11(1)(e) and/or 36.16(1) for discharge or setting aside of ex parte orders extending time for service of the Statement of Claim - application for dismissal or permanent stay of the proceedings - plaintiffs' application for leave pursuant to s 64 and/or 65 of the Civil Procedure Act 2005 (NSW) to amend the Statement of Claim; HELD - order pursuant to Rule 12.11(1)(e) that orders made ex parte on 16 November 2009 and 20 May 2010 extending the time for service of the Statement of Claim be discharged - proceedings dismissed - application to amend Statement of Claim dismissed
• Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth); Civil Procedure Act 2005 (NSW); Corporations Act 2001 (Cth); Fair Trading Act 1989 (NSW); Law Reform (Miscellaneous Provisions) Act 1946 (NSW); Limitation Act 1969 (NSW); Supreme Court Rules 1970 (NSW); Trade Practices Act 1974 (Cth); Uniform Civil Procedure Rules 1999 (Qld); Uniform Civil Procedure Rules 2005 (NSW)
• Cases Cited: Agricultural & Rural Finance v Kirk [2011] NSWCA 67; Agricultural and Rural Finance Pty Ltd v Atkinson [2010] NSWSC 42; Ahern v The Queen (1988) 165 CLR 87; Aktas v Adepta [2010] EWCA Civ 1170; Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229; Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175; Arthur Andersen Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104; Arthur Young v Tieco International (1995) 182 LSJS 367; Associated Leisure Ltd (Phonographic Equipment Co Ltd) v Associated Newspapers Ltd [1970] 2 QB 450; Australian Competition and Consumer Commission v CG Berbatis (2003) 214 CLR 51; Australian Competition and Consumer Commission v Radio Rentals Pty Ltd (2005) 146 FCR 292; Australian Croatian Cultural and Educational Society 'Braca Radici' Blacktown Ltd v Benkovic [1999] NSWCA 210; Australian Securities & Investments Commission v Rich [2009] NSWSC 1229; Australian Wool Innovation Ltd v Newkirk [2005] FCA 290; Baker v The Queen [1975] 1 AC 774; Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279; Bargan v State Government Insurance Office (Qld) (1982) 154 CLR 318; Barker & Ors v The Duke Group (in liq) [2005] SASC 81; Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; Battersby v Anglo-American Oil Co Ltd [1945] KB 23; Bayat v Lord Michael Cecil & ors [2011] EWCA Civ 135; Belan v Casey [2003] NSWSC 159; Bell Group Ltd & Ors v Westpac Banking Corporation & Ors (No 9) (2008) 70 ACSR 1; Birkett v James [1978] AC 297; Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863; Blazai Pty Ltd v Gateway Development (St Marys) Pty Ltd [2009] NSWSC 800; Blomley v Ryan (1956) 99 CLR 362; BP Australia Ltd v Brown & ors [2003] NSWCA 216; Breen v Williams (1996) 186 CLR 71; Brickfield Properties Ltd v Newton [1971] 3 All ER 328; Bridgewater v Leahy (1998) 194 CLR 457; Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; Brooks v Sunlife Properties Pty Ltd, unreported; SCt of WA (Scott J, 21 February 1996); Bruce v Odhams Press Ltd [1936] 1 KB 697; Buzzle (Buzzle Operations Pty Ltd v Breirl [2007] NSWSC 922; Cabassi v Vila (1940) 64 CLR 130; Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529; Canberra Data Centres Pty Ltd v Vibe Constructions (ACT) Pty Ltd [2010] ACTSC 20; Capital Finance Australia v Tolcher (2007) 164 FCR 83; Cartledge v E Jopling & Sons Ltd [1963] AC 758; CDJ v VAJ [1998] HCA 76; (1998) 197 CLR 172; Cement Australia Pty ltd & ors v Australian Competition and Consumer Commission (2010) 187 FCR 261; Chatsworth Investments Ltd v Cussins (Contractors) Ltd [1969] 1 All ER 143; Chief Executive Officer of Customs v Tony Longo Pty Limited (2001) 52 NSWLR 458; Christie v Purves and 2 Ors [2007] NSWCA 182; Clifton v Robinson (1853) 16 Beav 355; 51 ER 816; Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission (2000) 203 CLR 194; Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25; Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; Commonwealth Bank of Australia v Ridout Nominees Pty Ltd [2000] WASC 37; Commonwealth of Australia v Smith [2007] NSWCA 168; Commonwealth v Griffiths (2007) 70 NSWLR 268; Creevey v Barrois [2005] NSWCA 264; CSR Limited v Eddy (2005) 226 CLR 1; Dagnell v JL Freedman & Co [1993] 1 WLR 388; Dart Industries Inc v Decor Corporation Pty Ltd (1993) 179 CLR 101; Davies v Chicago Boot Co Ltd (2006) 58 ACSR 505; Davy v Garrett (1878) Ch D 473; Deloughery & Ors v Weston (2010) 79 ACSR 180; Department of Transport v Chris Smaller (Transport) Ltd [1989] 1 AC 1197; 1 All ER 897; Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458; Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169; (2004) ATPR 1(42-013); Duke Group Ltd (in liq) v Alamain Investments Ltd & Ors [2003] SASC 415; Duncan v Lowenthal [1969] VR 180; Dye v Commonwealth Securities Limited (No 2) [2010] FCAFC 118; Eleftheriou v Water Board [1991] NSWCA 91; Elvidge Pty Ltd v BGC Construction Pty Ltd [2006] WASC 264; FAI Insurance Ltd v Mainprize [2006] NSWSC 554; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; Fatimi Pty Ltd v Bryant (2004) 59 NSWLR 678; Fernance v The Nominal Defendant (1989) 17 NSWLR 710; Ford Excavations v Do Carmo [1981] 2 NSWLR 253; Forster v Outred & Co [1982] 1 WLR 86; [1982] 2 All ER 753; Foxe v Brown (1984) 58 ALR 542; Franklins v Metcash Trading (2009) 264 ALR 15; Galland v Mineral Underwriters Ltd [1977] WAR 116; Ghazal v GIO (NSW) (1992) 29 NSWLR 336; Gill v Eatts [1999] NSWSC 1056; GIO General Ltd v Love [2009] NSWCA 269.; Goldie v Johnston [1968] VR 651; Goldsmith v Sandilands (2002) 190 ALR 370; Graham Lewis Herbert v Nozala Pty Ltd and 1 Or [2006] NSWSC 1437; Greater Lithgow City Council v Wolfenden [2007] NSWCA 180; Greenwood v Papdemetri [2007] NSWCA 221; H 1976 Nominees Pty Ltd v Galli (1979) 30 ALR 181; Halpin v Lumley General Insurance Ltd [2009] NSWCA 372; Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230; Harris v Caladine (1991) 172 CLR 84; Hartigan v International Krishna Consciousness [1999] NSWSC 57; Hawkins v Clayton (1988) 164 CLR 539; Henderson v Amadio Pty Ltd (No 1) (1995) 62 FCR 1; 140 ALR 391; Hewitt v Henderson [2006] WASC 233; HIH Insurance Ltd (In Liq) v General Re [2006] NSWSC 128; Hoddinott v Persimmon Homes [2008] 1 WLR 806; Holman v George Elliot & Co Ltd [1944] KB 591; Hoser v Hatcher [1999] NSWSC 527; Hughes v Western Australian Cricket Assn Inc (1986) 69 ALR 660; Hytrac Conveyors Ltd v Conveyors International Ltd [1983] 1 WLR 44; Ingot v Macquarie [2004] NSWSC 1136; International Harvester Co of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Co (1958) 100 CLR 644; Itek Graphix Pty Ltd v Elliott [2002] NSWCA 104; (2002) 54 NSWLR 207; Jackamarra v Krakouer [1998] HCA 27 at 29; (1998) 195 CLR 516; Jago v District Court (NSW) (1989) 168 CLR 23; Kalls Enterprises Pty Ltd (in liq) v Baloglow (2007) 63 ACSR 557; Kellow-Falkiner Motors Pty Ltd v Christoforos Nimorakiotakis [2000] VSCA 1; Kleinwort Benson Ltd v Barbrak Ltd [1987] AC 597; Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; Krawszyk v Graham [1966] SASR 73; Lawrance v Norreys (1888) 39 Ch D 213; Leitch v Abbott (1886) 31 Ch D 374; Louth v Diprose (1992) 175 CLR 621; Magman International Pty Ltd v Westpac Banking Corp (1991) 32 FCR 1; 104 ALR 575; [1992] ATPR 41-161; [1992] ASC 56-127; Maile v Rafiq [2005] NSWCA 410; Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; Malterer v Southern Electric Authority of Queensland [1974] Qd R 43; Markisic v Commonwealth of Australia (2007) 69 NSWLR 737; Maronis Holdings Ltd v Nippon Credit Australia Ltd [2000] NSWSC 507; McDonald v Shone and Ors [2010] NSWSC 467; McGee v Yeomans [1977] 1 NSWLR 273; McKenna v McKenna [1984] VR 665; McLeod v West Australian Trustee Executor & Agency Co Ltd (1951) 53 WALR 4; Medcalf v Mardell [2003] 1 AC 120; [2002] 3 All ER 721; Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274; Micarone v Perpetual Trustees Australia Ltd (1999) 75 SASR 1; Milperra Marketing Pty Ltd v Bayliss [2001] NSWCA 315; Moratic Pty Ltd v Lawrence James Gordon [2007] NSWSC 5; NCR Australia v Credit Connections Pty Ltd [2004] NSWSC 1; Nelson v Wyong Shire Council (1989) 68 LGRA 164; New Cap Reinsurance v Reaseguros Alianza SA [2004] NSWSC 787; Newcastle City Council v Batistatos [2005] NSWCA 20; News Corporation Ltd v Lenfest Communications Inc (1996) 40 NSWLR 250; NZI Capital Corporation Ltd v Fulton [1998] FCA 667; OneFone Australia Pty Ltd v One. Tel Limited (2007) 61 ACSR 246; OneFone Australia Pty Ltd v One.Tel Limited (2007) 61 ACSR 429; Onefone Australia Pty Ltd v One.Tel Limited (In Liquidation) [2003] NSWSC 1228; Onefone Australia Pty Ltd v One.Tel Limited; Weston v Publishing and Broadcasting Limited [2007] NSWSC 1320; Onefone Australia Pty Ltd v One.Tel Ltd [2007] NSWSC 112; Onefone Australia v One.Tel Ltd [2006] NSWSC 349; Onefone Pty Ltd v One.Tel Ltd (in liquidation) [2006] NSWSC 1434; P&O Nedlloyd BV v Arab Metals Co & Ors [2007] 1 WLR 2288; Pacanowski v Simon Wakerman [2009] NSWCA 402; Pancontinental Mining Ltd v Posgold Investments Pty Ltd and Ors (1994) 121 ALR 405; Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187; Permanent Trustee Australia v FAI General Insurance Co Ltd [2001] NSWCA 20 (2001) 50 NSWLR 679; 187 ALR 380; Phillips v Phillips (1978) 4 QBD 127; Phillips v The State of New South Wales [1999] NSWSC 681; Pickin v British Railways Board [1972] 3 All ER 923; [1973] QB 219; Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; Pinson v Lloyds and National Provincial Foreign Bank Ltd [1941] 2 KB 72; Porter v Oamps Ltd and ors (2005) 215 ALR 327; Power v Ekstein [2009] NSWSC 130; Protean (Holdings) Ltd (recs and mgrs apptd) v American Home Assurance Co [1985] VR 187; Rajski v Bainton (1990) 22 NSWLR 125; Ramsay v Madgwicks (1989) VR 1; Ratcliffe & Anor v V S & B Border Homes Ltd (1987) 9 NSWLR 390; Ratcliffe v Evans [1892] 2 QB 524; Re Chittenden [1970] 3 All ER 562; Regie National des Usines Renault SA v Zhang [2002] HCA 10; (2002) 210 CLR 491; Rich v Packer; Rich v Long [2007] NSWSC 1290; Rich v Long [2008] NSWSC 487; Ridout Nominees Pty Ltd v Commonwealth Bank of Australia [2003] WASCA 158; Robertson v The Zinc Corporation Pty Ltd [2005] NSWCA 372; Rubenstein v Truth and Sportsman Limited [1960] VR 473; Rundle v Salvation Army (South Australia Property Trust) [2007] NSWCA 443; Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; Saad v J Robins & Sons Pty Limited [2003] NSWCA 87; Salvation Army (South Australia Property Trust) v Graham Rundle [2008] NSWCA 347; Savcor Pty Ltd v Cathodic Protection International APS (2005) 12 VR 639, [2005] VSCA 213; Scott & ors v Davis (2000) 204 CLR 333; Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596; Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; Sheldon v Brown Bayley's Steel Works Ld and Dawnays Ltd [1953] 2 QB 393; Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1986) 4 NSWLR 491; Spencer v The Commonwealth of Australia [2010] HCA 28; State of New South Wales v McCloy Hutcherson Pty Ltd (1993) 116 ALR 363; Stollznow v Calvert [1980] 2 NSWLR 749; Street v Luna Park Sydney Pty Ltd [2006] NSWSC 230; SWF Hoists & Industrial Equipment Pty Ltd v State Government Insurance Commn (1990) 6 ANZ Insurance Cases 61-002; [1990] ATPR 41-045; [1990] ASC 55-996; Tekno Ceramics Pty Ltd v Milat [2003] NSWCA 254; The Bell Group Ltd (in liq) v Westpac (2008) 225 FLR 1; The I.M.B. Group Pty Ltd (in liq) v Australian Competition and Consumer Commission [2007] 1 Qd R 148; The IMB Group Pty Ltd (in liq) v Australian Competition and Consumer Commission [2006] QCA 407; [2007] 1 Qld Rep 148; Tipperary Developments v WA (2009) 38 WAR 488; Tolcher v Gordon [2005] NSWCA 153; 53 ACSR 442; Trau v University of Sydney (1989) 34 IR 466; Tyrrell v Tyrrells Building Consultancy Pty Ltd [2008] NSWSC 416; Van Leer Australia Pty Ltd v Palace Shipping KK & anor (1981) 180 CLR 337; Vicary v State of Queensland [2009] QSC 284; Victa Limited v Johnson (1975) 10 SASR 496; Vines v Australian Securities and Investments Commission (2007) 73 NSWLR 451; Wallaby Grip (BAE) Pty Ltd (in liq) v Eraring Energy [2004] NSWCA 269; Wallingford v Mutual Society (1880) 5 App Cas 685; Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; Warman International v Dwyer (1995) 182 CLR 544; Watson v Foxman (1995) 49 NSWLR 315; Weston v Publishing and Broadcasting Limited [2007] NSWSC 1320; Weston v Publishing and Broadcasting Ltd [2007] NSWSC 1318; Weston v Publishing and Broadcasting Limited & Ors [2009] NSWSC 1235; Weston v Publishing and Broadcasting Limited & Ors [2009] NSWSC 321; Weston v Publishing and Broadcasting Ltd [2010] NSWSC 499; White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169; Whiting v JDS Engineering & Labour Services Pty Ltd [2010] NSWCA 28; Wickstead v Browne (1992) 30 NSWLR 1; Williams v Hursey (1959) 103 CLR 30; Williams v Milotin (1957) 97 CLR 465; Williams v Minister, Aboriginal Land Rights Act 1983 (1994) NSWLR 497; Witten v Lombard Australia Ltd [1968] 2 NSWR 529; (1968) 88 WN (Pt 1) (NSW) 405; Young v Waterways Authority of New South Wales [2002] NSWSC 612; Zhang v Zemin [2007] NSWSC 229
• Texts Cited: Balkin and Davis, The Law of Torts (4th edn); Bernard Cairns, Australian Civil Procedure (8th edn); Cheshire and Fifoot, On Contract (1997); Degeling and Edelman (eds) Equity in Commercial Law (2005); Heydon, Economic Torts (2nd edn); Ritchie's Uniform Civil Procedure Rules (NSW); Spry, The Principles of Equitable Remedies (6th edn); The Laws of Australia; Vout (ed) Torts, The Laws of Australia (2nd edn)
• Category: Procedural and other rulings
• Parties: Paul Gerard Weston in his capacity as Special Purpose Liquidator of One.Tel Ltd (in liq) (First Plaintiff); One.Tel Ltd (in liq) (Second Plaintiff); Publishing and Broadcasting Ltd (now known as Consolidated Media Holdings Ltd) (First Defendant); Consolidated Press Holdings Ltd (Second Defendant); Robbdoc Pty Ltd (Third Defendant); Toranaga Pty Ltd (Fourth Defendant); Cavalane Holdings Pty Ltd (Fifth Defendant); News Ltd (Sixth Defendant); Leteno Pty Ltd (Seventh Defendant); James Douglas Packer (Eighth Defendant); Peter William Yates (Ninth Defendant); Lachlan Keith Murdoch (Tenth Defendant); Peter John Macourt (Eleventh Defendant)
• Representation: Counsel: J Karkar QC with I Jackman SC, A D'Arcy (Plaintiffs); T F Bathurst QC, with J Elliott SC, S Nixon (First, Second, Third, Fourth, Fifth & Eighth Defendants); N Hutley SC with J Lockhart SC (Sixth, Seventh, Tenth & Eleventh Defendants); N J Young QC with J R Williams (Ninth Defendant); Solicitors: Lipman Karas (Plaintiffs); Minter Ellison (First, Second, Third, Fourth, Fifth & Eighth Defendants); Allens Arthur Robinson (Sixth, Seventh, Tenth & Eleventh Defendants); Atanaskovic Hartnell (Ninth Defendant); No appearance for Twelfth to Eighteenth Defendants
• File Number(s): 07/255083

Judgment

1. HER HONOUR: Before me for hearing on 15 -18 February this year were a number of applications brought in proceedings commenced in 2007 by the special purpose liquidator of One.Tel Limited (in liq), Mr Paul Gerard Weston, on behalf and in the name of One.Tel. Named as defendants in those proceedings were various entities and individuals, who may broadly be grouped as: the PBL defendants, those being Mr James Packer and entities associated with him, (the first to fifth and eighth defendants); the News defendants, those being Mr Lachlan Murdoch, entities associated with him and the Chief Operating Officer of News, Mr Peter Macourt, (the sixth, seventh, tenth and eleventh defendants); Mr Peter Yates, who was, at the relevant time in 2001, both the Chief Executive Officer of PBL and a then recently appointed director of One.Tel (the ninth defendant); four directors of One.Tel (the twelfth to fifteenth defendants; and the partners of three firms of professional advisers (the sixteenth, seventeenth and eighteenth defendants).

2. Although at times since 2001, the same firm of lawyers represented both Mr Yates and the PBL defendants, and thus Mr Yates might loosely be described as falling within the PBL interests for that purpose, Mr Yates has not, since 2004, been associated with the PBL group of companies and on the applications before me Mr Yates was separately represented. (This is relevant insofar as it is contended that various of the plaintiffs' submissions have conflated the position of the respective defendants over the period to date.)

3. The claims made in the proceedings relate to the decision by the Board of One.Tel on 29 May 2001 not to proceed with a renounceable rights issue of $132m that had been announced on 17 May 2001 and which was to be underwritten by entities associated with the PBL and News defendants. Following the decision not to proceed with the rights issue (and at that same meeting), the Board resolved to place One.Tel into administration under Part 5.3 of the Corporations Act 2001 (Cth) and to appoint Messrs Sherman and Walker of Ferrier Hodgson as administrators. Not long after, in July 2001, the company was placed in liquidation and Messrs Sherman and Walker (to whom I will refer as the general purpose liquidators) were appointed as the liquidators of the company.

4. The events leading up to the appointment of administrators (and then liquidators) of One.Tel (and its solvency in May 2001) have already been the focus of judicial consideration in proceedings brought by ASIC against three former executive directors of One.Tel and its former chairman but ultimately contested by only two of the directors - Mr Rich and Mr Silbermann. Judgment in those proceedings was delivered by Austin J on 18 November 2009 ( Australian Securities & Investments Commission v Rich [2009] NSWSC 1229) after a lengthy hearing (232 days) with numerous interlocutory applications over the period from September 2004 to August 2007. (As will be seen, the time that elapsed from hearing to the delivery of judgment was a factor in the delay in service of the originating process in the present proceedings.)

5. Mr Weston was appointed the special purpose liquidator of One.Tel by order of Windeyer J on 23 December 2003. He was appointed for the specific purposes of investigating the cancellation of the renounceable rights issue and of making recommendations to the creditors of the company, first, "as to whether any rights of action exist in respect of which there is a limitation period for the commencement of any such action of less than six years" and, further, as to whether any action should be commenced against any such person on any such rights. (An issue of potential conflict had arisen vis-a-vis the general purpose liquidators in that regard, as Mr Sherman had been present in an advisory capacity at the 29 May Board meeting.)

6. Windeyer J directed that the SPL's recommendation as to the existence of any rights of action should be made on the assumption that One.Tel became insolvent as a result of the cancellation of the renounceable rights issue (his Honour having noted ASIC's position, to the contrary, that the sum of $132m would not have been sufficient to enable the company to continue in business). Windeyer J considered that to be appropriate as it was "not to the benefit of creditors to have a vast sum of money spent on establishing the solvency question when this is going to be established at no expense to them [i.e. in the ASIC v Rich proceedings] unless they will lose valuable rights by reason of the delay" ( Onefone Australia Pty Ltd v One.Tel Limited (In Liquidation) [2003] NSWSC 1228 at [19]). His Honour observed that, were it not for the possibility of some order being made for the benefit of the company through the cancellation of the rights issue being held to be an uncommercial transaction, he would have considered reasonable and proper the decision of the general purpose liquidators to "wait and see" the result of the ASIC v Rich litigation. (The concern in relation to the expiry of any relevant limitation period at that stage related to the three year limitation period under s 588FF(3) of the Corporations Act for claims as to uncommercial transactions.)

7. These proceedings were commenced by Statement of Claim verified by the SPL and filed on 25 May 2007, less than a week before the expiry on 29 May 2007 of the (by then extended to six years) limitation period for the bringing of an uncommercial transaction claim under s 588FF. Under Rule 6.2(4)(a) of the Uniform Civil Procedure Rules , the time limited for service of that originating process expired 6 months after it was filed. It was not served within that time. In fact, the Statement of Claim was not served until 23 August 2010 (some 9 months after judgment was handed down in ASIC v Rich and over three years after the expiry of the extended limitation period for uncommercial transaction claims). Even then it was served on only some of the defendants who had been named as party to the Statement of Claim when it was filed.

8. On six occasions between May 2007 and May 2010 applications were brought by the SPL pursuant to Rule 1.12 of the Uniform Civil Procedure Rules 2005 (NSW) (and orders were on each occasion made) on an ex parte basis for successive extensions of time for the service of the Statement of Claim. On the first of those occasions (in November 2007), leave was unsuccessfully sought by seven of the unserved defendants (the PBL defendants and Mr Yates) to appear and be heard on the extension application. That leave was refused on the basis that, unless and until a filed process is served, a defendant has not been drawn in to the proceedings and has no definitive status in relation to the proceedings, ( Onefone Australia Pty Ltd v One.Tel Limited; Weston v Publishing and Broadcasting Limited [2007] NSWSC 1320 at [10] - [11] per Barrett J). Barrett J noted that there was a strong indication in the Uniform Civil Procedure Rules that a person named as a defendant in an unserved originating process is not intended to be heard on an application for extension of the time for which the process remains valid for service [at 9] and that a defendant's interest in the question whether time for service should be extended is something to be heard only retrospectively after that defendant has been drawn in to the proceedings.

9. All of the extension applications were made after the expiry of the relevant limitation period for claims under s 588FF of the Corporations Act (and after the expiry of the relevant limitation period for claims for breach of directors' duty under the Corporations Act or for claims of misleading and deceptive conduct under the Trade Practices Act 1974 (Cth) or Fair Trading Act 1989 (NSW)) but before the time at which the originating process would otherwise have become stale.

10. The applications now before me are as follows:

(i) an application by notice of motion filed 23 August 2010 by the plaintiffs for leave pursuant to rule 12.1(1)(b) of the Uniform Civil Procedure Rules to discontinue the proceedings against the 12 th to 18 th defendants, none of whom has been served with the Statement of Claim (those defendants variously being certain executive or non-executive directors of One.Tel and the professional advisers who had been involved in the events of May 2001 in one or other capacity) and for leave pursuant to s 64 and/or 65 of the Civil Procedure Act 2005 (NSW) to amend the Statement of Claim (inter alia, to include new claims of negligence, breach of contract, conspiracy, knowing involvement in breach of fiduciary duty and unconscientious conduct, as well as a new claim for relief in the form of an account of profits) ;

(ii) an application by notice of motion dated 3 September 2010 by the PBL defendants seeking a permanent stay of the proceedings and an order pursuant to rule 12.11(1)(e) that service of the Statement of Claim be set aside;

(iii) an application by notice of motion dated 6 September 2010 by Mr Yates seeking an order pursuant to rule 12.11(1)(e) discharging the orders extending the validity of service of the Statement of Claim, a declaration that Mr Yates had not been validly served, and an order pursuant to s 67 of the Civil Procedure Act and/or the inherent jurisdiction of the court, that this proceeding be permanently stayed (in the alternative, an order for the dismissal of the proceedings); and

(iv) an application by notice of motion dated 21 September 2010 by the News defendants seeking an order pursuant to rule 12.11(1)(e) (alternatively rule 36.16(2)(b)), that the six orders extending the time for service of the Statement of Claim be discharged or set aside and an order for a permanent stay of the proceedings against them.

11. Accordingly, apart from the application for leave to discontinue against the 12 th to 18 th defendants (against whom Mr Weston had, as long ago as March 2008, formed the view, with the benefit of Senior Counsel's advice, that the proceedings should not be pursued - subject only to any contrary view by litigation funders - and had so recommended to creditors), there are broadly two separate matters to be determined - first, whether any one or more of the orders for extension of the time for service of the Statement of Claim should be discharged or set aside (and whether the proceedings should now be permanently stayed or dismissed) and, secondly, if the proceedings are not permanently stayed or dismissed, whether leave should be granted to the plaintiffs to amend the Statement of Claim as now sought (those amendments being by no means insubstantial and including very serious allegations tantamount to fraud).

12. On the respective applications, each of the parties (other than the News defendants who filed no affidavit evidence) relied upon affidavit evidence from solicitors retained by them - the plaintiffs reading affidavits sworn by Ms Brooke Hall-Carney on 5 October 2010, 13 February 2011 and 14 February 2011, the PBL defendants reading affidavits sworn by Mr Joshua Wyner on 21 September 2010 and 2 November 2010, and Mr Yates reading an affidavit sworn by Mr Michael Sophocles on 21 September 2010. Mr Weston swore three affidavits, on 23 August 2010, 13 February 2011 and 14 February 2011, respectively, and was cross-examined. A nine volume Court Book was tendered (and marked Exhibit 3), to which I will refer for convenience as the CB.

Summary

13. In summary, for the reasons set out below, I am of the view that:

(i) had the Statement of Claim remained on foot, leave should be granted to the plaintiffs to discontinue the proceedings against the 12 th to 18 th defendants (but, as it is, such relief is not necessary);

(ii) the orders made ex parte on 16 November 2009 and 20 May 2010, (successively extending the time for service of the Statement of Claim through, first, to May 2010 and then to November 2010) should be discharged and, as the originating processes is now stale, the proceedings should be dismissed;

(iii) in view of the finding in (ii), the question whether leave should be granted to the plaintiffs to file an Amended Statement of Claim does not arise. I set out later in my reasons the relief I would have granted on this application had the proceedings remained on foot.

Background

14. Senior Counsel for the plaintiffs, Mr Karkar QC, identifies the factual substratum of the current proceedings as traversing the period from March 1995 to July 2001 (on the basis that the roles played by Mr Packer from 1995 and by Mr Murdoch from 1999 in relation to the business of One.Tel inform the conduct of the Board of One.Tel in May 2001). Nevertheless the critical events are those that occurred in around May 2001 (and the existing Statement of Claim does not make any relevant allegations of fact as to the earlier period).

15. On 17 May 2001, following an examination by senior analysts associated with the PBL interests (Messrs Miller and Green) into the financial affairs of the company (the Miller/Green review), the One.Tel Board resolved to proceed with a renounceable rights issue to raise $132m. It was contemplated that the rights issue would be underwritten by the PBL/News interests.

16. As the Statement of Claim is presently pleaded ([38], [39] and [58]), the plaintiffs allege that on 17 May 2001 there was an agreement between One.Tel and each of the first defendant, Publishing & Broadcasting Limited (now Consolidated Media Holdings Limited) (PBL), the second defendant, Consolidated Press Holdings Limited (CPH), and the sixth defendant, News Limited (alternatively, that those companies are estopped from denying such an agreement ), whereby (in effect) PBL, CPH and News, through their subsidiaries, would subscribe for their full entitlement to shares in the proposed renounceable rights issue and would underwrite that rights issue. The plaintiffs further allege ([37], [58]) that at the 1 7 May 2001 Board meeting, there was an agreement between One.Tel and PBL/CPH (alternatively, that those companies are estopped from denying such an agreement) whereby PBL/CPH would provide a bridging loan to One.Tel pending the receipt of cash under the rights issue.

17. At a One.Tel Board meeting on 29 May 2001, after a rapid succession of meetings (namely, meeting two days earlier between Messrs Packer, Murdoch, Macourt and others, though not Mr Yates; a further meeting on 27 May 2001 at the offices of PBL/CPH at which Mr Yates was present; and a One.Tel Board meeting on 28 May 2001, at which a presentation was made by Messrs Miller and Green), a resolution was passed by the One.Tel Board not to proceed with the renounceable rights issue. (The basis on which that resolution was said to be made was that One.Tel would be, or would be likely to become, insolvent even after raising $132m contemplated under the rights issue.) Following that resolution, the Board then resolved to place the company into administration, appointing Mr Sherman (who was at the meeting) and one of his partners, Mr Walker, as administrators of the company pursuant to the provisions of Part 5.3A of the Corporations Act . The timing of the respective resolutions (particularly, the fact that the decision not to proceed with the rights issue had preceded the resolution to place the company in administration) is one of the matters on which reliance is placed by the plaintiffs for various of the allegations now sought to be made in the present proceedings (such as the alleged conspiracy), as is the question of what information was before the Board when the relevant decisions were made (which is relied upon, inter alia, for the claims based on misleading and deceptive conduct as well as the conspiracy and breach of duty claims).

18. The plaintiffs allege (from [81] to [139] of the existing Statement of Claim), in effect, that prior to the 29 May One.Tel Board meeting (from about 25 May 2001), PBL/CPH had decided that they did not wish to proceed with the rights issue and that they then (together with News) engaged in conduct (defined in the current pleading as "Implementation of the Determination" but now dubbed the Scheme) designed to manipulate the process of the Board of One.Tel and to extract themselves from what are said to have been their contractual obligations to One.Tel in respect of the rights issue. That conduct is now alleged (in [58AO] of the proposed amended Statement of Claim) to have included:

• misleading the Board of One.Tel about the financial position of One.Tel including by providing "purportedly new" financial information about One.Tel's financial circumstances and suggesting that PBL/CPH had been misled at the time of the conduct of the Miller/Green review;

• misleading or lying to the One.Tel Board or individual Board members about a variety of matters;

• convincing the One.Tel Board to appoint Mr Long of Ernst & Young to investigate the financial position of One.Tel (in circumstances where it is asserted that Mr Long was not independent and had been told what conclusion PBL/CPH wanted him to reach and that the (short) time in which Mr Long was asked to report back to the One.Tel Board meant that his findings could not reasonably be relied upon by the Board);

• misleading the One.Tel Board about the "Long Report" in order to deprive the Board of the opportunity to review the report in a timely manner or to obtain further information about the contents of the report;

• manipulating the One.Tel Board process so as to create an "unnecessary sense of urgency", to deprive the Board of material information, and to conceal from the Board what is alleged to have been the true purpose of PBL, CPH and News (namely, to extract themselves from their binding obligations with respect to the rights issue); and

• misrepresenting the position of an entity described as a "major stakeholder" as to the possibility of funding by it (the "Lucent Position" as defined in [114]), described in the plaintiffs' submissions as feigning an interest to secure funds from alternative sources.

19. On 30 May 2001, there was a joint announcement by PBL and News to the ASX that the directors of One.Tel had advised that the company was insolvent, following due diligence investigations which had led the Board's two independent and two management directors to resolve that the $132m rights issue would be insufficient to assure its solvency. The announcement quoted a statement by Mr Murdoch and Mr Packer that they had been "profoundly misled" as to the true financial position of the company and intended "to explore all remedies available to us". (Mr Karkar relies on this as encouragement given by the PBL/News interests to ASIC to take the action it subsequently did in relation to Mr Rich and other directors of One.Tel; suggesting that the cause of any prejudice now suffered due to the delay in the present proceedings is self-inflicted (since that delay was referable to the ASIC prosecution they had themselves urged against Mr Rich in an attempt, it was said, to deflect attention from their own position).)

20. In the aftermath of those events, the PBL interests (and at least up to 2004 Mr Yates seems to have been included as someone on whose behalf those steps were taken) and the News defendants took steps to prepare for an investigation in relation to the financial position of One.Tel at the relevant time. They retained legal advisers and one or more of them recorded (at least in part) their then recollection of the relevant events. I was taken to transcript of some of the evidence in the proceedings before Austin J in which Mr Jalland, as the group general counsel and company secretary of PBL, accepted that PBL/CPH had retained external legal advisers at an early time in relation to the matter (vol 6 CB pp 3916, 3927 and 3930-1). It is said that in his evidence Mr Jalland indicated an awareness by PBL of the potential claims in relation to the alleged underwriting agreements (by accepting that it was important to the PBL interests that there not be found an agreement to underwrite the rights issue).

21. Shortly after the events in question Mr Murdoch swore an affidavit (vol 6 CB pp 4492ff) assisting ASIC in the preparation by it of an urgent application against Mr Rich in June 2001, in which Mr Murdoch deposed to various events and conversations around May 2001 and to his belief that he had been profoundly misled as to the true financial position of One.Tel from at least 30 March 2001. Statements were taken by Counsel representing the PBL defendants (Mr Elliott SC) from overseas witnesses and provided to ASIC and the PBL/News parties answered Notices to Produce issued by ASIC. Reference was also made by Mr Karkar to statements by ASIC that referred to receiving assistance or co-operation from the Packer/News interests. (Mr Karkar relies on this conduct, and the subsequent monitoring by the PBL/News defendants of the ASIC v Rich proceedings, as well as the information contained in the various liquidators' reports over the period, as demonstrating the defendants' awareness of the subject matter, if not the detail, of the present claims and as indicating that the defendants took the opportunity to preserve evidence in relation to the events of mid 2001.)

22. As early as June 2001, notification was made to insurers (on behalf of Mr Packer and Mr Yates) of circumstances which could give rise to a claim on a directors' and officers' liability policy (vol 8 CB p5362.10/11), reference in that notification being made to potential claims for insolvent trading, misrepresentation in relation to the financial position of the company, and breach of directors' duties. (In July 2001, further notification was made of a potential class action - vol 8 CB p 5362.12). (Notification was made on behalf of Mr Murdoch to insurers in June 2002, vol 7 CB p 4847A.)

23. As to the information that was publicly available as to any proposed or potential claims on behalf of the company, the first report to creditors (pursuant to s 439A of the Corporations Act ) prepared by Messrs Sherman and Walker in their then capacity as administrators of the company, on 12 July 2001, referred to their preliminary investigations and noted that the key areas of investigation included insolvent trading, unfair preferences, uncommercial and insolvent transactions, unfair loans and "directors' duty". The directors said to be the subject of review in the context of the insolvent trading claims included Messrs Murdoch and Packer. (Of Mr Yates, who had only been appointed to the One.Tel Board on 17 May 2001, the administrators' preliminary comment was that he had taken reasonable steps to establish the financial position of One.Tel and to act upon it by instigating a report and the Board meetings on 28 and 29 May 2001 (vol 6 CB p 4678). Thus, a reader of this report would not unreasonably conclude that Mr Yates was not then the subject of investigation in relation to proposed insolvent trading claims, or other claims at least up to the time of the May 2001 meetings.)

24. On 24 July 2001, Messrs Sherman and Walker were appointed as liquidators of the company. ASIC had already, by then, commenced its investigation into the affairs of the company.

25. In late 2001, ASIC conducted examinations under s 19 of the Australian Securities and Investments Commission Act 2001 (Cth) of a number of individuals (including Mr Packer in September 2001 and Mr Yates in November 2001). In December 2001, ASIC commenced proceedings against a number of directors or officers of One.Tel (Mr Rich, Mr Keeling, Mr Silbermann and Mr Greaves), those being the ASIC v Rich proceedings that culminated in the 18 November 2009 judgment of Austin J.

26. In 2002, the general purpose liquidators carried out their own examinations of various individuals associated with the PBL/News defendants, including each of Mr Packer, Mr Yates and Mr Murdoch.

27. On 24 June 2002, letters (vol 7 CB pp 4844, 4846, 4847C, 4847E) were sent by the SPL's solicitors, Kemp Strang, to the respective sets of solicitors then acting for Mr Packer, Mr Yates, Mr Murdoch and Mr Macourt (Gilbert + Tobin; Atanaskovic Hartnell; and Allens Arthur Robinson, respectively). In those letters, reference was made to the liquidators' (recent, in the case of Messrs Packer and Yates, and forthcoming, in the case of Mr Murdoch) examinations and the principal areas of investigation in relation to those individuals were noted. Those areas of investigation (in the case of each of Messrs Packer and Murdoch) included whether debts were incurred by One.Tel whilst it was insolvent during the period that he was a director in contravention of s 588G of the Corporations Act and (in the case of all three), the circumstances in which the underwriting or proposed underwriting announced on 17 May 2001 did not proceed and the circumstances in which a proposed bridge funding agreement did not proceed. (The June 2002 letters raised no suggestion of any investigation into claims of conspiracy, fraud or the like.) The letters also contained the statement that:

At the conclusion of the investigations of the above areas the liquidators will decide whether proceedings will be commenced against your client seeking to recover damages or other compensation by reason of your client's conduct including (but not limited to) conduct comprising a breach of statutory common law or equitable duties as a director . (my emphasis)

28. Mr Karkar points to the responses received by the SPL's lawyers from Gilbert + Tobin and Atanaskovic Hartnell (by letters dated 1 and 2 August 2002, respectively) (vol 7 CB pp4848/4850) as confirming that they were aware of the stated areas of concern of the liquidators. Those letters are construed by Mr Karkar as an attempt to discourage the investigation by the general purpose liquidators of the rights issue and bridging loan (the letters having referred to Mr Sherman's attendance as an 'adviser' of certain parties at the relevant board meetings and stating that if proceedings were commenced then he would (or could) be joined to any such proceedings). Whatever the intent, they clearly put the general purpose liquidators on notice of a contention that they were in a position of potential conflict, which was denied by his lawyers, Kemp Strang in their letter of 5 August 2002 (vol 7 CB p 485Z). That response must have fairly clearly indicated to the solicitors acting for the PBL defendants and Mr Yates that the general purpose liquidators were intending to continue with their investigations into at least the previously stated areas of concern (vol 7 CB pp 4852, 4853).

29. The general purpose liquidators' first annual report, issued pursuant to s 508 of the Corporations Act , dated 14 March 2002, (vol 7 p 4878) referred, under the heading "Investigations", to the two issues on which it was said that the liquidators had largely focussed in their investigations to that time - namely, whether there were any transactions recoverable under Part 5.7B and whether there was any substantive breach of directors' duties. The 'key' issues identified included the "termination of the Renounceable Rights issue, related underwriting and loan agreements and related directors duties". Again there is no suggestion of any allegation of conspiracy or fraud.

30. Mr Karkar emphasises that a key issue in both the ASIC v Rich proceedings and the claim against the PBL/News defendants was the question of One.Tel's solvency at the relevant time (and the defendants emphasise, in the context of the current applications, that their awareness at the relevant time was as to the potential for claims relating to insolvency). The 14 December 2002 liquidators' report noted that if, in the ASIC proceedings, it was established that the $132m rights issue would have been sufficient to establish solvency then this might positively impact on a cause of action relating to the Renounceable Rights Issue and the underwriting agreement; and, if not, then the question whether the non-executive directors had been misled would be relevant in relation to any defence that might be raised in answer to the potential insolvent trading claims.

31. On 6 August 2003, the liquidators' second annual report was issued. It summarised the key points at issue and the litigation in similar terms to the first report.

32. In December 2003, as adverted to earlier, application was made to Windeyer J by two creditors of the company for the appointment of a special purpose liquidator (that application being based on the perceived conflict in the position of the general purpose liquidators having regard to Mr Sherman's attendance at the relevant meeting(s)). Mr Karkar points to paragraphs [12] and [17] of his Honour's judgment on that application as a recognition of the essential 'interconnectedness' between the ASIC v Rich proceedings and what later came to be instituted as the present proceedings. Certainly, there seems to have been an assumption, when the matter was before his Honour, that the question of One.Tel's solvency would be determined in the ASIC v Rich proceedings. Ultimately, however, the question whether, had the rights issue proceeded, the company would have avoided insolvency was a question left unanswered at the conclusion of those proceedings. ASIC had contended that the company was insolvent as at May 2001. Austin J did not accept that this had been proven but made no finding as to what would have been the position had the rights issue proceeded, saying (at [7323]):

One of the unanswered questions is whether One.Tel would have survived if, in May 2001, PBL/CPH and News had maintained their support for the company and implemented their plan to underwrite a deeply discounted rights issue to raise $132 million. The tendered evidence has led me to reject ASIC's figures as to the financial circumstances of One.Tel at the end of February, March and April 2001, and to prefer the figures set out in Chs 11, 13 and 15 respectively. If those figures are right, a fundraising of $132 million accompanied by continuing support by the major shareholders would probably have been enough to address the company's cash requirement until November 2001, by which time, according to the business plans, the company's businesses would have been generating more healthy group cash flow. The withdrawal of that support, and the abandonment of the rights issue, may well have ensured that the company could not survive.

33. Following the appointment of the SPL, there was correspondence (on which Mr Karkar places some weight) from Atanaskovic Hartnell (writing on behalf of the PBL interests as well as Mr Yates) to the SPL on 29 January 2004, attaching a copy of that firm's 27 January 2004 letter of advice to Mr Jalland of PBL in relation to the appointment of the SPL (vol 7 pp 4902/4903). The letter of advice so attached referred to the time period for the making of civil claims under both the common law and the Corporations Act (with particular reference to ss 588M, 1325 and 1317R) and stated "There has been no suggestion that a claim under legislation other than the Act is possible and, in the circumstances, we do not examine this possibility". (It seems clear, therefore, that at that stage, the awareness of the PBL defendants and Mr Yates as to the potential claims being considered or investigated by the SPL did not extend to claims of a conspiracy involving individual directors, since one would expect such a claim to have been articulated in that letter of advice, and notified to insurers, had that been the case.) (The letter also suggested that it should be indicated to the SPL that, in the absence of an undertaking by the SPL to take steps to determine whether the Not Proceed Decision did fall within the description of "transaction", PBL was "presently disposed" to seeking declaratory relief.)

34. After advising on issues to which it was said the SPL must have regard in satisfying his fiduciary and other obligations as liquidator and to the court, the 27 January 2004 letter to Mr Jalland went on to consider the power of the court under s 588FF(3)(b) to extend the 3 year limitation period for claims under s 588FF. The writer expressed the opinion that it was appropriate for such an extension to be sought and for the SPL to cease further substantial investigation of the "Not Proceed Decision" until the outcome of the ASIC v Rich litigation was known. The letter observed that "The relevance of the ASIC proceedings, of course, is that questions of One.Tel solvency or otherwise will be determined (or at least significantly advanced) by the ASIC proceedings". It was said (and this was an argument put to the SPL more than once as to the potential futility of investigations prior to the ASIC v Rich litigation) that if, notwithstanding the rights issue, One.Tel would still have been insolvent (as ASIC in due course submitted to Austin J), then the voidable transaction issue would fall away.

35. Mr Karkar submits that the January 2004 letter is indicative of the attitude of the defendants - namely, an understanding on their part that ASIC v Rich would be determinative of many of the fundamental issues in any action against them and that it would be wasteful for the SPL to commence proceedings against them in advance of Austin J's judgment. (I interpose to note that there is nothing to suggest that it was in anybody's contemplation at that time that the outcome of the ASIC v Rich proceedings would not be known until six years later). The 2004 correspondence was again focussed on the issue of uncommercial transaction claims, not the (unnotified) fraud or conspiracy allegations. (It seems to me difficult, in light of later steps taken by the PBL defendants, to read this letter as indicative of an attitude that persisted right through up until 2010 when the last extension was sought and granted.)

36. The January 2004 letter foreshadowed the possibility of consent by the PBL defendants (and Mr Yates) to an order extending the time for commencement of proceedings for up to 6 years, conditional on the SPL suspending any subsequent activity on the "Not Proceed Decision" until the outcome of ASIC v Rich was known and suggesting that this would avoid a good deal of effort and expense. Mr Karkar accepts that this, of itself, may not have given rise to an agreement as such - not least because it was conditioned on the liquidator not taking steps that in fact the liquidator subsequently took - but submits that what it does make clear is that the PBL/Yates defendants were contemplating that the liquidators await the outcome of the ASIC proceedings before determining whether to take any proceedings and, if so, against whom. Again, it does not seem to me that I can draw from this letter the conclusion that this remained the respective defendants' position throughout the period up to 2010. It also appears to be based on an assumption that the outcome of the ASIC v Rich litigation would be known by May 2007 (i.e. within the then extended time period for a claim based on the events of May 2001 constituting an uncommercial transaction or breach of directors' duties or misleading and deceptive conduct).

37. Nor do I think it can be said that this letter supports the conclusion that the PBL/Yates defendants saw no prejudice arising from delay (still less that they had taken or were able to take all possible steps to ensure there would be no prejudice). Rather, the preparedness of the various defendants from time to time to contemplate a scenario where legal proceedings might not be taken against them until after the outcome of ASIC v Rich suggests merely that they were willing at that stage to accept the risk of whatever prejudice was then considered likely to arise from such delay.

38. Correspondence sent around this time by way of update for the PBL defendants' insurers makes it clear that it was the understanding of the PBL defendants that the SPL investigation at that time was as to the cancellation of the rights issue (see letter dated 12 February 2004 from Minter Ellison, also apparently acting for the PBL defendants by this stage - vol 8 CB p 5362.17).

39. In March 2004, the SPL (clearly not having taken up the suggestion that investigation into the 'Not Proceed' decision be deferred) obtained orders for the examination of a number of PBL and News officers and directors, who then moved to discharge the examination summonses. At the same time, examination summonses were issued to various of the professional advisers who made similar applications. Each of the examination summonses was subsequently set aside but in very different circumstances as between the different classes of examinees, as will be seen below.

40. The summonses issued to the PBL and News examinees were dismissed by consent on 6 April 2004, on the giving by PBL/News of undertakings which were noted by the court. Those undertakings were annexed to the court orders made by consent of the parties. The court expressly noted the agreement that if the undertakings were determined to be legally ineffective in achieving what were there stated to be their objectives, then there would be an admission that any misleading or deceptive conduct of each of the identified entities or individuals in relation to the rights issue of the decision of the board of One.Tel on 29 May 2001 not to proceed with the rights issue, to the extent it occurred, was a dealing in securities within the meaning of s 995 of the Corporations Law .

41. The particular undertakings given by the PBL defendants and Mr Yates (vol 7 p 4912; vol 8 CB pp 5476/7) (mirrored by the corresponding undertakings from the News defendants) were as follows:

1. Each of Publishing and Broadcasting Limited ("PBL") and its subsidiaries including without limitation Robbdoc Pty Limited ("PBL Group"), Consolidated Press Holdings Limited ("CPH") and its respective subsidiaries (collectively the "PBL/CPH Parties") on the conditions set out below:

(a) consent to the extension of the limitation period applicable under s 588FF of the Corporations Act (and any equivalent provision under any other corporations legislation) from three to six years in respect of any claim by One.Tel Limited (In Liquidation) ("One.Tel") or any liquidator thereof under that section (or equivalent provision) relating to the renounceable rights issue proposed by One.Tel in May 2001 or the decision by the Board of One.Tel on 29 May 2001 not to proceed with the rights issue; and

(b) undertakes to the Court that it will not plead by way of defence any period of limitation or other time bar or time condition in respect of proceedings for a claim under the Fair Trading Act (NSW) that One.Tel has suffered loss or damage as a result of any misleading or deceptive conduct, to the extent it occurred, in relation to the rights issue or the decision of the Board of One.Tel on 29 May 2001 not to proceed with the rights issue, on its part or on the part of any executive or employee for whom it is vicariously liable ("the waiver ") and for this purpose it admits that it is vicariously liable for any conduct of the executives or employees of itself and any company in the PBL Group or CPH Group of which it is part, and that the waiver extends to such vicarious liability, commenced within 6 years of the accrual of the cause of action.

2. Each of Peter Yates and James Packer undertakes to the court that he will not plead by way of defence any period of limitation or other time bar or time condition in respect of proceedings for a claim under the Fair Trading Act (NSW) that One.Tel has suffered loss or damage as a result of any misleading or deceptive conduct, to the extent it occurred, in relation to the rights issue or the decision of the Board of One.Tel on 29 May 2001 not to proceed with the rights issue, on his part, commenced within 6 years of the accrual of the cause of action.

3. The conditions of such consents and undertakings to waive are as follows:

(a) that News Limited and its subsidiaries consent and undertake mutatis mutandis in accordance with clause 1(b) above, and Lachlan Murdoch and Peter Macourt each undertake mutatis mutandis in accordance with clause 2 above;

(b) that the court orders that the limitation period applicable under s 588FF (or equivalent provision) is so extended in respect of any claim against it referred to in paragraph 1 above; and

(c) that neither the special purpose liquidator nor any other liquidator of One.Tel seeks further to examine any of the executives and employees of any of the PBL/CPH Parties in relation to any of the claims referred to in paragraphs 1 and 2 above, until the earliest of the following:

(i) the outcome of the ASIC proceedings against Mr Jodee Rich and certain other directors and former directors of One.Tel is generally known;

(ii) six months prior to the end of any extended or substituted six year limitation period referred to above; or

(iii) further order by the court (on which the PBL/CPH Parties have been heard before such order is made) that such examination not be further deferred,

and, if required by the special purpose liquidator, the court states that it is permissible for that liquidator so to do.

42. The earliest to occur of the three events listed in 3(c) of the undertakings, as it transpired, was that specified in (ii), since neither (i) nor (iii) had occurred by the date six months prior to May 2007. Thus, as I understand it, it is said for the defendants that the undertaking cannot be read as any ongoing acquiescence to the subsequent deferral of service of the Statement of Claim until after the ASIC v Rich decision - not only because it related in its terms only to the deferral of further examinations but also because, as a practical matter, in its operation it could and did come to an end well before then.)

43. At the same time the SPL sought (and obtained) orders from the court in effect that he was justified in deferring, until after the occurrence of any of the above events, any further investigation or other action pursuant to the orders made by Windeyer J in the 2003 proceedings (that investigation having been the specific purpose for which he had been appointed). (Pausing there, criticism can hardly be levelled at the SPL for not instituting these proceedings until just before expiry of the May 2007 limitation period for various of the claims, in circumstances where the SPL had been the recipient of judicial advice that he was justified in not taking the steps necessary to complete investigations as to the claims at an earlier stage, and where, for at least part of that period, he had been urged by the defendants not to expend moneys on what was considered by the defendants likely to be a futile exercise.)

44. In relation to the examination summonses issued to the professional advisers, no similar undertakings in relation to the extension of the time period for claims against them were agreed and there was a contested hearing on their (ultimately successful) application for the discharge of the examination summonses issued to them. Those examination summonses were discharged by Windeyer J on 8 April 2004 (his Honour accepting that there was no need for the examination summonses because the effect of the undertakings from the PBL/CPH parties was that SPL had until 29 May 2007 to issue process).

45. The effect of the orders (and undertakings) made on 6 April 2004 was to extend the period within which applications under s 588FF(3) or for misleading and deceptive conduct could be made to six years (i.e. up to 29 May 2007), that corresponding with the time period in which a claim for breach of the directors' statutory duties, by reference to the passage of the 2001 "Not Proceed" Board resolutions, could also be brought.

46. Mr Karkar relies on the undertaking regime agreed by the respective defendants as a further recognition by the parties (and the court insofar as it noted that undertaking) that the outcome of the ASIC v Rich proceedings was important in the context of the proposed claims in relation to the rights issue. That may be so but, again, it does not indicate that the parties or the court had in contemplation the possibility that the outcome of those proceedings would not be known until some two and a half years after the expiry of the extended time periods then agreed.

47. On 9 June 2004, the SPL again reported to creditors (vol 8 CB p 5237) in relation to potential claims and identified those as, first, a potential claim that the cancellation of the Renounceable Rights issue involved an uncommercial transaction within the meaning of s 588FB(1) and, secondly, a potential claim for misleading and deceptive conduct. (Reference was made in the report to the receipt by the SPL of instructions for the issue of examination summonses to 32 people, including officers and executives of PBL and News, who were involved in the 17 May and 29 May meetings and to those examinations having been deferred.)

48. On 29 June 2004, in their third annual report, the general purpose liquidators referred to their decision to "wait and see'' the outcome of ASIC v Rich before proceeding in relation to the renounceable rights issue as having been vindicated in regard to the orders made by the court in April 2004 (vol 8 CB p 5488).

49. On 30 July 2004, Minter Ellison (acting for the PBL defendants) wrote to update the insurer (vol 8 CB p5362.19) as to the proceedings and noted that the liquidators of One.Tel were still awaiting the outcome of the proceedings before deciding whether to take recovery proceedings and, if so, against whom. The correspondence with insurers from time to time makes it clear that there was an understanding that what was being (or to be) investigated by the SPL on behalf of One.Tel was the potential for claims arising out of, or relating to, the decision not to proceed with the renounceable rights issue (consistent with the indications that had been received from the SPL to that time). There was no suggestion that a claim in conspiracy or fraud was contemplated.

50. The ASIC v Rich hearing commenced in September 2004. There is no doubt that the proceedings were vigorously contested. The length of that hearing, and the delays encountered in the completion of that hearing, were chronicled in his Honour's later judgment. The current defendants were not a party to those proceedings nor are they bound by the findings ultimately made in those proceedings.

51. The case involved a detailed analysis of One.Tel's financial position, particularly over the period from January to May 2001, with a large volume of documentary material being tendered. (Mr Karkar referred, in particular, to chapter 16 of Austin J's judgment which was devoted to the events of 17-29 May 2001.) Each of Messrs Packer, Murdoch and Yates (and a number of other individuals associated with the PBL and News defendants, though by no means all of the individuals connected with the claims now made against the defendants in the present proceedings) gave evidence. Mr Murdoch and Mr Packer each swore a number of affidavits in connection with the ASIC proceedings over the period from 2001 to 2004 and Mr Yates swore at least one. Each of Messrs Packer, Murdoch and Yates was cross-examined over a number of days in late 2005 and early 2006 respectively (Messrs Packer and Murdoch having exhibited what was described by Austin J as poor or, in the former's case, decidedly poor recollection of events - as discussed in [771] - [781] and [800] - [814] of his Honour's judgment). As to Mr Yates, his Honour expressly noted at [831] that he did not accept the criticisms that had been made as to Mr Yates' credit, observing that he gave the impression of not being fully prepared to give evidence. His Honour said that he had not formed the view that Mr Yates' evidence was motivated by self-interest or a desire to protect PBL/CPH's interests. Although his Honour did comment that if certain evidence were to be accepted, then statements made by Mr Yates were misleading, Senior Counsel for Mr Yates, Mr Young QC, emphasises the conditional nature of this observation.)

52. Not surprisingly, given the length of the hearing and the complexity of the factual matters to be resolved, his Honour reserved his judgment at the conclusion of the hearing.

53. Meanwhile, in 2006 (at a time when the hearing of the evidence had not concluded, let alone the hearing of submissions), the SPL applied to the court for orders seeking to vary those made when he was initially appointed, by way of a direction that he was justified in performing certain work (that work, as noted by White J in his reasons for judgment of 26 April 2006 on that application, essentially being to review the evidence adduced, documents discovered and submissions made in the ASIC v Rich proceedings for the purposes of determining whether he was then in a position to express a view as to whether any rights of action existed relating to the cancellation of the renounceable rights issue and to his making recommendations about that to the creditors; and to form a view as to whether further investigations, including liquidator's examinations, should be conducted). A variation to the orders made in December 2003 was also sought in order to remove the limitation that, for the purpose of his investigations, the SPL should assume that One.Tel became insolvent as a result of the cancellation of the renounceable rights issue.

54. White J's reasons ( Onefone Australia v One.Tel Ltd [2006] NSWSC 349) make reference to a concern by the general purpose liquidators that the funds available to creditors should not unnecessarily be expended. It appears that they had submitted that, before there was a change to the status quo, enquiries should be made of PBL, CPH, News and the associated proposed examinees as to whether they were prepared to undertake further to extend the limitation periods under s 588FF and not to plead the limitations period in respect of other causes of action. His Honour considered that, while this was an attractive view, there were a number of countervailing considerations, including the delay that such a course would be likely to entail, a query as to whether a cause of action extinguished under the Limitation Act 1969 (NSW) could be saved by an agreement not to plead such a defence (on which issue he noted no argument had been heard) and the likelihood that a review of the materials in ASIC v Rich would have to be conducted even if the investigation was postponed until after judgment (since his Honour considered that the evidentiary basis upon which any findings of solvency might be made in the ASIC v Rich proceedings might not necessarily be the same as that which might be available in other proceedings).

55. His Honour noted that, by this stage, the position in the ASIC v Rich proceedings was that a substantial body of expert evidence that ASIC had sought to adduce in the proceedings had been rejected and that the defendants in those proceedings had announced that they did not propose to call expert evidence. Further, it was not clear to his Honour (as in fact transpired to be the case) that the precise questions of solvency relevant to the issues raised by the cancellation of the renounceable rights issue and the events that led up to that would necessarily be determined in the ASIC v Rich proceedings (nor that the parties in those proceedings would have the same interest in relation to that question as One.Tel would have). A fourth consideration to which his Honour there referred was that creditors of One.Tel were entitled to have the question whether any such causes of action are to be pursued determined as promptly as possible, noting (at [22]) that "There is a public interest also in such claims, if they are to be pursued, being brought on for hearing as soon as possible".

56. White J commented that the orders sought before him on that occasion did not affect the rights of the other parties under the orders made on 6 April 2004 but that different considerations would apply should the SPL, following a review of the materials which might become available to him, determine that further investigations including public examinations should occur ([30]-[31].)

57. The SPL's powers were varied by his Honour to permit the review of such material in relation to the ASIC v Rich proceedings to which the SPL might be able to obtain access and to remove the limitation as to the assumption on which the SPL's investigation should be based.

58. On 3 August 2006, the general purpose liquidators' annual report made reference to the renounceable rights issue (and to the expanded purposes of the SPL in that regard).

59. On 22 September 2006, in a letter on which Mr Karkar places weight (vol 8 CB p5607), Atanaskovic Hartnell (acting on behalf of both the PBL interests and Mr Yates) wrote to the SPL's solicitors in relation to the variation in the terms of the SPL's appointment made by White J on 26 April 2006 (issue having earlier been taken by Atanaskovic Hartnell with the lack of notice in relation thereto as amounting to a breach of the spirit and/or the terms of the April 2004 agreement). The letter noted the provisions of s 68A of the Limitation Act and expressed the opinion that there was no proper basis for concern that claims (against the PBL/News interests) would be automatically extinguished by operation of the Act . The 22 September letter conceded that it was 'perhaps conceivable' that claims might be made by the SPL in relation to the rights issue and/or the Board decision pursuant to s 588FF or under the misleading and deceptive conduct provisions (noting that no other claims seem to have been envisaged) and stated:

The purpose of this letter is formally to indicate that, subject to the conditions mentioned below, our clients PBL and CPH agree to extensions of the relevant limitation periods to six months after the judgment in ASIC v Rich is handed down

and that PBL/CPH agreed to accept vicarious liability for the conduct of the respective directors and officers and employees in relation to the rights issue and the board decision and to give such undertakings or agreements in the form of binding contract undertakings to the court or a combination thereof (without admission of liability).

60. Further, the letter noted that Messrs Yates and Packer were prepared to agree and undertake not to plead any limitation defence in respect of any claim under the Corporations Act , Fair Trading Act or Trade Practices Act for alleged loss or damage resulting from misleading or deceptive conduct or breach of duty under any provision in relation to the rights issues or board decision. The conditions to which this offer was subject were to similar effect as those on which the April 2004 undertakings had been provided. The letter expressed an understanding (subsequently confirmed by Allens Arthur Robinson) that the News parties would be prepared to reach a similar arrangement.

61. That letter further expressed the opinion that the ASIC interest in the Rich proceedings was essentially the same interest as One.Tel might have (noting that the proceedings related to the "core financial position" of One.Tel in the first half of 2001).

62. On 26 September 2006 (in the letter appearing at vol 7 CB p 4930), Allens Arthur Robinson wrote to confirm that their clients (the News defendants) were willing to agree to the proposals of Atanaskovic Hartnell referred to above.

63. The proposals to consent to an extension of the 'relevant limitation periods' were not limited to any particular time period within which the judgment in ASIC v Rich might be handed down (seemingly being open-ended) but also that the causes of action then in contemplation as being covered by the proposal (and of which it might be said that the PBL and News defendants were on notice, including Mr Yates within the PBL interests for this purpose) remained the s 588 uncommercial transaction claims and the statutory claims based on misleading and deceptive conduct and/or breach of directors' duties.

64. (In the context of the present application, Mr Karkar emphasises that service of the Statement of Claim on 23 August 2010 was in fact some two months earlier than the period in which a claim instituted within the six months following the ASIC v Rich judgment (i.e. filed by 18 May 2010) would have been required to be served (i.e. by 18 November 2010).)

65. Had agreement been reached on the offer made in September 2006, the present issue would therefore not have arisen. However, the SPL chose not to take up that offer. (In that regard, Mr Karkar says that the undertakings proffered by the defendants to the SPL in September 2006 contained an unacceptable condition that would have prevented the SPL from examining individuals who were able to give important evidence concerning the circumstances surrounding the withdrawal of the renounceable rights issue and who were not called as witnesses in ASIC v Rich . The SPL would have so been prevented only for a defined period of time, not indefinitely, although I accept that it seems clear that there was a concern as to whether such an arrangement would be effective to preserve the limitation period and that there could have been no confidence that the professional adviser defendants would adopt a similar course.)

66. By letter dated 25 October 2006 (vol 8 CB p 5326.271), Atanaskovic Hartnell took issue with the SPL's response to the request that had been made by them for notice of any application by the SPL for further orders in relation to examinations that would or may involve their clients, emphasising the desire of their clients to avoid the unnecessary expenditure of time effort and expense (on the examinations that had been proposed in 2004 when the initial undertakings were given). Atanaskovic Hartnell expressed their view as to why no further examination summonses should issue until after the decision in ASIC v Rich , referring to the probability that any such examinations would be futile (presumably based on their view of the likely outcome of the ASIC v Rich proceedings) and to the fact that their clients had already been the subject of multiple examinations. The letter stated that the offer to extend the agreement recorded in the April 2004 undertakings was to "preserve the present position without further cost or inconvenience to any party".

67. In that letter it was further noted that the findings on the solvency position of One.Tel in the ultimate decision in ASIC v Rich would be very relevant for the purposes of the investigation that the SPL had been appointed to conduct. In a second letter on that date (vol 7 CB p 4932), Atanaskovic Hartnell noted that the relevant matters in the ASIC v Rich litigation included the solvency of One.Tel in May 2001 whether with or without the benefit of the renounceable rights issue, "the question of whether anyone engaged in misleading or deceptive conduct in relation to the events of May 2001, and the advice and information given to the One.Tel board at that time on the basis of which it made its decisions".

68. The SPL did not agree to the proposed further extension arrangement and in November 2006, the SPL applied for orders, inter alia, that he was justified in continuing the work referred to in the order made by White J on 26 April 2006; in making such application as may be necessary to Austin J for access to the ASIC v Rich documents, including written submissions, not then in his possession; and in conducting the public examination of such persons as he determined appropriate. (Directions were also sought that the general purpose liquidators were justified in paying to the SPL, and the SPL was justified in receiving, the sum of $990,000 to pay expenses incurred by the SPL after 30 September 2006, including expenses of the proposed examinations).

69. That application came before White J, who declined to deal with it until it had been considered by One.Tel's Committee of Inspection. (When the matter came back before his Honour, the Committee had resolved to support the orders and directions sought by the SPL, a view to which his Honour considered substantial weight was entitled to be accorded on the application before him, though noting that the Committee had been told that its role in relation to the reasonableness of the proposed further legal expenses relating to the conduct of the public examinations was a consultative one.)

70. At [29] of his Honour's reasons for judgment ( Onefone Pty Ltd v One.Tel Ltd (in liquidation) [2006] NSWSC 1434), White J observed that an important factor on the application before him was the preparedness of the PBL and News defendants (which would presumably have included Mr Yates, since it seems he was then being represented by the same lawyers as the PBL defendants) to agree to extensions of the relevant limitation periods to six months after judgment was handed down in the ASIC v Rich proceedings. (At [32], however, his Honour noted that no arrangements for the extension of the limitation period had been finalised at that stage.) At [36], his Honour said that:

The present regime is intended to allow the special purpose liquidator, and his legal advisors, to acquaint themselves with the detail of the evidence and the submissions in the ASIC v Rich proceedings. This will put Mr Weston in a position to move swiftly after judgment is given in those proceedings if it appears to him that the company has causes of action arising from the cancellation of the announced RRI, which should be pursued . (my emphasis)

71. White J was of the view that "provided Mr Weston secures a binding agreement with the potential defendants to an extension of the limitation period, the current regime, whereby he confines himself to a review of relevant materials in the ASIC v Rich litigation, should not be changed" but in any event was not prepared on the present materials to give the court's imprimatur to the proposed expenditures on the conduct of examinations (see [38]).

72. Pausing there, his Honour's expectation that Mr Weston (with the benefit of the work then to be carried out in reviewing the materials in the ASIC v Rich litigation) would be in a position to move swiftly after judgment in that case proved contrary to what ultimately transpired (there being some 9 months between handing down of the judgment and service of the Statement of Claim in these proceedings).

73. Notwithstanding the proviso clearly drawn by his Honour on the preservation of the then regime (whereby further examinations had been deferred) and the reference by his Honour to the fact that at that stage no further extension to the limitation period had been agreed, no steps seem to have been taken thereafter by the SPL to finalise any agreement for a further extension to the limitation periods. Instead, on 20 December 2006, an amended interlocutory process was filed in relation to the proposed issue of examination summonses in relation to the examinable affairs of One.Tel (this time limited to specified persons, not as had previously been sought to "such persons as the SPL determines appropriate"). That application again came before White J, who, in closed court, stood the application over to 29 January 2007 before the Corporations Judge and delivered reasons which were ordered to be kept confidential. The matter came before Barrett J, who heard that application in closed court on 15 February 2007.

74. Before the hearing of that application, the offers of extension of the relevant time limits were reiterated by both Atanaskovic Hartnell and Allens Arthur Robinson. By letter dated 23 January 2007 (vol 7 CB p 4958) the former noted that this offer made on 22 September 2006 had "now been refreshed a number of times". By letter dated 24 January 2007 (vol 7 CB p 4934), Allens Arthur Robinson noted that this was the third time that the SPL had sought to commence public examinations before the conclusion of the ASIC v Rich proceedings and emphasised the statement that had been made by White J to the effect that provided the SPL's position was protected against the expiry of limitation periods there was nothing to be achieved by the commencement of further examinations prior to the conclusion of the ASIC v Rich proceedings. That letter also asserted that unless One.Tel was solvent as at 29 May 2001 (or would have been had the rights issue proceeded) then there could be no cause of action based on the Board's resolution not to proceed because the issue could not lawfully have proceeded. Allens Arthur Robinson indicated an intention to seek leave to be heard on the application for the issue of examination summonses to the News directors.

75. By letter dated 25 January 2007, the SPL's lawyers responded to Allens Arthur Robinson asserting that there was no reason why their clients ought to be heard on the application for leave to issue examination summonses as they could apply to set them aside once issued.

76. On 29 January 2007, interlocutory processes were filed on behalf of three individuals employed by or associated with News (Mr Hartigan, Mr Macourt and Mr Phillip) and two associated with the PBL interests (Messrs Miller and Green) seeking leave to be heard on the application for the issue of the examination summonses against them and for access to the confidential affidavit filed by the SPL pursuant to s 596C(1) in support of the application for the issue of the summonses. (Of those persons, Mr Macourt is the only defendant sought to be pursued in the current proceedings on foot by the SPL.)

77. On 5 February 2007, Austin J granted access to the public to inspect the submissions in ASIC v Rich. Both Atanaskovic Hartnell and Allens Arthur Robinson obtained access to the submissions (a matter that is said to go to the knowledge of the defendants of the allegations being made in that litigation by Mr Rich and others, though the defendants contend that there was no reason to expect that the liquidator would accept those allegations as correct and act on them). The lengthy ASIC submissions were summarised in an affidavit sworn by the solicitor acting for the News defendants, Mr Martignoni, on 6 February 2007 (vol 7 p 4942) in opposition to the application for leave to issue the examination summons, Mr Martignoni noting the submission by ASIC that $132m would not have been sufficient to avoid insolvency.

78. On 14 February 2007 ( Onefone Australia Pty Ltd v One.Tel Ltd [2007] NSWSC 69), Barrett J determined the application by prospective examinees for leave to be heard on the SPL's application for the issue of examination summonses. His Honour had regard to the background to the matter to date and noted the arguments advanced by the PBL associates and News associates, including (at [47]) that the ASIC v Rich outcome was still seen as an important element in the SPL's decision-making and the general principle advanced on their behalf that the SPL should defer "major investigative effort until after judgment is given" in ASIC v Rich . Reference was made to the undertakings that had been proffered by the PBL and News defendants (and the PBL and News associates) in relation to the time limits for institution of relevant proceedings by the SPL (at [48]).

79. His Honour expressed the opinion that the need for separate consideration of the solvency question [i.e. separate from that anticipated in the ASIC v Rich judgment] could no longer be seen to be non-existent and that continued monitoring of those proceedings could not necessarily be seen as sufficient for the promotion and protection of the interests represented by the APL (at [57]). In relation to the argument advanced by reference to the undertakings that had been proffered by the PBL/News defendants, his Honour (having analysed the particular time bar imposed by s 588FF(3) and referring with approval to the approach of Debelle J in Davies v Chicago Boot Co Ltd (2006) 58 ACSR 505) concluded that it would be "most unsafe for the SPL to contemplate that some consensual regime could be effective to preserve beyond May 2007 the full opportunity of the SPL to pursue all viable causes of action that may have accrued to One.Tel and its liquidators from the cancellation of the renounceable rights issue - assuming, of course, that an application under s 588FF(1) can be seen to be among those viable causes of action" (at [70]).

80. His Honour dismissed the applications for leave to be heard in relation to the issue of the examination summonses and for access to the confidential affidavit filed by the SPL.

81. On 21 February 2007, his Honour made orders for the issue of the examination summonses the subject of the December 2006 application, having noted that the evidence made it clear that "the SPL has, with the assistance of detailed legal advice and on the basis of material obtained from various sources, developed a prima facie cogent hypothesis as to the availability and viability of causes of action [including as to a cause of action under s 588FF(1)] but needs to gather further information in order to come to a concluded view about that hypothesis" (at [8], Onefone Australia Pty Ltd v One.Tel Ltd [2007] NSWSC 112). (That concluded view, as will be seen, seems to have been reached by April 2008 at the latest.)

82. Application was then made by the five individuals in question to set aside the examination summonses on the basis that the orders were oppressive unfair or an abuse of process (including, in the case of Messrs Miller and Green, on the basis that they had already been questioned in a formal setting in the examinations by the One.Tel liquidators and by way of examination under s 19 of the Australian Securities and Investments Commission Act 2001 (Cth)).

83. Barrett J dismissed the application for the discharge of the examination summonses. In so doing, at [22], his Honour noted an argument put for the SPL by Mr Glasson of Counsel as to the possible availability of causes of action other than those made available by s 588FF(1), such as for breach of directors' duties and for failure to advise or 'faulty advice', that could be available even if One.Tel was insolvent to an extent greater than $132m (to which Mr Karkar refers as putting the PBL/News defendants on notice of the possibility of broader claims, such as those now sought to be made). There was, however, as I read this paragraph of his Honour's judgment, still no hint of claims for conspiracy or fraud then being under consideration by the SPL.

84. His Honour noted that the concern as to limitation periods was not wholly resolved by the expressed willingness of potential defendants to cooperate in obtaining modification of (or not relying on) time bars otherwise applicable (at [30]) and did not consider that the argument advanced to suggest that this concern was without foundation was so obviously and unquestionably correct as to permit the SPL to embrace it without any prospect of prejudice to the administration (at [35]).

85. Some public examinations were held by the SPL in April and May 2007. (The public examinations of Messrs Miller and Green were not held until 11-14 February 2008, after the filing of the Statement of Claim.)

86. On 18 May 2007, on the SPL's application, Barrett J varied the SPL purposes to include the management of proceedings and authorised the SPL to issue the proceedings.

87. On 24 May 2007, the Committee of Inspection met and resolved (minutes at vol 8 CB p5613) that it "accepts or does not oppose" the SPL's recommendation that proceedings be issued but not served pending a review of pleadings by Mr Robb QC.

88. The Statement of Claim was then filed, seeking a declaration that the resolution passed in 2001 not to proceed with the renounceable rights issue was an uncommercial transaction and should be set aside and seeking payment of the $132m (being the amount referable to the abandoned rights issue), damages for breach of duty and for breach of the Corporations Law and equitable compensation and restitution.

89. Mr Weston, in his affidavit sworn 8 February 2011 on the present applications, has deposed that:

6. At all times, on and from my appointment as SPL of One.Tel, I have believed that there is an overlap of issues between the matters which were the subject of the proceedings in Australian Securities and Investment Commission v Rich proceedings 5934 of 2001 ("ASIC v Rich") and the matters the subject of my investigations as SPL.

7. As a result, at all times on and from my appointment as SPL of One.Tel I believed that the outcome of the decision in ASIC v Rich was relevant to:

7.1 whether I would be able to obtain funding to prosecute these proceedings; and

7.2 whether the plaintiffs would prosecute these proceedings and, if so, against which defendants.

and, for those reasons, Mr Weston says that he monitored the ASIC v Rich proceedings between September 2004 and 18 November 2009. (However, the initial applications for an extension of time to serve the Statement of Claim were not based on any stated need to await the outcome of the decision in ASIC v Rich in order to decide whether to pursue the proceedings and, if so, whether to do so against one or more of the defendants; nor were Mr Weston's beliefs at [6] and [7] said to be relevant to the grant of extensions at the relevant times.)

90. Mr Weston has also deposed to the two broad options that he believed were available to him at the time he sought the various extensions of time, those being, first, to serve the proceedings prior to the expiry of any limitation periods and then to serve the proceedings on all defendants "notwithstanding that [he] had not completed all of [his] investigations, the proceedings in ASIC v Rich had not been completed and [he] had not made a final decision as to whether to prosecute the proceedings against any of the defendants" and the second option being to issue the proceedings prior to the expiry of any limitation periods and then to apply to the court to extend the time within which to serve the proceedings ([9]) (the latter being the course he adopted).

91. In the plaintiffs' submissions, those options are expanded to introduce other variables (those being for the SPL to have reached agreement with the defendants not to issue the proceedings until six months after delivery of judgment in ASIC v Rich, something the defendants had proposed as late as January 2007) ; to have reached agreement with the defendants to issue the proceedings prior to 29 May 2007 but not to serve the proceedings until some time after delivery of judgment in ASIC v Rich ; and to have served the proceedings on or before 25 November 2007 and then proceeded with the action in the ordinary course).

92. In essence, however, and leaving aside the possibility of reaching agreement with the defendants not to issue the proceedings until after ASIC v Rich or prosecuting the proceedings without any delay, it seems to be acknowledged that the SPL broadly had a choice at the various times either to activate the proceedings by service of the originating process (and then to seek to put in place measures by which costs were not incurred in the active prosecution of those proceedings pending judgment in ASIC v Rich ) or, instead, to seek extensions of time.

93. Mr Weston says in his affidavit that he believed each course of action had different advantages and disadvantages (though in his affidavit those are not identified) and that he believed, having regard to those, that he should adopt the latter course and "not ... proceed to serve the Statement of Claim until after a reasonable time after delivery of judgment in ASIC v Rich during which my advisers and I could consider the implications of that judgment on these proceedings " [10] (my emphasis). (The fact that he held such a belief (namely, that he and his advisers should have a "reasonable time" to review the judgment) was not, it would seem, communicated to the court (at least on the earlier of the various occasions when extensions were sought). The link between the handing down of the judgment and the service of the claim only arose in 2008 in the context of the requirements of the proposed litigation funders (in relation to the shortfall insurance cover for the last layer of potential adverse costs). There was no indication up to that stage that there would be a need for the SPL's advisers to consider the implications of the decision (or to do what has now been done and prepare copious amendments to the claim, as filed, whether to reflect or incorporate matters the subject of findings or evidence recorded in his Honour's judgment or otherwise).

94. As to the first and second of the options identified by Mr Karkar, it is said that even if a binding agreement could have been reached with the PBL/News defendants and Mr Yates for the extension of time limits (noting the doubts about the validity of any such agreement expressed by Barrett J in OneFone Australia Pty Ltd v One. Tel Limited (2007) 61 ACSR 246 at [61]-[70] and OneFone Australia Pty Ltd v One.Tel Limited (2007) 61 ACSR 429 at [31]-[38]), there was no certainty that any such arrangement could have been reached with the other (i.e. 12 th to 18 th ) defendants. (It is submitted that the fact that the SPL has since decided not to prosecute causes of action against those defendants is irrelevant since this was not and could not have been known prior to the expiry of the limitation period on 29 May 2007. Th at does not, however, explain the SPL's position after March 2008 when the SPL had decided to recommend against pursuing claims against the 12 th to 18 th defendants.) The plaintiffs say that unless an agreement could have been reached with all defendants the first was not an available option (and that even if this option had been implemented, the defendants would be in the same position as they are now.)

95. As to the possibility that the plaintiffs could have served the proceedings on all defendants and then sought an order for a stay of proceedings until some time after delivery of judgment in ASIC v Rich, it is suggested that such an application would have been supported by the PBL/News defendants and Mr Yates, defendants "whose position was that they did not want these proceedings issued or served until up to six months after delivery of judgment in ASIC v Rich ". That, however cannot be assumed to have still been the position as at November 2007 and was not tested by the SPL. As to the other defendants (the professional advisers and other directors no longer sought to be pursued), it is said that there is no reason to think that they would have supported such an application (and the refusal by some to proffer the 2004 undertakings would seem to confirm that).

96. It is submitted that if a stay had been granted at the stage at which proceedings had been commenced then the option in fact pursued by the SPL to extend the time for service of the statement of claim will have resulted in exactly the same delay that would have resulted had the third option been pursued. (There is, however, one glaring difference - namely, that the defendants would very clearly have been on notice of the actual claims at the much earlier time and would also have had the status, as a party, to have a say in the ongoing conduct of the proceedings at a much earlier time.)

97. As to the final option to which Mr Karkar referred (service of the claim and then proceeding with the action in 2007) it is said that the SPL did not have sufficient funds to prosecute these proceedings and therefore that it would not have been appropriate for the SPL to serve the proceedings on any of the defendants. Accordingly, it is said that the only real option for the SPL in these circumstances would have been not to serve the statement of claim and let the originating process become stale. (This is disputed by the defendants who point to the "free cash" available to the SPL which would have permitted the commencement of the proceedings.)

98. Mr Karkar submits that if, contrary to the above, it is assumed that the SPL could have served the Statement of C laim in 2007 then the plaintiffs would have been required to proceed with the action against all defendants, including those defendants against whom it has now decided not to proceed and that those defendants would have incurred costs defending the action which they no longer have to incur. (However, the conclusion, that the SPL would have been required to proceed against all defendants does not seem to me necessarily to follow - the SPL could simply have acted on the advice then to hand and sought to discontinue against them at that stage).

99. Mr Karkar submits that the other options then open to the SPL were not feasible and therefore that the only option consistent with the statutory objectives of s 56 was the option the SPL had taken. It is submitted that if the plaintiffs had pursued the option of effecting service or the process and Austin J in ASIC v Rich had accepted the evidence of Messrs Packer, Yates and Murdoch, the SPL would most likely have had to discontinue the proceedings which would have given rise to an entitlement of the defendants to a substantial order for costs; an order which the SPL may not have been in a position to meet.

100. Mr Weston deposed at [11] that:

...Since that time [filing of the Statement of Claim], I believed that the PBL and News defendants have also adopted the position that I should await the judgment in ASIC v Rich and that my decision whether to proceed with the action should only be made with the benefit of the Court's consideration of the findings of fact and the conclusions made in that action with respect to the Renounceable Rights Issue and the financial circumstances of One.Tel in May 2001.

101. I accept Mr Weston's evidence that he held such a belief. However, that belief (that a decision whether and against whom he should proceed should only be made with the benefit of consideration of the findings in ASIC v Rich) was not one which he saw fit to share with the court at least on the earlier of the respective extension applications.

102. Further, as to the stated belief that the PBL/News defendants had adopted the position that proceedings should await judgment in ASIC v Rich , I do not accept that there was a reasonable foundation for that belief at least as from the time of the first extension application in November 2007, when it was clear that some of the defendants (the PBL defendants and Mr Yates) wished to be heard on that application and to contend that there should be no such extension of time.

103. In other words, while it is certainly the case that, as late as January 2007, the defendants had expressed a willingness to agree to an extension of the limitation period (or, perhaps more accurately, not to plead a limitation defence) for a period up to six months after the ASIC v Rich judgment was handed down (in the context of their assertion that further public examinations at that stage were unnecessary and were likely to prove futile), I was taken to nothing that indicated that such a willingness continued after the time at which the proceedings were instituted.

104. Mr Weston was clearly on notice that there was no agreement in place for the extension at that stage - it had been pointed out very clearly by White J in his April 2006 reasons and there was no suggestion at that time that his Honour had incorrectly described the position. Further, Mr Weston has had the benefit of legal advice throughout and must have been aware of the risk that any extension of time obtained by him (on an ex parte basis) could be subject to later challenge (indeed, that possibility was expressly adverted to by Barrett J both in November 2007, in the context of the defendants' unsuccessful application for leave to be heard, and, most recently, on the final extension application in May 2010).

105. I note that an application was made to the court registry on behalf of the PBL defendants and Mr Yates on 28 May 2007 by Atanaskovic Hartnell for access to the originating process in these proceedings, the stated reason for access being that "we have not yet been served with a copy of the originating process. We seek immediate access to that document so that we may advise our clients as soon as possible" (CB p 5267). That application was apparently refused. There is no suggestion that this was at the instigation, or with the knowledge of, the plaintiffs. The making of the application is, however, relevant in circumstances where it seems now to be suggested for the SPL that the defendants chose not to make any enquiries as to the claim that had been filed, or to ask the SPL for a copy of the originating process, for tactical reasons. I have difficulty accepting that there was any ostrich-like behaviour on the part of the PBL defendants, or Mr Yates, given that they had attempted at a very early stage to obtain a copy of the originating process and further that, as appears below, they were told very clearly by the SPL's lawyers that it was not intended that the Statement of Claim be served and, later, in the SPL's own report to creditors that it was confidential and privileged. Nor can it fairly be said that the PBL/Yates defendants had been acquiescent in the extensions being granted, when they sought on the very first occasion that arose to be heard to oppose them.)

106. On 28 May 2007, Mr Rich himself commenced proceedings against various parties including PBL/CPH, News, Messrs Packer, Yates, Murdoch and Macourt and against the professional accounting advisers, alleging breach of fiduciary duties. (While Mr Karkar initially submitted that the PBL/News/Yates defendants had detailed knowledge of the case they faced in the separate Rich proceedings and that in substance this was the same as the SPL's case, when pressed on this he did accept that (since the Rich Statement of Claim had not been served on the defendants named therein over the same period in which the SPL Statement of Claim remained unserved) the defendants to the current proceedings could not have known the detail of the allegations made against them by Mr Rich other than as had emerged in the course of examination during the public examinations by the SPL (or in the written submissions from the ASIC v Rich proceedings obtained in February 2007).

107. On 30 May 2007, the lawyers then acting for the SPL (NOT Lawyers) informed Atanaskovic Hartnell and Allens Arthur Robinson that the Statement of Claim had been filed; that their respective clients had been named as defendants; and that they did not intend to serve the Statement of Claim. (There is no suggestion that the parties were put on notice at that stage of the identity of all of the defendants who had been named as defendants, although that was disclosed in the later report by the SPL to creditors in August 2007.)

108. Mr Weston accepts that, as at May 2007, he had received Senior Counsel's advice that the claim as then propounded had reasonable prospects of success (T 6.22). The decision made at that initial stage, to defer service of the process, seems to have been in order to permit a review of the pleadings by Senior Counsel nominated by the Committee (not to await the outcome of ASIC v Rich ). Mr Weston does not recall any discussion with the Committee at that time as to what was to happen in relation to the service (or otherwise) of the Statement of Claim once that review was complete and Mr Robb's advice was received (and assuming it was a favourable review from the Committee's point of view) (T 7.46).

109. Mr Weston confirmed in the witness box that, as at that time, he had not completed his investigations (T 8.9), the ASIC v Rich proceedings were ongoing and his discussions with the general purpose liquidators had led him to the view that there were insufficient funds in the company to enable him "to meet the likely costs of the claim and running the proceedings" (T 8.9).

110. On 3 August 2007, the SPL reported to the Committee of Inspection (vol 7 CB p 4177-4178, 4182) outlining the potential claims and explaining, in relation to the issue of the Statement of Claim, that there had been very little time to issue the claim, that the examinations were not completed and that, out of abundant caution, all potential defendants had been joined in relation to potential causes of action but that the SPL would reconsider the parties in consultation with his legal team. (Mr Karkar points to this, as I understand it, as public notice that there was a possibility that the claim would not be pursued against all defendants.) From the annexures to this report the identity of all of the defendants could be ascertained.

111. Following the filing of the Statement of Claim, the SPL proceeded (in accordance with the wishes of the Committee of Inspection) to obtain a review of the pleading by Mr Robb QC and took steps to procure funding for the litigation. A request was made of the general purpose liquidators for funds (and, from time to time, the SPL was informed as to the "free cash" then available in the general liquidation to which access might be available for the purposes of the litigation). (Later, on 4 August 2008, the SPL in his then report to creditors invited creditors to finance the action without success in that regard.)

112. In November 2007, the first application for an extension of time for service of the Statement of Claim was made. (I consider in more detail in due course the basis on which this, and each of the subsequent applications was made.) Further applications (and orders extending time for service) were made in May 2008, October 2008, April 2009, November 2009 and May 2010. On each occasion, Mr Weston swore one or more affidavits in which he deposed to his reasons for seeking the extension.

113. During the period in which extensions were sought and granted for the service of the present proceedings, applications were also made from time to time for extensions of time for the service of the other proceedings (now resolved) instituted by Mr Rich (the most recent extension being granted in July 2010 by Bryson AJ).

114. From May 2007 through to May 2010, there were various reports made by the SPL to the Committee and by the general purpose liquidators to creditors, in which the status of the respective liquidators' investigations was noted.

115. There seems little doubt that the PBL and News interests monitored reasonably closely the ASIC v Rich litigation and did so in the awareness of the potential for claims to be made against one or more of them in relation to the matters the subject of those proceedings. (For Mr Yates, who at some stage apparently came to be separately represented from the PBL defendants, and who ceased to be a director of One.Tel and of PBL in 2004, it is submitted by Mr Young, that the evidence does not disclose a similar level of monitoring as that carried out by the PBL defendants.)

116. Relevantly, in my view, by March 2008, the SPL had formed the view that it was likely that only the PBL/News defendants (including Mr Yates for this purpose, as associated with the PBL interests at the relevant time) would be pursued in these proceedings. An information memorandum prepared in connection with the SPL's attempts to obtain litigation funding conveyed that opinion, a draft statement of claim included in the litigation funding package was prepared on that basis and Mr Weston himself accepts that he sought litigation funding on that basis (T 27). In May 2008, Mr Weston made such a recommendation to the Committee of Inspection. (However, he says that a firm decision to that effect was only made when the Statement of Claim was finally served in August last year - T 27.) This was not disclosed on the making of the second or subsequent extension applications, although there was a disclosure from time to time to the effect that the SPL had yet to determine which claims (and against whom any such claims) were to be prosecuted. I consider later the impact of that non-disclosure.

117. Meanwhile, in late April 2008, the SPL's lawyers wrote to the defendants' legal representatives asking for confirmation that they had instructions to accept service (something inconsistent with an understanding that there was then any arrangement that service was to be deferred until after the outcome of ASIC v Rich ).

118. On 23 October 2008, a due diligence agreement was entered into by the SPL in relation to funding, after approval by the court. (Mr Weston, in his February 2011 affidavit, refers to the steps he had taken as to the funding negotiations). Under that agreement there was to be an initial eight week period of due diligence and, if satisfactory, entry into a funding agreement. (In fact, the agreement provided for the litigation funder, on completion of the due diligence period, to issue a notice as to whether it was proceeding and, if it was, obliging it to enter into the funding agreement attached.) The agreement contemplated the procurement by a funding syndicate (of which One.Tel was to be a member) of indemnity shortfall insurance to cover adverse costs orders above $12 million to a limit of $40 million. (Issue is taken by Mr Young as to the necessity for the level of costs cover sought by the liquidator and the manner in which it was calculated, to which I will refer in due course.) The initial due diligence period was successively extended (as outlined in the affidavit sworn by Mr Weston in support of the fourth extension application), ultimately to February 2010 (vol 2 CB pp 1088, 1092, 1168, 1169 relate to the successive extensions of the due diligence period). With the global financial crisis, there was also a need to substitute at least one syndicate member. However, broadly, the proposed funding arrangements were in place, subject to finalisation in what was anticipated to be a short period.

119. Completion of the funding arrangements did not in fact occur until after judgment was handed down in the ASIC v Rich proceedings (and then with a different litigation funder, on terms that were not in evidence before me). However, it is fair to say that this was because the SPL's preferred funding option was for there to be insurance to cover what the SPL described as the 'catastrophic costs' scenario and in those circumstances it was the requirement of one of the members of the proposed litigation funding syndicate that there be a review of the ASIC v Rich judgment before it committed to the provision of insurance for the indemnity shortfall cover in respect of that catastrophic adverse costs layer.

120. It is also fair to say that the delay in completion of the litigation funding arrangements (and the perceived need, as from late 2008/early 2009, on the part of the SPL to await the outcome of the ASIC v Rich proceedings before serving the Statement of Claim) was the concern by Mr Weston that he not be personally exposed and that he have funding in place to meet the full estimated "catastrophic" adverse costs event (of around $40m); his desire to achieve this on the basis he considered most cost effective for creditors through the procuring of indemnity shortfall cover; and the requirements placed by the litigation funders on this scenario.

121. It further seems clear (although in the witness box Mr Weston suggested otherwise) that the basis on which the estimated $40m costs exposure was calculated was that the SPL might be liable for the whole of the costs of the PBL and News defendants (including a separate and equal amount for the CPH defendants within the PBL group) on a solicitor/client basis (an unrealistic and unreasonable assumption in the submission of Mr Young, unless it were also to be assumed that the SPL would be guilty of some gross impropriety in the conduct of the litigation). That is because the $40m was comprised in effect of taking the amount estimated for the SPL's (solicitor/client) costs (roughly $14m); assuming that there would be the same level of costs incurred by each of three sets of defendants - PBL, CPH and News, and adding this multiple of three times the SPL's costs to the $14m figure for the SPL's own costs. The process by which the likely costs were estimated seems to have been relatively broad brush (and was expressly qualified by NOT Lawyers). (Mr Young submits that it was manifestly excessive. That may or may not be the case. However, what is not clear is that Barrett J was fully apprised of the manner in which the costs had been estimated when he was asked to approve an extension of time to permit the funding negotiations to be concluded.) Mr Weston's suggestion in the witness box that this was to enable him to meet an order for provision of security for costs should there be such an application once the proceedings were enlivened by service of the Statement of Claim, does not accord with the basis on which costs were estimated.

122. On 18 November 2009, judgment was handed down by Austin J in ASIC v Rich . The following day, the PBL interests issued a press statement (vol 7 p 5718) (colloquially referred to, in the proceedings before me, as the invitation by Mr Packer to "bring it on"), in the context of which, together with other matters, Mr Karkar submits that the present application to set aside the extensions of time is an abuse of process. (No such press statement was issued by Mr Yates or the News interests.)

123. Mr Weston has disposed that if any of the applications for an extension of time had not been granted then he would have pursued other options (including serving the claim and then applying for a stay or seeking to reach agreement with the defendants not to serve the proceedings until a reasonable time after the outcome of the ASIC v Rich proceedings). Which of those options he would have pursued would, he said, have depended on a number of matters including legal advice, the stage of the ASIC v Rich proceedings and of the Rich proceedings against PBL and others, the attitude of the defendants, and whether sufficient funding arrangements were in place. Mr Weston says that he did not pursue any of those options "because the Court granted me the extensions of time sought in which to serve the Statement of Claim".

Issues for Determination

124. As noted earlier, there are three broad issues for determination:

(i) whether leave should be granted to the plaintiffs to discontinue the proceedings as against the 12 th to 18 th defendants who have not been served;

(ii) whether the orders made for the extension of time to serve the Statement of Claim should be discharged under rule 12.11(1)(e) or set aside under rule 36.16(2)(b); and whether the proceedings should now be permanently stayed or dismissed; and

(iii) whether leave should be granted for the amendment of the Statement of Claim.

125. I consider those issues in turn.

(i) Leave to discontinue

126. Mr Weston seeks leave to discontinue the proceedings as against the 12 th to 18 th defendants (one executive and three non-executive directors of One.Tel, together with the partners of the respective firms who had provided legal and accounting advice in relation to the renounceable rights issue and its cancellation). The need for leave is premised on the fact that, as none of those d efendants has been served with the or iginating process, those defendants cannot consent to the discontinuance. As noted by Barrett J in his November 2007 judgment Weston v PBL [2007] NSWSC 1320 at [10] (though in a different context) the unserved defendants were at this stage non-participants in the proceedings.

127. The originating process, as far as those defendants are concerned, is now stale. Though a stale writ is not a nullity (as made clear in Van Leer Australia Pty Ltd v Palace Shipping KK & anor (1981) 180 CLR 337), in the absence of any application which would operate to renew the writ or to extend the time for service and in the face of the SPL's decision not to pursue the claim against them, there would seem to be no purpose to be served in refusing leave to discontinue the proceedings as against the 12 th to 18 th defendants. (I consider, in the context of issue (ii), the question as to whether the remaining defendants are prejudiced in their ability to bring any cross-claim against the 12 th to 18 th defendants by reason of the delay and/or manner in which the plaintiffs have proceeded in this matter having regard to the fact that the originating process was allowed to become stale against them, but for the purposes of issue (i) I note that no objection was raised to the discontinuance of the proceedings against those defendants.)

128. Therefore, I consider that it would be appropriate to grant leave to discontinue the proceedings against the 12 th to 18 th defendants and, but for the finding I make in (ii), would do so.

129. The discontinuance of the proceedings as against these defendants would also warrant some amendment to the pleadings to reflect the fact that claims are no longer pursued against them. In this regard, the paragraphs identified as those to be deleted on the discontinuance of these claims were as follows: [157] to [161] (which relate to the claims against various of the One.Tel directors - Messrs Silbermann, Beck and Howell-Davies and Ms Kekalainen-Torvinen); [ 248] to [307] (which relate to the claims against the respective professional legal and accounting advisers) ; [308] to [330] (which relate to the claim against the general purpose liquidators); the prayers for relief sought against those defendants (in prayers 9, 13, 14 and 15; and [23] to [25] which identifies the 16 th to 18 th defendants and the references to the 12 th to 15 th defendants in [153] to [156]).

130. Mr Karkar notes that some of the factual substratum pleaded in the paragraphs sought to be deleted as part of the discontinuance of the claims against the 12 th to 18 th defendants has been incorporated into paragraphs which are proposed to be retained in the proposed amended statement of claim, referring by way of example to the following: [283] (now incorporated or reflected in proposed [58BE]); [285] to [289] (now proposed [119A] to [119G] and [129]); [ 290], [291] and [293] to [299] (now proposed [I30T] to [130V]); and [292], (now proposed [58BH]).

131. To the extent that the proposed new paragraphs simply incorporate material already contained in the Statement of Claim but to be deleted as part of the discontinuance of the claims against the 12 th to 18 th defendants, there could be no real complaint in my view and it would (subject to the question of the continuation of the proceedings as a whole) have been appropriate for leave to be given in relation to those matters.

(ii) Application to discharge/set aside orders for extension of time for service and for a permanent stay or dismissal of proceedings

132. I have grouped these applications together as they raise similar issues and reliance is placed on similar matters to support the making of orders in favour of the defendants on the respective applications. Before turning to them, however, I deal with an initial point raised by Mr Karkar in his written submissions on the basis of which it is said that the applications brought under rule 12.11(1)(e) of the Uniform Civil Procedure Rules (and Mr Yates' application, to the extent that it is made under rule 12.11(1)(c)) should be dismissed and his further submission that the current applications are an abuse of process.

• Consequence of earlier filing of appearances

133. It is submitted that the filing of an appearance by the respective defendants (before their respective applications to discharge or set aside the orders for service of the originating process) is fatal to the making of these applications. (Atanaskovic Hartnell filed an appearance on 26 August 2010 on behalf of both the PBL defendants and Mr Yates and Allens Arthur Robinson filed an appearance on 6 September 2010 on behalf of the News defendants.) Mr Karkar notes that these applications could have been made without filing an appearance (by reference to rule 6.1(2)(a)) and points to the caution expressed in Ritchie's Commentary on the Uniform Civil Procedure Rules at [12.11.5] against the entry of an appearance before the filing of such an application.

134. Reliance is placed by Mr Karkar on what was said by Giles CJ Comm D (as his Honour then was) in News Corporation Ltd v Lenfest Communications Inc (1996) 40 NSWLR 250 at p254, namely that a defendant who files an appearance "waives any objection to the jurisdiction of the Court and any irregularities in the manner of the commencement of the proceedings or the service of the originating process". Reference was also made to the dicta of Gibbs J (as his Honour then was) to similar effect in Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529 at 539, and of Singleton LJ in Sheldon v Brown Bayley's Steel Works Ld and Dawnays Ltd [1953] 2 QB 393 at 400.

135. It is noted that, in England, in Re Chittenden [1970] 3 All ER 562, Ungoed-Thomas J held that failure to serve an originating process within 12 months was an irregularity which was waived by the entry of an unconditional appearance, particularly where the "unconditional appearance was entered after the defendant became aware that service was out of time and that the order for extension of time for service had been made" (at 571).

136. Mr Karkar notes, but seeks to distinguish, the decision of Bryson J (as his Honour then was) in Maronis Holdings Ltd v Nippon Credit Australia Ltd [2000] NSWSC 507. There, his Honour considered that the fact that an appearance had been filed by a defendant (who was outside the jurisdiction) before an application was made to set aside the originating process under the then provisions of Part 10 rule 6A of the Supreme Court Rules 1970 (NSW), could not in principle prevent him from asking the court to exercise its jurisdiction to set aside service of the process. At [10], his Honour said that "There is no inconsistency between accepting that the Court has jurisdiction and asking the Court to set aside service of the process, and there cannot be any question of waiving the second by electing the first".

137. The bases on which Maronis is said by Mr Karkar to be distinguishable from the present case are, first, that his Honour's comments were, for present purposes, obiter (since Maronis was a case under the equivalent of the present rule 11.7 and not under the equivalent of the present rule 12.11); secondly, on the basis that the defendant in that case had sought an order setting aside the originating process (equivalent to the present rule 12.11(1)(a)) and that no such order was sought in the present case; and, thirdly, that after referring to the passage extracted above from Lenfest , Bryson J had noted that what was sought before him was "a quite different decision, a discretionary decision whether or not the Court will set aside its process" (at [12]), contrasting this with an objection to the jurisdiction or the raising of irregularities in the manner of commencement or service of the initiating process.

138. Mr Karkar submits that, insofar as an order is sought by the defendants under rule 12.11(1)(e), this raises an irregularity "in the manner of the commencement of the proceedings" (and insofar as Mr Yates also seeks an order under rule 12.11(1)(c), this raises an irregularity "in the service of the originating process"). Thus it is said that Maronis is distinguishable from the present case and, to the extent to which the defendants' notices of motion rely on rule 12.11, they should be dismissed.

139. A similar argument was raised (and dismissed) in proceedings determined by the Court of Appeal after I had reserved my decision in the present matter (and on which decision I gave the parties leave to serve supplementary submissions), that being Agricultural & Rural Finance v Kirk [2011] NSWCA 67. There, Tobias JA (with whom Macfarlan JA and Sackville AJA agreed) noted (at [217]) a submission by the plaintiff that, by filing Notices of Appearance "and otherwise partaking, albeit to a limited degree, in some interlocutory skirmishes as well as seeking documents by serving a Notice to Produce" the defendants in question had, in effect, submitted to the jurisdiction of the court from which they could not resile or had waived their right to challenge service of the summons.

140. Tobias JA referred to Maronis and noted that, there, the filing of an unconditional appearance did not prevent the defendant from having service set aside (Bryson J having held that, although the fact that an appearance had been filed was a relevant factor within the ambit of the discretion under the relevant rule, it was not conclusive and thus did not exclude the exercise of the discretionary power). Tobias JA said (at [219]):

In the present case, there is no question of a submission by the respondents to the jurisdiction of the court as the defendants have at all times been within the jurisdiction. It must follow that their filing of Notices of Appearance is but a factor to be taken into account in determining whether the court should exercise its discretion under UCPR r 1.12 to extend time. Certainly no question of election or waiver arose.

141. It seems to me that the same conclusion is apposite here. The defendants have at all times been within the Court's jurisdiction; they accept that jurisdiction and they seek to invoke the right open to them under the rules to argue that the orders permitting service of the Statement of Claim outside the time stipulated by the rules should be discharged or set aside. I do not see any question of election or waiver arising by reason of their submission to the jurisdiction of the Court so as to prevent the defendants from bringing the present applications.

142. Accordingly, while this was recognised by Tobias JA as being a factor to be taken into account in considering the exercise of a discretion to extend time for service, and I take note of what has occurred in the present case in relation to the timing of the applications, I do not accept that the defendants, by filing unconditional appearances, have waived their right to ask the court to exercise afresh the discretion whether to grant an extension of time for the service of the Statement of Claim as at the relevant times or to exercise the discretion to discharge or set aside the orders extending time for service and I would not dismiss the notices of motion on this ground alone.

• Alleged abuse of process in the bringing of the present applications

143. It was also submitted by Mr Karkar that these applications are an abuse of process , on the basis that the position now adopted by the defendants is inconsistent with the position that they are said to have consistently maintained from at least early 2004 to late 2009, namely that matters of controversy between them and the SPL could sensibly be left to await the outcome of ASIC v Rich. I t is said that, having acquiesced in and encouraged the delay in these proceedings, the current applications should be struck out, alternatively dismissed, with indemnity costs.

144. It is suggested that the defendants may have adopted this position for two reasons: first, in the hope the proceedings in ASIC v Rich would confirm their position that One.Tel was insolvent in May 2001 and that they had been the victims of misleading and deceptive conduct (thus vitiating any binding agreements with One.Tel and in the hope that the SPL would not then pursue these proceedings); and, secondly, in order to obtain a forensic advantage in seeking to prevent the SPL from examining executives and employees of PBL/CPH and News.

145. Pausing there, the fact that the defendants seem to have had (or at least publicly, and through their lawyers, to have expressed) a firm view as to the outcome of the ASIC v Rich proceedings may well explain the proffering of the undertakings, but does not seem to me to be relevant on the current applications. Whatever the tactical advantage that may have been perceived by the defendants at the time (and whether it extended beyond the reasons expressed in the correspondence sent on their behalf), it cannot be said that the SPL was deprived of opportunity to carry out and complete his investigations prior to the expiry of the relevant limitation period and it cannot, in my view, be said that there was any relevant acquiescence in the delay after 2006 when the proffered undertakings were rejected by the SPL. Complaint is not made on the current applications as to the delay in commencement of the proceedings, it is as to the delay in prosecution of the proceedings thereafter.

146. It is submitted that the defendants led the SPL to believe that they would agree to extensions of the limitation period until six months after the judgment in ASIC v Rich ; that the SPL acted on the faith of the defendants' representations and sought various extensions of time from the Court within which to serve the proceedings; and that the defendants, by their notices of motion, now unconscionably seek to resile from their representations and assert, contrary to the position previously adopted by them, that they have suffered or will suffer prejudice as a result of the delays in service of the proceedings . I do not consider that the evidence establishes such a contention.

147. True it is, that the defendants sought to persuade the SPL at various times not to conduct further examinations pending the ASIC v Rich proceedings and proffered undertakings in relation to the limitation periods for that purpose. However, after the expiry of the 2004 undertakings, no similar regime was put in place going forward. The SPL was well aware in 2006 of the fact that there was no binding agreement to that effect and cannot reasonably be said to have acted in reliance on an assumption in any way encouraged by all the defendants that their position remained the same, at least after the application by the PBL and Yates defendants in November 2007 to intervene and to oppose the grant of an extension of time. (Although there does not seem to have been a corresponding application by the News defendants, there is nothing to suggest that they would not have adopted a similar course had the PBL defendants been permitted to be heard in opposition to the extensions and, given the manner in which they had hitherto adopted a position largely in line with the PBL defendants, the SPL could surely not have assumed that there was a difference in the stance likely to be adopted as between those groups of defendants.)

148. As to the suggestion that the defendants could have asked the SPL for a copy of the statement of claim, it is clear that the PBL/Yates defendants sought to obtain one from the Registry within a couple of days of the filing of the proceedings (vol 9 CB p 5267/8). Furthermore, in circumstances where the SPL had told them that the process was not being served on them at that stage and, via the reports to creditors, that the claim would be kept confidential, no criticism can in my view be made of the defendants in failing to ask the SPL for it. It seems to me that it was a matter for the SPL, if he wished to minimise the chance that extensions of time would be set aside, to make a copy available (on a confidential basis if thought necessary) to the defendants rather than waiting for them to ask for it.

149. As to the public position of the PBL defendants (as late as 19 November 2009) that they desired a hearing on the merits in which they would be able to establish the "true" financial position of One.Tel (a statement not echoed by the News defendants or Mr Yates), I note that it is not said that any prejudice was suffered by the SPL in reliance on that publicity (and the statement in any event is, as Mr Bathurst points out, consistent with a concern that there be no delay in the proceedings and that evidence not be lost).

150. There is nothing to suggest that the defendants are not genuinely seeking the relief claimed in the present applications. I do not consider the present applications to be an abuse of process and do not strike them out on that ground.

• Approach on applications to discharge/set aside orders for extension of time for service

151. As noted earlier, each of the extension applications was made under rule 1.12, which confers a judicial discretion (but one which is conceded to be not at large). When the matter came before me, the parties approached the matter on the basis indicated in Arthur Andersen Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104 at [14], per Ipp JA (with whom Tobias and McColl JJA agreed) namely that the hearing of an application under rule 12.11(1)(e) to discharge or set aside an order for extension of time for service of an originating process involves a hearing de novo such that the court is asked to determine afresh (on the evidence presented at the later hearing as to the state of affairs at the earlier time) whether the time for service of the statement of claim should have been extended under rule 1.12 and on the basis that it was for the plaintiffs to satisfy the court that an order under rule 1.12 should have been made at each of the relevant times. (Reference was made by Mr Karkar to what was said in relation to such a hearing in Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission (2000) 203 CLR 194 at [13] per Gleeson CJ, Gaudron and Hayne JJ; and in Harris v Caladine (1991) 172 CLR 84 at 124-125 per Dawson J and at 164 per McHugh J).

152. I note that in Agricultural & Rural Finance , Tobias JA (while confirming at [94] that the governing principle relevant to the exercise of discretion to extend the time for service of originating process is that which was articulated by Ipp JA in Buzzle at [43], to which I will refer below) said at [58] that:

... the primary relief sought in the Notices of Motion was for orders pursuant to UCPR r 12.11(1)(b) setting aside service of the summons upon the respondents rather than for an extension of time pursuant to UCPR r 1.12(1). Relief was also sought pursuant to UCPR r 36.16(1) for orders setting aside or vacating the ex parte order made by Bergin J on 14 November 2008 to extend time for service of the summons on each respondent. The relief sought in Buzzle was similar [as, I interpose to note, is the relief sought on the present applications]. Yet Ipp JA stated the relevant principles as applicable to an application to extend time for service pursuant to UCPR r 1.12(1). Be this as it may, in my view the applicable principles are the same irrespective of the applicable rule pursuant to which the relevant relief from service of the originating process is sought. (my emphasis)

153. In the present case, to the extent that the applications are brought under rule 12.11 (or, on the alternative application by the News defendants, under rule 36.16(2)(b)), Agricultural & Rural Finance is thus authority for the proposition that the applicable principles are the same as those articulated in Buzzle .

154. What is clear is that this is not an appeal from, or review of, the successive decisions in which time for service of the Statement of Claim was extended (though the reasons for those decisions may be taken into account). This is, rather, the first opportunity that the defendants have had to address the reasons why they say that the time should not have been extended and the first occasion that the Court has had the benefit of those submissions (this being recognised by Barrett J, on the occasion of the last extension application, as the "safeguard" provided for under the rules). Hitherto, the court has not had any contradictor on the extension applications.

155. Mr Karkar submitted that what is required for an extension of time is that an applicant establish a proper, good or adequate reason on all the circumstances of the case and that this expression should be given a broad and liberal interpretation. He nevertheless accepts that the formulation of the test by reference to the existence of a broad discretion that may be exercised 'for any good reason' has been found to be inadequate and incomplete, and capable of leading to error ( Buzzle per Ipp JA from [28]).

156. In Buzzle , Ipp JA (having referred to what was said in CDJ v VAJ [1998] HCA 76; (1998) 197 CLR 172 per Gaudron J (at [53]-[54]) and by way of illustration to the approach in Brisbane South Regional Health Authority v Taylor (per McHugh J at 554 and Kirby J at 564-565) and in The IMB Group Pty Ltd (in liq) v Australian Competition and Consumer Commission [2006] QCA 407; [2007] 1 Qld Rep 148 per Keane JA, as his Honour then was) said (at [28]) that:

The rule requires the exercise of a judicial discretion, not fettered by inflexible prescriptions: Bray CJ in Victa Ltd v Johnson (1975) 10 SASR 496 at 503, approved by Stephen J, sitting alone, in Van Leer Australia Pty Ltd v Palace Shipping KK [1991] HCA 11 ; (1991) 180 CLR 337 at 343-344, and Mason J, sitting alone, in Foxe v Brown (1984) HCA 69 ; (1984) 59 ALJR 186 at [189]. But this does not mean that the discretion is at large. The discretion is to be exercised in the context of and by reference to the statute by which it is conferred (and any other statute that is relevant to the legislative context) and in accordance with principles developed by judicial decisions. (my emphasis)

157. As to the statutory provisions applicable in this jurisdiction, Ipp JA said (at [36]):

Sections 56, 57, 58 and 59 require a judge, exercising a discretion under UCPR r 1.12, to have regard to whether a party, seeking the exercise of the discretion in its favour, has:

(a) diligently pursued the object of disposing of the proceedings in a timely way;

(b) used, or could reasonably have used, available opportunities under the rules or otherwise, to avoid delay; and

(c) reasonably implemented the practice and procedure of the court with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination.

158. In addition to the statutory regime, his Honour expressed the opinion that, when exercising the discretion conferred by rule 1.12, regard must be had to the policy behind the limitation statute applicable, noting what had been said by Hodgson JA in Tolcher v Gordon [2005] NSWCA 153; 53 ACSR 442 (at [3], 443):

Although the 3-year period is a limit for the commencement of such proceedings, not service of the proceedings, in my opinion an important aspect of the public policy behind the limitation period is that potential defendants should be made aware of claims against them within a reasonable time; so that in my opinion, delay in service of such proceedings, in contravention of the rules, is particularly serious if it occurs after the expiration of the 3-year limitation period. A liquidator who does not commence proceedings until just before expiry of the limitation period should in my opinion be especially diligent in pursuing prompt service of the proceedings.

159. As to Tolcher , Mr Karkar submits that Hodgson JA's comments were directed to the position where (unlike here) the delay in service was in breach of the rules and are not apposite where (as is asserted to be the case here) the delay in service has been acquiesced in or encouraged by a defendant (although I am not persuaded as to there being any ongoing acquiescence). Further, he notes that Hodgson JA agreed that the plaintiff in that case should be given an extension of time.

160. Ipp JA referred also to the need for the judicial discretion to be exercised in accordance with principles encompassed within the doctrine developed by judicial decision (citing what had been said in Regie National des Usines Renault SA v Zhang [2002] HCA 10; (2002) 210 CLR 491 by Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ (at [22]) and referring to the principles relating to the exercise of a discretionary decision under a rule such as r 1.12 when dealing with an application to renew a statement of claim nunc pro tunc as evidenced in the remarks of Bray CJ in Victa Ltd v Johnson , as approved in Van Leer Australia Pty Ltd and Foxe v Brown ). In Victa, Bray CJ noted that prominent amongst the matters for the consideration of the court, "apart from whatever attempts have been made at service, will be the length of the delay, the reasons for the delay, the conduct of the parties and the hardship or prejudice caused to the plaintiff by refusing the renewal or to the defendant by granting it".

161. In Buzzle , (at [43]), in a passage recently confirmed by the Court of Appeal in Agricultural & Rural Finance as setting out the governing principles in this context, his Honour concluded as follows:

Accordingly, the court should consider, when exercising a discretion such as that under UCPR r 1.12, the attempts that have been made at service, the length of the delay, the reasons for the delay, whether the delay was deliberate, whether notice was given to the defendant, the conduct of the parties generally, and the hardship or prejudice caused to the plaintiff by refusing the renewal or to the defendant by granting it.

162. Thus, Mr Karkar lists the matters for consideration on the exercise of the discretion under rule 1.12 as being: the attempts that have been made at service; the length of the delay; the reasons for the delay; whether the delay was deliberate; whether notice was given to the defendant; the conduct of the parties generally; the hardship or prejudice caused to the plaintiff by refusing the renewal or to the defendant by granting it; and the requirements of ss 56 to 59 of the Civil Procedure Act 2005 (NSW) (to which one must add, to the extent that they are not already encompassed by a consideration of the question of delay and prejudice occasioned thereby, the policy underlying the statutory limitation periods and the rules in relation to service of originating process).

• Non-disclosure

163. Before considering the matters set out above in relation to each of the extensions of time that were granted in this case, I note that the News defendants also bring an application under rule 36.16(2)(b) to set aside the ex parte orders, relying in essence on the same matters as those relied upon by each of the defendants on the applications under 12.11(1)(e) (though perhaps requiring a different emphasis on the issue of alleged material non-disclosure to the court on one or more of the extension applications).

164. In Buzzle , the Court of Appeal considered an appeal in relation to the exercise of discretion to extend the time for service of a statement of claim on a hearing that followed an initial ex parte extension of the time for service. Ipp JA noted that it was not in dispute that (there having been a failure on that ex parte application to disclose to the Registrar that the limitation period had expired) on the ground of non-disclosure alone that order should be set aside. (In the present case, as I will discuss in due course, it is submitted by the defendants that non-disclosure by the SPL of various matters at the time of various of the extension application would be sufficient to set aside one or more of the ex parte orders extending time for service.)

165. The relevance of non-disclosure on an application of this kind was considered in Savcor Pty Ltd v Cathodic Protection International APS (2005) 12 VR 639, [2005] VSCA 213, where Gillard AJA noted the existence of the court's inherent jurisdiction (unless displaced by statute), in circumstances where an order is made ex parte without notice, to re-hear the application and contrasted the position where an application is made to set aside an ex parte order based on non-disclosure.

166. There, Gillard AJA noted (at [21] - [22]):

... The Rules of Court also give the right to a party to apply to the court for an order to set aside an order made without notice. See r 46.08(b). If an application is made to the court pursuant to the inherent power or the Rule, the court re-hears the original application. In those circumstances, the general practice is to refer the matter back to the judicial officer who made the order but it is not fatal if that is not done. It is a re-hearing of the whole application. However, at the re-hearing the judicial officer has the benefit of submissions and any material the opposing party wishes to place before the court. I do not accept the statement made by the Full Court of Western Australia in Bellgroup NV (in liq) v Aspinall where the Court seemed to be of the view that an application to set aside in those circumstances could only proceed if new material evidence was placed before the court. In my opinion, the jurisdiction is much wider and gives the right to the party affected by the order to appear before the court and put submissions as to why the order should not be made on the materials which were before the judge who made the first order. It is a re-hearing and the court may reach a different decision after hearing submissions . Sir John Donaldson MR in WEA Records Ltd v Visions Channel 4 Ltd wrote concerning ex parte orders:

He (the judge) expects at a later stage to be given an opportunity to review his provisional order in the light of evidence and argument adduced by the other side and, in so doing, he is not hearing an appeal from himself and in no way feels inhibited from discharging or varying his original order.

See also observations of Sir Leo Cussen in Zinc Corporation Ltd v Hirsch, to the same effect. In my opinion, this jurisdiction is different to the situation when an order made ex parte is set aside because there was a material non-disclosure of a material matter by the party who obtained the order. The order is set aside because of some irregularity and not on the merits. When this jurisdiction is enlivened, the court's function is to determine on the material that was placed before the judicial officer at first instance, whether a party has failed to discharge the obligation which rests upon any party seeking an order ex parte, namely, making a full and fair disclosure of all matters within its knowledge and which are material, to the court. The court is not concerned whether the order should have been made on the material before the court. Whether or not the court will set aside the order upon proof of the failure to discharge the obligation depends upon the particular circumstances . (my emphasis)

167. Ordinarily, where an ex parte order has been set aside for material non-disclosure at the time it was made, the party who obtained that order is able to make a fresh application for the order (based on full disclosure).

168. As to the question of the reason for delay (there delay in seeking to set aside an order on the ground of material non-disclosure) Gillard AJA emphasised the difference between an application to rehear the original application and an application to set aside an ex parte order on the ground of non-disclosure. In the latter case, the issue is not whether the order should have been made on the evidence before the judicial officer - that was said to be irrelevant (though his Honour expressed the view that it was doubtful in light of the decisions in Ramsay v Madgwicks (1989) VR 1 and Dagnell v JL Freedman & Co [1993] 1 WLR 388 that the judicial officer there should have made the order extending time on the basis of the "general rule that the mere wish of a party to await the outcome of some other proceeding is not a good reason for extending the validity of the writ"). Rather, the relevant issue was described as follows:

"The questions are, was the master misled by a misstatement or failure to disclose a material fact in reaching his decision to make the order and, if so, should the court set aside the order? ... It is not to the point in this application [ie the application to set aside for non disclosure] that in the circumstances the master should not have extended time." [42], [79].

169. Therefore, in circumstances where I had understood the parties to be approaching the applications under rule 12.11(1)(e) as a hearing de novo of the extension applications, I raised with Senior Counsel for the PBL defendants, Mr Bathurst QC (who largely had the responsibility for the presentation of oral submissions for all of the defendants on the applications to discharge the orders for extension of time) the relevance of any non-disclosure at the time of the initial hearings. In other words, if the effect of non-disclosure is to enable orders to be set aside, but the party is then entitled to seek those orders afresh and this is treated as a hearing de novo of the extension application, is the fact of the earlier non-disclosure of any relevance. Mr Bathurst submitted that non-disclosure remains relevant on the current applications, primarily because it reveals what was not before the court (and thus not able to be taken into account) on the earlier applications but also that it was relevant on the basis that it would, of itself, permit the orders to be set aside.

170. The gravity of non-disclosure on an ex parte application was noted by the English Court of Appeal in Bayat v Lord Michael Cecil & ors [2011] EWCA Civ 135, (at [25]):

I should like to think that the judge did not intend to state (as he did) that it would not be appropriate to set aside the orders made if there had been deliberate non-disclosure or misrepresentation, and I shall proceed on that basis.

171. Apart from the significance of any such non-disclosure on the applications to discharge under rule 12.11(1)(e), it is clearly a matter of relevance to the separate application by the News defendants to set aside the ex parte orders under rule 36.16(2)(b). I consider the issue of whether there has been any relevant non-disclosure in due course.

• Authorities on the question of delay and prejudice

172. Again, before carrying out the necessary balancing exercise in relation to each particular extension of time, I note that there has been some divergence in the authorities as to how delay in the prosecution of proceedings has been treated in this context. Not surprisingly, the respective parties have sought to characterise the circumstances in which delay arose in the present case as falling on one or other of side of the line as to what is acceptable delay. There is also an issue between the parties as to what prejudice can be said to have been (or to be likely to be) caused to the defendants by reason of the delay in this case, in circumstances where there has been no (or limited) evidence as to any particular prejudice suffered or likely to be suffered by them. (I use the phrase "particular prejudice" because there is a dispute as to whether the kind of prejudice referred to by McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 552-553 should be regarded as "presumptive" prejudice or "actual" prejudice and as to the weight that should be placed on such prejudice in an application such as the present).

Delay

173. On the question of delay, in the Brisbane Health case , McHugh J said (at 552-553):

The discretion to extend time must be exercised in the context of the rationales for the existence of limitation periods. For nearly 400 years, the policy of the law has been to fix definite time limits (usually six but often three years) for prosecuting civil claims. The enactment of time limitations has been driven by the general perception that "[w]here there is delay the whole quality of justice deteriorates". Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties. Prejudice may exist without the parties or anybody else realising that it exists . As the United States Supreme Court pointed out in Barker v Wingo , "what has been forgotten can rarely be shown". So, it must often happen that important, perhaps decisive, evidence has disappeared without anybody now "knowing" that it ever existed. Similarly, it must often happen that time will diminish the significance of a known fact or circumstance because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose. A verdict may appear well based on the evidence given in the proceedings, but, if the tribunal of fact had all the evidence concerning the matter, an opposite result may have ensued. The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose.

...

The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost . Second, it is oppressive, even "cruel", to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed . Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them . Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liabilities beyond a definite period. As the New South Wales Law Reform Commission has pointed out:

"The potential defendant is thus able to make the most productive use of his or her resources and the disruptive effect of unsettled claims on commercial intercourse is thereby avoided. To that extent the public interest is also served."

In enacting limitation periods, legislatures have regard to all these rationales. A limitation period should not be seen therefore as an arbitrary cut off point unrelated to the demands of justice or the general welfare of society. It represents the legislature's judgment that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated. Against this background, I do not see any warrant for treating provisions that provide for an extension of time for commencing an action as having a standing equal to or greater than those provisions that enact limitation periods. A limitation provision is the general rule; an extension provision is the exception to it. The extension provision is a legislative recognition that general conceptions of what justice requires in particular categories of cases may sometimes be overridden by the facts of an individual case. The purpose of a provision such as s 31 is "to eliminate the injustice a prospective plaintiff might suffer by reason of the imposition of a rigid time limit within which an action was to be commenced." But whether injustice has occurred must be evaluated by reference to the rationales of the limitation period that has barred the action. The discretion to extend should therefore be seen as requiring the applicant to show that his or her case is a justifiable exception to the rule that the welfare of the State is best served by the limitation period in question. Accordingly, when an applicant seeks an extension of time to commence an action after a limitation period has expired, he or she has the positive burden of demonstrating that the justice of the case requires that extension . (my emphasis)

174. In BP Australia Ltd v Brown & ors [2003] NSWCA 216 Spigelman CJ noted what had been said by McHugh J as to the four broad rationales for the enactment of limitation periods and went on to say (at [112] - [114], in the context of an extension of the time limit under s 588FF(3), the following:

There is, in my opinion, a broader public interest to be served by allowing persons who have had dealings with companies which become insolvent to conduct their commercial affairs with a degree of certainty about their exposure to having past transactions unravelled.

I note the traditional hostility of the common law to the exhumation of bodies which was once described as an "inhuman and barbarous felony". ( Haynes' case (1614) 12 Co Rep 113, 77 ER 1389. See also R v Lynn (1788) TR 733, 100 ER 394; R v Sharpe (1857) 7 Cox CC 214, 169 ER 959.) In this respect, equity followed the common law. (P W Young " The Exclusive Right to Burial " (1965) 39 ALJ 50; Beard v Baulkham Hills Shire Council (1986) 7 NSWLR 273 esp at 280.) This policy is informed by considerations of decency and human respect. Nevertheless, in my opinion, there is also a public policy against the disinterring of corporate corpses . Commercial life must at some stage rule off the past and focus energy on the future.

The commercial and economic life of the community is sometimes better served by allowing the loss to lie where it falls, so that all concerned may proceed with a high degree of certainty as to their financial position. The passage of time, even the passage of three years, can be seen to legitimately alter the balance of conflicting interests in this regard. (my emphasis)

175. His Honour considered (at [119]) that in a context where conflicting interests have to be balanced, the eventual loss of the ability to make a relevant claim (there a claim for a voidable transaction) may "reasonably be regarded as something to be surrendered, in favour of providing certainty to others who have had dealings with the company, including other creditors, so that they can proceed with their business affairs with an assurance that they are no longer at risk".

176. In Tolcher v Gordon in the context of proceedings commenced by a liquidator (as was the case here) only days before the expiry of the relevant limitation period, Hodgson JA said as to delay (at [2]-[3]):

I agree that it cannot be said that it was in itself dilatory conduct for the liquidator not to commence proceedings until 3 days before expiry of the limitation period. However, I do not agree that this was not a relevant consideration in the context of the subject application to set aside the dismissal under Pt 18 r 9 of the District Court Rules (the rules), or that it was irrelevant for the primary judge to take into consideration the public policy behind the 3-year limitation period.

Although the 3-year period is a limit for the commencement of such proceedings, not service of the proceedings, in my opinion an important aspect of the public policy behind the limitation period is that potential defendants should be made aware of claims against them within a reasonable time; so that in my opinion, delay in service of such proceedings, in contravention of the rules, is particularly serious if it occurs after the expiration of the 3-year limitation period. A liquidator who does not commence proceedings until just before expiry of the limitation period should in my opinion be especially diligent in pursuing prompt service of the proceedings. (my emphasis)

177. In the same case, Tobias JA said at [32]:

...Reference was made to, and his Honour accepted the relevance of, the principles expounded by this court in Itek Graphix Pty Ltd v Elliott (2002) 54 NSWLR 207 and in particular the statement of Ipp AJA, with whom Spigelman CJ and Sheller JA agreed, that (at 224):

... where a broad discretion is conferred to grant leave to sue after expiry of a limitation period, the general question that has to be asked is what is fair and just (per Gleeson CJ in Salido ). Or what does the justice of the case require (per McHugh J in Brisbane South Regional Health Authority ).

178. At [106], Tobias JA said:

I can accept for present purposes that it was the decision of the liquidator to delay the institution of the action until such time as litigation funding to enable the proceedings to be properly prosecuted had been put in place. ... The primary judge described this decision as a commercial one: this is in part true, but I would also designate it as a responsible decision.

and at [108]:

Furthermore, it seems to me that it would have been irresponsible for the SLC to have been served upon the opponent before that litigation funding was in place and which provided for any costs order in favour of the opponent to be met. Otherwise once the opponent had been served, he would have commenced to incur legal costs in preparation of a defence to the allegations contained in the SLC which would not have been recoverable from Senafield (as it had no assets), although such costs would have been recoverable against the liquidator personally but in circumstances where there were no assets of the company from which he could be reimbursed.

179. The question of delay has been considered by the Court of Appeal in two cases that are highly relevant to the current application and to which I have already referred - Buzzle and Agricultural & Rural Finance. Different conclusions were reached as to whether the relevant extensions of time should have been granted (and in both cases the Court of Appeal placed emphasis on the need to take into account all the circumstances of the particular case).

• Buzzle

180. In Buzzle, there had been a finding that the litigation funder had held the practical control over the decision to prosecute the claim and that the liquidator had wished to avoid the case management procedures of the court. Ipp JA noted that there was no evidence that consideration had been given by the liquidator to the possibility of serving the statement of claim and then applying for a stay of the proceedings to minimise costs while other proceedings (arising out of the HIH litigation) remained unresolved. It was a case where the delay had occurred after the expiry of a limitation period.

181. As to the issue of delay after expiry of a limitation period, in Buzzle , Ipp JA said (from [68]):

In weighing delay after a limitation period has expired, regard must be had to the public policy behind the limitation period. ...

The point was crisply made by Handley AJA (with whom Tobias JA and Basten JA agreed) in Pell v Hodges [2007] NSWCA 234 (at [44]):

A plaintiff who issues proceedings just before the limitation period and only then has the merits of the case investigated should not have any expectation of obtaining an extension of time to enable investigations to continue. There should also be no expectation that time spent in this way after the statement of claim has been issued, especially after it has become stale, will be accepted as an adequate explanation for such delays.

182. Ipp JA referred to the principle that it is not for a plaintiff (or a litigation funder for that matter) to arrogate to itself the decision as to the period in which the writ should be served, saying at [81]-[82]:

In Battersby v Anglo American Oil Co Ltd [1945] KB 23 (at 32) Lord Goddard said: "It is for the court and not for one of the litigants to decide whether there should be a stay". This statement was made in the passage cited with approval in Kleinwort Benson Ltd v Barbrak Ltd [1987] AC 597 and by Lord Browne-Wilkinson in Dagnell v Freedman & Co [1993] 1 WLR 388.

In my view it would be inappropriate to allow an extension of time for the service of a writ or statement of claim where a significant cause of the delay has been the willingness of the plaintiff to do nothing about service while awaiting a decision from a litigation funder as to whether or not to provide the necessary funds. Were that to be regarded as a good reason to extend time, the court would be allowing plaintiffs to arrogate to non-parties the right to decide the period by which the time for service of a writ should be extended. That would be fundamentally in conflict with the court's duty to exercise, alone, the discretion conferred upon it. (my emphasis)

183. In relation to the deliberate decision of the liquidator to delay proceedings, Ipp JA referred to what he had earlier said (with the concurrence of Spigelman CJ and Sheller JA), in Itek Graphix Pty Ltd v Elliott (2002) 54 NSWLR 207, (at ([91]):

A deliberate decision to allow a statutory limitation period to expire would be a powerful factor against the grant of leave. Were a deliberate decision to allow the period to expire has been made, ordinarily it would be difficult to provide an explanation for that decision sufficiently cogent to warrant the grant of leave.

and (at [93]) expressed the view that a deliberate decision to allow a writ to become stale after a limitation period had expired would be a powerful factor against the grant of the order sought (referring also to Van Leer at 350). His Honour noted that any prejudice suffered in such circumstances, were the writ not to be extended, would be self-inflicted.

184. The statement by Tobias JA in Tolcher (at [50]) to the effect that the deliberate decision by the liquidator in that case not to attempt service of the statement of claim until "the litigation funding was in place" was "appropriate, prudent and responsible and not a decision for which the liquidator can be justifiably criticised" was noted by Ipp JA, who recognised that a deliberate decision to delay is not a factor that has an absolute effect on the discretion to be exercised, each decision depending on its own circumstances, but considered that the failure by the primary judge to take such a decision into account was in error.

185. His Honour noted that the delay in Tolcher was far shorter than in the case before him and that the circumstances of the respective cases were substantially different. Taking into account the length of the delay; the reasons for the delay (and, in particular, the fact that it was due to the desire to resolve a recoverability issue); the conduct of Buzzle through the liquidator (and its lack of diligence) in attempting to overcome the reasons for the delay; and the deliberate decision made by Buzzle to allow the delay to occur (first, in the knowledge that the limitation period would soon expire and, secondly, after the limitation period had expired), Ipp JA considered that the extension of time should not have been granted.

• Agricultural & Rural Finance

186. A different conclusion was reached in Agricultural & Rural Finance. There, the Court of Appeal considered an appeal from a judgment setting aside an ex parte order extending the time for the service of a summons pursuant to rule 1.12(1). (Such an extension had been required as the summons had become stale nearly four and a half years before the order extending the time for service was made.)

187. Tobias JA noted (at [57]) that it had not been suggested in the case there before him that the principles articulated by Ipp JA in Buzzle [with whose reasons he had as a member of that court agreed] did not inform the exercise of the discretion to extend time in an application under rule 1.12(1); but rather it had been submitted that the application of those principles was inappropriate in a case such as the one then before his Honour.

188. His Honour noted that, in Buzzle , the application to extend the time for service of the originating statement of claim was made after the limitation period in respect of the plaintiff's claim had expired, whereas in the Agricultural & Rural Finance case the application for extension was made (and the summons itself served) prior to Agricultural & Rural Finance 's claim becoming statute barred. (I interpose to note that, in the case now before me, the first application for an extension of time to serve the Statement of Claim was made after the expiry of the limitation period for the bringing of the s 588FF, breach of statutory duty and misleading and deceptive conduct claims - as was in effect conceded at the time that the SPL reported to creditors on the commencement of the proceedings). His Honour considered that, even if that were a relevant point of distinction, there were aspects of the statements of Ipp JA in Buzzle which had relevance to the Agricultural & Rural Finance case.

189. In considering the import of Tolcher , in Agricultural & Rural Finance Tobias JA said at [99]:

Tolcher was a case where the plaintiff had delayed the institution of proceedings until three days prior to the expiration of the limitation period applicable to the plaintiff's claim. The present is not such a case as the summons was filed more or less at the commencement of the limitation period rather than at its end. However, in my opinion that fact does not invalidate the application of the general principles required to be considered in approaching the exercise of the discretion under UCPR r 1.12 in a case such as the present. All factors that are relevant to the exercise of the discretion have to be considered. These include the delay of the respondents in filing their Notices of Motion to set aside the service of the summons until after the limitation period relating to commencement of fresh proceedings against them, had expired [a factor that his Honour noted was not present in Buzzle ]. (my emphasis)

190. In the present case, the Statement of Claim was filed by the SPL a mere four days before the expiry of the limitation period (thus the comments of Hodgson JA in Tolcher as to the need for diligence in the service of the claim thereafter might be said to be apt) but that factor must be considered in the context of the reasons why the claim was not instituted at an earlier time (the SPL having not been appointed until December 2003 and the undertakings having been proffered in April 2004 that led to an extension of the relevant time period) and why it was that the applications to extend the time for service were made (together with all the other relevant circumstances of the case).

191. In Agricultural & Rural Finance , Tobias JA also considered the statement of Lord Goddard in Battersby v Anglo-American Oil Co Ltd [1945] KB 23 at 28 (cited by Ipp JA at [81] of his reasons in Buzzle as being of particular relevance) that ordinarily it is not a good reason that the plaintiff desires to hold up the proceedings 'while some other case is tried or to await some future development', together with the passages in Ipp JA's reasoning in Buzzle which addressed the reasonableness of the liquidator's decision to await the resolution of the HIH litigation before proceeding to seek an extension of time to serve the defendants.

192. Tobias JA (at [102]), considered that emphasis should be placed on the word "ordinarily" in the statement in Battersby . His Honour said:

It is clear that his Lordship was not laying down an inflexible rule. This is evidenced by the context in which the sentence in Lord Goddard's judgment in Battersby at 32-33 was made. The full passage is as follows:

It is the duty of a plaintiff who issues a writ to serve it promptly, and renewal is certainly not be granted as of course on an application which is necessarily made ex parte. In every case care should be taken to see the renewal will not prejudice any right of defence then existing, and in any case, it should only be granted where the court is satisfied that good reasons appear to excuse the delay in service, as, indeed, is laid down in the order. The best reason, of course, would be that the defendant has been avoiding service, or that his address is not known, and there may well be others, but ordinarily it is not a good reason that the plaintiff desires to hold up the proceedings while some other case is tried or to await some future development. It is for the court and not for one of the litigants to decide whether there should be a stay, and it is not right that people should be left in ignorance that proceedings have been taken against them if they are here to be served.

193. In Agricultural & Rural Finance , Tobias JA (at [111]) noted that well before the summons had become stale the particular defendants were aware "not only of the proceedings against them, but also as to the nature of those proceedings and the fact that they had been joined as defendants to the summons" (my emphasis). His Honour went on to say (at [112]):

Furthermore as a member of the Action Group, Mr Kirk was aware that on 29 August 2003 Bergin J had by consent ordered that the defendants in the Group represented by Clayton Utz should nominate a test case defendant; that that nominated defendant should file a defence and cross-claim and that the parties should identify the common issues of all defendants in the Group. By November 2003 Mr Jones was also aware of the proposed test case and agreed, subject to being served with the summons, to be bound by its determination. Accordingly, there was nothing about ARF's claim against them that the respondents only learned when they were served in December 2008 . (my emphasis)

194. His Honour accepted that, in one sense, the failure to pursue service upon the unserved defendants was intentional or deliberate (and not due to "mishap nor oversight"). However, while his Honour accepted that "it was a calculated decision, ... it was not one made in a vacuum", there was a reason or explanation for it (the making of orders by consent for the proceedings to proceed by way of a test case with respect to issues common to all defendants (which his Honour noted would include Messrs Jones and Kirk notwithstanding that they had not been served).

195. At [121], Tobias JA concluded:

In the foregoing circumstances, in my opinion it cannot be legitimately asserted, as the primary judge did, that ARF "unilaterally abrogated (sic) to itself the equivalent of a stay of proceedings". I accept, as I have indicated, that there was a de facto stay of proceedings, but one which was brought about by the agreement of the parties including the defendants in the Action Group represented by Clayton Utz, that the matter proceed by way of a test case. That together with the case management directions ... had the effect of a de facto court-endorsed stay . (my emphasis)

and considered that it could not fairly be asserted that it was Agricultural & Rural Finance who had unilaterally "that is, without the concurrence of the other parties to the proceedings [and the judge]" arrogate to itself the equivalent of a stay.

196. Of relevance was the fact that, although not served with the summons, both of the parties later seeking to set aside the extensions of time for service "were fully aware that they had been joined as defendants to the summons and were cognisant of the nature of the claims made against them". His Honour considered that that knowledge went "some distance to mitigating the prejudice that a defendant might otherwise suffer through delay in actual service of process, where the defendant is unaware of the proceedings until service is actually effected" (at [123]).

197. Tobias JA contrasted the position in Agricultural & Rural Finance , where it had been considered reasonable and appropriate by the judge managing a case with 216 defendants in the commercial list for the litigation to proceed by way of a test case and for the proceedings to be generally placed in suspense until the issues in the test case were finally resolved, with that in Buzzle, " where a plaintiff was waiting for a litigation funder to decide whether the case was strong enough for it to commit to fund it " (my emphasis). Thus his Honour concluded (at [130]) that:

In my view, the present case cannot be fairly described as one where ARF unilaterally and without judicial endorsement or rational cause, arrogated to itself a stay of the proceedings against the respondents. In the circumstances, in my view, the failure of ARF, whether deliberate or not, to pursue service of the summons upon the respondents while the issues in the test case remained unresolved, cannot be regarded as so unreasonable and lacking a rational explanation or basis as to weigh heavily in the balancing exercise which the court is required to undertake.

198. His Honour's conclusion (at [225]) was that:

Finally, in my opinion AFL has adequately explained the delay in service which has occurred. In particular, it has not arrogated to itself the benefit of a stay of proceedings, unilaterally or at all. Applying those principles stated by Ipp JA in Buzzle which are relevant to the issues in this appeal I have come firmly to the view that the court's discretion to set aside service of the summons upon the respondents should not be exercised in their favour.

• Bayat

199. On the question of delay, reliance was also placed by the defendants on Bayat , a decision of the English Court of Appeal, in which the court heard an appeal from a decision at first instance by Hamblen J not to set aside extensions of the time for service, in circumstances where those extensions had been sought before the writ became stale, but after expiry of the relevant limitation period (as is the case here).

200. Lord Justice Stanley Burnton considered the principles applicable on applications for extension of time in the context of the relevant rules of that court, noting that, at first instance, Hamblen J had referred to a number of pertinent authorities ( Hashtroodi v Hancock [2004] 1 WLR 3206 , Collier v Williams [2006] 1 WLR 1945, Hoddinott v Persimmon Homes [2008] 1 WLR 806, and Imperial Cancer Research UK v Ove Arup and Partners Limited [2009] EWHC 1453 (TCC)) and had observed (at [166]) that:

As to the relevance of limitation, whether the claim has become statute barred since the issue of the claim form is a matter of importance. Where an extension of time is sought in circumstances where the claim has, or may have, become time-barred since the date on which the claim form was issued, or will become time-barred in the extended period, the court should have regard to the fact that an extension of time might disturb a defendant who is entitled to assume that his rights can no longer be disputed as a matter of importance when deciding whether to grant an extension of time for service: see Hashtroodi para. 18 and Hoddinott para. 52. See also Sodastream v Coates [2009] EWHC 1936 (Ch).

201. Hamblen J had also accepted that if a potentially good reason for an extension has been shown, then balance of hardship might be relevant to the exercise of the court's discretion to extend time.

202. Stanley Burnton LJ noted that the primary judge (while accepting that lack of funding will often not be a good reason for an extension of time) had been satisfied in the unusual circumstances of that case that good reason for the extension had been made out. (There, the reason for the plaintiffs' funding difficulties had been that significant amounts had been spent by them in US proceedings relating to the same dispute between the parties but, through no fault of theirs and without any determination on the merits, those proceedings had very unusually been dismissed on the Court's own motion. Hamblen J noted the possibility that the claimants could have funded the service of the relevant process and then sought a stay but thought there was little doubt that that would have been opposed and that they would in any event have been faced with the present application.)

203. In the unusual circumstances of the case, Hamblen J had accepted that the claimants had acted "sensibly and responsibly" in not serving the court process before there was a real prospect of funding, since funding was required for the claim to be viable. While it was said that this could "clearly not justify a prolonged extension of time", a short extension was said to be appropriate (having regard also to the hardship the claimants would suffer if the extension was not granted). (On appeal, the Court said that when weighing up the "balance of hardship", in a case concerned with limitations periods having expired, a plaintiff "must show a (provisionally) good reason for an extension of time which properly takes on board the significance of limitation" ([109]).

204. Submissions on this decision were forwarded to me after my judgment was reserved. The defendants rely on various statements of principle enunciated in that decision as relevant in the current applications notwithstanding the differences in the respective rules of court. In particular, the PBL defendants in their supplementary submissions note that the English Court of Appeal accepted that seeking litigation funding, of itself, is "firm[ly]" not a good reason to obtain an extension, though not determinative of the position ([97]-[98]); that it suggested that if a plaintiff is not in a position to proceed immediately with the complete prosecution of claim, it should serve the claim within time and then seek a stay, or an extension of time for procedural steps to be taken ([42], [45], [51], [107]) and that, by so doing, this allows the court to control the litigation process (since, until service of the claim, the court has no part to play in the proceedings) ([42], [43] citing Hoddinott v Persimmon Homes (Wessex) Ltd. ). They point to the fact that the court there noted that security for costs may be ordered on a staged basis and thus it was not necessary for provision to be made for the costs of the entire proceedings at early stages (and accordingly not necessary, for the service of the claim, for a plaintiff to have access to funds to cover the entirety of the litigation ([47]) and that issue was taken by the English Court of Appeal to the proposition that funding of the litigation is required for a claim to be viable, it being there said that a claim is viable in the financial sense if the plaintiff has the means to commence the litigation ([96]).

205. Reference was also made by the PBL defendants to the statements in Bayat to the effect that even if a claim is well-founded, the aim of funding providing "access to justice" does not allow the courts to "side-step limitation [periods]" and that no exceptions should be made because of the size and complexity of the claims that the plaintiff is seeking to bring as that would "stand access to justice on its head" ([98]).

206. The English Court of Appeal considered it relevant to the court's discretion that the plaintiff had considered that it had meritorious claims for some years prior to service ([46]) and noted that the reason why a failure to serve in time has always been dealt with strictly is bound up with the fact that proceedings are commenced when issued and not when served ([48], [76], citing Aktas v Adepta [2010] EWCA Civ 1170, and that it is not until service of the claim that the defendant has been given proper notice of the proceedings in question ([48]) again citing Aktas v Adepta.

207. Finally, the PBL defendants point to the recognition by the English Court of Appeal that an extension of time for service effectively extends the period during which a plaintiff can do nothing to bring its litigation formally to the notice of the defendant ([78]) and that loss of a plaintiff's claim by reason of the expiry of a limitation period is likely to be a barren excuse for extending time ([48], [76], [108], again citing Aktas v Adepta ) .

208. The plaintiffs' submission in response is that Bayat is not relevant to the consideration of the defendants' applications seeking to set aside the orders extending the time for service of the statement of claim, on the basis that it depended on the application of particular rules (7.6(2) and (3)) of the English Civil Procedure Rules and English precedents which it is said have no counterpart or application in New South Wales. (In particular, it is said that the requirement under rule 7.6(3) (where an application is made after the time or extended time for service of the claim) for the claimant to establish the taking of reasonable steps to serve the claim, which was considered to be of significance by his Lordship in relation to the discretion under 7.6(2), does not apply in the context of the discretion under our rule 1.12 which is in different terms.)

209. Mr Karkar submits that the English authorities take a strict approach to extensions of time for service of a claim form (the equivalent of an originating process in New South Wales) (referring to what was said in Bayat at [48] and [76], [90], and [98], such that, in England, an extension of time for service will be granted only in exceptional circumstances ( Bayat at [55]). It is submitted that such an approach is inconsistent with the approach laid down by the Court of Appeal in Buzzle and does not represent the law in New South Wales (that being that each case depends upon its own circumstances).

210. It is therefore submitted that it would be an error to approach the exercise of discretion with any pre-determined views or inflexible prescriptions to the effect that rule 1.12 is to be strictly applied, that extensions of time are only to be granted in exceptional cases, or that there will be very few (if any) acceptable excuses for failures to observe the time limit for service.

211. As a statement of general principle, the above does not seem to be disputed by the defendants, who expressly confirmed their acceptance that the approach laid down in Buzzle was (prior to Agricultural and Rural Finance , at least) the authoritative decision for the purposes of these applications. However, the defendants do not accept that there is any relevant difference of substance between the English approach and that laid down by the Court of Appeal in Buzzle.

212. In that regard, the defendants contend that the attempt by the plaintiffs in the present case to distinguish Bayat on the basis of differences between the relevant rules (r7.6(2) and (3)) of the English Civil Procedure Rules from the relevant Uniform Civil Procedure Rules applicable in this Court is misconceived, since most of the observations of each of Stanley Burnton LJ and Rix LJ were made in the context of the general nature of the application, rather than the specific language used in the English Civil Procedure Rules . Among other things, this is said to be evident from the references to cases considering the position which prevailed under the previous rules of court (in particular the references to Dagnell v JL Freedman & Co as "instructive" to the issues under consideration at [99] and reliance upon Aktas v Adepta ). Thus it was submitted that the need for the reasons for an extension of time to be dealt with strictly by the court was because of the nature of the application and the principles held to be applicable to the exercise of the discretion, rather than the particular language of the relevant rules.

213. I was provided with a copy of the previous RSC order 6 rule 8 (as reprinted in The Supreme Court Practice 1988 by JIH Jacob et.al), the commentary to which (at p. 52 (6/8/1)) notes that the relevant test under that rule in relation to granting an extension of time for service is whether or not there are "good reasons" for granting an extension. It is submitted by the defendants that although Stanley Burnton LJ did make specific reference to the language used in rule 7.6(3), that does not detract from the fact that most of the observations made by their Lordships were grounded in the general principles that have always been applicable to applications to extend the time for service when limitation periods have expired. It is noted that the relevant rule applicable in Bayat was the English CPR 7.6(2), as the applications to extend the time for service were each made within time and that, consequently, the differences between the language used in the English CPR 7.6(3) and UCPR 1.12 are irrelevant, as all applications for extensions of time in this case, like in Bayat, were made within the extended periods of time and that no recourse was or is necessary to the rules dealing with applications out of time. In any event, to the extent that it can be said that there is some difference between the English approach and the law in New South Wales, the defendants submit that such a difference does not discount the relevance of any of the matters of general principle referred to in their submissions.

214. The plaintiffs also sought to distinguish Bayat pointing to the reference at [48] to the fact that "the limitation defence of the defendant will or may be prejudiced" provides another ground for distinguishing the decision (reference also being made to the observations in Bayat that the extension of a claim form has the effect of extending the limitation period and potentially prejudicing a limitation defence - [50], [76] and [108], thus requiring an "especially good reason" for an extension where the limitation period would expire during the period of the extension (at [91]). It is submitted by the plaintiffs that this approach relies upon the observations of Lord Goddard in Battersby cited in Bayat at [103], ("that the court will not exercise that discretion in favour of renewal ... if the effect of so doing be to deprive a defendant of the benefit of a limitation which has already accrued') and, in particular, Lord Goddard's conclusion that Holman v George Elliot & Co Ltd [1944] KB 591 was per incuriam and ought to be disregarded (at [104]) and that those observations do not represent the law in Australia ( Holman's case having been approved by the Full Court of the Supreme Court of South Australia in Victa Limited v Johnson (1975) 10 SASR 496 at 500, 502-503 per Bray CJ (with whom Walters and Wells JJ agreed), the Full Court of the Supreme Court of Western Australia in McLeod v West Australian Trustee Executor & Agency Co Ltd (1951) 53 WALR 4 and by Stephen J in Van Leer Australia at 342-346). Mr Karkar noted that Bray CJ's observations in Victa were approved in Buzzle at [41]. Thus it is said that the approach taken in Bayat differs from that which applies in this jurisdiction.

215. In response to this submission, the defendants note that as Bayat did not concern the validation of a time-barred claim (unlike the position in Battersby ), the debate as to the question whether renewal of a stale writ deprives a defendant of an accrued right to rely upon a limitation defence is irrelevant to the situation now before the Court. The defendants place emphasis on the fact that, both in the present case and in Bayat, what was being considered was the position where an extension application had been made prior to the expiry of the time allowed for service (including any prior extensions thereof) but after a limitation period has expired. The defendants submit that the approach taken in Bayat to this situation (that the level of satisfaction as to there existing a good reason for an extension will be higher than otherwise) can be seen to be also the law in Australia (referring to Tolcher at [3] and Buzzle at [37]-[39]).

216. The plaintiffs submit that the decision in Bayat is further distinguishable because the Court of Appeal in that case placed weight on two other matters.

217. First, the fact that extensions were obtained at ex parte applications at which the defendants were not represented (at [86]), that being said to be irrelevant in the present case as there has been held to be no right for the defendants to intervene on such an extension application because the rules evince an intention that the defendants were only to be heard after the event. In response to this, the defendants submit that it is not correct to say that the decision in Bayat "placed weight on" the fact that the extensions were obtained at ex parte applications; rather, that was simply a fact noted in the judgment of Rix LJ (at [86]) and does not form part of the reasoning for the decision.

218. Secondly, the funding arrangements lacked transparency and were not dependent on the objective view of the court (at [103]), whereas in the present case the SPL obtained court approval for the funding agreement (that decision being upheld by the Court of Appeal in Deloughery & Ors v Weston (2010) 79 ACSR 180 at [55] to [59]); the SPL's powers have been prescribed by the Court and varied from time to time (including to obtain litigation funding); and the Court has also authorised the various extensions of time for service of the Statement of Claim.

219. In response to this, the defendants submit that, although it is correct that the funding arrangements (or the proposed funding arrangements as the case may be) were generally transparent at the time each of the extensions was previously granted, it cannot be submitted that such transparency is presently available to this Court, which is (as is common ground) considering the matter de novo, given the deliberate decision of the SPL to maintain privilege in relation to funding arrangements, and not to provide the Court with any details at all of those arrangements. (Certainly, the detail of the funding arrangements has not been placed before me and, other than the fact that they have been approved by Barrett J, I have no knowledge of those arrangements.) Further, it is submitted that the fact that the negotiations for funding may not have been as "transparent" to the court in Bayat when compared to the level of transparency in other applications played a far less significant role in the Court of Appeal's decision than did the other factors referred to in the statements of general principle relied upon by the defendants.

220. Finally, the plaintiffs refer to two matters: the acknowledgement by the Court of Appeal in Bayat as to the purposes served by service of an originating process (those being said (at [43]) to be: first, to notify the defendant that the claimant had embarked on the formal process of litigation and to inform him of the nature of the claim; secondly, to enable the defendant to participate in the process; and thirdly, to enable the court to control the litigation process since until that time the court had no part to play in the proceedings) and the observation in Bayat that once the limitation period plus four months for service had expired " a defendant who has not been served can be entitled to assume that he will not be bothered by litigation " (at [77]).

221. As to these matters, the plaintiffs' position is that the first and third of the recognised purposes for requiring service of the Statement of Claim have been met in the present case (notwithstanding the fact that the Statement of Claim was not served until August 2010). It is submitted that the defendants knew that proceedings had been taken against them (and (it is said) had sufficient notice of the nature of the claim) and that this Court has had a crucial part to play in approving the extensions of time granted to the plaintiffs for service of the Statement of Claim (such that it cannot be said that the Court has been unable to control the litigation process or has had no part to play in the proceedings). Secondly, it is submitted that there can be no suggestion in this case that the defendants were entitled to assume that because they had not been served that they would not be bothered by this litigation, since the defendants knew that extensions of time were being sought and there was a prospect that they would continue to be bothered by this litigation once judgment had been delivered in ASIC v Rich .

222. Mr Karkar submits that the Battersby principle is founded on the proposition that it is not right for a defendant to be left in ignorance that proceedings have been taken against them, noting that one of the exceptions to the general rule applies where the delay in service is due to the conduct of the defendant ( Re Chittenden ). It is submitted that the proffering of undertakings to the SPL to extend the limitation period until six months after delivery of judgment in ASIC v Rich , was tantamount to "a request to delay service" and provides a good reason for an extension of time. A further distinction is drawn by the plaintiffs in that in Buzzle and Dagnell (where collateral litigation was relied upon to justify the delay) the collateral litigation was litigation commenced by the plaintiff seeking the extension of time.

223. In the present case it is submitted that it cannot be suggested that Mr Weston has sought to arrogate control of the timing of the proceedings to himself or to cede control of the timing of the proceedings to a third party funder as was the case in Buzzle. (I address later the concerns I have with this proposition.)

224. As to those final submissions, the defendants reject the suggestion that they had "sufficient notice of the nature of the claim" prior to service of these proceedings (as to which I discuss later in these reasons) and they maintain (and I agree) that it is incorrect to suggest that the court has had "control" of the litigation process prior to service of the proceedings simply because the court had made a number of extensions of the time for service of the originating process. Of course, it is true that this Court has had more involvement than the mere extensions of time for service; it has also played a role in determining the scope of the purposes for which the SPL was appointed and varying those purposes from time to time. That said, it is difficult to see that this Court's control or case management of the proceedings approaches in any real degree that which occurred in Agricultural & Rural Finance .

225. The defendants place weight on Bayat in light of the fact that (as is said to be the case here) the plaintiffs were unwilling "to commence proceedings unless they were entirely insulated against the cost consequences of such proceedings" and they note that the facts in the matter presently before the Court are in some respects more extreme than in Bayat (having regard to the facts that: in Bayat, the plaintiffs obtained two extensions of time (the first being a six month extension until 20 March 2009, the second being a six week extension until 30 April 2009, thus a total of just over seven months) whereas in the current proceedings, the SPL obtained six extensions of time for a total of 33 months). Further, it is said that the SPL had some millions of dollars in cash immediately available in the liquidation, (as well as a much greater amount again available had the SPL proceeded to finalise the version of the funding arrangements (plan B) that did not await the outcome in ASIC v Rich ) in which to commence the proceedings .

226. I have noted the various general statements of principle in Bayat (bearing in mind the different rules applicable to the cases in which those statements were made) under the respective court rules. Ultimately, however, the authorities to which I have turned for guidance as to the weight to be placed on delay in the present case are those cited earlier: Brisbane Health , BP Australia , Tolcher , Buzzle and Agricultural & Rural Finance . Further, insofar as the statutory context includes the mandatory requirements in ss 56-59 of the Civil Procedure Act , I note what was said in Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230 at [36], by Allsop ACJ (with whom Campbell and Young JJA agreed) namely that these provisions (together with ss 60 and 61 of the Act) bring about:

"a new statutory balance among various factors in litigation including court and party efficiency and the delivery of individual justice. Delay and case backlog are not merely factors affecting the public cost of delivering justice, they corrode the ability of the courts to provide individual justice."

• Prejudice

227. As to the issue of prejudice, in Agricultural & Rural Finance (at [192]) Tobias JA said:

Although I accept the principle of presumptive prejudice is applicable to a case such as the present, I do not think that it should carry much weight when balancing the various factors which the court is required to take into account in the re-exercise of the relevant discretion.

noting that one of the respondents (Mr Jones) had never believed that the claims against him had been abandoned; had, not long before the orders for the conduct of the test case, said in an email that his position remained in limbo; and had undertaken in November 2003 to be bound by the results of the test case and knew what the issues were in that case. Tobias JA said that "If [Mr Jones] believed that he had been misled into failing to appreciate the potential significance of punctually making interest payments, he had the opportunity to record his recollections of the relevant conversations and to collect any material documentation in late 2003 or even earlier."

228. It was submitted for Agricultural & Rural Finance that it had sustained prejudice as a consequence of the applications of the respondents to set aside service of the summons upon them because those applications were not made, and allegedly deliberately not made, until after the limitation period expired before which fresh proceedings could have been instituted against the respondents which would have overcome both the limitation issue as well as the delayed service issue. His Honour accepted that instead of seeking an ex parte order to extend the time for service of the summons upon the respondents, Agricultural & Rural Finance could have instituted fresh proceedings as long as it did so prior to the expiry of the limitation period but noted that it had elected not to do so; seeking instead an ex parte order to extend the time for service. Here, there can be no suggestion that the SPL was deprived of an opportunity to activate the proceedings at an earlier time; rather it chose not to do so.

229. In the Agricultural & Rural Finance case, his Honour considered that Agricultural & Rural Finance's legal advisers must have been aware that in view of the significant delay in serving the summons on the respondents, it was likely that they would apply to set aside service pursuant to rule 12.11(1)(b) (as should the SPL's legal advisers have been aware in the present case) and that any such application was unlikely to be filed prior to the then imminent expiry of the limitation period. In circumstances where his Honour noted that at the time of the ex parte application, Agricultural & Rural Finance was concerned only with its own position with particular reference to the impending expiry of the limitation period and had had no regard at that time for the respondents' position, his Honour considered that no weight should be attached to the fact that the course taken by Agricultural & Rural Finance had denied it the opportunity to institute fresh proceedings against the respondents within the relevant limitation period.

230. Insofar as Agricultural & Rural Finance submitted that it had been prejudiced by conduct occurring after the orders to extend time, Tobias JA said (at [220]):

Further, ARF's submission that the court was required to re-exercise the discretion exercised by Bergin J as at 14 November 2008 cuts the ground away from its submission that the subsequent conduct of the respondents in 2009 was relevant to that re-exercise. However, it should be said that the basis for ARF's submission is misconceived as the court is not being asked to re-exercise the discretion exercised by Bergin J to grant an extension of time for service but to exercise the discretion under UCPR r 12.11(1)(b) to set aside that service . (my emphasis)

231. His Honour found that Agricultural & Rural Finance had not been relevantly misled by any conduct on the part of the respondents nor had it otherwise been prejudiced in a manner which would justify refusing to extend the time for the filing by the respondents of their Notices of Motion to set aside service of the summons; nor had Agricultural & Rural Finance demonstrated that it would suffer any material prejudice as a consequence of the conduct of the respondents in seeking to set aside service of the summons upon them. His Honour said (at [223]): "Nor has it sustained any relevant prejudice to which I would accord any weight, by now being denied the opportunity of instituting fresh proceedings against the respondents".

232. However, on the other side of the ledger, his Honour also considered that the delay in the service of the summons upon the respondents would not cause them any relevant prejudice in defending Agricultural & Rural Finance's claim or in pursuing any cross-claim which might be available to them against either it or the other potential cross-defendant, particularly in light of undertakings to the court by both of them not to raise any limitation defence to any such cross-claim.

233. In New Cap Reinsurance v Reaseguros Alianza SA [2004] NSWSC 787, White J, considered an application to extend the time period under s 588FF(3)(b). His Honour said that in assessing what is fair and just in all the circumstances, regard must be had to the reason for the imposition of the limitation period, both as applicable to limitation periods generally and those relevant to s 588FF(3)(b) and referring to the rationales for the enactment of limitation periods to which McHugh J had referred in Brisbane South Regional Health Authority . His Honour went on to say, at [55]:

In Itek Graphix Pty Ltd v Elliott (2002) 54 NSWLR 207 at 224, Ipp AJA identified the issue of prejudice as being one which ordinarily should be of paramount importance. But the absence of prejudice is not itself decisive. It is rather a relevant factor to be taken into account in the exercise of the general discretion. ( BP Australia Ltd v Brown at 358). There is an onus on the applicant to show why it is fair and just that the general rule established by s 588FF(3)(a) should not apply. (my emphasis)

and at [72]:

It is probable that the litigation of the existing claim will require investigation of the circumstances surrounding the other payments which are the subject of the proposed amendment. They may well be relevant to whether the defendant knew or had reason to suspect that New Cap was insolvent. Where the defendant does not point to the delay causing any identified prejudice, it would be somewhat incongruous if the circumstances relating to the other payments, which might themselves be unfair preferences, were investigated, perhaps minutely, to assess a defence to the claim, yet the liquidator was precluded from claiming relief in respect of them . (my emphasis)

234. Finally, as to delay and prejudice, I note what was said by the High Court in Jackamarra v Krakouer [1998] HCA 27 at 29; (1998) 195 CLR 516:

Delays in the courts are a major cause of disquiet not only among those who resort to the courts but also among judges and all others associated with the courts. Delay will almost always impede the proper disposition of any case that does not come to trial promptly. Memories fade; records may be lost. The impediments are many, varied and obvious. Those impediments may be overcome but their presence is an added burden for both the litigants and the court that must try the case. Delay in a case will almost always add to the costs. The case takes longer to prepare and to try because the events are no longer fresh in the minds of those who will give evidence. Costs, therefore, increase. Delay in a case also adds to the overall burden on the judicial system. The case that has been delayed in coming to trial and therefore takes a day longer to try than otherwise would be needed, keeps another case out of the lists for that day. Or, as happened here, the case that has been delayed occupies the courts by applications to remedy some failure to comply with prescribed time limits. Each day's delay in bringing a case to trial and final judgment simply prolongs the uncertainty and worry felt by the litigants. No doubt there are other reasons for the disquiet felt by both litigants and lawyers about delay but the matters we have mentioned indicate why it is so important to avoid delays wherever possible. (my emphasis)

235. As the issues relating to prejudice to the defendants in a broad sense apply across the whole period from 2007-2010, I address them in an overall sense before considering the position as at each extension application.

236. Mr Karkar submits that the defendants have not pointed to (or established) that they have suffered any actual prejudice as a result of the extensions of time and says that no prejudice should be presumed. The defendants on the other hand point to the loss of potential cross-claims (or prejudice occasioned by the delay in an opportunity to investigate them in a timely manner) as an instance of the prejudice that they say is suffered by reason of the delay, together with the prejudice to the integrity of the evidence and the damage to the business reputation of the individuals.

• Cross-claims

237. The potential cross-claims were not clearly identified (nor did any of the defendants or their legal representatives give evidence as to the formers' intention to bring or the latters' receipt of instructions in relation to any such cross-claims, in contrast with the position in Agricultural & Rural Finance , where the parties had apparently given some detailed evidence in that regard).

238. In the PBL defendants' submissions (at [61]) it is said that there are clearly possible cross-claims that the defendants could have brought in the event that the plaintiffs succeed in, for example, their alternative claim for negligence against Mr Packer (the PBL defendants having conceded that they did not rely on any inability to pursue a cross-claim against Mr Rich). In oral submissions I was informed by Mr Bathurst that there was a present intention that the PBL defendants may cross-claim against Messrs Silbermann and Beck and the general purpose liquidator (T 134). Mr Young identified the potential cross-claims as the three firms of professional advisers retained advised by One.Tel to give advice to the directors and referred to the loss of the opportunity to investigate in a timely fashion the claims against them.

239. (In paragraph 25 of the PBL submissions reference is also made to statements in Austin J's judgment indicating that various documents concerned with the financial position of One.Tel in 2001 and previously available had either ceased to be available, had irregular provenance or had been corrupted [687], [699], [706], [708] or indicating that relevant documents had either never been in the possession of the PBL defendants or available to them after the collapse of One.Tel; thus it is said that the PBL defendants, and presumably this applies even more so to the News defendants, had never had an ability to protect at least some of the relevant financial information for the purpose of the current proceedings.)

240. It is clear that loss of potential cross-claims is a relevant factor to take into account in these circumstances. In Tekno Ceramics Pty Ltd v Milat [2003] NSWCA 254 at [41], Foster AJA (with whom Meagher and Handley JJA agreed) noted that t he prejudice arising from loss of a cross-claim is obvious and significant. In Creevey v Barrois [2005] NSWCA 264 (Basten JA, with whom Handley and McColl JJA agreed) considered the prejudice suffered by loss of a right to cross-claim (at [56]):

As noted in the passage from Tekno Ceramics set out above at [50], an assumed loss of a right to cross-claim against a joint tortfeasor will give rise to significant prejudice sufficient to render it unjust to allow a claimant to proceed out of time, but only where the possible claim for contribution has been shown to be viable and realistic, rather than a fanciful or theoretical possibility . (my emphasis)

and at [65]:

In terms of well-established principle, it is a matter for the claimant to establish that any delay would not be likely to render proceedings unfair or cause real prejudice to the proposed defendant. However, the issue for present purposes is not concerned with the immediate effects of delay, whether in terms of presumed or actual prejudice in relation to the conduct of the trial, but such effects as may flow from the inability of the proposed defendant to bring a cross-claim against Mr Clements . Had Mr Barrois considered he had a tenable claim against Mr Clements and that Mr Clements had assets or insurance which made such a claim worth pursing, he could no doubt have joined Mr Clements as a proposed co-defendant. He did not do so: the reason for this omission was not explored in cross-examination. On such evidence as was presented to the trial judge, it may be inferred that he or his advisors did not think he had a tenable claim against Mr Clements. In these circumstances, Mr Creevey had an evidential burden of producing some evidence to demonstrate an arguable case that Mr Clements was a concurrent tortfeasor from whom contribution might reasonably have been sought. Evidence sufficient to discharge that burden was not forthcoming. Accordingly, on the basis of the material before the Court, I am not satisfied that the lost opportunity to bring a cross-claim against Mr Clements involved the loss of anything more than a theoretical possibility. Accordingly, no prejudice to Mr Creevey has been established, in a real and practical sense, flowing from the decision to grant leave to Mr Barrois to commence proceedings out of time. (my emphasis)

241. The requirement that a potential cross-claims must be viable and realistic, rather than fanciful or theoretical, for the loss thereof to amount to prejudice , was applied by the Court of Appeal in GIO General Ltd v Love [2009] NSWCA 269.

242. Mr Karkar submits that there has been no loss of any potential cross-claim as no damage has yet been suffered by the defendants (but if that is incorrect then any such prejudice was caused by the defendants' own inaction, for which it is said the plaintiffs should not be responsible).

243. In relation to the suggestion that the loss of any cross-claims was self-inflicted (on the basis it would have been open to the defendants to commence proceedings within the time limits and then to have sought an extension of time for service or a stay of those proceedings pending the activation of the current proceedings), I note that a similar suggestion was dismissed as entirely unrealistic by Einstein J at first instance in Agricultural and Rural Finance Pty Ltd v Atkinson [2010] NSWSC 42 (in an observation not later the subject of adverse comment in the Court of Appeal) and I consider it to be apt in this case. At [45], his Honour said:

Both Mr Jones and Mr Kirk have given evidence of claims that they would wish to make against parties other than OAL and ARF. These claims include claims arising from the defects in the prospectus against the directors of the entities (as persons knowingly concerned in the contraventions) and, particularly, against the investigating accountant of the Projects. The failure of the Applicants to assert these claims while unserved is immaterial to the relevant prejudice. As outlined below, it is entirely unrealistic to expect Mr Kirk and Mr Jones to have voluntarily joined the litigation by filing those cross-claims despite not having been served with the summons in these proceedings. (my emphasis)

244. His Honour there considered (and Tekno Ceramics and Creevey support the view that depending on the circumstances of the case) the loss of a right of third parties to raise limitations defences as a clear prejudice that can arise from a delay in service of originating process and that this is a material factor to take into account on an application to extend time for the service of such process (or, by analogy, on an application to set aside orders extending the time for service).

245. In light of the lack of evidence going to the nature of the cross-claims that the defendants would have pursued (but for the extensions of time for service), the question whether or not any possible cross-claims are statute-barred is necessarily speculative. However, the evidence discloses that the SPL considered there was a viable basis for allegations of breach of directors duty and common law duties against the various directors and for breach of duty of care against the professional advisers, and had legal advice from Senior Counsel as to the prospects of that claim on the basis of which he had been in a position to verify the Statement of Claim containing those allegations. If One.Tel had such claims then it is difficult to see why its directors would not also have claims directly or for contribution against them. Therefore, I do not accept that such claims can simply be dismissed as speculative. (It should be noted that it was only for strategic reasons that the SPL has decided not to pursue these defendants not for any issue as to whether it would be worthwhile to do so).

246. There are two potential categories of cross-claim that must be considered in this respect - a direct cross-claim (say, for breach of a duty of care by the professional advisers owed in the performance of their retainers) and a claim for contribution (the more likely claim against the directors).

247. As to a direct cross-claim, Mr Karkar submitted that no potential cross-claim has been lost since the unserved 12 th to 18 th defendants (against whom a cross-claim has been mooted) are nevertheless parties to the proceedings for the purposes of s 74 of the Limitations Act , such that any direct cross-claim against them would be deemed (by virtue of s 74 of the Limitations Act ) to have been brought as at 25 May 2001 - thus within six years of the passage of the relevant resolution. (That, however, does not address the difficulty that the Statement of Claim is now stale as against those defendants and there was no application to renew the originating process for the purpose of serving them - indeed, the plaintiffs seek leave to discontinue against them.)

248. Section 74(1) of the Limitation Act 1969 (NSW), relevantly provides, that:

Where, in an action (in this section called "the principal action"), a claim is made by way of... cross action, the claim, for the purposes of this Act:

is a separate action, and is, as against a person against whom the claim is made, brought on the only or earlier of such of the following dates as are applicable:

(i) the date on which the person becomes a party to the principal action, and

(ii) the date on which the person becomes a party to the claim.

249. Section 74 thus determines the time at which a cross-claim is taken to have been commenced, that being on the earliest date on which the person against whom the claim is made became a party to the proceedings, not the time limit within which any particular cause of action must be brought. Where the cross-claim is brought against a third person who is also a party to the proceedings, the claim is taken to have been brought when they first became a party to the proceedings: Nelson v Wyong Shire Council (1989) 68 LGRA 164 at 167-9; (1992) Aust Torts Reports 81-177.

250. There was debate before me as to when an unserved defendant can be said to become a party for the purposes of this section. The defendants contend that until a defendant is served with process it cannot be said that the proceedings have been activated against that defendant (and in this sense it is apt to describe an unserved defendant up to that point as being in the position of a non-party, as was seemingly conceded by the plaintiffs at the time of the November 2007 application by the PBL defendants and Mr Yates to be heard on the first extension application). It was noted by Barrett J on the November 2007 extension application that "Unless and until a filed process is served, the defendant has not been drawn into the proceeding." ([10]). In Kleinwort Benson Ltd v Barbrak Ltd [1987] AC 597 at 621, it was held that prior to service of the pleading, a named defendant "has no locus standi and can make no applications to the court at all". Similarly, in HIH Insurance Ltd (In Liq) v General Re [2006] NSWSC 128 at [26], Hoeben J was of the view that u ntil the pleading is served there is no issue b etween the parties and issue has not been joined.

251. Mr Karkar submits, however, that in HIH (where the application was for access to documents on the court file) it was simply assumed that the applicant was not a party. He points to provisions in the Rules that suggest that a distinction is drawn between active and non-active parties. On the former issue, I accept that where there a proposition of law is assumed or conceded in the course of argument (without the proposition being addressed or tested by Counsel or within the judgment) then it will not have the same precedential value as it would had the point been so considered, even if it forms an essential part of the decision ( Baker v The Queen [1975] 1 AC 774 at 785; CSR Limited v Eddy (2005) 226 CLR 1 at 11 [13], per Gleeson CJ, Gummow and Heydon JJ; Chief Executive Officer of Customs v Tony Longo Pty Limited (2001) 52 NSWLR 458 at 474 per Heydon JA as his Honour then was; Eleftheriou v Water Board [1991] NSWCA 91, Clarke and Handley JJA). In Markisic v Commonwealth of Australia (2007) 69 NSWLR 737 at 748 [56], Campbell JA, with whom Handley AJA and Bell J agreed, affirmed the proposition that a decision is not authority for a matter that has been assumed, rather than actually decided, in the course of making the decision.

252. The significance of a finding that the unserved 12 th to 18 th defendants have not yet become "parties" for relevant purposes to the current proceedings (as would seem to me to be the more likely consequence of them not yet having been served) would be that s 74(l)(b)(i) of the Limitation Act would have no application and therefore that any cross-claim now brought against them would be a claim brought at the time it was filed (as the defendants contend) not as at May 2001. There is, therefore, in my view, a not unreasonable argument that any potential cross-defendants might seek to run that they are not "parties" until served, (and therefore that the decision not to serve them has at least a potential to prejudice those defendants who have now finally been served with the originating process if the direct cross-claims have now become statute barred).

253. However, ultimately it does not seem to me that the risk of prejudice in this regard is great, since I am by no means satisfied that any direct cross-claim against the professional advisers would yet be statute-barred, at least insofar as it would be a cause of action that did not accrue until more than nominal damage was suffered by the defendants in reliance on advice given to them. So, for example, a direct cross-claim, say, in tort against the professional advisers in relation to any advice given by them at the relevant meeting) a six year limitation period would apply from the date on which the cause of action accrued. It would only be if the claim accrued on the passage of the resolution not to proceed with the rights issue on 29 May 2001, or in the ensuing period up to say 2005 that a limitation issue would arise. Even though passage of the resolution did, on the case now brought against the defendants, expose them to liability in these proceedings, that is not necessarily sufficient to lead to the conclusion that any potential cross-claim accrued at that time.

254. The tort of negligence is actionable only when measurable ( Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at [531]) or appreciable (or other than purely minimal) damage occurs ( Ratcliffe & Anor v V S & B Border Homes Ltd (1987) 9 NSWLR 390 at [398] per Hunt J, citing Williams v Milotin (1957) 97 CLR 465 at [474] and Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458 at [467] - [468]) being "beyond what can be regarded as negligible" ( Cartledge v E Jopling & Sons Ltd [1963] AC 758 at [772] per Lord Reid). The limitation period runs from the time when the damage occurs, whether or not the plaintiff is aware that such damage had occurred ( Cartledge at [782] - [783]; Hawkins v Clayton (1988) 164 CLR 539 and Wardley at [540], [554] - [555]). A summary of the above principles was provided by Ipp JA in Christie v Purves and 2 Ors [2007] NSWCA 182 at [40].

255. There is authority in England to the effect that actual loss can be found to have been suffered immediately on entry into an agreement as the result of negligent advice, see Forster v Outred & Co [1982] 1 WLR 86; [1982] 2 All ER 753), the position in Australia has been to the contrary ( Wardley, referring to SWF Hoists & Industrial Equipment Pty Ltd v State Government Insurance Commn (1990) 6 ANZ Insurance Cases 61-002; [1990] ATPR 41-045; [1990] ASC 55-996; and Magman International Pty Ltd v Westpac Banking Corp (1991) 32 FCR 1; 104 ALR 575; [1992] ATPR 41-161; [1992] ASC 56-127) and this seems now to be the direction in which English authority is also tending: Law Society (UK) v Sephton & Co [2006] 2 AC 543; [2006] 2 WLR 1091; [2006] 3 All ER 401).

256. Thus it seems to me that, in all probability, no potential direct cross-claim (at least if that is a claim for damages suffered in reliance on negligent advice from professional advisers) will yet have become statute-barred (and there was no suggestion of any other cross-claim against the professional advisers).

257. As to a claim for contribution (which is likely to be as joint tort-feasors or by reference to liability for breach of directors' duties), there is a statutory right to cross-claim for contribution contained in the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s 5(1)-(2). The statutory limitation period for claims of contribution and indemnity between tortfeasors applies to the exclusion of any other limitation period in the Limitation Acts ( Bargan v State Government Insurance Office (Qld) (1982) 154 CLR 318) and is sui generis ( The Laws of Australia at [5.10.1260]). By analogy, the limitation period for breach of directors' duties may apply to a contribution claim ( Graham Lewis Herbert v Nozala Pty Ltd and 1 Or [2006] NSWSC 1437 per White J, approved in Tyrrell v Tyrrells Building Consultancy Pty Ltd [2008] NSWSC 416 and Blazai Pty Ltd v Gateway Development (St Marys) Pty Ltd [2009] NSWSC 800). White J held:

That directors owe a duty of care to a company is now established ( Daniels v Anderson (1995) 37 NSWLR 438). Accordingly, equity would, at least prima facie, apply the Limitation Act by analogy to a claim for equitable compensation arising from the same facts (see Belan v Casey (2003) 57 NSWLR 670 at [149], 712-713). However, I cannot say that this is clearly an absolute bar to any such proceeding as equity retains a discretion as to whether or not to apply the statute by analogy (see Brightwell v RFB Holdings (2003) 171 FLR 464 ; (2003) 44 ACSR 186) . (my emphasis)

258. The relevant limitation period for a contribution claim between joint tort-feasors is contained in s 26(1) of the Limitation Act :

26 Contribution between tort-feasors

(1) An action on a cause of action for contribution under subsection (1) of s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 is not maintainable if brought after the first to expire of:

(a) a limitation period of two years running from the date on which the cause of action for contribution first accrues to the plaintiff or to a person through whom the plaintiff claims, and

(b) a limitation period of four years running from the date of the expiration of the limitation period for the principal cause of action.

259. Under s 26(2)(a), the cause of action for a contribution claim accrues two years from the date on which judgment is given in the principal action ( Creevey at [54] and Wallaby Grip (BAE) Pty Ltd (in liq) v Eraring Energy [2004] NSWCA 269 at [8]). As judgment has not yet been handed down in relation to the principal proceedings (i.e. in relation to the proceedings commenced by the Statement of Claim filed by the plaintiffs on 25 May 2007), the limitation period for a contribution claim has clearly not expired under s 26(2)(a).

260. The relevant limitation period for these purposes will be under s 26(1)(b), namely within 4 years of the date the limitation period for the principal cause of action expires. The Statement of Claim filed by the plaintiffs on 25 May 2007 claims various forms of relief. The present causes of action (an uncommercial transaction claim, together with claims for breach of common law and statutory directors' duties, as well as for misleading and deceptive conduct) were largely subject to limitation periods expiring on 29 May 2007 (leaving aside the one allegation as to breach of fiduciary duty for present purposes). Accordingly, a claim for contribution in relation to those claims would expire at the end of May this year. (There is no time limit prescribed under the Limitation Act for a claim for equitable contribution, as there is between a claim for contributions between joint tortfeasors, and the question would be whether such a time limit applied by analogy, an issue considered by Campbell J, as his Honour then was, in Belan v Casey [2003] NSWSC 159.)

261. Mr Karkar therefore submits, and it seems to me that it is likely to be the case, that the defendants are still in time to bring cross-claims against the 12 th to 18 th defendants for contribution under s 26 of the Limitation Act. Therefore, while there is potential for prejudice in relation to the loss of cross-claims by reason of the time that has elapsed, I do not think there is real substance in this point.

• Other prejudice

262. As to the more general matters considered in Brisbane Health , as areas of potential prejudice arising from delay, emphasis is placed by the defendants on the well-recognised effect of delay on the reliability of memory ( Watson v Foxman (1995) 49 NSWLR 315) (and the potential for loss of documentary evidence highlighted by the reference in ASIC v Rich to the corruption or unavailability of some financial documents) and on the prejudice to individuals who are left for a considerable period with serious allegations having been publicly made against them that may affect their business reputation and livelihood.

263. As to those matters, Mr Karkar submits that the areas of concern in Brisbane Health are not applicable here and that prejudice of that kind has not been established. He notes that there is no suggestion that the delay in serving the process has meant that the defendants have not been able to arrange their affairs and suggests, in effect, that any damage to the business reputation of the individual defendants has been already done. As to prejudice of the kind which is presumed to arise from the passage of time, such as the dimming of witnesses' recollections or the loss or destruction of evidence, while the plaintiffs accept that presumptive prejudice is a matter to be considered where a stay of proceedings is sought on the basis of unreasonable delay (referring to Pacanowski v Simon Wakerman [2009] NSWCA 402 at [15]), it is submitted that in the present case any such prejudice is no more than speculation (noting that t he weight to be given to presumptive prejudice will vary from case to case depending on the circumstances of each case - Vicary v State of Queensland (Logan Hospital) [2009] QSC 284 at [56]).

264. It is also submitted that any presumption as to such prejudice is negated in this case by the matters referred to in the affidavit of Ms Hall-Carney, detailing the steps taken by the defendants to preserve evidence in relation to the events of May 2001 and the matters of which the defendants were on notice in relation to the potential claim.

265. Mr Karkar points to the fact that there was no evidence as to actual prejudice (citing Milperra Marketing Pty Ltd v Bayliss [2001] NSWCA 315 as a case where the defendants did not put on any evidence to show that they suffered actual prejudice but the plaintiff led a considerable body of evidence to demonstrate that there could be no prejudice to the defendants and the Court of Appeal said at [41] that, u nanswered, the plaintiff's evidence remained compelling and could not be put aside on the basis of general considerations of presumptive prejudice based on speculation).

266. Mr Karkar submits that the defendants were on notice that their actions were a matter for the investigation and potential claims from 2001 (and that, from at least late 2004 when Senior Counsel's opinion was tendered in ASIC v Rich, were of the view that Mr Packer, and inferentially the other directors, had breached his duties as a director). Mr Karkar submits that the defendants have had an opportunity to preserve their recollections (and those of potential witnesses) including having an opportunity to recall on oath their recollections of events. Reliance was placed on Australian Croatian Cultural and Educational Society 'Braca Radici' Blacktown Ltd v Benkovic [1999] NSWCA 210; Phillips v The State of New South Wales [1999] NSWSC 681 and Whiting v JDS Engineering & Labour Services Pty Ltd [2010] NSWCA 28, where (presumptive) prejudice was either negated or not given much weight (where there had been the opportunity to take statements from relevant witnesses and/or there was no suggestion that relevant documentation had been destroyed or lost).

267. Mr Karkar notes the observations of Santow JA, (with whom Mason P and Hodgson JA agreed), in Saad v J Robins & Sons Pty Limited [2003] NSWCA 87 at [34]:

Thus in the present case, the Respondent points to no specific prejudice were the relevant leave granted, but opposes the granting of that leave. It claims the presumptive or general prejudice inherent in a delay of eleven years. There is no suggestion that a particular witness is unavailable or that there is a particular difficulty in proving some crucial matter of defence.

Indeed, here, the Appellant's delay in making any election at all for some six years after the injury works to some extent in the Appellant's favour. Thai is because it is impossible to assume that a diligent defendant, faced with the possibility before any election is made of a common law action in damages, would not, at least during the first three years before the limitation period expired make some preparation to defend such a claim against the possibility that it would be brought.

and those of Tobias JA (with whom Brownie AJA agreed) in Maile v Rafiq [2005] NSWCA 410 at [90]-[91]:

... the present is not a case in which in any relevant way the memories of the parties have faded particularly as the opponent had no memory of the collision in the first place. The memories of the claimant and Mr Vikilani are recorded in their records of interview. Further, given the only relevant factual issue between the parties going to breach to which I have already referred, no line of enquiry relevant thereto has been identified which may have become cold as a consequence of the delay. ...

In these circumstances, in my opinion no relevant prejudice even of a presumptive nature had been shown possibly to exist to warrant a finding that the opponent may not be able to secure a fair hearing on the issue of breach of duty if the claimant were now permitted to deny any such breach.

268. Mr Karkar says that the majority of critical witnesses have already given evidence on oath on several occasions both in ASIC v Rich and in examinations conducted by ASIC, the general purpose liquidators and the SPL. (The defendants take issue with this - particularly by reference to the number of witnesses in attendance at the critical Board meetings whose recollection has not been tested at all in any formal proceedings and noting that Ms Kekalinen-Torvinen, who was said to be party to the relevant conversation with Mr Yates, has also not given evidence in relation to the matter.) In the case of Messrs Packer and Murdoch, Mr Karkar pointed to the observations made by Austin J as to their poor recollection of the events of 2001 (noting that Mr Packer had accepted in cross-examination that he had deliberately tried to forget those events and that self-inflicted prejudice cannot be relied on as relevant prejudice) and the uncertain evidence given by Mr Yates as to his recollection of the May Board meeting.

269. Further, it is said that, to the extent that memories have failed or evidence has been lost, that is not the fault of the SPL (since it had sought in April 2004 to conduct various examinations to guard against the possibility that memories may fade and evidence may be lost and the court had declined to permit those examinations to be held because the defendants had given the undertakings to the SPL to extend limitation periods). In that regard, accepting that the SPL had attempted to obtain evidence at that stage, this does not meet the difficulty that there seem to be a large number of potential witnesses to the relevant events who have not been the subject of any examinations or given evidence of their recollections to date, and however assiduous some or all of them may have been in recording their recollection of events, inevitably their evidence will have less immediacy (and hence be more prone to be unreliable) than it would have been closer to the events in question. The defendants submit that this is actual prejudice in the sense considered by McHugh J in the Brisbane Health case.

270. I accept that the defendants have not pointed to particular witnesses who are no longer available to give evidence or whose memories have been adversely affected by illness or the like; nor have they pointed (beyond reference to the matters noted in Austin J's judgment) to loss of documentary material. I also accept that there has been an opportunity for them to preserve or record their recollection of events (and there is every indication that they have done so through the retainer of legal advisers) and, further, that the events of May 2001 have been tested in a public context over the period since 2001 with a variety of people. I do not, however, accept that this means that the likelihood of prejudice has been negated and I do not consider that this is a matter which should be accorded little weight (particularly having regard to the context in which delay must be considered in the light of the statutory mandate contained in ss 56 - 59 of the Civil Procedure Act ).

271. The prejudice to the plaintiffs must also be considered, namely the loss of claims that would now be statute-barred and, as noted by Barrett J in November 2007, the potential loss of a significant financial investment in the investigation of the potential claims against the defendants in these proceedings.

272. Mr Karkar notes that the loss of a cause of action was recognised to be a hardship in Tolcher at [125(b)]. Such a loss, it is said will result in the plaintiffs being irreparably prejudiced. Mr Bathurst accepts that loss of the ability to bring the proposed claims against the defendants is a relevant prejudice but submits that this cannot be a determinative factor because, by definition, in every case where there is an application to extend service (or a challenge to such extension), where the relevant limitation period has expired, the effect will be that the plaintiff is no longer able to pursue the proceedings. (Reference is made to the observation by Keane JA in The I.M.B. Group Pty Ltd (in liq) v Australian Competition and Consumer Commission [2007] QCA 407; [2007] 1 Qd R 148. In considering an appeal against a decision not to grant an extension of the time for service of a statement of claim under r 24(2) of the Uniform Civil Procedure Rules 1999 (Qld), his Honour held (at [47]) that this circumstance alone can never in law constitute sufficient "good reason".)

273. Mr Bathurst further submits that the value of the claims against the defendants needs to be assessed having regard to the fundamental problems with the claims as articulated in the proposed amended statement of claim (as to which I consider in (iii) below). However, as Mr Lockhart SC pointed out in response to the supplementary submissions that had been served for the plaintiffs shortly before the hearing (and which I address later in these reasons), for the purpose of considering the applications to discharge the orders extending time for service of the Statement of Claim it is the existing Statement of Claim to which I must have regard, not the proposed amended statement of claim. Therefore the criticisms made of that proposed claim (and the prejudice by reason of the serious allegations it makes) is not strictly to the point.

274. Mr Bathurst also submits that the value of pursuing the claims against the PBL defendants is lessened having regard to the facts that a litigation funding agreement is now in place whereby (it is assumed) the litigation funder will be entitled to a substantial proportion of the net amount of any settlement or judgment (following the full repayment of all legal fees incurred and that it is likely that the SPL will remain appointed for so long as the claims are being pursued and will continue to incur substantial costs in so doing, which will further deplete the amount remaining in the estate for distribution to the creditors of One.Tel.

275. In this regard, Mr Bathurst notes that the SPL had been paid some $3.13m in fees and disbursements as at the start of August 2010 (exclusive of GST), over and above legal costs, for steps taken in investigating and formulating claims against the defendants and that there remains, according to the report of the general purpose liquidators of One.Tel dated 5 August 2010, a net amount of some $12.4m in the company. It is said that in those circumstances, the court should conclude that the pursuit of the proceedings to judgment (and the payment of further expenses of the SPL up to that point in time) is likely, absent any success in the proceedings, to result in a very substantial reduction in the amount remaining in the estate for the creditors of One.Tel. (That may well be the case but it leaves open the question as to whether the SPL's claim will succeed, an issue on which I cannot possibly form a view at this stage. Furthermore, the litigation funding agreement, which I have not seen, was approved by the court and I must therefore assume that its terms were regarded as being in the interests of the creditors.)

276. I have noted above the passage in Buzzle at [36] which emphasises the obligation imposed by ss 56-59 of the Civil Procedures Act to having regard to matters going to the diligence of the conduct of the proceedings. Mr Karkar notes that the overriding purpose identified by s 56 is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. In Halpin v Lumley General Insurance Ltd [2009] NSWCA 372 at [28]-[29] per Basten JA and at [93] per Sackville AJA with whom Tobias JA agreed, it was said involves the resolution of conflicting tensions between speed (including avoidance of delay), reduction of costs and the proper consideration of the issues raised by the parties, especially in cases of complexity.

277. Mr Karkar submits (and I agree) that it is not appropriate to give one factor (delay) primacy over the other two (namely, the justice of the case and costs). However, it is a relevant factor in the balancing exercise to be carried out that there has been considerable delay in the prosecution of the proceedings (and that such delay, coupled with the delay in the commencement of the proceedings in the first place, is likely to have a prejudicial effect on the conduct of the proceedings by the defendants).

278. Having addressed those general principles I turn to the evidence now before me as to the circumstances pertaining to each extension application.

• Consideration of circumstances on each extension

279. In summary, the defendants submit that the service of the Statement of Claim should be set aside because of the delay in effecting such service, the alleged lack of any good reason for such delay, the alleged failure of the plaintiffs to conduct these proceedings in accordance with the objects of ss 56 to 59 inclusive of the Civil Procedure Act and the prejudice that it is said will be suffered by the defendants if the proceedings are allowed to go forward (particularly given the nature of the allegations now sought to be made against them in the proposed amended statement of claim, the period of time that has elapsed since the events which are the subject of those allegations, and the effect of late service on their ability to bring any cross-claim).

280. For the plaintiffs it is submitted that what is important is the reason for, and effect of, the delay and that, here, the defendants have not suffered any actual prejudice (and none should be presumed) and that, if they have, then any such prejudice has been self-inflicted. Further, it is contended that this is not a case (as was the case in Buzzle ) where they have sought to arrogate to themselves the power to stay the commencement of proceedings - rather, they seek to characterise events as a de facto Court endorsed stay with the acquiescence of the defendants.

281. Broadly, the reasons for the delay in service are noted as falling into three categories:

(i) to enable the completion of the SPL's investigations (this being relevant only in relation to the first extension of time);

(ii) to enable the SPL to secure funding (in satisfactory terms to the SPL) for the proceedings (that being, from around late October 2008/early 2009 until at least September 2009, dependent upon the outcome in and litigation funders' review of ASIC v Rich ) (relevant to the second to fifth extensions); and

(iii) to permit a final review of the judgment in ASIC v Rich , handover of the matter to new solicitors and to allow for the preparation of the proposed amendments to the statement of claim having regard to the evidence, submissions and reasons for judgment in ASIC v Rich (the final extension).

282. It is further submitted by Mr Karkar that, to the extent that Mr Rich's proceedings were pursued against many of the same defendants and apparently also covered substantially the same ground as the present proceedings, it is likely that a question would have arisen (had either set of proceedings been served) as to whether the two should have been heard together with these proceedings. It is said that the extensions of time given to Mr Rich within which to serve his proceedings, combined with the matters set out in (i) to (iii) above, also provide a good reason for extending the time within which to serve the present proceedings (though I note that this was not put forward to the Court as a reason for extension on any of the applications and this seems to involve an element of retrospective speculation).

283. A distinction is drawn between cases such as Buzzle , where the prosecution of the proceedings had been delayed pending the outcome of collateral proceedings in which the liquidator was involved and here where the proceedings on the outcome of which the SPL was waiting were third party proceedings over which he had no control.

284. The setting aside or discharge of any one order necessarily has the result that the originating process when finally served had by then become stale.

First application for extension of time - November 2007

285. The first application for an extension for time of service was made shortly before the time limited by the rules for service of the originating process (that being due to expire on or about 25 November 2007). The application was supported by an affidavit sworn on 14 November 2007 by Mr Weston. The extension sought was for a period of 6 months from 25 November 2007 to 25 May 2008.

286. It is accepted that there were no attempts at service of the process (and this remained the position at the time of each successive extension application). It is clear from the SPL's report to creditors in August 2007 and from the affidavit sworn by Mr Weston that the non-service of the originating process was a deliberate decision on his part. Mr Karkar concedes that plaintiffs' delay in serving the statement of claim was deliberate in the sense that it was not the result of a "mishap nor oversight" (Van Leer Australia Pty Limited at 350). (He submits, however, that it was not, deliberate in the sense of amounting to a contumelious disregard of or deliberate breach of the plaintiffs' obligations under ss 56 and 59 of the Civil Procedure Act.

287. Mr Karkar submits that nothing adverse to the SPL should be drawn from the intentional nature of the delay in service of the originating process. Mr Karkar says that no attempts were made to serve the statement of claim prior to 23 August 2010 primarily because the defendants were content (perhaps, more precisely, the SPL believed the defendants were content) to proceed on the basis that this action would not be prosecuted (if at all) until at least six months after delivery of the reasons for judgment by Austin J in ASIC v Rich .

288. Weighing this factor against others, it seems to me that the deliberate nature of the decision not to serve the claim should not be accorded much weight in the present case - rather, it is the reason for that decision that is of more relevance.

289. As to the length of the delay as at November 2007, the delay from the events in question was almost six and a half years. However, in the present context (considering this as a factor relevant on the application to discharge the extension order) what is relevant is the delay from the filing of the Statement of Claim not from the accrual of any cause of action pleaded there.

290. In Tolcher , Tobias JA said at [94]:

In other words, the law permits proceedings to be instituted at any time within the limitation period. If at that time the delay between the time the cause of action arose and the filing of the initiating process makes it difficult for the defendant to obtain a fair trial, then that is irrelevant. This is because that difficulty is a product of the defendant having a potential liability until the limitation period expires in respect of which it may, if it sees fit, take precautions such as seeking out evidence when the possibility of a claim becomes known.

291. The SPL's decision to commence proceedings shortly prior to the expiry of the limitation period cannot be characterised as dilatory conduct: Tolcher at [83]. This is particularly so having regard to the circumstances of Mr Weston's appointment as SPL.

292. When assessing the impact of considering the delay from the time of filing of the Statement of Claim a six month delay, in the circumstances, does not seem to me to weigh heavily in the balance against an extension. (Mr Karkar notes that the basis on which the PBL defendants wished at that stage to oppose the extension of time at that stage was the potential loss of cross-claims, not any prejudice as to loss of evidence/deterioration in recollection or the like.)

293. Although Mr Weston swore three affidavits on 14 November 1997and all three were in the Court Book on the present application, Mr Lockhart indicated that not all had been read on the first extension application and, following the conclusion of the hearing of the present application, I was informed by the solicitors for the News interests with the consent of the other parties, that the parties were agreed that the two further affidavits sworn by Mr Weston on that day (contained at tabs 21/22 of vol 2 CB) did not form part of the material that was before Barrett J on that occasion. (Of course, to the extent that on the hearing de novo they formed part of the evidence tendered they have some relevance insofar as they disclose what Mr Weston had been prepared to swear to at the relevant time. That said, it was not suggested that there was anything material to the present application in those two further affidavits and the only comment I would make in passing is that Mr Weston's third affidavit made reference to the estimate he had provided to the Committee of Inspection of the SPL's costs and expenses of the proceedings, including provision for adverse costs orders in the range of $17.875m to $37m, depending on different scenarios, and of the approximation he had been given by the general purpose liquidators of the "available cash" of One.Tel to fund the proceedings, which he said was insufficient, material that appears elsewhere in the Court Book and the substance of which was disclosed on various of the extension applications.)

294. The reasons given by Mr Weston for seeking this first extension were summarised in paragraph 4 of his affidavit and were, in essence, as follows:

(i) that further investigations were required before he would be in a position to make a final recommendation to the creditors as to whether to proceed to serve the Statement of Claim "on any of the named Defendants and, if so, which claims against which Defendants" (those further investigations being set out in paragraphs 20 to 24 of his affidavit); and

(ii) that Mr Weston needed to be satisfied that there were sufficient resources available to fund the proceedings.

295. Mr Weston deposed as to the steps he had taken to restore the examinations of Messrs Miller and Mr Green (which had been postponed to enable further information and documents to be obtained) and to the need then to analyse the transcript of those examinations. His affidavit set out the steps that had been taken towards further examinations of those persons, including attempts made to obtain documents.

296. Mr Weston deposed to the fact that his investigations were ongoing and had been significantly impeded by the fact that Mr Weston was not in possession of all the relevant books and records of One.Tel which had been sought (at [15]). Mr Weston pointed to various matters upon which completion of the financial analysis of One.Tel was dependent, including access to and review of an Adept accounting system, and other financial information yet to be obtained by him.

297. Mr Weston referred (at [14]) to the work that, as at the time of filing of the Statement of Claim was being carried out by Mr Weston and his legal representatives in the review of documents, transcript and submissions arising in the ASIC v Rich proceedings, noting that that hearing had not yet concluded. He deposed to the fact that pending the completion of his ongoing investigations and securing "appropriate" litigation funding, no steps had been taken by him to serve the Statement of Claim on any of the defendants ([15]).

298. As to the prospective litigation funding, Mr Weston deposed that he had given consideration to the obtaining of commercial litigation funding for the future prosecution of the proceedings (subject to the completion of the work referred to in his affidavit) ([25]) and noted that a number of commercial litigation funders had expressed a firm interest in funding the proceedings. Mr Weston noted that, subject to the execution of strict confidentiality undertakings, he had provided the said litigation funders "with a large volume of material to consider".

299. Mr Weston deposed (at [27]) that it was his belief, based on the volume of material to be reviewed and the complexity of the issues involved, that it was unlikely that any interested funders would be in a position to put a formal proposal for funding to him until about February 2008. He said that at that stage, he anticipated that any such funding proposal would be accompanied by a draft litigation funding agreement for consideration by him and his legal representatives. He anticipated that negotiations for a funding agreement would take about 4 weeks thereafter, and then he would need to obtain creditor or Committee of Inspection approval for the agreement, which could take a further 2 weeks. In the event that Court approval would need to be sought, he expressed the view that this could take another 2 weeks. Thus, Mr Weston deposed that he did not expect that issue of external funding to be resolved until about April 2008 at the earliest.

300. At [28], Mr Weston deposed that the quantum of funding could not be finally resolved until he had completed his further investigations and finalised his recommendations to the Committee "as to which of the Defendants and which causes of action are to be pursued". At that stage he anticipated that completion of the work referred to would take in the range of 4 to 5 months, that is until March-April 2008.

301. At the time of this application, therefore the possibility that the SPL might not pursue all claims against all defendants was disclosed to Barrett J.

302. I note that annexed to Mr Weston's affidavit was a copy of the SPL's 3 August 2007 report to creditors, s 9 of which referred to the "Review and Service of the Statement of Claim" in which it was noted that:

In the context of these time constraints, the statement of claim was drafted with a view to ensuring all available claims against all defendants were included, so as to preserve such claims for the benefit of creditors. Before the Statement of claim is served I need to decide, in consultation with the COI and my legal team, whether all causes of action against all defendants are pursued, or whether to proceed only with claims against some but not all of the current defendants. In making this decision I will need to take into consideration the strengths and weaknesses of each claim, the potential costs of pursuing all the defendants and other strategic considerations [a process that he said he was currently undertaking]

303. (I interpose, for completeness, to note that the fact that a statement contained in this annexure as to the possibility that all defendants might not be pursued would not, of itself, necessarily have amounted to sufficient disclosure - having regard to what was said in Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955, by Allsop J, as his Honour then was, at [38]:

In an ex parte hearing, it is the obligation of the party seeking orders, through its representatives, to take the place of the absent party to the extent of bringing forward all the material facts which that party would have brought forward in defence of the application : Thomas A Edison Ltd v Bullock (1912) 15 CLR 678 at 681-82 per Isaacs J. That does not mean stating matters obliquely, including documents in voluminous exhibits, and merely not mis-stating the position. It means squarely putting the other side's case, if there is one, by coherently expressing the known facts in a way such that the Court can understand, in the urgent context in which the application is brought forward, what might be said against the making of the orders . It is not for the Court to search out, organise and bring together what can be said on the respondents' behalf. That is the responsibility of the applicant, through its representatives. (my emphasis)

That would depend on whether his Honour was taken to the relevant passage in the annexure. Nevertheless, as noted above, such a statement is also contained in the body of the affidavit itself.)

304. In cross-examination on the present application, Mr Weston was taken to the contents of the affidavit sworn by him on 14 November 2007 (tab 20, vol 2 CB). There was no reference in Mr Weston's 14 November affidavit that was read on the extension application (and Mr Weston in the witness box accepted that this was the case), or the others sworn on that day, to any need or desire on the part of the SPL to wait for the judgment in ASIC v Rich before serving the proceedings (T 9.34) and Mr Weston accepts that that was not a reason that the extension was sought at that time (T 9.47). (Accordingly, the belief to which he deposed in the proceedings before me - as to the relevance of the outcome of those proceedings to the decisions he was required to make in relation to the present proceedings - was not a matter that he can then have considered warranted an extension of time to serve the originating process.

305. The application was heard by Barrett J on 12/13 and 15 November 2007. His Honour made the order sought, extending time for service of the Statement of Claim to 28 May 2008 and gave his reasons on 15 November 2007 ( Weston v Publishing and Broadcasting Ltd [2007] NSWSC 1318). (The PBL defendants and Mr Yates sought leave to be heard on this application but that was refused, as noted earlier).

306. In his reasons for judgment, his Honour referred to the breadth of the court's discretion, having regard to various cases including the first instance decision in Buzzle (Buzzle Operations Pty Ltd v Breirl [2007] NSWSC 922) (that being before the Court of Appeal decision in which the formulation of the test at first instance was said to have been likely to lead to error) and Rich v Long [2007] NSWSC 1290 (the application by Mr Rich for an extension of time for his own set of proceedings) as well as FAI Insurance Ltd v Mainprize [2006] NSWSC 554; Kleinwort Benson Ltd v Barbrak Ltd [1987] AC 597; Rich v Packer & Ors; and Zhang v Zemin [2007] NSWSC 229).

307. His Honour saw the choice, at a practical level, as being between forcing Mr Weston to serve the Statement of Claim as it stood within the next week or ten days, on the one hand, and giving him further time in which to make the further investigations and assessments to which he had referred in his affidavit, on the other. His Honour noted that a large amount of money had been spent already on the litigation and that the substantial financial investment that represented should not be allowed to be lost without good reason.

308. His Honour had no doubt (at [9]) that the further steps Mr Weston intended to take (as outlined in his affidavit sworn 14 November 2007) would be beneficial in the sense of refining the litigation strategy, "perhaps even to a point where no strategy was left" and considered that further time would mean that a more complete and mature proposal could ultimately be considered by the Committee of Inspection.

309. His Honour considered that it would be short-sighted to force service within the next week or ten days, or failing that, to see the investment to date yield nothing because service was not effected within the prescribed period of six months. His Honour therefore held that there was "good reason" to grant the extension and extended the time for service to 25 May 2008.

310. I have set out above the two reasons for the delay on this occasion, namely the fact that investigations were not yet complete and that there was a need to secure litigation funding (though it should be noted that there seem to have been sufficient funds even at that stage to commence the proceedings; what was not available was sufficient funding to meet the likely costs of the SPL in full of the proceedings let alone any adverse costs orders).

311. In this regard, the fact that investigations had not been completed (where there was no suggestion that the SPL had been dilatory in that regard) seems to me to be a compelling factor tending towards an extension. The lack of funding through to completion of the proceedings might be said to be not as compelling, although having regard to the comments of Tobias JA in Tolcher and the incomplete investigations, I consider it to be a responsible decision for the liquidator at that stage to seek an extension in order both to complete investigations and secure funding.

312. As to notification of the claim, in Van Leer Stephen J at 350 said that "the giving of ... notice may sometimes mitigate the prejudice which a defendant may otherwise stiffer through delay in actual service of process". Mr Karkar notes that same point was made in Krawszyk v Graham [1966] SASR 73 by Napier CJ, Travers and Mitchell JJ at 80:

It is, accordingly, obvious that delay will be much less significant if the defendant has been aware from the first of the pending claims, and has had an opportunity of preparing to meet it.

313. Similarly, in Tolcher per Hodgson JA at [3] noted the importance of potential defendants being made aware of claims against them within a reasonable time .

314. The defendants were informed, through their respective solicitors, of the filing of the claim from shortly after that occurred. They had already been on notice of the principal areas of investigation and had been alerted to the prudence of making notification of a potential claim to their insurers some time before. They were on notice of the likely subject matter of the claims that might be made against them at least insofar as that comprised uncommercial transaction claims; perhaps insolvent trading claims; misleading and deceptive conduct claims; and claims for breach of their duties as directors under the Corporations Act .

315. They had been the subject of examinations in relation to matters relating to the renounceable rights issue and had given evidence in the proceedings before Austin J (and so were aware at least of the thrust of the questioning from the Rich/Silbermann perspective).

316. It is submitted by Mr Karkar that the cross-examination of Messrs Packer, Murdoch and Yates in ASIC v Rich put them on notice of the contention that their "profoundly misled" defence was misconceived factually and legally (and the submission that it constituted an artifice designed to deflect attention from their own improper conduct as directors of One.Tel and camouflage the breaches of duty the subject of the present proceedings). By the time of the first extension, the defendants' legal representatives had also had access to materials in the ASIC v Rich proceedings. (That said, it is by no means apparent that knowledge of the allegations that Mr Rich and his co-defendant were making in the context of those proceedings would enlighten the defendants in these proceedings as to the nature of the claims that the plaintiffs might later seek to bring against them.)

317. They were also on notice of matters of public record such as the general purpose liquidator's reports to creditors and the SPL's own reports. So, for example, in the SPL's report to creditors dated 9 June 2004, reference was made to possible claims under s588FB(l) of the Corporations Act 2001 (Cth) and for misleading and deceptive conduct under the Fair Trading Act 1987 (NSW) .

318. There is however, no suggestion that the defendants were provided with the details of the allegations made against them in the Statement of Claim. That was a conscious decision on the part of the SPL. Mr Bathurst notes that the SPL stated in August 2007 that it was his intention to keep the Statement of Claim confidential and privileged.

319. Therefore, while it cannot be said that these were defendants who were totally unaware of the existence of any potential claims against them or of the broad subject matter of those claims, nor could it be said that the defendants had a specific knowledge of the claims then made. A fortiori they could not be expected to have been aware of the additional claims now sought to be brought against them; however, when assessing whether extensions of time should have been granted (or the orders so made should now be discharged), the relevant pleading to which I have regard is the pleading as filed (not the pleading in the form it would be if leave to amend were now granted) since it is the former that the SPL was granted an extension of time to serve.

320. Mr Bathurst submits that the material available to the court on the extension applications did not indicate the nature of the claims that the SPL intended to advance. In that regard I assume he is referring to the nature of the proposed amended claims, since the court had aurthorised the SPL in May 2007 to issue the proceedings (on which occasion I would have thought the draft pleading would have been before the court) and, in any event, by the time of the extension applications the pleading was on the court's own file. Therefore, insofar as it is said that nature of the claims proposed to be brought was a relevant matter that should have been brought to the court's attention in exercising its discretion, and that the plaintiffs' failure to do so means that the exercise of the discretion should be set aside, I am not persuaded as at the time of this extension application (or others at least up to May 2010) that there was any relevant non disclosure in this regard.

321. Mr Karkar submits that at no time (apart from the issue by Mr Packer on 19 November 2009 of his "bring it on" press release) did any of the defendants ask to be provided with a copy of the statement of claim or for it to be served upon them and suggests that this is because it suited the defendants' tactical and forensic purposes not to be provided with a copy of the statement of claim.

322. As to the suggestion by Mr Karkar that the defendants could have asked for the Statement of Claim to be provided to them on an "informal" basis, Mr Bathurst submits (and I am inclined to agree) that this is disingenuous, in circumstances where they had sought to be heard in relation to the extension of time, and this was opposed by the plaintiffs.

323. The conduct of the defendants (on which much weight is placed by Mr Karkar) is their conduct in seeking to postpone the public examination process in 2004 and then in 2006/2007, in the context of which the 2004 undertakings were given and the 2006 undertakings were proffered. Mr Karkar accepts that there was no agreement in place (relevantly, for present purposes, as at November 2007 but also at any time thereafter) pursuant to which the defendants had consented to the extension of time for institution (and hence later service) of the proceedings until 6 months after the judgment was handed down in ASIC v Rich . However, as I understand it, Mr Karkar relies on the proffering of the undertakings as amounting to acquiescence (or as tantamount to an "offer" to postpone the time for service) and as indicative of the lack of prejudice that the defendants then perceived they would suffer by reason of such an extension.

324. Mr Weston, in his affidavit, seems to suggest that he relied on the defendants' earlier professed willingness to extend the limitation periods when making the decision at the later points of time to take the extension route (rather than the other broad option that he concedes was open to him and of which he was aware at the time - namely, serving the process and then applying for a stay).

325. I have already expressed the opinion that SPL could not reasonably have formed the view (as from November 2007) that the PBL defendants and Mr Yates (if not also the News defendants) were acquiescent in any further delay in service of the Statement of Claim (since they had on that occasion sought leave to oppose it). Mr Weston, having (as he says he did) weighed the advantages and disadvantages of the respective courses of action, chose to delay the service of the originating process and to keep it confidential. The reason for his desire to keep it confidential was not made clear. I can only infer that there was perceived to be a tactical advantage in keeping the defendants in the dark as to the claims it was then intended to bring against them.

326. I raised with Mr Young whether an inference could be drawn (from the fact that the undertakings had been given in 2004 and there had been an offer in 2006 to extend them), that there was no perception by the defendants of any prejudice likely to arise by reference to the potential delay. Mr Young's response (which I accept has force) is, in effect, that one cannot infer an absence of prejudice (or of perceived prejudice) from this conduct; at most one can infer a preparedness to suffer that prejudice in the context of the circumstances at that time (namely the benefit to be obtained by avoiding the cost and expense of the further public examinations at a time when it was considered they might ultimately prove futile). I also note that what might have been considered an acceptable risk of prejudice in late 2006/early 2007 would not necessarily have been so regarded had it been apparent at the time that the judgment would not be handed down until late 2009.

327. In any event, I do not accept that the defendants acquiesced in the delay or had encouraged Mr Weston in the belief he deposes to in his affidavit, such that it would be unconscionable for them now to resile from that position. Indeed, the letters sent in 2008 to the defendants' solicitors requesting confirmation that they had instructions to accept service (to which the immediate response was not a query as to why such a request would be made in advance of the judgment but affirmation of such instructions) are to my mind inconsistent with an understanding that there had been an arrangement to defer service until after the outcome of the judgment in ASIC v Rich . Tellingly, Mr Weston's position in that regard seemed to be that at that stage he was anticipating that funding would be concluded and the proceedings commenced by late 2008.

328. Mr Karkar submits that it was open to the defendants to "take precautions such as seeking out evidence" (Tolcher at [94]) to defend themselves from claims of which they had been on notice since 2001. It is said that the defendants have thus clearly been alive to the need to preserve the integrity of evidence (evidenced by Mr Packer's 19 November 2009 press release that issued a call to the Supreme Court " immediately [to] order that all documents be preserved for the SPL and Rich proceedings" and that stated that "prompt action is essential to seek to ensure the integrity of evidence which will become a central feature of these proceedings". It was noted that Mr Jalland had taken steps to locate and preserve within days of 29 May 2001 all of the PBL defendants' documents in relation to One.Tel and that Counsel had been retained to prepare witness statements in relation to On e.Tel.

329. Mr Karkar further notes that in 2004 Atanaskovic Hartnell advised the PBL defendants that they could issue proceedings seeking a declaration that the 29 May 2001 resolution not to proceed with the rights issue was not a "transaction" for the purposes of Division 2 Part 5.7B of the Corporations Act, thereby demonstrating to the SPL that his potential uncommercial transaction claim was doomed to failure, but that no such steps were taken.

330. In the written outline of submissions for the PBL/Yates defendants on the application for leave to be heard opposing the extension, the submission made by the applicants as to why they should be heard on the extension application was that:

[a]ny amendment to the Statement of Claim to introduce new causes of action would necessarily introduce new causes of action that were statute barred. The Applicants have a vital interest in being heard on any such step, and any questions of 'relation back' (paragraph 5(b) of the outline).

331. It is submitted by Mr Karkar that as no amendments have yet been made to the statement of claim (and the defendants and Mr Yates are able to make whatever submissions they wish to make in relation to the plaintiffs' application, including as to whether any amendments to the statement of claim should be permitted and on the question of relation back), the position of the PBL defendants and Mr Yates has not been affected by the refusal of their application for leave to be heard on the November 2007 application and they are in the same position now as they were on 15 November 2007. On one view that is the case. However, it does not seem to me that the fact that the matter may have been argued on only one basis precludes the defendants now raising other matters. (Furthermore this points to the need for the SPL,(in circumstances where the defendants were not permitted to appear on the application(s) to ensure that the argument the defendants might have been expected to make was clearly articulated before the court both on this and on subsequent occasions. It is not apparent that the plaintiffs did so.

332. Balancing the above factors, and considering the kind of prejudice recognised as likely to arise from delay (fading recollections, potential loss of evidence, damage to business reputation, as noted by McHugh J in Brisbane Health ), it seems to me that the prejudice occasioned by a short six month extension is outweighed by the reason for which the extension was required and the circumstances in which the matter had reached this point, particularly in light of the significant prejudice to the plaintiffs if an extension were not to be granted. I do not consider that this order should be discharged.

Second application for extension of time - May 2008

333. As noted above, following the orders made on 15 November 2007, the time for service of the Statement of Claim was due to expire on 25 May 2006. On 19 November 2007, an ASX announcement was issued by PBL referring to the fact that time for service of the Statement of Claim had been extended, so it is clear that the PBL defendants were on notice of the extension and there is no suggestion that the News defendants or Mr Yates were not equally on notice of the fact that the time for service of the proceedings had been extended.

334. Prior to the expiry of that extended time, the SPL brought an application for a further extension of 6 months of the period of time for service of the Statement of Claim (ie from 25 May 2008 to 25 November 2008).

335. Again, there was no attempt at service. Mr Weston accepts that he made a deliberate decision not to serve the claim but, instead, to seek an extension.

336. By this point, the delay in service of the Statement of Claim from the date of filing had been close to 12 months (it had been nearly 6 months since the originating process, but for the first extension, would have become stale).

337. Two affidavits were sworn by Mr Weston on 12 May 2008, one in support of the extension application and the other in support of an application in the main proceedings between OneFone and One.Tel for variation of his powers to make the extension application (those affidavits appearing in vol 2 CB at tabs 23 and 24 respectively).

338. The reasons given by Mr Weston on this occasion for seeking the extension were summarised by him at [4] of his affidavit sworn in the present proceedings as being "to enable [him] to have sufficient time to obtain satisfactory litigation funding" (my emphasis) and thereafter to take the following steps: (a) make final recommendations to the Committee of Inspection and seek the Committee's views on the proposed funding agreement; (b) make an application to the Court to vary his powers to enter into a funding agreement; (c) complete the proposed amendments to the Statement of Claim in these proceedings; (d) seek leave to make those amendments; and (e) serve the Statement of Claim.

339. In his longer affidavit sworn in support of his application for a variation of his powers, Mr Weston summarised the work that had been undertaken since 15 November 2007 in the performance of his role as SPL, including restoring the public examinations of Messrs Miller and Mr Green and reviewing in detail the transcript of those examinations, obtaining and reviewing documents that had been obtained from ASIC, the 'interrogation' and subsequent recreation of a working version of the One.Tel "Adept" financial system in order to prepare for the examinations of Messrs Miller and Green and then to review information and complete a "detailed financial analysis of, and report upon, various aspects of the business and financial status of One.Tel in 2001, preparation by his Counsel of a number of further memoranda of advice (including an advice on evidence for the purposes of enabling him to formulate a recommendation to the Committee as to the existence and prosecution of the various causes of action in the unserved Statement of Claim) and preparation of a draft amended statement of claim "which, subject to the views of a litigation funder, might be filed in the Proceedings". (Insofar as the reasons given by Mr Weston referred to the making of amendments to the pleadings, Mr Weston confirmed in the witness box that he had been referring to amendments required for the deletion of claims or defendants and not to the more extensive amendments to add new claims of conspiracy and the like which are the subject of the present application for leave to amend the Statement of Claim).

340. Reference was also made to negotiations with PBL and its lawyers and entry into a Deed with a view to protecting One.Tel's rights of recovery against PBL following a commercial restructure or demerger of PBL in late 2007. Mr Weston gave evidence as to the steps that had been taken towards obtaining an offer of commercial litigation funding for the proceedings and, in particular, that it was not until 11 April 2008 that his Counsel were able to provide their joint memoranda of advice, whereupon he had started to distribute a comprehensive "Funding Package" of information to two Australian based litigation funding entities and seven overseas based litigation funding entities (with a third Australian based litigation funding entity having subsequently requested a copy of the package).

341. In his affidavit he expressed the view that the proceedings should be prosecuted (without suggesting that a view had been formed that they should be prosecuted only as against certain of the named defendants) but that in the absence of sufficient assets within One.Tel to fund the proceedings, or confirmed external litigation funding, he was not yet in a position to make application to the court to vary his powers to enter into a particular funding agreement and to prosecute the proceedings and would almost certainly not be in a position to do so prior to 25 May 2008.

342. Mr Weston, in cross-examination, accepted that at this stage some of the Committee wanted him to serve the claim (T 10.49). That information was not included in the material put before the Court. In re-examination, Mr Weston said (at T 39.16) that he did not regard it as a relevant matter to disclose because the views of the committee changed from period to period and in relation to this matter he did not think it appropriate to serve the Statement of Claim when he had only limited funds. Mr Weston's view was that to serve the claim might lead to a position where the funds were wasted in defending proceedings that were not fully funded.

343. By letter dated 9 May 2008 (Exhibit 1) from Mr Weston to the committee members, Mr Weston referred to a presentation made by Senior Counsel to the committee on 8 April 2008 and noted that at that meeting he (Mr Weston) had made a recommendation to proceed against the Packer and Murdoch interests only and not to serve the other parties to the Statement of Claim for "commercial and strategic reasons". Mr Weston accepted that he had not disclosed the making of that recommendation in his affidavits in support of the application for an extension (T 11). When asked why he had not, Mr Weston said (at T 11.43):

In May of 2008 I based my position on the advice of Counsel that it was in all likelihood not appropriate to pursue the non-Packer and non-Murdoch interests in the proceedings. It was, however, known that I still required funding in relation to the matter and by May 2008 I was already entertaining obtaining funding from various litigation funders and it may be that, on the basis of also reviewing further issues that come to light after May 2008, that it was deemed appropriate in conjunction with any funder that action be pursued against the other non-Packer and non-Murdoch interests

and at T 12.29:

It was my recommendation that we do not pursue the nonPacker non Murdoch interests at that time but it was something that was not a certainty. There was also a prospect in my view that they could be served.

344. Again, Mr Weston accepted in the witness box that as at 12 May 2008 the reasons why an extension was regarded as appropriate had nothing to do with the pending judgment in the ASIC v Rich matter (T 13.27). (However, he did not accept that the only thing holding up the service at that stage was his belief that this should not be done until funding was "locked in", saying that he had needed to make further amendments to the Statement of Claim (those being only minor amendments at that time) and to seek the leave of the court to do so.)

345. The time for service was extended on 12 May 2008 by Hammerschlag J to 25 November 2008. At around the same time, Young CJ in Eq (as his Honour then was) extended the time for the service of the Rich proceedings in a judgment published by the court on 21 May 2008 Rich v Long [2008] NSWSC 487. There, his Honour noted that the evidence before him was substantially the same as was before Barrett J on 12 November 2007 and said at [9] that:

The principal reason for the further delay is that this case is closely connected with a civil penalty proceeding in which judgment was expect by now, but would not now appear to be delivered until well after 28 May. Until that judgment is delivered, the plaintiffs and probably the defendants, do not wish to invest further funds in this litigation so long as there is protection against the running of time.

noting also that that both here and in England the practice had been to hear such applications ex parte but to give the defendants notice (presumably to seek to set aside) of the order for extension.

346. Therefore, the reasons for the delay, unlike the first extension, were not the need to carry out further investigations in relation to the claim. Mr Weston accepts that, by this time, there had been a detailed analysis of the financial position (having regard to the "interrogation" of the computer programme and the review of the examinations of Messrs Miller and Green; and that advice had been received from Senior Counsel as to the claims, including an advice on evidence). The draft amendments to which Mr Weston referred related to the advice (not disclosed to the Court) not to pursue the claims against the non-Packer/non-Murdoch interests (largely, it would seem, for tactical reasons).

347. The relevant reasons for this extension related to the need to secure litigation funding (and the need to obtain Court approval for the funding agreement as well as for the proposed amendments to the pleadings once approved by the Committee).

348. This seems to lead squarely into the territory considered in Buzzle and Agricultural & Rural Finance as to whether the delay for the purpose of securing litigation funding (balanced against the other factors) is a sufficient basis on which to justify an extension of time for service (and, though I consider this becomes a more relevant factor on subsequent extension applications), whether Mr Weston was seeking to arrogate to himself (or to the litigation funder) the power to stay the proceedings.

349. The Court of Appeal in Buzzle had said (at [82]) that:

... it would be inappropriate to allow an extension of time for the service of a writ or statement of claim where a significant cause of the delay has been the willingness of the plaintiff to do nothing about service while awaiting a decision from a litigation funder as to whether or not to provide the necessary funds. Were that to be regarded as a good reason to extend time, the court-would be allowing plaintiffs to arrogate to non-parties the right to decide the period by which the time for service of a writ should be extended. That would be fundamentally in conflict with the court's duty to exercise, alone, the discretion conferred upon it.

350. Again, the position seems to have been that there were sufficient funds to commence the proceedings, though not to meet the likely costs of the SPL in full of the proceedings or adverse costs orders of the kind against which the SPL wished (not surprisingly) to be protected.

351. It is submitted by Mr Bathurst (and by Mr Young) that the plaintiffs clearly had sufficient funds available to serve the Statement of Claim and at that point could have approached the court and sought a stay pending the obtaining of funding. Such a step would have required the court to exercise a discretion to grant a stay, on which each of the defendants would have had a right to be heard and make submissions, as opposed to allowing a litigation funder, in effect, to stay the proceedings while it made up its mind about whether or not to fund them, without the defendants having any right to make submissions in that regard.

352. In Buzzle it was recognised (at [94]) (as noted above) that in Tolcher a decision to await funding had been described as "appropriate, prudent, responsible and not a decision for which the liquidator can be justifiably criticised" but noted that the delay in Buzzle (almost 18 months from filing to service) was much longer than in Tolcher (around 8 months, with some attempts to serve in the meantime). In the present proceedings, of course, the delay in service has been more than twice the length of the delay in Buzzle . However, as at May 2008 that was not the case.

353. As for the desirability of awaiting the outcome in ASIC v Rich , the Court of Appeal in Buzzl e noted (at [88]) there were numerous difficulties with such an approach in that case, and in that regard quoted (at [89]) with approval what had been said by Rothman J at first instance:

Ultimately, an extension of time in which to serve originating process will be granted for only good reason, which would not usually include awaiting the outcome of other proceedings: Pell v Hodges [2007] NSWCA 234; Ramsay v Madgwicks [1989] VR 1.

354. To this, the Court of Appeal added (at [90]) a further observation of Lord Goddard in the Battersby case (at 32 to 33):

Ordinarily it is not a good reason that the plaintiff desires to hold up the proceedings while some other case is tried or to await some future development.

355. As to notice, the defendants were no further enlightened as to the claims proposed to be made against them at this stage.

356. The relevant additional conduct to be taken into account at this stage is the conduct of the SPL in not disclosing to the Court the matters now raised by Mr Bathurst as matters that it is said should have been disclosed - namely, the fact that the Committee had unanimously pressed for the SPL to serve the claim at that stage and that Mr Weston's position, based on the legal advice he had received, was not to pursue the claim against the non-Packer/non-Murdoch defendants. Leaving aside whether the fact of nondisclosure would be sufficient to set aside the orders on the application under rule 36.16(2)(b), does this additional information weigh the balancing provision against extension?

357. As to the Committee's view, I do not consider it to be material. It was not the Committee's role to make such decisions. As to the decision not to prosecute the claims against the 12 th to 18 th defendants, however, I have been quite troubled by this issue. It seems to me there is a respectable argument that this was something that should have been disclosed. The PBL/News defendants had already indicated a concern as to relation-back periods and this concern surely would be relevant to the bringing of any potential cross-claim as well. The PBL/News defendant may well have taken strategic decisions based on an assumption that those named as parties in the originating process would be served. However, there was no evidence that they did and, when considering afresh whether the extension of time should be granted as at October 2008, on balance, I have not accorded weight to this factor because of the fact that if the relevant damage was the passing of the Board resolution, then the potential cross-claims in tort had already expired so that disclosure of an intention not to proceed against them probably takes the matter no further and if, as more likely, no cross-claims accrued until damage was suffered as a result of reliance on the advice (this being at a much later date) then no cross-claims would by then have expired.

358. By May 2008, seven years had passed since the events in question. At this and each successive occasion, it must logically be the case that the risk of prejudice (whether that be termed presumptive, inferred or otherwise) from the passage of time, and the harshness of the operation of the delay on the individual defendants will have increased (at least in the absence of some further steps taken to preserve the position). Similarly, the prejudice to the plaintiffs by the potential loss of the claim and the loss of the (by now) increased financial investment in the proposed proceedings remains.

359. On balance, I consider that weighing the above factors, the order for extension made on this occasion should not be set aside.

Third application for extension of time - October 2008

360. Prior to this application being brought, the SPL had reported to the Committee of Inspection on 4 August 2008 (vol 9 CB tab 60) that a final opinion had been received from Counsel on 11 April 2008 (ie before the previous extension application); that he was now at stage where he was ready to serve, subject to funding and the leave of the Court; and that he had expended some $5.1m in legal costs in investigations. Mr Weston accepted in the witness box that by his stage he was able (without the benefit of the decision, not yet to hand, of Austin J in ASIC v Rich ) to form the view as to whether the claim should be brought.

361. Again, there was a deliberate decision not to serve the claim. By this time the delay from the filing of the Statement of Claim was 17 months (only slightly less than the delay in Buzzle ).

362. This third application was supported by an affidavit sworn by Mr Weston on 21 October 2008 (vol 2 CB tab 25). By this application, Mr Weston sought to extend, by a further 6 months, the period of time for service of the Statement of Claim from 25 November 2008 to 25 May 2009.

363. In this affidavit Mr Weston deposed to the efforts that had been undertaken to date to obtain litigation funding. He outlined the steps undertaken in relation to creditors ([11] - [14]), in relation to Australian funders ([15] - [20]), and in relation to Offshore funders ([21] - [32]). Mr Weston outlined the details of the proposed funding agreement (i.e. the agreement to be entered into between Calunius, the proposed syndicate vehicle (yet to be formed) and syndicate members, One.Tel and Mr Weston as special purpose liquidator, subject to positive due diligence. Mr Weston stated the reasons he believed the proposed funding agreement should be entered into (at [41] - [42]) and why its terms were reasonable (at [43] - [45]).

364. At [56]-[58] of his affidavit Mr Weston set out reasons for application for extension.

365. He deposed that a further extension of the time for service of the Statement of Claim was necessary in light of the fact that the due diligence period in the proposed due diligence agreement between Calunius and Mr Weston in his capacity as special purpose liquidator was to expire 8 weeks after Court approval of that agreement. He said that if an offer of funding were to be made, following favourable due diligence, a further 28 days was provided for in the due diligence agreement for entering into the proposed funding agreement and seeking Court approval to do so. Mr Weston deposed that it was therefore extremely unlikely that funding arrangements would be concluded prior to 25 November 2008 (the last service date as it stood at the time). Mr Weston referred to the funding negotiations in which he had been involved. He exhibited a copy of the due diligence agreement he had entered into with a potential funder, Calunius. The funding package there proposed was for the entirety of the SPL's legal costs, the SPL's remuneration and his non-legal expenses to be met (with no cap) and for the first $12m of any adverse costs order to be indemnified and for the payment of an insurance premium to secure an insurance policy to cover any additional adverse costs exposure. Mr Weston disclosed that the 'free cash' was to be used as part of the lending.

366. Mr Weston further deposed that in the event that the Court approved the proposed funding agreement, his "legal team" would then be required to review and amend the Statement of Claim accordingly (mainly with a view to removing the claims made against a number of the defendants), and Mr Weston would also be required to convene a meeting of the Committee of Inspection formally to make his final recommendation to creditors.

367. Mr Weston agreed in the witness box that, as at about October 2008, he had effectively received an offer that he could have accepted for the funding of his costs, nonlegal expenses and an indemnity of $12m for adverse costs orders (T 31.43) and that if the aggregate funding exceeded $42m then there was a process under clause 11.3 by which either further payment could be made or there would be further negotiation (such that the $42m figure was not a cap, as such, on the promise of funding) (T 32.42). In reality, the offer was still subject to due diligence. However, Mr Weston seems to have been confident of the outcome of that process (having regard to his reports to creditors).

368. From July 2008 to October 2008, the amount of funding sought had increased from $26m to around $42m. Mr Weston agreed that all the delays after October 2008 were connected to the desire to secure additional funding coverage for adverse costs orders over and above about $12m (T 38). He agreed (at T 33) that as at October 2008 the only 'hitch' in finalising the funding agreement was the inability to find an insurer who was prepared to provide insurance on acceptable terms for adverse costs and the due diligence period provided for under the agreement with Calunius. He also accepted that it would have been open to the general purpose liquidators had they wished to have reorganised their funding priorities (T 37.32). (The so-called 'free cash' that might be available for the funding of the SPL litigation varied over the period of time but it seems that around $7.5-8m of the 'free cash' was proposed to be included in the funding package since the company was to be a syndicate member and capital provider for the fund (T 39.29).)

369. The time for service was extended on 22 October 2008 to 25 May 2009. Reasons for the extension on that occasion were included in the reasons for judgment delivered by his Honour on 24 April 2009. As is apparent, by this stage the reason for the delay is focussed almost wholly on the time taken in relation to the negotiations with the litigation funders. No further notice was given as to the claims. By this stage some seven and a half years have elapsed since the events in question (and the comments as to prejudice made earlier apply with greater force on each extension).

370. The prejudice to the plaintiffs remains the same, but again with an increased investment in the costs invested by the SPL in relation to the proposed proceedings.

371. I consider that even though the period of delay had increased, the balance still lies with in favour of an extension, the SPL having taken active steps to put in place funding in order to enable the commencement of proceedings on a basis favourable to creditors. However, that view is influenced by the fact that litigation funding at that stage appeared likely to eventuate with reasonable promptness. (the due diligence agreement having been signed by now).

Fourth application for extension of time - April 2009

372. Mr Weston swore an affidavit of 20 April 2009 in support of this application to extend, by a further 6 months, the period of time for service of the Statement of Claim from 25 May 2009 to 25 November 2009 (vol 2 CB tab 27).

373. Again, there were no attempts at service. The delay from time of filing of the Statement of Claim (by now approximately 2 years) is beyond that which was considered unacceptable in Buzzle .

374. Mr Weston deposed to the further steps undertaken as at that date to obtain litigation funding, including the steps undertaken in relation to the due diligence agreement with Calunius (at [17] - [20]) and the One.Tel funds that were available to him as special purpose liquidator. At [17], Mr Weston referred to the negotiations with Calunius as to the litigation funding. At [19] he detailed the arrangement whereby it was proposed that a funding syndicate with One-Tel would fund $12m against an adverse costs order, subject to some insurance being obtained. He outlined details of meetings with major creditors (at [30] - [41]) and dealings with the Committee of Inspection (at [42] - [43]).

375. In relation to the prospects of obtaining funding at the time, Mr Weston referred to a letter dated 17 April 2009 from Calunius, in which Calunius expressed the view that "...there is still a high probability that the financing will be successfully completed" (at page 4). Mr Weston deposed (at [44]) that he was aware, from his direct dealings with Calunius since about July 2008, that a considerable amount of time and expense had been spent by Calunius is developing the funding transaction to its then current stage for no present reward (as Calunius had at all times acted as agent for the proposed funding syndicate and not as agent for Mr Weston). In this regard, Mr Weston referred to the following comment in the 17 April letter: "The fact that we continue to invest in this transaction is testament to the fact that we are confident it represents a financially viable claim that will successfully be funded and insured" (at page 5).

376. Mr Weston further deposed (at [45] - [47]) that he was still of the view, in accordance with advice from Counsel, that the prospects of success in the proceedings are high and that it is in the best interests of creditors of One.Tel for the litigation to be pursued.

377. Mr Weston deposed (at [48] - [52]) that a further extension of time for service was necessary because if an offer of funding were to be made, following favourable due diligence, a further 28 days was provided for in the due diligence agreement for entering into the proposed funding agreement and seeking court approval to do so. He therefore considered it "extremely unlikely" that he could conclude the funding arrangements prior to 25 May 2009.

378. Mr Weston further deposed that in the event that the court approved the proposed funding agreement, his legal team would then be required to review and amend the Statement of Claim accordingly (mainly with a view to removing the claims made against a number of the defendants - thus squarely noting the possibility that not all defendants would be pursued, though not identifying which), and Mr Weston would also be required to convene a meeting of the Committee of Inspection formally to make his final recommendation to creditors. (I interpose to note that this suggests that there may have been an indication from Calunius that the recommendation as to non-service of the non-Packer and non-Murdoch interests would be accepted by the then proposed litigation funder - since the reference to removal of claims against defendants is put in relatively unqualified terms - but this is not clear). Mr Weston highlighted the fact that the 17 April letter from Calunius contained a timeline for completion of the funding by 20 August 2009 (best case) and 24 September 2009 (on the worst case basis).

379. Mr Weston also referred to the substantially completed investigation and his receipt of the detailed final opinion from Counsel.

380. At T 15, Mr Weston agreed that, as at April 2009 he did not take the view that it was in the interests of creditors to await the decision in ASIC v Rich but that this was necessary because that seemed to be a condition of funding and he was not prepared to go ahead without funding. He agreed that the only impediment to service of the Statement of Claim at that stage was the offer of funding, the making of certain minor amendments to the Statement of Claim and obtaining the leave of the court.

381. The annexure to this affidavit referred to costs on the "catastrophic" scenario by which it seems that Mr Weston was contemplating the full costs of PBL/CPH and News (at $14.8m for each of the three) calculated on the assumption that those costs would mirror the estimated actual costs of the SPL (though in the witness box he suggested that the $40m estimate was for party/party costs (on a catastrophic scenario) and not solicitor client costs and he also seemed to suggest that the estimate was only for security for costs that might be ordered on an application by the defendants and not as security for the SPL against the possibility that he might in due course be subject to adverse costs orders for the costs of the proceedings brought by him - inconsistently with the basis on which those costs appeared to have been calculated).

382. Mr Weston accepted (at T 17.25) that he was not prepared to take any risks until a funding agreement was in place even though he knew that the events in question had taken place some 8 or so years beforehand by that stage and that by this stage there was a 'high probability' that he would obtain funding for the litigation.

383. Mr Weston in effect accepted that the sole reason he was not prepared to serve the Statement of Claim in April 2009 was that funding was not 'locked in' (T 17.40) though he acknowledged that he may have had enough funds (the $7.5m 'free cash' or thereabouts) to commence running the proceedings (T 17.19)

384. The submissions made for the SPL on that occasion identified the "good reason" to extend time for service under UCPR r 1.12 as being any or all of the following reasons:

(a) that the claim could not be served and prosecuted until Mr Weston was satisfied that there were sufficient resources available to him, including by way of external litigation funding, to fund the proceedings;

(b) that there was a "high probability" that funding would be successfully obtained by August or September 2009;

(c) that a large number of lawyers, including independent solicitors for potential insurers, had reviewed the claim and considered it to have reasonable prospects (Mr Weston and his legal advisers' view remaining to that effect);

(d) that the claim is for a very large sum ($132 million together with accrued interest making a total claim in excess of $225 million) which, if wholly successful, would represent a return of more than 50 cents in the dollar for admitted creditor claims, less the costs of funding;

(e) that a very significant sum had been expended on the investigation and preparation of the claim, the potential benefit of which investment should be preserved by an extension; and

(f) that the prejudice to Mr Weston and One.Tel from a failure to extend time for service clearly outweighed any to the prospective defendants from an extension of time.

385. Significantly, in my view, the above submission continued "Moreover, there can be no prejudice to the prospective defendants if an order is made as they have an express right under Uniform Civil Procedure Rules 12.11(1)(e) to apply to have any extension set aside after service and the extension does not create any additional or different circumstance for or against such an application". Thus, it is clear that Mr Weston was well aware of the risk that any such extension obtained might later be set aside (gainsaying to an extent the suggestion in his most recent affidavit that he had in some way acted in reliance on the fact that he had obtained extensions of time from the court as a reason for not serving the Statement of Claim).

386. Relevantly, also, to the extent that Mr Weston made submissions as to the lack of prejudice to the prospective defendants, it was incumbent upon him (given the ex parte nature of the application) to put forward any potential prejudice that it could be anticipated that the defendants might seek to argue and he was at least on notice of a concern as to cross-claims (that, combined with his then state of mind as to non-service on the non-Packer/non-Murdoch interests, might well have been considered to be a material fact to disclose by that time even if not earlier).

387. In Walter Rau , Allsop J said at [46] - [48]:

I take the relevant principles of ex parte disclosure to be as discussed by Isaacs J in Thomas Edison and to be in the discussion by Mahoney AP in Gerrard v Email Furniture Pty Ltd (1993) 32 NSWLR 662 at 676-77 and in the cases there referred to by his Honour.

The high standard of candour and the heavy responsibility on those who seek ex parte orders is especially the case where (as it was here, and as will often be the case) a discretion is involved. The judge must be given the opportunity of analysing the facts from the perspective of any available case which can be put, or anticipated to be put, by the absent party. That was not done here. Facts were identified, but not in a fashion which illuminated with any clarity the known facts and not in a coherent and ordered way as plainly would have been done by the absent party . (my emphasis)

As the Full Court said in Town & Country v Partnership Pacific (1998) 20 FCR 540 at 543:

The rationale behind the principle is clear; it is of the utmost importance in the due administration of law that the Courts and the public are able to have confidence that an ex parte order has been made only after the party obtaining it has complied with its duty to disclose all relevant facts.

388. The time for service was extended to 25 November 2009. ( Weston v Publishing and Broadcasting Limited & Ors [2009] NSWSC 321). In his Honour's reasons for judgment, Barrett J highlighted that a major factor in the litigation funding negotiations had been that judgment has not yet been delivered in ASIC v Rich. His Honour considered that it was in the best interests of the creditors of One.Tel that the litigation be pursued, and that if funding is not obtained, the litigation would not be able to proceed and there would be no alternative but to let the Statement of Claim lapse.

389. His Honour noted (at [13]) that while good reason to extend the time for service was shown, it was still necessary to consider whether relevant prejudice would be visited upon the defendants by the granting of an extension. His Honour relevantly stated as follows from [14]- [17] and then [24]:

The first point to make is that, although the s 588FF(3) limitation period expired shortly after the statement of claim was filed on 25 May 2007, the situation cannot and should not be regarded as one in which an extension of time for service will deny the defendants a defence that would otherwise be available. This is made clear in the judgment of Stephen J in Van Leer Australia Pty Ltd v Palace Shipping KK (1981) 55 ALJR 243, with particular reference to the Canadian case of Simpson v Saskatchewan Government Insurance Office (1967) 65 DLR (2d) 324.

Further, in relation to any possibility of prejudice to the defendants, the special purpose liquidator refers to orders and undertakings of April 2004 in proceedings in which certain persons associated with some of the present defendants challenged Pt 5.9 examination summonses issued on the application of the special purpose liquidator. On that occasion, it was ordered, without opposition by the special purpose liquidator, that the examination summonses be discharged. Certain consents were, at that time, given by certain of the present defendants. These were given on conditions which included a condition that the special purpose liquidator not seek to examine any executives or employees of those defendants until after the delivery of judgment in the Australian Securities and Investments Commission v Rich case referred to above.

This, the special purpose liquidator submitted, indicates an attitude on the part of the relevant defendants that matters of controversy between the special purpose liquidator and those defendants can sensibly be left to await the outcome in Australian Securities and Investments Commission v Rich. There is force in that submission.

Finally, of course, there is the point that, if and when service within the extended period is actually effected, the defendants will have ample opportunity to argue that the order extending service should be set aside. This opportunity is assured by r 12.11(1)(e) of the Uniform Civil Procedure Rules .... (my emphasis)

... [In considering whether any formal notification should be made as to the extension of the kind Young CJ in Eq had considered in the Rich proceedings against PBL] In the present case, there is the added practical point that the defendants are well aware that proceedings against them have been commenced. They applied unsuccessfully for leave to be heard when the first extension application was made. Highly competent lawyers represent them. Even if a direction of the kind advocated by Young CJ in Eq may be of some use in some cases as a means of reminding a defendant of a right that might in future arise and become relevant to the defendant's welfare, there is no need for it in this case.

390. His Honour granted the extension of time to 25 November 2009.

391. The reasons for the delay by now are squarely linked with the litigation funding and the requirement by the litigation funder that the outcome of the ASIC v Rich proceedings be known prior to committing itself on the shortfall indemnity insurance for the adverse costs layer. This is not only within the territory of a party seeking to arrogate to itself the power in relation to a stay but seeking to do so in order to enable a litigation funder to assess the prospects of the litigation it was proposing to fund having regard to the outcome of other litigation.

392. Again, there was no notice to the defendants of the actual claims, the delay from the events in question was by now eight years and the financial investment by the plaintiffs in the matter had continued to increase.

393. Mr Bathurst submits that on this application it was at the urging of the plaintiffs that the question of prejudice to the PBL defendants if the proceedings were pursued was not considered in any detail at the time of the extensions of service (at least insofar as that is reflected in the judgments handed down in relation to the extensions of time for service of the Statement of Claim).

394. Mr Bathurst also refers to the fact that in the fourth extension application heard in April 2009, Barrett J noted that the SPL was of the view that it was in the best interests of the creditors of One.Tel that he pursue the litigation and, to that end, continue with his attempts to arrange the necessary funding, and that the SPL expected "that a number of matters relevant to the funding possibilities will become more clear-cut after judgment is delivered in [ ASIC v Rich ]".

395. By this stage it seems to me that the balance is clearly shifting against an extension. The sole reason for the delay is the SPL's desire to achieve funding on terms satisfactory to him (even though that may have been at a higher than necessary level) (and the need to await ASIC v Rich is simply a function of the requirements of such funding). The SPL had expressed confidence in it being concluded by September 2009, he had advice expressing confidence in the claim and he was ready, but for funding, to serve it. Moreover, while I do not go so far as to say the level of funding sought was excessive, there was clearly a point at which the SPL could have taken the view that the proceedings could commence (as the Committee back in 2007 had urged be done) with the funding for the immediate tasks, with consideration to further negotiations in relation to what was on the SPL's own estimates a catastrophic funding scenario. With some hesitation, nevertheless, I have concluded that this order for extension should not be discharged.

Fifth application for extension of time - November 2009

396. Mr Weston's affidavit in support of the application to extend, by a further 6 months, the period of time for service of the Statement of Claim from 25 November 2009 to 25 May 2010, was sworn 6 November 2009 (tab 28 vol 2 CB). There were still no attempts at service and the delay from filing of the Statement of Claim was now two and a half years.

397. Mr Weston deposed (at [12]) that in the period prior to 24 April 2009 (when the last extension of time was granted) a dispute arose with the Committee of Inspection in relation to Mr Weston's entry into the due diligence agreement, and this dispute was ventilated during an interlocutory hearing before Barrett J in early November 2008. Following a confidential review of the due diligence agreement by Senior Counsel and a solicitor on behalf of the Committee, the Committee withdrew its initial objections and expressed support for the due diligence agreement. During the period after 22 October 2008, he said that a considerable amount of work was carried out in relation to the due diligence process pursuant to the terms of the due diligence agreement.

398. Mr Weston outlined (at [15] - [29]) the steps that had been undertaken to obtain litigation funding since April 2009. In that affidavit [15], he referred to the necessity to obtain indemnity shortfall insurance for the second layer of adverse costs of $28m. At [19] he explained that because of the delay in obtaining the ASIC v Rich judgment, the need for an extension of the service date and the position of insurers (by this I understand him to mean their requirement to see the ASIC v Rich judgment before committing to the indemnity shortfall insurance cover), Calunius had proposed in late September 2009 an alternative funding structure to that which Mr Weston said had been envisaged "at all times" since execution of the due diligence agreement.

399. At [22], Mr Weston deposed that the alternative funding structure that had been proposed in September 2009 by Calunius would, if successfully implemented, enable a funding agreement to be concluded on terms similar to the draft annexed to the due diligence agreement even in circumstances where the judgment in ASIC v Rich remained to be delivered. The alternative funding structure was described as "Plan B" (the original proposed funding structure being described as "Plan A").

400. Mr Weston deposed at [23] that "Plan B" involved the introduction of additional capital investors into the existing proposed funding syndicate to effectively provide an additional $28 million in capital in lieu of the indemnity shortfall insurance and that under this model all capital investors (in the total amount of funding) would rank pari passu. A second version of "Plan B" (described at [24] of his affidavit) involved an implementation of the draft Funding Agreement structure unchanged, with the indemnity shortfall insurance cover being provided by additional "contingent" capital investors. A confidential memorandum from Calunius to the SPL dated 30 September 2009 and titled "Proceeding Without Insurance ("Plan B")" was exhibited to that affidavit.

401. There is no suggestion in Mr Weston's affidavit that funding was not then achievable within a relatively short period. Rather, at [25] he made clear that it had been his decision not to pursue that option, stating that:

Because the alternatives involve introducing new capital participants with an interest and claim on any judgment or settlement, both Calunius and I anticipate that the effective cost to the creditors of this strategy is much higher than obtaining insurance cover for the same risk of a capital requirement. Hence my view remains that if funding can be obtained on the original model consistent with the interests of justice as to when service should be effected, the interests of creditors are best served by the insurance model.

402. Quite candidly, at [26], Mr Weston said:

Thus, whilst the delay in the delivery of judgment in ASIC v Rich has caused a delay in the funding process, it has not prevented me pursuing alternative funding, although such alternative funding would be at a greater cost to the creditors of One.Tel.

403. Mr Weston also stated (at [40]) that he was still of the view, in accordance with advice from Counsel, that the prospects of success in the proceedings were high and that it was in the best interests of creditors of One.Tel for the litigation to be pursued.

404. Mr Weston deposed (at [41] - [43]) that under the terms of the due diligence agreement, if an acceptable offer of funding was received at the end of the due diligence period, a further 28 days was allowed for entry into a formal funding agreement and seeking approval from the Court to do so (and that there was therefore no possibility of funding arrangements being in place by 25 November 2009).

405. Mr Weston further deposed that in the event that the Court approved the proposed funding agreement, his legal team would then be required to review and amend the Statement of Claim accordingly (mainly with a view to removing the claims made against a number of the defendants), and Mr Weston would also be required to convene a meeting of the Committee of Inspection formally to make his final recommendation to creditors.

406. Mr Weston said in the witness box that up to November 2009 he was trying to pursue the two plans and had been in discussions with Calunius in relation to Plan B as well (T 20). In his affidavit he indicated that either structure would take approximately 11-15 weeks to implement but, in relation to Plan A, that time period would run only from the judgment in ASIC v Rich . Mr Weston agreed that in the period up to the November application for extension he was focussed on Plan A and did not "start the clock running" on Plan B (T 21).

407. In submissions prepared on that occasion it was said that service ahead of the consummation of full funding (either on the insurance model or the Plan B model) would expose both the liquidator personally and the creditors' funds "to the hazard of not being able to pursue proceedings to completion and an exposure to substantial costs orders in trying to disengage". It was said that the SPL had had regard to the interests of creditors in not implementing Plan B to this point because of the additional effective cost to the creditors of having a larger "equity" pool claiming on any fund generated but that "if the requirements of justice are for service sooner than ASIC v Rich , the liquidator must implement Plan B for funding". Thus Mr Weston clearly recognised that there was an alternative to the option he had chosen to pursue.

408. In those submissions it was again said that the point at which any prejudice to the defendants caused by any extension of time for service is to be determined was in an application under UCPR rule 12.11(1)(e), in the event that they could demonstrate prejudice by a delay in service . (It is submitted for the defendants that this was incorrect and that prejudice to the defendants was required to be considered, as his Honour did, at the time the order for extension was made. More relevantly, in my view, is the fact that the submission made on this occasion to his Honour clearly illustrates the awareness of the SPL that any extension he obtained was at risk of being set aside and that he can only have chosen the course of action he did on the basis that he was prepared to assume such a risk.)

409. The time for service was extended to 25 May 2010 ( Weston v Publishing and Broadcasting Limited & Ors [2009] NSWSC 1235). Barrett J stated (at [6]) that the position was that the SPL was well advanced with negotiations to obtain litigation funding for the purposes of the proceedings, and it was clear from the evidence that the delay in the handing down of the judgment in ASIC v Rich had caused delays in the negotiations.

410. In relation to any potential prejudice to the defendants, his Honour stated as follows from [7]:

Publication of the judgment in ASIC v Rich has implications also for another matter that must be taken into account on the present application. I refer to the question of prejudice to the defendants. They are aware of the proceedings. Indeed, they made an unsuccessful application for leave to be heard when the first application for extension of the time for service came before the court: see Onefone Australia Pty Ltd v One.Tel Ltd; Weston v Publishing and Broadcasting Ltd [2007] NSWSC 1320. The defendants are also aware of the significance of the judgment in Asic v Rich . As was noted when the last application for extension of service was before the court (see Weston v Publishing and Broadcasting Ltd [2009] NSWSC 321 ; (2009) 71 ACSR 577 at [15] and [16]), key defendants may be taken to have accepted that matters of controversy between the special purpose liquidator and those defendants can sensibly be left to await the outcome of ASIC v Rich . (my emphasis)

There was discussion in Tolcher v Gordon [2005] NSWCA 135 ; (2005) 53 ACSR 442 and Arthur Andersen Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd [2009] NSWCA 104 about the weight that should, in cases such as the present, be afforded to a desire not to proceed until the outcome of some other proceeding is known or attempts to obtain litigation funding have been successful. As to the latter matter, the observation in the later case (at [82]) that it would be inappropriate to allow an extension of time for service "where a significant cause of the delay has been the willingness of the plaintiff to do nothing about service while awaiting a decision from a litigation funder" stands in contrast to the statement in the earlier case (at [107]) that "it would have been both imprudent and irresponsible for the claimants to institute the proceedings without having litigation funding in place" (the reference to institution of the proceedings was, in the context, a reference to service).

411. In fact, as at this date (as indeed as from November 2007 at the latest), it could not safely be assumed by the SPL that the key defendants were prepared to accept that matters of controversy between the special purpose liquidator and those defendants could sensibly be left to await the outcome of ASIC v Rich . Rather, the SPL seems simply to have assumed that that was the case based on the earlier correspondence.

412. His Honour held (at [10]) that good reason had been shown for an extension of time for service and extended the time to 25 May 2010. His Honour noted that:

The present position is that the special purpose liquidator is well advanced with negotiations to obtain litigation funding for the purposes of the proceedings. It is clear from the evidence that the continued unavailability of the judgment in the ASIC v Rich proceedings has caused that process to be delayed. It is understandable that a potential funder - and the special purpose liquidator himself-will wish to review the findings in that case in some detail before making a decision to proceed. This is because of a substantial overlap between issues of fact in that case and issues of fact in these proceedings. ([2009] NSWSC 1235 at [6])

413. The reasons for the delay were again solely attributable to the position adopted by the SPL as to the choice of litigation funding to pursue and the requirements of the proposed litigation funder. However, by this stage the further (in my view, very significant) factor to note is that the SPL was aware that he could in all probability have secured litigation funding (even for the catastrophic costs scenario), albeit at a higher cost, by proceeding with Plan B. He did not do so.

414. As regards the desirability of entering a funding agreement, Mr Bathurst notes that there does not appear to have been any discussion as to why the amount of money remaining in the company (which was over $12m as at August 2010) or "free cash" (that being described as an artificial concept in itself) was insufficient to allow the claims to be pursued, particularly taking account of the fact that more than $8m in legal costs (excluding GST) had been expended as at August 2010. In his supporting affidavit, Mr Weston indicated that around $9m was available in the company at that time, and that another $8-$9m was expected to become available, giving some $17-18m on top of the legal expenses of more than $6m paid to date. Mr Weston nevertheless deposed that "the position remains that there are insufficient available assets of One.Tel to fund the SPL Proceedings without external litigation funding".

415. Whatever the position going forward, Mr Bathurst submits (and there is some force to this observation) that it could not on any view be said that the plaintiffs were impecunious such as to be unable to serve the Statement of Claim until funding was in place. As Keane JA observed in The I.M.B. Group Pty Ltd (in liq.) v Australian Competition and Consumer Commission [2007] 1 Qd R 148 at 160 [57], the decision in that case not to serve could not be explained by impecuniosity on the part of the plaintiffs, because "The costs involved in serving the claim would have been minimal...".

416. The delay from the events in question was now eight and a half years. The prejudice to the plaintiffs remains the loss both of the cause of action and the investment in the litigation to that date - subject, however, to the possibility that a claim could still be brought for causes of action in equity that would not be subject to the statutory limitation period.

417. In my view, the deliberate decision by the SPL to pursue as at September 2009, in effect, a funding option that required the outcome in ASIC v Rich to be known in advance (and not to pursue what from at least late September 2009 was known to be an available alternative option for funding that did not require the outcome in ASIC v Rich to be known and that would have permitted service within a short period of time - thus eliminating the uncertainty of timing inherent in the Plan A option) is a significant factor pointing against any further extension.

418. It seems to me that this was a decision by the SPL, made in the awareness of a risk of challenge to the orders for extension (and on the basis that the SPL was apparently urging the court to defer a consideration of prejudice until after the originating process was finally served). Mr Weston seems to have proceeded, at the highest, on an assumption that because the defendants had previously offered to extend the relevant limitation periods - or not to raise a limitations defence - by reference to the time at which the ASIC v Rich decision was handed down, then they were content to allow time to continue to run without service of the claim and a higher degree of certainty. I do not consider that it can be said that this was a reasonable assumption nor was it one that was encouraged by the defendants - given that there was an attempt in 2007 to achieve exactly the opposite position.)

419. By this stage, therefore, the factual scenario is far closer to that which was considered in Buzzle (though I accept that the same level of criticism of inactivity cannot be made of the SPL as was made in that case). Nevertheless, the practical effect of the SPL choosing to pursue Plan A and not Plan B was that (in effect) control of the time at which the originating process was to be served was largely abdicated to the litigation funders (since it was their requirement to await the decision in ASIC v Rich ).

420. Further, the manner in which the successive extension applications were made shortly before the expiry of the then extended time for service on each occasion was to present the court with the difficult situation that (because of decisions made by the SPL) it was not possible for matters to be progressed within the time then available before the imminent expiry of the extension and hence the alternatives were to refuse the extension (and thus deprive the creditors of the benefit of the potential causes of action) or grant the extension based (as was the case by November 2009) on circumstances that were largely within the SPL's control. It might be thought that the approach of the SPL assumed that as each extension was sought for a limited further period it involved no or little incremental prejudice. However, the risk of prejudice by reason of delay can only have increased as each successive extension was sought.

421. Mr Weston deposes that the reason he took the steps he did was because the Court had granted the extensions. However, he must have been aware, and he was certainly on notice, of the fact that there would be an opportunity on the part of the defendants ultimately to test the making of those orders - therefore, he must be said to have assumed the risk that they would be set aside (and thus gains no benefit from the fact that they were made in the first place).

422. Balancing the factors outlined above, I have concluded that the order extending the time for service of the Statement of Claim (which was made in November 2009 with some hesitation by his Honour), should be discharged under rule 12.11(1)(e).

423. It seems to me significant that there was a deliberate decision by the SPL not to pursue what he knew at that time was an potential alternative source of funding (and one which would not have been dependent on the ASIC v Rich judgment), which had the inevitable effect of prolonging the delay in commencement of proceedings. I accept that there was not at that stage a concluded agreement as to funding (and that there would have been a need for completion of the due diligence and hence funding was not assured). I also accept that the membership of the proposed funding syndicate (which was to include One.Tel itself) had not been settled in 2008 (and there was some substitution in the proposed membership over time, Mr Karkar pointing in this regard to the documents at vol 2 CB 1021, 1035, 1086, 1136 and 1137).

424. However, by late 2009, the SPL himself saw there being a high probability of funding by this time (at a level of funding to meet what Mr Young submits was an unrealistic catastrophic costs scenario) and simply chose not to pursue that option (that being a deliberate decision on his part) in the time leading up to the November 2009 extension, though it was known by him by late September to have been an available alternative option for funding (and, had enquiries been made of alternative options at an earlier time there seems no reason to believe that option would not have been available then). In cross-examination, Mr Weston agreed that he was not prepared to take any risks until a funding agreement was in place even though he knew that the events in question had taken place some 8 years or so before and that there was a high probability that he would obtain funding (T 17.25). His decision not to pursue Plan B (which was not suggested to be an inappropriate or inadequate method of funding, simply a less favourable one) meant that he had made it impossible to progress the proceedings diligently at that point.

425. Therefore, while I accept that the position was (as Mr Karkar emphasised) that there was no offer of funding then capable of acceptance so as to constitute a binding agreement (being dependent still on the outcome of the due diligence exercise), the position is that whether or not funding could have been finalised as at late 2009 will never be known because of the SPL's decision not to pursue the avenue that he conceded was then available to him. The arrangements for funding seem to have been well in train and the decision not to set the clock running (as it was put to Mr Weston in cross-examination) meant that this opportunity was foregone and the SPL was left, in effect, at the dictates of the litigation funder as to the timing of its decision in relation to the shortfall indemnity insurance cover (without which Mr Weston was not prepared to proceed).

426. The (by then considerable) lapse of time since the events in question (at least 8 and a half years after passage of the May 2001 resolution but appreciably longer if, as is now asserted in the context of the amendment application, it would have been necessary to trawl through the actions of Mr Packer from as far back as 1995 and Mr Murdoch from 1999) must have increased the risk of prejudice as to the ability of the defendants to conduct their defence (in circumstances where it was apparently known, by reference to Austin J's judgment that not all financial records were still available at all or, if available, within the hands of the defendants and where it was to be expected that the memory of witnesses would have become more unreliable).

427. Furthermore, the SPL was aware that, as early as November 2007, the PBL/Yates defendants had expressed concern as to the potential for amendment to the claims having a relation-back consequence (and could have been expected to be concerned that delay not prejudice their position vis a vis potential cross-claimants) yet did not enlighten the court that a decision not to proceed against those potential cross-claimants had been made (subject only to the contrary wishes of any ultimate litigation funder(s) - therefore again seemingly abdicating to the litigation funder, whoever that might be, a critical decision in the conduct of the proceedings).

428. Taking into consideration the rationales recognised by the courts for the imposition of limitation periods and the statutory context in which applications of this kind must be determined (to which I have referred earlier), the likelihood that continuing delay would prejudice the defendants by the inevitable deterioration in the quality of evidence and the oppression of having the spectre of proceedings of this kind, I am of the view that the order made in November 2009 (without his Honour having had the benefit of argument from the defendants) should be discharged. (I also note that the prejudicial aspect of the spectre of litigation is most obvious in the case of Mr Yates, who by this time had not been associated with PBL for some years and hence, if any distinction were to be made amongst the defendants I would have considered the prejudice to Mr Yates to have been likely to be the greatest.)

429. Even if that conclusion were to be incorrect, the same result would follow having regard to my conclusion as to the position in relation to the final order for extension of the time of service, to which I now turn.

Final application for extension of time - May 2010

430. The affidavit in support of this application was sworn on 14 May 2010 (tab 29 vol 2 CB) to extend, by a further 6 months, the period of time for service of the Statement of Claim from 25 May 2010 to 25 August 2010. Mr Weston also sought approval of the Court under s 477(2B) of the Corporations Act, to prosecute the proceedings.

431. There were, again no attempts at service of the proceedings, this being a deliberate decision of the SPL, and no notification was given to the defendants of the proposed expansion of the claims that had hitherto been foreshadowed against them. (The SPL had seemingly disregarded the very public call by Mr Packer for the proceedings to be served.) By now, of course, the delay from the filing of the Statement of Claim was 3 years.

432. The reasons for the delay on this final occasion were to permit the new legal representatives (apparently retained on the instructions or at the behest of the litigation funders) to review the materials that (other than the judgment itself) previous legal representatives had already reviewed (and where they had done so at considerable cost to the creditors). The order extending the SPL's powers to permit such a review in 2006 was clearly made by White J in the expectation that this would facilitate a prompt prosecution of the claim once the judgment was handed down. His Honour's expectations were sadly not met. Rather, the change of solicitors must have contributed, if not led, to a not insubstantial further delay in the service of the Statement of Claim (and a rather wholesale revamp of the causes of action contained therein).

433. At [5] of Mr Weston's affidavit, reference was made to the need to review the Statement of Claim (this, according to Mr Weston, was a reference to the substantial amendments to the version in due course made in August 2010, thus it would seem that what he had in mind was an extensive exercise whereby any further potential claims that might be considered to have arisen would be added, notwithstanding that no notice had been given of those matters to the defendants). Mr Weston deposed on that occasion that his legal advisers were of the view that the Statement of Claim as filed (but unserved) would require significant amendment and particularisation, as a result of the need to remove a number of the defendants and as a consequence of the judgment handed down in ASIC v Rich .

434. Mr Weston deposed that the new legal representatives on the matter, Lipman Karas, required an extension of 3 months to enable them to brief an additional Senior Counsel and to complete a review of all available material to determine which of the possible defendants to pursue, which causes of action to pursue, amendments to be made to the Statement of Claim consequential to the ASIC v Rich judgment and otherwise, and to seek leave to make any such amendments. His Honour, however, was not informed that it was proposed that consideration be given to the introduction of a vast array of new and very serious allegations (the mere deletion of defendants and the need for further particularisation giving no indication of what was in store in terms of the pleading amendments). (It may, of course, be that there was no intention at that stage to plead matters such as conspiracy or fraud. However, it does not seem to me that his Honour was alerted to the scope of the exercise then being proposed to be undertaken - of substantially rewriting the claims the subject of the proceedings albeit by reference to some or more of the same set of facts.)

435. At [6], Mr Weston said that he had deliberately refrained from incurring substantial expenses in relation to the amendments until the funding was in place so that this could be done at the expense of the funder. The affidavit referred to the engagement of new solicitors, which Mr Weston said in the witness box had been contemplated for some time and discussed as a possibility as early as late 2007 because of the need for litigation funding and his perception that litigation funders generally liked to have significant input into the lawyers to be retained (T 21). Without any disrespect to the lawyers in question, the seeking of an extension for that purpose (when considerable sums and time had already been expended on and by the lawyers who had acted on the matter for some years in preparing the proceedings and who presumably would have been in a position to review the ASIC v Rich judgment and attend to any pleading amendments in a much shorter space of time), whether in order to satisfy the wishes of litigation funders or not, seems to me to be contrary to the objective of the just, quick and cheap resolution of matters in dispute (and the time so involved was certainly contrary to the expectation that White J had had when amending the SPL's powers to allow for the review of the ASIC v Rich material in 2006). (To the extent that it was at the behest of the litigation funders, and I have nothing other than the suggestion from Mr Weston himself to indicate whether that was the case, this again suggests a willingness of the SPL to abdicate at least some of the decision-making to the litigation funder(s).)

436. The time for service was extended to 25 August 2010 ( Weston v Publishing and Broadcasting Ltd [2010] NSWSC 499). His Honour stated his reasons at [3] - [5] as follows:

Had circumstances remained today as they were when I considered - and, with some hesitation, granted - the last application in November 2009, this present application would have been refused.

However, the matters referred to in my reasons of today in Onefone Australia Pty Ltd v One.Tel Ltd [2010] NSWSC 498 represent a major step forward and make it clear that the special purpose liquidator will be in a position to effect service soon, albeit with a need for some necessary matters to be attended to over a period likely to be of the order of several weeks.

In those circumstances and bearing in mind, first, the broad discretion that the court has upon an application such as this and, second, the safeguard provided for the defendants by r12.11(1)(e), I have decided to grant the request.

437. As to the respective prejudice to the defendants and the plaintiffs, the delay since the passage of the relevant Board resolution was by now 9 years (and the likely delay to any hearing would only serve to increase that time gap). The comments consistently made by the courts in considering the impact of such delay (as noted earlier) suggest that there should be real concern as to the prejudice likely to be occasioned to the defendants by such a delay (albeit that such concern may be tempered by the fact that there was little evidence of actual prejudice in the sense of physical evidence lost or memories having faded.) As McHugh J noted, in effect, in Brisbane Health , a party may not be able to point to the actual deterioration in the quality of the evidence by reference to delay but that does not mean that such prejudice will not be suffered.

438. The prejudice to the plaintiffs remains the loss of potential causes of action said to be worth a considerable sum (notwithstanding the involvement of litigation funders who will presumably take a sizeable proportion of any verdict as the price for funding the litigation and exposing themselves to liability for potential adverse costs orders). The financial investment in the litigation had by then also increased.

439. The significant factor that in my view weighs against an extension as at May 2010, is that the sole reason for the delay at that stage seems to have been the litigation funders' desire to retain different lawyers and to conduct not simply a process of amending the claim to deal with amendments based on material emerging in ASIC v Rich (materials in which had already been reviewed by the SPL's previous lawyers) but a wholesale review and expansion of the pleadings. The SPL had nine months to serve a statement that had been drafted already to serve back in 2007.

Conclusion as to applications to discharge under rule 12.11(1)(e).

440. In summary, as Mr Bathurst notes, it was not suggested by the plaintiffs at any time after the first extension application (in November 2007) that more time was needed to complete investigations before proceeding with the claims against the defendants or that the SPL considered it would be necessary to undertake any further investigations following the decision in ASIC v Rich (other than the final extension when there was to be a review of the pleading in light of the judgment of Austin J), nor was there any need expressed to await the outcome of the decision in ASIC v Rich until this was imposed as a condition of commitment to the highest level of funding sought by the SPL (a matter for the SPL's benefit as much, if not more so, than for the creditors). In Mr Weston's 8 February affidavit in support of the present application he nevertheless expressed the view that at [7]:

At all times on and from my appointment as special purpose liquidator of One.Tel I believe that the outcome of the decision in ASIC v Rich will be relevant to my decision whether to pursue these proceedings

441. Mr Weston, in the witness box, explained this apparent inconsistency by saying that up to 2009 the ASIC v Rich decision was not a factor in terms of receipt of funding (T 22.29) and that it was a relevant factor in relation to the proceedings but not necessary in relation to the service of the Statement of Claim (T 22.39). He then agreed that it only became relevant when it appeared that it might be difficult to obtain funding pending the judgment in ASIC v Rich being handed down and that this was in 2009. He accepted that even then there were other sources of funding.

442. Mr Weston accepted that his position was that if he could get funding without the judgment then he would proceed with the case (T 23.7) and that he was aware that all the PBL/News defendants had agreed was not to plead the limitation periods up to May 2007 (though in paragraph 11 of his February affidavit he had stated his belief that those parties had adopted a position that any decision whether to proceed should await and only be made with the benefit of the Court's consideration in ASIC v Rich ).

443. The SPL had concluded his investigations in May 2008; had received detailed final opinions of counsel in April 2008; and was in a position to approach funders with a proposed litigation funding package between February and September 2008. Mr Bathurst notes that there was no suggestion by the SPL at this time (or even later) that a judgment in ASIC v Rich was necessary for the SPL to make a decision on whether to prosecute a claim against some if not all of the defendants (the only suggestion being that the proceeding might not be prosecuted against all defendants and might not be prosecuted in respect of all claims). (I also note that there was no suggestion at that time that time might be taken in formulating a whole raft of new claims of the kind now sought to be pressed). Mr Bathurst submits that the position is akin to that described in The I.M.B. Group Pty Ltd (in liq) v Australian Competition and Consumer Commission [2007] 1 Qd R 148, by Keane JA (where the plaintiffs had awaited the outcome of proceedings brought against them before serving their related claim that same party (at 160 [56]):

. It is simply wrong to say that the delays in the Federal Court prevented the formulation of the case which the plaintiffs wished to pursue against the ACCC and the service of that claim upon it. While the outcome of the proceedings in the Federal Court would be likely to have had a real bearing on the likelihood that the plaintiffs' claims would succeed, the plaintiffs, as they well understood, were not dependent on the success of the defence of the ACCC's proceedings to be able either to plead the case which they wished to advance against the ACCC or to serve that pleading.

444. The SPL had by September 2009 been in a position where there was a high probability that litigation funding could be quickly concluded (albeit not in as favourable terms as that contemplated by Plan A) to cover the full extent of his estimated costs exposure (be that a realistic or unrealistic estimate) but chose not to pursue that option. The SPL seems to have taken what might be said to be the calculated risk (instead of proceeding to take steps to finalise litigation funding in late 2009 at a higher cost but so as to minimise further delay in the prosecution of the company's claims) of waiting to see if more cost-effective funding could be procured after the judgment in ASIC v Rich was handed down. This was so even though he must have known that this would mean further delay (and all at a time when there was sufficient cash available in the liquidation to have permitted the commencement of the proceedings and the SPL's concern seems to have been to put himself in a position to meet an adverse costs order predicated on an indemnity costs basis that would not arise, in the ordinary course, absent unreasonable conduct of the litigation on his part). (The suggestion that the SPL would in some way have been forced to serve the 12 th to 18 th defendants at a stage when he did not intend to proceed against him ignores the fact that this was ultimately a decision for him and not the litigation funders.)

445. By the time of the last extension application (and in my view also at the time of the November 2009 application) the position that emerges on the evidence before me is that the SPL was, in effect, seeking to arrogate to himself (with a view to the requirements or anticipated requirements of litigation funders) the power to determine when proceedings should be served; not least by having chosen not to take steps to facilitate the earlier completion of funding, such that by the time various of the applications for extension were made (in particular the penultimate application) the die was cast and his Honour was presented, in effect, with a fait accompli - that it was not by then possible to secure funding within the limited time available before the extension applied or, in the case of the last extension, the change in legal representatives had delayed completion of the pleading amendments.

446. To the extent that the SPL's decision to await the outcome of ASIC v Rich before concluding funding negotiations (and before making a final decision as to whether or not to pursue these proceedings or particular claims in these proceedings against some or all of the defendants) was one made by the SPL in the belief that it had a measure of acquiescence from the defendants (a matter to which his Honour had referred on the last two extension applications), I do not accept that there was a reasonable basis for that belief having regard to the steps taken in November 2007 by the PBL defendants and Mr Yates to oppose those extensions (which, if successful, would surely have been mirrored by a similar stance from the News defendants) and from the absence of any suggestion in 2008 (when the SPL sought advice as to whether the defendants' lawyers had instructions to accept service) that this was contrary to an arrangement in place whereby the service of the process was to await the judgment in ASIC v Rich ).

447. In this regard, Mr Bathurst points to the terms of the conditions to the undertakings provided to the Court on 6 April 2004 (in particular, that the condition that that there be no further attempt to examine any of the executives and employees of the relevant parties in relation to any of the claims referred to in the undertaking, contained in 3(c), until one of a number of events, described those three events prefaced by the words "until the earliest of the following"). It is said, therefore, that any acquiescence on the part of the defendants which might have been inferred from the proffering of the undertakings could be inferred only for a period no longer than 6 months prior to 29 May 2007 and that such acquiescence could no longer be inferred by 2009 (particularly following the November 2007 application by the PBL defendants and Mr Yates to be heard on the question of the first extension). There was no extension of the undertakings in relation to the limitation period beyond 6 years. The SPL proceeded to conduct public examinations in relation to the examinable affairs of One.Tel (thus, as I understand it, it is submitted that the SPL has not been impeded in his investigation of the claims by reason of the undertakings) and chose not to notify the defendants with any precision as to the claims intended to be made against them.

448. The defendants accept that they have taken a number of steps since 2001 to preserve evidence regarding events surrounding One.Tel (though in Mr Yates' case, any active involvement in monitoring the proceedings may not have continued throughout the period - he having left PBL in 2004). It is said by Mr Bathurst (and I accept), that such steps were legitimate and the defendants should not be criticised for so doing. However, the question is whether the steps that they have taken sufficiently mitigate any prejudice caused or likely to be caused by the delay so as to weight the balancing exercise in terms of the discretion that I have to exercise in favour of the plaintiffs (having regard to the prejudice that they will suffer by reason of any discharge of the orders).

449. I accept that it is likely the defendants will suffer prejudice if the proceedings are allowed to continue, that being the prejudice inherent in having serious allegations made and pursued long after the events to which they relate (referring to Brisbane Health at 552 and Hans Pet Constructions [at [36]). Reliance is placed by Mr Bathurst in this regard on what was said in Aon by French CJ (at 182 [5]) namely that "... the primary judge and the Court of Appeal should have taken into account that, whatever costs are ordered, there is an irreparable element of unfair prejudice in unnecessarily delaying proceedings". As McHugh J recognised in Brisbane Health , it not always the case that one can point to a palpable deterioration in quality of evidence and that "perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties". His Honour accepted that prejudice may exist without the parties or anybody else realising that it exists and it is this concern that is one of the rationales for limitation periods to be imposed. Here, the question of solvency may well be able to be determined on the documentary evidence but there will be critical evidence going to the question of breaches of directors' duty and misleading and deceptive conduct as to the witnesses' recollection of events back in 2001 (and perhaps earlier) and not all of those witnesses have had their memories refreshed by court processes in the interim. If what has been forgotten can rarely be shown, it is difficult to criticise the defendants for being unable to adduce evidence of particular memory failings on the part of individual potential witnesses (though I accept that the lack of evidence of a palpable deterioration in the quality of the evidence may lessen the weight that can be put on this factor).

450. I also accept that there is likely to be prejudice to the individual directors by reason of the significant delay in bringing claims that go directly to their probity, honesty and fitness for his main occupation ( Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863 at 887 [60], where Tadgell and Ormiston JJ (with whom Brooking J agreed) held that, in addition to the prejudice a defendant may face by reason of the effect of delay upon his ability to conduct a defence of the claims against him, there is significant prejudice inherent in the situation where an individual defendant faces claims regarding events of a decade ago that go beyond "mere casual negligence" to acts which reflect upon the competence or probity of that person, and in particular his professional competence).

451. Mr Bathurst notes that at [60]), their Honours said that"... it is not so much the size of the claim as the effect on a person's reputation which is critical to prejudice of this kind" and that when "... that burden is not merely deferred but then unjustifiably drawn out over many years, it is easier still to infer serious prejudice of the relevant kind to a defendant"; and points out that on similar grounds, McDougall J rejected an amendment sought by the plaintiffs in the Ingot litigation, which would have had the effect of raising, some 6 years after the events concerned, allegations that"... in a very real and direct way ... strike at the probity, or honesty, of the relevant defendants". That prejudice is compounded where the allegations concerned are made in a complex commercial case, such that it is likely that the allegations will be in the public domain for a considerable period, perhaps several more years, before final judgment. The fact that the individual defendants cannot point to particular business or professional disadvantages suffered by reason of the delay does not detract from the recognition that such damage is likely to be inevitable.

452. As to the possible prejudice to the defendants by reason that the delay by the plaintiffs in serving the Statement of Claim and the proposed amended statement of claim upon them has affected their ability to bring cross-claims against other parties (for example, in relation to the alternative claims for negligence now sought to be made), this would be relevant prejudice if it were likely that such cross-claims had in fact been lost.

453. In Agricultural & Rural Finance , at first instance, Einstein J referred to the prejudice caused to a defendant by serving a pleading on him after the time when he was able to bring cross-claims against other parties, noting (at [43]-[44]) that:

In the search for hardship or prejudice caused by the grant of the renewal of the summons, a further important matter in the Applicants favour is to be discerned in what was referred to during the hearing as 'the limitations point'.

The clearest and most fundamental prejudice suffered by both Applicants is the likely expiry of the time bar in relation to cross-claims pursuant to the Trade Practices Act (and Fair Trading Act ) and Corporations Law . ARF now appears to concede, as it must, that these are not saved by s 74 of the Limitations Act .

454. Noting that both of the applicants had there given evidence of claims that they would wish to make against parties other than those bringing the proceedings against them (something of which there was no evidence as such in the present proceedings), his Honour observed that "The failure of the Applicants to assert these claims while unserved is immaterial to the relevant prejudice. As outlined below, it is entirely unrealistic to expect Mr Kirk and Mr Jones to have voluntarily joined the litigation by filing those cross-claims despite not having been served with the summons in these proceedings" and considered that the right of these third parties to raise limitations defences was a clear and highly material prejudice arising from the delay in service of the summons.

455. I have considered earlier the position of the potential cross-claims. On the material before me, it does not appear to me that they would yet be statute-barred and hence I do not consider that it is likely that there will be prejudice suffered in that respect. I do, however, consider that this was an issue that should have been debated before his Honour in the ex parte applications and that it was incumbent on the SPL (having chosen to bring those applications on an ex parte basis) fully to apprise his Honour of the potential prejudice in that regard (or at the very least the potential that the defendants might wish to be heard on that issue and to raise any concerns arising from the (also undisclosed) decision by the SPL not to pursue claims against those potential cross-defendants unless so required by litigation funders).

456. On balance, the conclusion I have reached, subject to the discretionary considerations I refer to below which were raised in the plaintiffs' supplementary submissions, is that the penultimate and last extension orders should be discharged.

Plaintiffs' supplementary submissions

457. By way of supplementary submissions filed shortly before the hearing before me, the plaintiffs have argued, as a matter going to discretion, that the Court should not set aside the orders extending the time for service in circumstances where the orders setting aside the service would not be wholly effective (which it is said is the case here because some of the same causes of action could be pursued against the defendants in fresh proceedings). Reliance is placed on Birkett v James [1978] AC 297, 325E (per Lord Diplock) and McDonald v Shone and Ors [2010] NSWSC 467. It is said that if the defendants" applications to set aside the extensions of time for service are successful, the plaintiffs could nevertheless issue fresh proceedings against the defendants (that would not be time-barred by any analogy with the Limitation Act 1969 ) seeking the same relief and it is said that no defence of laches would apply in those circumstances.

458. The plaintiffs further submit that to the extent that the time limit for bringing the plaintiffs' claims has not yet expired, the defendants' assertions of prejudice should be given little weight (because if the defendants' applications were successful they would still face some of the same claims, albeit in fresh proceedings). (Conversely, it might be said, the prejudice suffered by the plaintiffs if the defendants' applications to set aside the extension orders are successful, by reference to loss of valid causes of action and the financial investment in investigating those causes of action to date, is lessened if the plaintiffs are able to pursue some at least of the relief they are presently seeking in other proceedings.)

459. The equitable causes of action (that it is said could still be brought in fresh proceedings even if the present proceedings are dismissed) are claims of the kind sought to be introduced by the amendments sought to be made to the Statement of Claim, namely breaches of fiduciary duties by the allegedly conflicted directors (the duty to avoid conflicts, the duty not to benefit, the duty to act in the company's best interest, the duty to exercise powers for a proper purpose and the duty to act with care and skill); claims of knowing assistance and participation, with knowledge of the dishonest and fraudulent design, by the corporate defendants in each of the conflicted directors' breaches of fiduciary duties; claims against the corporate defendants procuring or inducing breaches of fiduciary duties by the conflicted directors; and claims for unconscientious conduct against all of the defendants.

460. Mr Karkar accepts that the question for the Court in determining whether to apply a time limit by analogy, as stated by Doyle CJ In Duke Group Ltd (in liq) v Alamain Investments Ltd & Ors [2003] SASC 415 (at [113]-[114]) , is as to whether the equitable right that is asserted is so similar to a legal right or claim which is subject to a statutory time limit that the time limit should be applied to the equitable claim (his Honour there emphasising that the decision whether the time limit is to be applied is made in light of all the circumstances and it is necessary to consider whether, despite the similarity, it would be unjust to enforce the analogy).

461. Section 23 of the Limitations Act 1969 (NSW) provides that:

23 Equitable relief

Sections 14, 16, 17, 18, 20 and 21 do not apply, except so far as they may be applied by analogy, to a cause of action for specific performance of a contract or for an injunction or for other equitable relief.

462. In Belan v Casey , Campbell J cited Spry, The Principles of Equitable Remedies , 6th edition (2001) p 419-420:

The court may decide that the material equitable right is so similar to legal rights to which a limitation period is applicable that that limitation period should be applied to it also. In this latter case the limitation period is said to be applied by analogy, and the principles which govern cases of this kind are that if there is a sufficiently close similarity between the exclusive equitable right in a question and legal rights to which the statutory provision applies a Court of Equity will ordinarily act upon it by analogy but that it will so act only if there is nothing in the particular circumstances of the case that renders it unjust to do so. What is regarded by Courts of Equity as a sufficiently close similarity for this purpose involves a question of degree, and reference must be made to the relevant authorities. The basis of these principles is that, in the absence of special circumstances rendering this position unjust, the relevant equitable rules should accord with comparable legal rules.

463. Campbell J then said:

In accordance with this principle, an allegation of breach of fiduciary duty, based on facts which would also have allowed a common law action for fraud to be brought, has applied to it the same statutory limitation period as the common law action for fraud: Coulthard v Disco Mix Club Ltd (2000) 1 WLR 707 at 730, and a claim for breach of fiduciary duty founded upon the same facts as would justify a claim in tort or contract has the limitation periods for tort or contract applied to it: Cia de Seguros Imperio v Heath (REBX) Ltd [2001] 1 WLR 112.

464. In relation to the similarity in the present case between the equitable rights in question (the rights deriving from the claims for breach of fiduciary duty and the like as set out above) and the legal rights to which the statutory provision applies (namely the claims for breach of the directors' statutory and common law duties), Mr Karkar notes that on the appeal from Alamain , in Barker & Ors v The Duke Group (in liq) [2005] SASC 81, Perry J (with whom Duggan J and, broadly, White J agreed) expressed doubt as to whether t here was sufficient similarity between the causes of action for breach of fiduciary duties which had been pleaded against the company directors in Alamain, and a cause of action in tort, so as to warrant the application of the time limit for the cause of action in tort by analogy. At [96], Perry J obiter said:

Whilst I accept that there will always be differences in the elements of the claim sought to be pursued and the cause of action which is said to be analogous and while in that sense there is always a question as to the degree of difference or similarity, in my view, the elements of a claim in tort against the directors differ so substantially from a claim against the directors for breach of fiduciary duty that I have some hesitation in thinking that it is appropriate to apply the analogy.

465. Reference was made to the obiter comments made by Kirby P (as his Honour then was, with whom Priestley JA agreed) in Williams v Minister, Aboriginal Land Rights Act 1983 (1994) NSWLR 497, 509-10:

... that a claim for compensation for breach of fiduciary duty will rarely be subject to a statutory time limit by analogy, and the doctrine of laches accommodates any and all of the factors that would fall to be considered in deciding whether or not a statutory limit should be applied by analogy. That is not to say that equity will never, in such a case, apply a statutory time limit by analogy.

466. Mr Karkar notes that the onus is on the defendants to establish that a time limit should apply by analogy (citing Barker at [115]).

467. Mr Karkar recognises that there might be said to be an element of inconsistency in arguing that the new causes of action sought to be pleaded are based on substantially the same facts, referring to the allegations in [58AK] to [141 V.4] (and hence should be permitted even if they were otherwise statute barred) but then arguing that the statutory limitation period should not apply by analogy to equitable claims based on those substantially similar facts, but submits that the distinction is that what is required to be shown for the statutory limitation period to apply is a correspondence between the remedies available at law or in equity (adopting the terminology used by the English Court of Appeal in P&O Nedlloyd BV v Arab Metals Co & Ors [2007] 1 WLR 2288, per Moore-Bick LJ, with whom Buxton LJ and Jonathan Parker LJ agreed, at [38] and [43] as to the application by analogy of the statutory limitation period if the remedy in equity is "correspondent to the remedy at law").

468. In P&O Nedlloyd , the position was contrasted as between the application by analogy to claims for an account of for equitable compensation of limitation periods applicable to claims at law for an account or damages for breach of contract or tort (on the basis that the same facts give rise to the respective claims and the same kind of relief is available) and a claim for specific performance (where th e facts needed to support a claim for specific performance are not in all respects the same as those necessary to support a claim for breach of contract).

469. Mr Karkar submits that although the facts which give rise to the common law and statutory claims for breach of duty are the same as those giving rise to the claim for breach of fiduciary duty, the remedy sought by the plaintiffs in respect of the claim is not "correspondent" to the equivalent remedy sought for the statutory and common law claims; in particular because One.Tel seeks an account of profits (a solely equitable remedy with no equivalent at either common law or statute).

470. As to the other equitable causes of action, it is submitted by Mr Karkar that these require the establishment of additional elements (knowledge in the case of the knowing assistance and procuring of breach of fiduciary duty claims; a special disadvantage on the part of One.Tel for the unconscientious conduct claim) and that there is no equivalent common law or statutory cause of action the limitation period of which could be applied to those equitable cause of action by analogy.

471. The plaintiffs therefore submit that there is insufficient similarity between the equitable causes of action and any corresponding common law or statutory causes of action for the limitation periods of the latter to be applied to the former and they submit that, even if that is not the case, it would be unjust to apply the statutory limitation period by analogy in this case.

472. In relation to the question whether it would be just to apply the common law time limit by analogy, Mr Karkar relies on two matters (which were considered relevant in Alamain ), first, that it is regarded as generally inappropriate to determine a question as to the application of limitation periods on an interlocutory application, such a question best being best considered in light of all of the facts ( Alamain at [135]; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 and Young v Waterways Authority of New South Wales [2002] NSWSC 612) and, secondly, that this is a case of concealed fraud (noting that in Alamain , Doyle CJ at [136] observed that in exercising the court's discretion to apply a statutory time limit by analogy account is taken of the plaintiff's knowledge of its rights and in particular of the impact of fraud and that equity will not apply a time limit in a case of "concealed fraud").

473. Mr Karkar asserts that this is a case of concealed fraud, confirming that it is One.Tel's case that the defendants "embarked on a covert scheme to prefer their own interests over the interests of One.Tel" and to extract the corporate defendants from their obligations to One.Tel. The concealment is said to be that the actions of the defendants in performance of the Scheme included concealing the conflicted directors' dishonest breaches of fiduciary duty and representing that the defendants were victims of misleading and deceptive conduct by Mr Rich (referring to the actions pleaded at [141V]. (In this regard, Mr Karkar specifically refers, as being an action taken in performance of that scheme - and hence in perpetration of the alleged fraud, to the " extensive assistance" provided to ASIC in relation to the proceedings it brought against Mr Rich and others. I consider in due course the difficulties posed by such an allegation - not least that it would seem to open up for exploration the ASIC prosecution of the Rich proceedings, something challenged as oppressive by the defendants.) Mr Karkar submits that it is likely that the said causes of action were discovered by the SPL during his investigations between 2007 and 2008 (though the facts in relation to the alleged scheme seem to have been known to the SPL at least as at the time the claim was filed in May 2007).

474. As to any defence based on laches, Mr Karkar submits that One.Tel has not been guilty of unreasonable and inexcusable delay causing actual prejudice to the defendants so as to make it unjust to grant relief, calling in aid in this context, among other things, the fact that the SPL has obtained the approval of the court for the extensions of time in which to serve the proposed causes of action at six monthly intervals and that t he defendants have been on notice of a potential claim being made against them from soon after the events of 29 May 2001. In any event, Mr Karkar submits that any question of laches is a matter for the trial judge, again citing Wardley, Young v Waterways and Alamain . In Wardley , Mason CJ, Dawson, Gaudron and McHugh JJ saying (at 533):

We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question.

475. Mr Karkar notes that the relevant statements in Alamain and Barker have been followed at an appellate level both in New South Wales and Western Australia ( Salvation Army (South Australia Property Trust) v Graham Rundle [2008] NSWCA 347 (McColl JA, with whom Bell JA agreed); and Hewitt v Henderson [2006] WASC 233 (Buss JA, with whom Steytler P and Pull in J A agreed)).

476. It is submitted by Mr Karkar (and I accept) that were One.Tel to initiate fresh proceedings alleging breach of fiduciary duties, accessorial liability and unconscientious conduct, any limitation by analogy or laches defence would not be likely to be dealt with summarily or at any interlocutory stage of the proceedings; rather, the issues would be likely to go to trial to be determined by the trial judge on the basis of the evidence there adduced.

477. However, while I accept that there are equitable claims now asserted (arising, at least in some respects, out of substantially the same facts as those giving rise to the existing common law and statutory claims that by now would be statute barred), in respect of which it is arguable that no statutory limitation period arises and where a defence of laches would most appropriately be dealt with at trial, I do not accept that the conclusion that follows is that it would be inappropriate to terminate the current proceedings before trial if (as I have concluded) the orders extending the time for service of the Statement of Claim should be discharged. Further, as Mr Lockhart notes, what is being considered in relation to the application for the discharge of the extension orders, is the position in relation to the current Statement of Claim (not one that might be in the form proposed by the amendment applications before me).

478. Mr Karkar submits, in effect, that to put the SPL to the expense of initiating fresh proceedings on the equitable claims would be unfairly prejudicial to the plaintiffs and would constitute a waste of the court's time and the parties' costs (and would be inconsistent with the approach mandated by ss 56 and 58 of the Civil Procedure Act ). I do not accept that this conclusion necessarily follows. First, it assumes that a decision will be made by the SPL to commence new proceedings (and that any necessary approval for those proceedings would be given), which may or may not be the case. Secondly, as will be seen below on the issues raised on the plaintiffs' application to amend, it is my view that substantial re-pleading is necessary at least in relation to those of the equitable claims that amount to allegations of fraud and it is by no means the case that there will be any great saving of cost by the SPL having to commence afresh if that is what he would have to do in pleading terms in any event. If the equitable claims sought to be raised in the proposed amended statement of claim were to be run in the present proceedings, there would still in my view be a need for costs to be incurred in re-pleading and hence the only real cost of a dismissal of the current proceedings in that regard is the incurring of a fresh filing fee.

479. This last factor is relevant when considering the prejudice from the perspective of the plaintiffs, since the possibility of fresh proceedings for the equitable claims must logically ameliorate the prejudice to the plaintiffs of the financial investment otherwise thrown away (in the investigation and formulation of the claims to date) since the benefit of that work will presumably flow through to a (more concisely pleaded) claim. Insofar as any additional cost of preparing fresh proceedings to deal with the equitable claims (if the SPL be so advised) is concerned, that does not seem to me to outweigh the other factors to be considered under s 56 of the Act. (The consequence of my findings above is that the originating process is stale and any fresh proceedings would necessarily be more limited in scope, and potentially less expensive to run, due to the common law and statutory claims being statute barred).

480. In summary, it seems to me that the SPL chose to take the course of action he did: keeping the originating process confidential, notifying the defendants only in broad terms of the claims that were being made against them, and in delaying the service of the Statement of Claim well beyond the time at which he had formed a view as to the prospects of the proceedings, with the benefit of advice from more than one Senior Counsel, and beyond both the time at which he considered there was a high probability that he could obtain litigation funding had he 'started the clock running' on that process and the time at which the outcome of ASIC v Rich eventually became known. In so doing, the SPL seems to have little, if any, regard paid to the necessity to prosecute proceedings with due expedition (though I accept he had weighed the advantages and disadvantages of various courses of action, it is not clear to me that he factored in any real concern for the potential prejudice to the defendants). That may well be explained by his belief that they were "content" to await the outcome of ASIC v Rich . However, I consider that any such belief was unfounded.

481. Finally, I am concerned that matters that may well have been considered material by his Honour on the extension applications (particularly the likelihood since March 2008 that proceedings would not be pursued against the 12 th to 18 th defendants and the likely concern of the defendants as to limitation periods in that regard) were not raised with Barrett J when the applications came before him on an ex parte basis.

482. Therefore, my conclusion remains the same. The result is that the proceedings should be dismissed. As Bray CJ said in Victa Ltd v Johnson (1975) 10 SASR 496 at 503-504, (in a passage cited with approval by Stephen J in Van Leer (at [344]) and Mason J in Foxe v Brown (1984) 58 ALR 542 at [548]):

It is not correct to say that the defendant has acquired an absolute right to immunity when a writ issued within the limitation period is not served within twelve months of its issue and the limitation period has in the meantime expired. What has expired is in reality not the limitation period but the period which would have been the limitation period if no writ had ever been issued. What the failure to serve a writ within twelve months gives the defendant is no more than a right to contend that the Court in the exercise of its discretion should not renew the writ. The efficacy of the writ does not expire absolutely at the end of the twelve months, it only expires if and in so far as the Court sees fit not to renew it. (my emphasis)

Application to discharge under rule 36.16(2)(b)

483. The alternative basis on which the News defendants seek to set aside the orders for the extension of time is under rule 36.16(2)(b). In light of the findings I have made above it is not necessary to spend much time on this alternative basis, save to note that it appears largely to be predicated on the alleged non-disclosure of material matters when the extension applications came before the Court on an ex parte basis (and to that extent involves a different enquiry as was made clear in Savcor ). In particular, the question where non-disclosure on an ex parte application is concerned is not whether the outcome of that application would have been any different nor is it a hearing de novo of that application; rather, the focus is on whether the matters said not to have been disclosed were material to the decision to be made on that ex parte application.

484. After referring to the statement of principles by Isaacs J in Thomas A Edison Ltd v Bullock , Gillard AJA said (from [27]-[33]):

Two observations need be made. The first is that the obligation is to disclose all material facts, that is, facts material to the decision. Secondly, whether or not the order be set aside is a matter of discretion. In Lazard Brothers & Co v Midland Bank Ltd, Lord Wright said:

... The Court has discretion to set aside an order made ex parte when the applicant has failed to make sufficient or candid disclosure.

...

In Spry, Equitable Remedies , 6th ed, (2001), pp 497-8, the learned author opined that it was not an inflexible rule that the order should be set aside as a matter of course and noted: "Courts of equity have here a discretion, especially since matters that are material in the sense that has been discussed here may vary greatly in their importance or weight and the hardship that will be caused to the plaintiff if he is refused relief may vary likewise." I respectfully agree. In my view it is not an inflexible rule that a non-disclosure of a material fact in an ex parte application invariably leads to the order being set aside. Of course if there is a high degree of culpability in the sense that a party has set out to mislead a court, a court in most if not all cases would be reluctant to excuse the intentional misconduct. Each case will depend upon its own circumstances. Justice is the determinant. I respectfully agree with Balcombe LJ in Brink's Mat Ltd v Elcombe where his Lordship said in relation to an ex parte injunction:

... But it also serves as a deterrent to ensure that persons who make ex parte applications realise that they have this duty of disclosure and of the consequences (which may include a liability in costs) if they fail in that duty. Nevertheless, this judge-made rule cannot be allowed itself to become an instrument of injustice. It is for this reason that there must be a discretion in the court to continue the injunction, or to grant a fresh injunction in its place, notwithstanding that there may have been non-disclosure when the original ex parte injunction was obtained. [Emphasis added.]

In the same case, Ralph-Gibson LJ said:

Finally, it "is not for every omission that the injunction will be automatically discharged. A locus poenitentiae may sometimes be afforded" per Lord Denning MR in Bank Mellat v Nikpour . The court has a discretion, notwithstanding proof of material non-disclosure which justifies or requires immediate discharge of the ex parte order, nevertheless to continue the order, or to make a new order on terms.

Whether a court will set aside an order will depend upon many factors. The court should not overlook the practical effect of such a step. What would be achieved by setting aside the order? Absent deliberate and intentional non-disclosure or misleading information (which usually leads to a discharge), the court must weigh all relevant material. An important matter is that the setting aside of the order will not necessarily preclude another application being made. See Fitch v Rochfort and The Hagen . The practical effect would be a waste of time and costs. The point was made by Morton J in Ellinger v Guinness Mahon & Co . His Lordship said:

... Counsel for the applicants ... argues that, if there has been non-disclosure of any material fact on the ex parte application, the ex parte order ought to be set aside, even if the judge, on being fully informed of the facts, thinks that the case is a proper one for allowing service of the notice of the writ out of the jurisdiction. In my judgment that argument cannot succeed. In the absence of any attempt to deceive the court I do not think it would be right for a judge to take this course. The only result would be to put the applicant to the expense of making a further application under RSC Ord 11, r 1 which would be bound to succeed.

It cannot be overlooked as was stated in Wiseman v Wiseman that an order made where the material facts have not been fully disclosed is not void but is irregular and therefore voidable. It stands until it is set aside.

In my opinion a court does have a discretion to not set aside an order despite a material non-disclosure or misrepresentation of law or fact. Setting aside does not follow as a matter of course . Relevant to the discretion is whether the material non-disclosure was serious or otherwise the importance or weight that should be attached to the omitted fact in the decision making process and also any hardship if the order was set aside. The approach is different if the plaintiff has acted culpably in the sense that the omission to disclose relevant matters was done deliberately to mislead the court. The most likely result in those circumstances would be that the order would be vacated . (my emphasis)

485. His Honour noted that other relevant matters are delay in moving to have the order set aside resulting in prejudice which cannot be overcome, acquiescence under an order and, depending upon the particular order in question, the irregularity may be waived. As to what is required to be disclosed on an ex parte application, Gillard AJA said (at [35]-[36]):

The obligation is to disclose all material facts. What is a material fact is a matter which is relevant to the court's determination. To be material, it would have to be a matter of substance in the decision making process . (my emphasis)

In Brink's Mat Ltd v Elcombe , Ralph Gibson LJ conveniently summarised the principles. His Lordship noted that "the material facts are those which it is material for the judge to know in dealing with the application as made: materiality is to be decided by the court and not by the assessment of the applicant or his legal advisers." His Lordship observed that the applicant must make proper enquiries before making an application. If a material non-disclosure is established the court would be astute to ensure that the plaintiff obtaining an ex parte order without full disclosure is deprived of any advantage he may have derived, and further that whether a fact not disclosed "is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the facts to the issues which were to be decided by the judge on the application." His Lordship pointed out that the innocence or otherwise of the non-disclosure and the failure to understand its relevance are important factors to take into account.

486. At [87] Gillard AJA summarised the matters relevant to the exercise of the discretion to set aside for non-disclosure:

At the outset it is necessary to identify the issues involved in the exercise of the discretion.

· Once it is established that there has been a material non-disclosure or misstatement of fact, the general rule is that the order be set aside. However, the general rule is not inflexible and the court has a discretion whether it will do so.

· The issue is whether in the exercise of the discretion to set aside, the wrongdoing should be excused.

· Factors relevant to the issues are the gravity of the wrongdoing, whether there has been delay, whether the delay has resulted in prejudice to the wrongdoing party, whether the party affected by the order has acquiesced under the order and whether the wrongdoing party may suffer any hardship if the order is set aside or the innocent party suffers hardship if the order is not set aside.

487. In Mendarma (at [45ff]), White J, referring to a claim of non-disclosure of all material matters in an affidavit filed in support of an application for leave to issue an examination summons, said:

In Re Southern Equities Corporation Ltd (in liq); Bond & Caboche v England (1997) 25 ACSR 394 (a decision of the Full Court of the Supreme Court of South Australia), Lander J, with whom Cox and Bleby JJ agreed, said (at 422-423):

"An application for an examination summons is made ex parte. Consequently there is a heavy obligation upon the person applying for the examination summons to make full and frank disclosure of all matters which may impact upon the decision to summon a person for examination about a corporations examinable affairs . (my emphasis)

There can be no doubt, in my opinion, that a person who makes an application of this kind is under an obligation to bring all facts and material to the court's attention which might bear upon the order to be made. The applicant has no lesser obligation than that imposed upon a party seeking an injunction ex parte.

The obligation is to provide to the court all material which might impact upon the order sought, including all material which might lead the court to refuse the application. The applicant must act in the place of the proposed examinee and therefore draw to the attention of the court anything which might lead the court to refuse the application ". (my emphasis)

488. The duty of disclosure in general terms is such that even if something has been forgotten a failure to disclose it may be sufficient to lead to the order being set aside (see Clifton v Robinson (1853) 16 Beav 355; 51 ER 816) .

489. Here the relevant non-disclosures were identified as follows, first, that as at the time of the second extension application, the fact that the Committee of Inspection was unanimous in its view (contrary to the view of the SPL) that the initiating process should be served and, secondly as to the decision by the SPL based on legal advice, as from about March 2008, that subject to any contrary view by litigation funders he would not prosecute or proceed with the claims against the 12 th to 18 th defendants. It was also put in submissions that the substance of the allegations proposed to be made was not put before the court (and certainly by the final extension application, while there was a suggestion that the pleading was to be reviewed in light of the ASIC v Rich judgment, there was no intimation as to the far-reaching nature of that review). Mr Young also submitted that Barrett J had been left under a misapprehension as to the justification for the funding estimate - not being told that the amount of money sought to be procured was for a limited number of defendants, nor how precisely it had been calculated (or that it was based not on a party/party costs basis), nor the rudimentary nature of its calculation or the level of adverse costs contemplated by the amount sought.

490. As to the first, while the Committee's view was not disclosed, I do not consider that it was material to the issue then to be decided by Hammerschlag J (nor was it considered by me to be relevant on the present hearing de novo in relation to that extension application).

491. As to the second matter, I have been far more troubled. I consider that there is a respectable argument that this was a matter that should have been drawn to the court's attention, insofar as it might have been seen to be relevant not simply in considering whether there was any prejudice to the defendants in the grant of an extension (ie the likely status of the 12 th to 18 th defendants as served or unserved defendants by the time the originating process would ultimately became stale) but in coming to a view as to whether (notwithstanding their 'non-party' status) it would at that stage have been appropriate for the defendants to be heard on the application. That non-disclosure affects all of the extension applications after the first.

492. If the question whether all of the unserved named defendants (ie including the potential cross-defendants) were ultimately to be served before the originating process became stale is a question that, at least on one view, could be relevant to the ability of those defendants who were ultimately served to cross-claim against those who were not, then the SPL's then (apparently firm, though subject to the litigation funder's ultimate approval) decision not to proceed against them at that early stage would surely have been a material matter to be drawn to his Honour's attention (not least because his Honour might then have determined that notice should be given to the other defendants to permit them to bring any such claims within time). In this regard, I note that the attitude of the SPL in submitting that any prejudice now suffered by the defendants by reason of a loss of potential cross-claims is self inflicted (in effect because it would have been open to them to do as the SPL has done and simply commence proceedings and seek extension of those proceedings) seems to me to highlight the manner in which such information might be said to be material.

493. After no little hesitation, I have, however, concluded that this is not a non-disclosure that should of itself lead to the setting aside of the originating process because I am not satisfied that any potential cross-claims (direct or otherwise) are yet (or were by then likely to be) statute barred and because it is difficult to see what relief the defendants would relevantly have sought had they been apprised of the fact in mid 2008 that, subject to any different view by a litigation funder, there was no longer an intention to pursue the 12 th to 18 th defendants. It does, however, indicate an attitude on the part of the SPL of keeping the defendants in the dark as to what claims were intended to be brought and against whom.

494. As to the other matters raised, the substance of the allegations in the pleading should have been discernible from the court file in any event so I am not satisfied that the fact that his Honour may not have been taken to them is particularly material (although I do note that in considering the position afresh the fact, as seems to be the case, that as at the last extension application the SPL was contemplating a wholesale review of the claim with perhaps inevitable further delay is something that should have been disclosed in November 2009.).

495. As to the material put before his Honour on the funding costs, there is nothing to suggest that his Honour was given a thorough explanation of how the figure that was being sought in respect of the funding was comprised and, more importantly, as to the import of the Plan B option (although that option was put before his Honour as was the SPL's opinion that plan A was more favourable). In effect, it was the SPL's decision not to pursue that option that put the SPL in the position where, as at November 2009, he was seeking yet a further extension. I think there is a question as to how fully that position was explained to his Honour. That said, the existence of Plan B and the SPL's comparison with Plan A was put before his Honour and I would not conclude that any incompleteness in the non-disclosure on that issue should of itself lead to the ex parte order being set aside).

496. Therefore, with some disquiet, I would not have set aside the orders based on solely on the non-disclosures so identified (even though I am of the view that in order to comply with the duty of candour on an ex parte application matters as to the import of the delay on potential cross-claims, the likelihood that the 12 th to 18 th defendants would not be pursued and the litigation funder(s) potential role in making that decision, as well as a more thorough explanation of the funding position, should have been drawn to his Honour's attention).

• Stay

497. Further to their applications under r 12.11(1)(e) (and, in the case of the News defendants rule 36.16(2)(b), the respective defendants seek that the proceedings against them be permanently stayed or dismissed, on the basis of want of prosecution and the prejudice occasioned to them by such delay.

498. A defendant may apply to the court for an order dismissing a proceeding for want of prosecution if the plaintiff fails to proceed expeditiously. The court has two sources of jurisdiction to dismiss for want of prosecution - the Rules (Rule 12.7) and the inherent jurisdiction. It has been held that the principles the court applies are the same whether it acts under the rules or the inherent jurisdiction ( Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229 at [268]; Malterer v Southern Electric Authority of Queensland [1974] Qd R 43 at [45] - [46]; Hytrae Conveyors Ltd v Conveyors International Ltd [1983] 1 WLR 44).

499. The power to dismiss an action for want of prosecution is not confined by rigid guidelines ( Stollznow v Calvert [1980] 2 NSWLR 749; Witten v Lombard Australia Ltd [1968] 2 NSWR 529; (1968) 88 WN (Pt 1) (NSW) 405 at [411] - [412]). Although delay is the threshold circumstance that potentially enlivens the discretion to dismiss an action, delay is a relative concept and the significance of any delay must depend on the particular circumstances of the case involved ( Bishopsgate ).

500. The proposition that the power to dismiss an action for want of prosecution should be exercised only where the plaintiff's default has been intentional and contumelious or where there has been inordinate and inexcusable delay giving rise either to a substantial risk that a fair trial would not be possible, or to a risk of serious prejudice to the defendant ( Birkett v James at [318]) has been rejected as unduly restrictive of the true scope of the power ( Stollznow; Micalleff v ICI Australia Operations Pty Ltd [2001] NSWCA 274).

501. The ultimate question (keeping in mind the overriding purposes mandated by ss 56-59 of the Civil Procedure Act ) is whether, balancing the prejudice to the respective parties by making or not making an order dismissing the proceedings, justice demands that the action be dismissed ( Hoser v Hatcher [1999] NSWSC 527 at [20]; Witten at [411]; Stollznow; Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1986) 4 NSWLR 491; McKenna v McKenna [1984] VR 665; Hartigan v International Krishna Consciousness [1999] NSWSC 57; Ritchie's Commentary on Uniform Procedure Rules at [12.7.5]).

502. Simpson J in Hoser at [21] - [30], with whose analysis Levine J agreed in Gill v Eatts [1999] NSWSC 1056 at [61] said this of the balancing exercise to be undertaken on such an application:

(2.) the discretion should be exercised only in a clear case where it is manifestly warranted ; Razvan , per Kirby P; as is generally the case with discretionary decisions, each case depends upon its own facts. Rigid formulae should not be applied to the exercise of the discretion: Stollznow v Calvert at 751 D;

(3.) any explanation offered by the plaintiff for the delay in proceeding must be considered: Burke v TCN Channel Nine Pty Ltd , unreported, 16 December 1994, per Levine J;

(4.) personal blamelessness on the part of a plaintiff (as distinct from any tardiness or other fault on the part of his/her/its legal representative) is relevant: Stollznow , p73.

(5.) a defendant who takes no steps to secure progress in the proceedings, or to activate an apparently inactive plaintiff or who stands by in the hope that the passage of time will ensure the quiet death of the proceedings or that the longer delay will strengthen the case for striking out, runs the risk that that very behaviour will operate to his/her/its disadvantage . A defendant has two choices: to attempt to prod the plaintiff into action, or to stand by, doing nothing, trusting that time will bring about the slow death of the action. Either choice represents something of a gamble, dependent upon future events that the defendant is unable with any degree of confidence to predict. If the defendant opts for the former course, of prodding the plaintiff into action, it may succeed in doing so, precluding an application to strike out. On the other hand, if the plaintiff remains inert, the defendant's case for striking out strengthens with passing time. If the defendant chooses the latter option and takes no action, the plaintiff may take no further steps, or may take no further steps until such irremediable prejudice is caused to the defendant that the application to strike out will succeed; if, however, some other event galvanises the plaintiff into action the defendant, having done nothing to progress the matter, can hardly be heard to complain of the plaintiff's earlier inactivity: Calvert v Stollznow , 1 April 1980, Ritchie's Supreme Court Procedure, (NSW) Vol 2, para13,022, per Cross J (at first instance); and in the Court of Appeal per Moffitt J, p753; Vilo, p10; McBride v Australian Broadcasting Corporation , unreported 6 November 1998, per Levine J; Bass v TCN Channel Nine Ltd , unreported 25 July 1997, per Levine J; Hart v Herron , unreported, 3 June 1993, Court of Appeal per Priestley JA;

(6.) delay between the date the cause of action arose and the commencement of the proceedings may be a relevant factor: Calvert v Stollznow , per Cross J; Burke v TCN . But in my view, this circumstance must be treated with some caution. The weight that can be accorded to that delay is limited. Where an action is commenced within the period provided for by an applicable statute of limitations, it would not ordinarily be appropriate to take that period into account. However, if a plaintiff has delayed significantly in the commencement of the proceedings, and that delay is followed by further lethargy in the advancement of the proceedings, the effect of the initial (but permissible) delay is compounded. The real question is not the length of the delay, but the impact that delay has upon the defendant's capacity properly to defend the plaintiff's claim. That will be a question of fact in each case. While there may be some prejudice presumed by reason of the passage of time, much will depend upon the nature of the proceedings, and the identification of the issues involved in the litigation. Where, for example, at the close of pleadings it can be seen that there are disputed questions of fact dependent upon the oral evidence of witnesses, or their recollections, the prejudice will plainly be greater than in cases that depend essentially upon the application of legal principle to largely undisputed facts, or upon disputed questions of fact that will be resolved by reference to documentary or other objective evidence not likely to be affected by the effluxion of time ; (my emphasis)

(7) the onus lies on the defendant to establish any prejudice upon which reliance is placed. The disappearance or death of witnesses, the fading of their recollections, or the destruction of records, are some obvious examples of the kind of prejudice that might arise;

(8) prejudice to a defendant caused by delay has to be balanced against prejudice to a plaintiff deprived of an otherwise valid claim; delay in the commencement of proceedings by a plaintiff is sometimes taken as evidence contra-indicating prejudice to the plaintiff in the sense that he/she/it has evinced no interest in his/her/its own case: Burke , supra. Such an inference may be contra indicated by explanatory evidence; in this regard the plaintiff's personal responsibility for the delay is an important factor as is any explanation provided for the delay;

(9) what the defendant has (or has not) done by way of preparation for trial may be a factor. This is a distinct question from that concerning any steps taken (or not taken) by the defendant in prompting the plaintiff to action. A defendant who has not interviewed witnesses, taken statements or collected documents, after being served with the claim, has a less meritorious complaint about the effect of prejudice caused or presumed by reason of delay: McBride v ABC , unreported, 6 November 1998, per Levine J;

(10) the plaintiff's prospects of success is a relevant factor. If it appears that the prospects are minimal, the discretion is more likely to be exercised in favour of the defendant. Conversely, where the plaintiff's case is strong (absent the kind of prejudice to the defendant to which I have referred) it is less likely that justice will be done by striking the action out: Razvan , per Kirby P;

(11 ) the exercise of the discretion to strike out should not incorporate any element of punishing a tardy plaintiff, or of excluding one who may appear to have some unworthy characteristics: Razvan , per Kirby P. The ultimate aim of a court is the attainment of justice: The State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146. To adapt the words of the High Court in that case, discretions such as that presently invoked ought not to be used to supplant the overall aim of the attainment of justice. (my emphasis)

503. Applying those principles to the case at hand, I accept that rigid formulae should not be applied and the discretion should be exercised only in a clear case (a conclusion that can only be reached having regard to the other factors to which reference is there made).

504. The explanation proffered by the plaintiffs for the delay has been considered above - it varies over time from the need (understandable in the circumstances of the SPL's appointment and the undertakings given by the defendants in 2004) to complete an investigation into the facts in a very limited period of time; to the need to secure litigation funding (on terms that the SPL considered satisfactory and, in due course, on terms that the SPL considered to be the more favourable of the options open to him) to cover a "catastrophic" indemnity costs scenario; to the desire (for it cannot have been an objective need given the involvement of lawyers throughout the process to that time) of the ultimate litigation funder(s) to retain new lawyers and to carry out what seems to have been a complete review (and overhaul) of the pleadings (said to be following the judgment in ASIC v Rich but, one might equally infer, in order to plead whatever further causes of action were thought to arise out of the facts already known to the SPL or his advisers - a conclusion that must almost inevitably follow from the submission that the current amendments do not expand the matrix of facts the subject of the existing pleading). My view is that the explanation was reasonable at the outset but that over time the explanation for the delay became more focussed on the SPL meeting the litigation funders' requirements for the so-called Plan A (in the belief, which I do not suggest is other than genuine, that that this was in the creditors' overall interests) but without adequate regard for the prejudice that might thereby be occasioned to the defendants by reason of the ongoing delay.

505. As to the question of personal blame or blamelessness, no blame is sought to be attributed to the SPL. Although there was a suggestion that he was most worried about securing his own cost position, and this may have influenced the manner in which the funding options were pursued, in principle I do not consider that the SPL can be criticised for wanting to ensure that the costs of the litigation were responsibly provisioned, provided that this did not detract from the expeditious conduct of the proceedings. (The question, here, is whether in so doing he placed undue weight on achieving the optimal outcome and insufficient weight on facilitating the diligent conduct of the proceedings themselves).

506. As to the factor referred to in item (5) of her Honour's judgment, the suggestion that seemed to be raised in submissions (that the defendants had stood by, inactively, in some calculated fashion so as to put themselves in a position to avail themselves of the delay in an application such as the present) is not consistent with the fact that the PBL/Yates defendants were sufficiently motivated to engage in the litigious process at an early stage in that they sought leave to be heard on the first extension application. It seems to me to be difficult to criticise the defendants for doing nothing to activate the proceedings when an early attempt by at least some of them to bring the matter to a head was resisted by the plaintiffs and failed to achieve that result (for reasons with which I do not cavil - my point simply being that the PBL/Yates defendants at the very least cannot be criticised for delay in this regard).

507. The defendants, as unserved parties, were not in a position to progress the proceedings. The fact that they might have taken other action, such as making an application for declaratory relief as to whether there was a 'transaction' for the purposes of s 588 of the Corporations Act seems to me to be somewhat disingenuous when the defendants did not know precisely what was being claimed against them and should not have been expected to anticipate what that was. Indeed, even if they had sought declaratory relief on the s 588 transaction argument, there would have remained the variety of other claims (expanded on the proposed amended statement of claim) now pressed against them.

508. As to the other principles outlined in Hoser , this brings me to the question of the delay between the date the cause of action arose and the date of commencement of the proceedings (given that the latter was followed by further delay in the advancement of the proceedings. Here, again, emphasis is placed by the plaintiffs on the absence of any (or any specific) evidence of actual prejudice as a result of the delay and the question is whether such prejudice should be presumed or inferred, noting that the onus is on the defendant to establish any prejudice upon which reliance is placed.

509. Whether the court should infer prejudice from delay depends on the circumstances of the case (see discussion in Bernard Cairns' Australian Civil Procedure (8 th edn) at p 459, referring to Goldie v Johnston [1968] VR 651, where the court considered that delay of itself did not justify the dismissal of a proceeding without some other evidence of prejudice and Duncan v Lowenthal [1969] VR 180 where a different view was adopted. Reliance is placed by the defendants on McKenna v McKenna [1984] VR 665, where the court inferred prejudice from a delay of 17 years. It is said that, overall, all the defendant need demonstrate is an inordinate and unexplained delay, and that it is for the court to infer prejudice from this delay.

510. It has been held that striking out the proceedings for want of prosecution when a fair trial remains possible and the defendant is not otherwise prejudiced would not be an appropriate sanction, even for inordinate delay, in the conduct of litigation ( Department of Transport v Chris Smaller (Transport) Ltd [1989] 1 AC 1197; 1 All ER 897).

511. In general, the submissions by the respective parties in relation to what inference if any as to prejudice should be drawn from the delay in the present case are the same as those raised on the application under rule 12.11(1)(e). Mr Bathurst notes that, in Bishopsgate , the court considered that a plaintiff who chooses to wait the full limitation period before issuing proceedings is "obliged to move with greater speed" (and a similar observation was made in Tolcher ).

512. The question of what preparation has been made by a defendant in respect of the claim is something that may cut both ways. Simpson J was of the view that a defendant who had not interviewed witnesses, taken statements or collected documents "after being served with the claim" had a less meritorious complaint about the effect of prejudice caused or presumed by reason of delay. Here, of course, the defendants were not served with the claim and were only made aware in broad terms of the nature of the claims that were proposed to be (or had been) made by the plaintiffs. (In particular, it is noted, and I accept, that there is no evidence that the defendants were on notice that any allegations of fraud, conspiracy and dishonesty as set out in the proposed amended statement of claim were contemplated by the SPL, as opposed to being the subject of submissions made by Mr Rich in the proceedings against him, at any relevant stage prior to service of the Statement of Claim.)

513. The fact that the defendants did take steps to preserve evidence notwithstanding the limited knowledge of the claims would, on the principles outlined in Hoser , mean that one could not regard any complaint about the effect of prejudice as a result of the delay as less meritorious. However, the fact that evidence has been preserved could still operate to minimise prejudice arising in the first place or to prevent an inference of prejudice being drawn. (The preservation of some evidence does not, of course, address prejudice of the kind referred to in the Brisbane Southern Regional Health Authority case , which may not be able to be tested but which can be presumed to arise, given the ordinary course of human memory - a discussion as to the unreliability of which is to be found in the oft-quoted passage of McLelland J (as his Honour then was) in Watson v Foxman ) nor does it address the oppression that an individual is recognised as being likely to suffer when serious allegations of lack of probity and of dishonesty (including fraud) are made some considerable number of years after the relevant event(s).)

514. Mr Bathurst referred to what was said in Bishopsgate (at 880 [42]), that:

... it was irrelevant to the question of delay whether the defendant was or was not aware what claim the plaintiff was likely to bring against it. As has been emphasised time and time again, the issue is the delay from the time when the action was commenced, although, as we have pointed out earlier, the longer the delay in issuing proceedings, especially those where the plaintiff is aware of its rights, the more insistent the courts have been upon the plaintiff proceeding thereafter with expedition.

515. As to the question of prejudice being caused to the defendants by reason of the delay, Mr Karkar repeats the submissions made in relation to the applications to discharge or set aside the extension orders. It is submitted that the defendants have not discharged the onus of showing that the effluxion of time since the events giving rise to the cause of action makes it impossible for the defendant to receive a fair trial ( Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256).

516. In particular, Mr Karkar relies on Batistatos a s establishing that what the defendants must show in order to obtain a permanent stay is the very high hurdle of impossibility of a fair trial, noting what was said in the context of a criminal trial in Jago v District Court (NSW) (1989) 168 CLR 23 at 34 per Mason CJ and that it has been said that for a trial to be fair it need not be perfect or ideal ( Robertson v The Zinc Corporation Pty Ltd [2005] NSWCA 372 at [31]; Commonwealth of Australia v Smith [2007] NSWCA 168 at [52]). Reference was also made to what was said in Rundle v Salvation Army (South Australia Property Trust) [2007] NSWCA 443, by Simpson J at [115]-[116]:

If a jury can be entrusted, in weighing evidence in a criminal trial in the light of these considerations, then surely a judge sitting alone in a civil trial can be expected to undertake the same tasks. Indeed, one would expect that it would be almost instinctive. The inability of the first defendant to obtain material for cross-examination, or to adduce evidence in response to the evidence called on behalf of the plaintiff, would be factors relevant to the assessment of credibility, and to the weight to be given to any item of evidence, and, ultimately, to whether the plaintiff has established that justice favours the granting of the extension.

I do not suggest that analogy with criminal trials constitute a complete answer to the prejudice alleged to have been suffered by the first defendant. But potential amelioration of prejudice is one consideration to be taken into account in determining the overall justice of granting or refusing the extension sought.

517. It is submitted by Mr Karkar that if any prejudice has been suffered then such prejudice was primarily caused by the defendants' own conduct in seeking ASIC to run complex and long proceedings (accusing Mr Rich of misleading them), which proceedings ultimately failed. (I have considerable difficulty with this submission - it seems to be predicated on an assumption that ASIC was no more than a handmaiden for the PBL/News interests prepared to act on their bidding; there is nothing to suggest that this was the case; similarly, it is difficult to see how the PBL/News interests can be blamed for the length of the hearing or the time that elapsed to the delivery of judgment, matters wholly out of their control.)

518. It should be noted that in considering the steps that have been taken to preserve evidence (which may mitigate the delay), the issues now sought to be raised of conspiracy and fraud cannot be assumed to have been the subject of considered investigation during the course of the intervening period. Mr Karkar suggested that any prejudice from the fading recollection of the principal witnesses is immaterial, since the recollection of those witnesses was poor even back in 2005/2006 (and since at least Mr Packer, in cross-examination in the ASIC v Rich proceedings acceded to the proposition that he had deliberately tried to forget matters relating to the events in question). Even if there was some conscious desire to put the events in question out of their minds, and accepting that their recollection when cross-examined in proceedings to which they were not a party was poor, the prejudice likely to be suffered by the PBL/News defendants does not turn solely on the recollection of persons such as Mr Packer and Mr Murdoch. (One of the critical conversations in the case against Mr Yates is with Ms Kekalainen-Torvinen, for example, and there is no reason to suggest that her memory of an isolated conversation some 10 years ago would now be as reliable as it was closer to the events at hand.) I consider that a degree of prejudice should be inferred as arising from the delay in prosecution of these proceedings, based on the acknowledged frailty of human memory (as considered above). That said, in the absence of evidence as to particular instances where the ability to adduce relevant evidence will be adversely affected by the delay, I am unable to conclude that there is no possibility of a fair trial (particularly since the trial judge will be in a position to make an assessment of the impact of delay on the reliability of relevant witnesses' evidence). I note that the Packer/News and Yates defendants have been represented and advised over the period by very experienced litigation lawyers and have had the opportunity to preserve evidence in relation to the events of May 2001 and (at least to some extent) to record their more contemporaneous recollection of events.

519. The prejudice to the plaintiffs must also be considered and here I accept that the prejudice will be considerable insofar as they would lose the opportunity to pursue a substantial claim that cannot be dismissed as unarguable or where the prospects are minimal (that said, I consider that at least the unconscientious conduct claim is one the prospects of success of which are indeed minimal for the reasons discussed later). However, to the extent that the plaintiffs contend that they would remain in a position to maintain equitable claims in relation to the same set of facts, the prejudice suffered by a stay of the present proceedings would seem to be lessened.

520. Bearing in mind the prejudice to the plaintiffs if the proceedings were to be stayed and the fact that a fair trial still seems to me to be possible (oppressive as the delay no doubt has been to the individual defendants), had the most recent orders extending the time for service of the Statement of Claim not been stayed I would have had real hesitation as to the making of an order staying the proceedings for want of prosecution. As it is, however, this issue does not arise because I am satisfied that in balancing the matters required to be taken into account on the discretion under rule 12.11(1)(e), the final extension order (and that preceding it) should be discharged. That has the effect that the Statement of Claim is now stale and in those circumstances the appropriate order is to dismiss the proceedings under that rule.

(iii) Leave to amend

521. The third area for determination is the application by the SPL for leave to amend, sought under s 64 and/or s 65 of the Uniform Civil Procedure Act 2005 (NSW) to make numerous amendments to the Statement of Claim. In light of the findings above, this issue (to use Mr Bathurst's words) simply falls away. However, I consider below the position I would have reached on this issue had my decision on (ii) been otherwise than it is.

522. Sections 64 and 65 of the Act, relevantly provide, as follows:

64(1) At any stage of procee d ings, the court may order:

(a) that any document in the proceedings be amended, or

(b) that leave be granted to a party to amend any document in the proceedings.

(2) Subject to s 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings.

...

65(1) This section applies to any proceedings commenced before the expiration of any relevant limitation period for the commencement of the proceedings.

(2) At any time after the expiration of the relevant limitation period, the plaintiff in any such proceedings may, with the leave of the court under s 64(1)(b), amend the originating process so as:

...

(c) to add or substitute a new cause of action, together with a claim for relief on the new cause of action, being a new cause of action that, in the court's opinion, arises from the same (or substantially the same) facts as those giving rise to an existing cause of action and claim for relief set out in the originating process. (my emphasis)

(3) Unless the court otherwise orders, an amendment made under this section is taken to have had effect as from the date on which the proceedings were commenced.

(4) This section does not limit the powers of the court under s 64.

(5) This section has effect despite anything to the contrary in the Limitation Act 1969 .

...

523. In Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 258 ALR 14, the High Court said, from [14]:

There is a distinction between the discretion of a court to allow a party to amend its pleading on that party's motion and the requirement to make all such amendments as may be necessary to determine the real questions in controversy. That requirement engages with the authority conferred on the court to make amendments of its own motion. The point was made in 1887 by the Full Court of the Supreme Court of Victoria in Dwyer v O'Mullen in relation to O XXVIII r 1 of the 1875 Rules. Higinbotham CJ said of the last clause of the rule that it:

makes an amendment mandatory. The judge is under the obligation of making an amendment, but only for a certain purpose and in certain cases - for the purpose of determining the real question in controversy between the parties - that being expressed in many cases to be the question which the parties had agitated between themselves, and had come to trial upon.

...

An important aspect of the approach taken by the plurality in J L Holdings was that it proceeded upon an assumption that a party should be permitted to amend to raise an arguable issue subject to the payment of costs occasioned by the amendment. So stated it suggests that a party has something approaching a right to an amendment. That is not the case. The "right" spoken of in Cropper v Smith needs to be understood in the context of that case and the Rule, which required amendment to permit the determination of a matter already in issue. It is more accurate to say that parties have the right to invoke the jurisdiction and the powers of the court in order to seek a resolution of their dispute. Subject to any rights to amend without leave given to the parties by the rules of court, the question of further amendment of a party's claim is dependent upon the exercise of the court's discretionary power.

524. The exercise of the discretion to grant or refuse leave must be in accordance with s 64(2) of the Civil Procedure Act and must adhere to the "dictates of justice" (ss 56, 57 and 58 of the Civil Procedure Act). Those matters will generally require consideration of the nature and degree of any prejudice that may be suffered by the grant or refusal of the application ( Itex Graphix Pty Ltd v Elliott [2002] NSWCA 104; (2002) 54 NSWLR 207).

525. In Greenwood v Papdemetri [2007] NSWCA 221, Tobias, Campbell JJA and Young CJ in Eq said (at [35]):

Even if a proposed amendment is one whose effect could be described by the language in para (b) of s 65(2), there is still a discretion in the court whether to permit that amendment. Section 65(2) contemplates that any amendment made under s 65(2) will be effected through leave granted under s 64(1)(b). Thus, the discretion of the court concerning whether to grant leave to amend under s 65(2) needs to be exercised in accordance with s 64(2). Section 64(2) itself requires the court to exercise its discretion in accordance with s 58, which in turn requires the court to have regard to the provisions of ss 56 and 57. Even if it were not inherent in the grant of a discretion to a judicial officer, s 58(2)(b) enables the court to have regard, in an application for an order under s 65(2)(b), to matters such as the knowledge that the person proposed to be added as a party had of the proceedings during the limitation period, and the nature and degree of any prejudice that the person sought to be added would suffer if the order were made . (my emphasis)

526. Where the proposed amendment to the pleading satisfies the express criteria in s 65(2) of the Act, it is said to be unlikely that a person opposing the grant of leave will be able to demonstrate material prejudice ( Ritchie's at [65.45]). The exercise of discretion necessarily involves a balancing exercise ( Cement Australia Pty Ltd v Australian Competition and Consumer Commission [2010] FCAFC 101 at [51] and [66]) having regard to the circumstances of the particular case. In Aon at [102] the factors to be weighed in the exercise of this discretion were said to include the nature and importance of the amendments to the plaintiffs; the effect of the proposed amendments on the defendants; the delay in making the amendments; and where there is delay in applying for amendment, whether an adequate explanation for the delay has been given. There, Gummow, Hayne, Crennan, Kiefel and Bell JJ said (at [98]) that the requirements for speed and efficiency "should not detract from a proper opportunity being given to the parties to plead their case" and at [102] that "The objectives stated in [the relevant rule there under consideration] do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will".

527. Mr Karkar points out that, in Aon , one of the factors to be weighed in the balance was the point the litigation had reached relative to a trial when the application to amend is made and that in the present case the litigation is not far advanced (perhaps a rather notable understatement given the complaints made by the defendants as to the delay in prosecution of the claims). It is said that where the pleadings have not closed, there can be no suggestion that the amendments will cause any delay, let alone delay such as to undermine public confidence in the administration of justice of the kind referred to in Cement Australia at [75]. Further, Mr Karkar contrasts the present case, where the application for leave to amend was filed at the same time as the Statement of Claim was served, with the position in Aon (where the application for leave to amend was brought late, during the time set for the trial and followed a deliberate tactical decision made some time before not to seek that amendment in circumstances where no explanation had been given by the plaintiff for the delay in seeking leave to amend ( Aon at [106]-[109]). He notes that it is not a case, here, where the amendment will result in the trial being abandoned in circumstances where there was a question whether an order for costs, even indemnity costs, would overcome the prejudicial effects on the defendant ( Aon at [104]), which is not the case here.

528. In that regard, while there was no delay between the service of the claim and the application for leave to amend, that does not take into account the considerable delay from the time of the filing of the Statement of Claim and the application to amend (which may be seen to give rise to prejudice in that it inevitably prolongs the time to any hearing of the claims sought to be made and is relevant where the allegations sought to be introduced by the amendment are serious allegations of fraud) and that there was a deliberate decision by Mr Weston not to seek leave to amend (or even to consider any necessary amendments) at an earlier time (as Mr Weston in his affidavit has confirmed). Mr Karkar submits that delay between the filing and service of the originating process is irrelevant to the application for leave to amend but in any event says that the delay has been adequately explained for the reasons set out in the plaintiffs' written submissions in response to the defendants' application for a stay of proceedings. I accept that there has been an explanation given for that decision and that it is not the case (as it was in Aon ), that if the amendments are permitted the defendants will be required to defend again as from the beginning ( Aon at [104]).)

529. In relation to the question of prejudice, Mr Karkar again submits that the defendants have not shown that they will suffer any real or actual prejudice as a result of the proposed amendments and contends that any presumed prejudice has been negated by the affidavit of Ms Hall-Carney, which deposes to the matters establishing that the defendants have been on notice of the proposed claims (though not, I might add, all of them nor of the detail of most of them) and have taken steps to preserve evidence in relation thereto. (In that regard, while the evidence does suggest that steps were taken to record evidence as to the solvency or otherwise of One.Tel or the events of the May 2001 meetings where the resolution not to proceed with the rights issue was passed, the efficacy of those steps would necessarily be limited by the extent to which such information was within any of the defendants' control. Further, any such steps were obviously taken at a time well before the ambit of the claims now sought to be pressed became known and there is nothing to suggest that the defendants would have appreciated a need to focus on events prior to around 2001 (whereas the proposed amendments raise matters going back as far as 1995 (for the negligence/breach of duty allegations) and 1999 for the conspiracy allegations). (As will be seen, this is of no little significance since the conspiracy allegations are the foundation for the basis of the attribution of knowledge and conduct in a whole raft of paragraphs.)

530. Mr Bathurst submits that the fact that the plaintiffs have produced a claim against the PBL defendants "which is inadequately pleaded, patently flawed and which in various respects is embarrassing, oppressive and discloses no reasonable cause of action" (more than 9 years after the relevant events) is further reason to set aside the service of the Statement of Claim against them or alternatively to stay the proceedings against them, noting the observation of Gleeson CJ in Trau v University of Sydney (1989) 34IR 466 at 475 (quoted with approval in Bishopsgate) , that:

If one sees that a plaintiff's lawyers are experiencing extreme difficulty in formulating with clarity and particularity their client's cause of action, then that is often a very good indication that there is no cause of action.

Amendments now sought to be made

531. The amendments sought to be made fall into a number of categories. The least contentious ones are the amendments sought to be made to the Statement of Claim to address the discontinuance of the claims against certain of the defendants and the deletions to the pleading to reflect the fact that the SPL no longer wishes to pursue the shadow director claims against PBL/CPH (first and second defendants) and the allegations made against the 8 th to 11 th defendants (Messrs Packer, Yates, Murdoch and Macourt) to the effect that there was a duty owed by them to One.Tel and its creditors to vote against the 29 May 2001 resolution not to proceed with the renounceable rights issue.

532. I do not understand there to be any objection raised to the deletion of those claims from the pleading and the relevant paragraphs are identified as follows:

(i) [219] to [235] (dealing with the shadow director claims); and

(ii) [168] -[170], [171(c)(iii)], [186]-[188], [189(d)(iii)], [198]-[200], [201(d)(iii)], [212]-[214] and [215(d)(iii)] (dealing with the one aspect of the directors' duty claims not sought to be pressed).

533. Mr Karkar also notes that some of the factual substratum pleaded (or, perhaps more precisely, particularised) in the paragraphs to be deleted dealing with the shadow directors is retained in the proposed amended statement of claim, referring by way of example to the following:

1. particulars (i) to (iii) of [221] in proposed [58AI] and [58 AJ];

2. particular (iv) of [221] in proposed paragraphs [580], [58P], [58S] and [58U];

3. particular (vi) of [221] in proposed [119G];

4. particular (vii) of [221] in proposed paragraph [58AR];

5. particular (ix) of [221] in proposed paragraphs [119C]; and [223] in paragraphs [25M] and [25N]).

534. Again, I do not understand there to be a complaint as such to the incorporation of existing material into other paragraphs of the pleading (although there are other objections to a number of the paragraphs referred to above into which that existing material is being incorporated).

535. In summary, the defendants' complaints as to the pleading have been grouped into a number of categories, complaints as to:

(i) the inadequate particularisation of various allegations and or as to the embarrassing nature of the various allegations, such as complaints as to the pleaded "agreement", "decision" or determination" (in [58AN], [58AO], [58AW], [58BL], [141H], [141K], [156Z] [156AA] and [156AB8 AJ]); the pleading of conduct or knowledge "on behalf of the defendants" ([58AN], [58AQ] - [58AU], [58BB], [58BS], [111], [112], [119A], [119D], [119E] - [119I], [119M], [119N], [129], [141C], [141D], [156AC] - [156AE], [235A] - [235T]; the alleged assistance, in furtherance of the alleged conspiracy, provided to ASIC ([141V]); the implied term alleged in [156AO]; the knowledge alleged of Mr Packer [25N], Mr Yates [58BA], [141D] - [141F] and the Conflicted Directors [235K]; the terms of the agreements in [58E.2] and [58E.3]; the respects in which the Miller/Green schedules [58BC], [58BD], [58BK] and the Long Report [130T] are said to be incorrect;

(ii) the cross-referencing throughout the pleading arising by use of the expression "individually, together or in any combination" [156R.4], [156T], [156U], [156V] and [235U] and the nexus with News [58W], [58AE] and [58AG.1];

(iii) the 'contrived view' about the need for $300m [58K] ][58AL] [58AM];

(iv) the so-called "fundamental flaw" [156L];

(v) the plea of unconscientious conduct" [156AK];

(vi) the allegation of misleading and deceptive conduct [141A] [235N]; and

(vii) complaints as to other particular paragraphs [58BN], [130L] [130R] [141B] [141D] and [141I].

536. I deal with these below (though not in that order necessarily).

537. In relation to the pleading complaints, the plaintiffs have served a number of submissions: the first, being written submissions filed in support of the application for leave to amend on 19 October 2010 (on which I have drawn in some detail to explain the purpose for which the plaintiffs seek to rely on various amendments) identifying the various causes of action which the plaintiffs now seek to bring and outlining what is understood to be the substance of the proposed changes to the Statement of Claim (but without, it is said by Mr Hutley SC, addressing the deficiencies in the proposed amended statement of claim to which Atanaskovic Hartnell had earlier identified by letter dated 21 September 2010); the second, being the written submissions in reply filed on 2 November 2010; and the third being a detailed document headed "Response to the Defendants' Pleading Complaints", dated 25 February 2011 and served pursuant to leave I granted at the conclusion of the hearing of the applications before me. (Mr Hutley maintains that this last document is the plaintiffs' only substantive response in relation to the pleading complaints that have been raised and complains that the matters contained in it should have been the subject of the plaintiffs' reply submissions filed on 2 November 2010. That said, the defendants were given the opportunity to respond to those Response submissions and did so.) I refer to the 25 February submission as the February Response.

538. Turning then to the substantive amendments now sought to be made, these can best be understood by comparison with the existing pleading (and the plaintiffs' initial submissions indeed proceeded on the basis of such a comparison).

Existing pleading

539. Broadly, the existing Statement of Claim focuses on three matters: the resolution of the Board of One.Tel of 29 May 2001 not to proceed with the rights issue (defined in the existing pleading as the Resolution); the 'decision' of PBL and CPH (alternatively the decision of PBL, CPH and News) (defined in the existing pleading as the Determination), on and from 25 May 2001 to undertake a course of conduct (pleaded in [86] of the Statement of Claim), which it was said was designed and intended to procure One.Tel to release them from their obligations in respect of the rights issue; and the steps allegedly taken by PBL, CPH and News (pleaded in [87] to [139] of the Statement of Claim) to give effect to the Determination (defined in the existing pleading as the Implementation of the Resolution). (In the proposed amended statement of claim there is some re-casting of the definitions to which I will refer shortly.)

540. The causes of action pleaded in the existing Statement of Claim are grouped into the following categories:

(a) claims against the 1st to 7th defendants (the various corporate entities) under ss 588FB, 588FC and 588FE of the Corporations Act 2001 (Cth) (referred to as the uncommercial transaction claims);

(b) claims (no longer sought to be pressed) against the 1st and 2nd (PBL/CPH) defendants and claims (which are sought to be pressed) against the 8th to 11th defendants (Messrs Packer, Yates, Murdoch and Macourt) for alleged breaches of their statutory and general law duties (only one of which is presently described as a fiduciary duty)as directors (the directors' duty claims); and;

(c) claims against the 1st and 2nd (PBL/CPH), 6th (News) and 8th to 11th defendants (Messrs Packer, Yates, Murdoch and Macourt) for misleading and deceptive conduct in breach of s 52 of the Trade Practices Act 1974 (Cth), s 995(2) of the Corporations Act and s 42 of the Fair Trading Act 1987 (NSW) (the misleading and deceptive conduct claims).

541. Pausing there, those causes of action broadly follow the areas of investigation highlighted by the SPL in the communications with the PBL and News interests, and as reported to creditors, (as outlined earlier) and hence would be unlikely to have come as a surprise to the PBL/News/Yates defendants when the claim was served.

542. The uncommercial transaction claim is pleaded, first, on the basis that the Resolution itself was a voidable transaction (this being an issue on which the defendants' lawyers have already asserted their firm contrary opinion based on Senior Counsel's advice) and, in the alternative, on the basis that the Determination, the Implementation and the Resolution taken together (defined as the Transaction) were a voidable transaction.

543. As to the directors' duty claims against the 8th to 11th defendants (ie the four individual directors) (pleaded in [153]-[156] and [162]-[218]), the breaches are pleaded as comprising: the failure to vote against the Resolution (no longer sought to be pressed); the participation in the Transaction; the failure to disclose that PBL and CPH had determined on or about 25 May 2001 that they did not wish to comply with their obligations in relation to the rights issue; the failure to inform the Board of the so-called 'Lucent position'; and misleading and deceptive conduct in relation to matters concerning Ms Kekalainen-Torvinen (one of the non-executive directors), the "Long report" and the management presentation to the Board on 29 May 2001, and by the 'manner' in which the Resolution was put to the Board.

544. (The directors' breach of duty claim against the 1st and 2nd defendants, which is no longer pressed, was based upon an allegation that those corporate defendants were shadow or de facto directors of One.Tel and breached their statutory and general law duties as directors.)

545. The misleading and deceptive conduct alleged in the existing Statement of Claim comprises allegations that each of Messrs Packer, Yates, Miller, Green, Jalland and Jacob (Mr Jacob also being a director of PBL/CPH) (on the PBL interests' side) and Messrs Murdoch and Macourt (Mr Macourt being a director of News) (on the News interests' side) engaged in misleading and deceptive conduct contrary to s 42 of the Fair Trading Act and s 995(2) of the Corporations Act and that each of PBL/CPH and News, respectively, is vicariously liable for the conduct of one or more of the individuals on their side or (alternatively) that each of Messrs Packer and Yates and Murdoch and Macourt was knowingly concerned in the misleading conduct of PBL, CPH and News. (In relation to the pleas of vicarious liability, Mr Karkar points to the April 2004 undertakings given to the Court to which I have earlier referred, in which admissions as to these matters were proffered.)

546. The relief sought in the existing Statement of Claim includes declaratory relief; an order for payment of money (the $132m) under s 588FF of the Corporations Act ; damages under the Corporations Act , Fair Trading Act , Trade Practices Act and at law; equitable compensation; restitution (no longer sought to be pressed); and interest.

Proposed amended pleading

547. Mr Karkar submits that the proposed amended statement of claim relies on much the same factual terrain as that pleaded in the original Statement of Claim, pointing in particular to the fact that the critical time period (20 April to 29 May 2001) lies at the heart of both and that the core allegation of each pleading is that the individual defendants determined to undertake such steps and actions as may have been necessary to procure that One.Tel release the corporate defendants from their binding obligations in respect of the rights issue. A comparative table of the factual terrain of each pleading was provided to illustrate that point. (Nevertheless, it should be noted that the amendments seek to introduce additional factual material - only very broadly identified - going back as far as 1995.)

548. It is submitted that the substance of the central allegations remains the same, namely that:

• between 19 April and 8 May 2001, Messrs Miller and Green commenced an examination of the financial affairs of One.Tel (existing [26]);

• from 20 April to 16 May 2001 PBL, CPH and News were of the opinion that One.Tel required a capital raising of $132 million by way of a rights issue (existing [26]-[29]);

• on or about 17 May 2001 a binding agreement was reached between One.Tel and various of the defendant companies associated with Messrs Packer and Murdoch to subscribe for and underwrite the rights issue (alternatively those companies are estopped from denying such an agreement) (existing [29] to [31], [33] to [36] and [38] to [58]);

• on or about 17 to 23 May 2001 a binding bridge loan agreement was reached between PBL and One.Tel (alternatively those companies are estopped from denying such an agreement) whereby PBL agreed to provide a bridge loan to One.Tel pending the receipt of cash under the rights issue (existing [32], [33], [37] and [40] to [58]);

• on or about 27 May 2001 PBL, CPH and News decided upon a scheme to extract themselves and their subsidiaries from their binding obligations to One.Tel under the Subscription and Underwriting Agreement and the Bridge Loan Agreement (existing [80] to [87]).

549. It also seems that it is a core allegation that One.Tel was solvent in May 2001 or that it would not have become insolvent had the rights issue then proceeded (in other words, the antithesis of the contentions made by ASIC in the ASIC v Rich proceedings). This is an illogical and flawed thesis according to the defendants, on the basis that if they knew One.Tel to be solvent at the relevant time then it is illogical that the PBL/News entities would have taken the action they are alleged to have deliberately done, the effect of which was to destroy the financial position of the company and deprive them of the substantial benefits that on this hypothesis they would have known would be gained from the rights issue. (I refer to this later but, at the outset, note that though this may make the allegations ultimately unsustainable, it does not seem to me to make them wholly unarguable - and submissions were put by the plaintiffs as to why there was no such inherent illogicality in the pleading).

550. Where the proposed amended statement of claim departs in substance from the earlier pleading is the addition of what are conceded to be new claims (at least some of which the defendants contend are statute-barred). The SPL now seeks to allege causes of action in negligence; in conspiracy; under the second limb of Barnes v Addy for knowing assistance in breach of fiduciary duty; for procuring or inducing directors' breaches of fiduciary duty; for breach of contract; an Amadio style claim for unconscientious conduct and a claim of unconscionable conduct under the Trade Practices Act . In relation to the relief sought, there are additional claims for declaratory relief and an account of profits (as an alternative to other relief) but, as noted above, the claim for restitution is no longer sought to be pressed.

551. At the outset, Mr Karkar notes the following observations of Lander J in Arthur Young v Tieco International (1995) 182 LSJS 367 at 370 (approved by McDougall J in Ingot v Macquarie [2004] NSWSC 1136 at [46]):

Whether the material facts and whether sufficient particulars have been pleaded must depend upon the cause of action, the complexities of the case and the whole of the circumstances of the case. None of those matters can be considered in isolation any more than each of the paragraphs of the pleading can be considered in isolation.

When the Court considers a pleading it will not consider the pleading with the same degree of scrutiny which the courts are required to give to an Act of Parliament. With the complexities of modern litigation, a pleader can usually point to some deficiency in the opponent's pleadings. One can usually, if one approaches the matter with a critical eye, identify some failing in a pleading. But that is not the approach that in this age ought to be adopted. A court would not sit down in the manner of a nineteenth century pleader seeking to find an error capable of sending a party away to re-plead his claim or defence. Such a technical approach is inconsistent with modern litigation and inconsistent with the court's function which is to try to arrive at a just result. A successful result, if arrived at, after too great an expense may not be considered by even the successful party to be a just result. A court ought to approach a consideration of the adequacy of a pleading seeking to answer the ultimate question; does the pleading give fair notice of the case to be made against the other party at trial, thereby minimising the risk of injustice resulting from surprise. (my emphasis)

552. The plaintiffs contend that the proposed amended statement of claim enables the defendants to understand the nature of the claim that is propounded against them and to prepare to meet it (referring to the test enunciated in Ingot at [44]). It is asserted (but disputed by the defendants) that there can be no doubt on the proposed amended pleading as to the case that the defendants have to meet. (It is further submitted that, to the extent to which they are able, the defendants have already provided their answers to this case in their evidence in ASIC v Rich and in the evidence they have given during their examinations by ASIC, the general purpose liquidators of One.Tel and the SPL, an assertion that could only properly be tested by having regard to the whole of that evidence, which for the purposes of the present application I have not done.)

553. The plaintiffs' written submissions address the proposed changes to the pleading in various categories: changes of terminology (not, as I understand it, the subject of any serious complaint); additional facts sought to be pleaded (resisted on the basis both that they are not pleaded with specificity and that they do not arise out of the current pleading); the amendment or reformulation of, or additions to, claims already pleaded; and the introduction of admittedly new pleadings. I address each in turn.

Changes in terminology

554. The existing Statement of Claim defines the alleged agreement to achieve the "extraction outcome" referred to above as the Determination and defines the steps taken to implement the Determination as the Implementation; (the proposed amended statement of claim instead defines the decision to extract the 'Corporate Defendants' from their obligations as the 'Scheme' and combines what previously comprised the Determination and Implementation pleadings and incorporates them into the new "Implementation of the Scheme" allegations and the new "29 May Strategy allegations" (the latter, it being conceded, 'introducing' some additional matters). An attachment was also provided of those amendments. It is submitted that substantially the same conduct is relied upon in both the existing Statement of Claim and the proposed amended statement of claim in relation to these matters.

555. Apart from the change in terminology referred to above, there are other changes to the defined terms used in the pleading (said to be non-substantive): amending the Resolution to the "Abandonment Resolution" (to distinguish it from the new term "Administration Resolution"); introducing the terms "Conflicted Directors" (those being Messrs Packer, Yates, Murdoch and Macourt), the "Executive Directors" and "Other Directors" instead of "Other Directors" and "Independent Directors"; introducing new definitions such as the "Corporate Defendants"; and defining the "Press Releases" as the "Continuous Disclosure Announcements" (it is said to reflect more accurately the nature of the documents).

556. Of themselves, those amendments do not appear to me to be objectionable.

Additional facts sought to be pleaded

557. The additional facts sought to be pleaded relate to the historical background and experience or role of Mr Packer from 1995 and Mr Murdoch from 1999 (and the companies associated with each) in relation to One.Tel [25H] to [25I] and events relating to an agreement alleged to have been reached in February 1999 between Messrs Packer and Murdoch that the former would monitor the business of One.Tel and report to the latter on material matters ([25J] to [25N]).

558. It is submitted by Mr Karkar that these are facts relevant to the existing causes of action pleaded in the Statement of Claim, in which it is alleged that Mr Packer owed various duties to One.Tel, including a duty under s 180 of the Corporations Act and at common law to exercise his powers and discharge his duties as a director "with the degree of care and diligence that a reasonable person would exercise if they (a) were a director of One Tel in One Tel's circumstances and occupied the same office and had the same responsibilities within One.Tel".

559. Mr Karkar explains that the SPL wishes to contend that, when conducting himself in and about the affairs of One.Tel in May 2001, Mr Packer brought to bear a detailed knowledge and experience of One.Tel gained from his close involvement in the development and operation of the company from May 1995 and that his office and responsibilities within One.Tel as at May 2001 were not that of an ordinary arms length non-executive director. It is said that the court can only properly appreciate the office occupied by Mr Packer and his responsibilities within One.Tel in May 2001 by understanding the early office and responsibilities which he held in the company from May 1995.

560. In particular, the SPL wishes to rely on the ongoing involvement and support provided from 1995 by Mr Packer and the defendant companies associated with him (and from 1999 by Mr Murdoch and the defendant companies associated with him) as matters relevant to an understanding of the ability of the corporate defendants and their nominee directors to dominate the decision-making process of One.Tel in April and May 2001 and to have their representatives perform tasks (such as the Miller and Green review) which would normally have been carried out by One.Tel management and staff. (It is acknowledged by Mr Karkar that the level of influence which it is asserted that the Corporate Defendants and the Conflicted Directors exerted over One.Tel in April and May 2001 might otherwise seem implausible and inexplicable if the background events from 1995 were not pleaded.) Similarly, it is said that the role of Mr Murdoch, and the companies associated with him (as a more passive investor in One.Tel) can only properly be understood in the context of the alleged agreement between Messrs Packer and Murdoch (and others) in February 1999 that Mr Packer would monitor the One.Tel business and report to Mr Murdoch on material matters ([25J] to [25N] of the proposed amended statement of claim).

561. The proposed additional factual allegations are said to be largely based upon findings made by Austin J in ASIC v Rich . An attachment was provided cross-referencing the matters pleaded in the proposed paragraphs [25H] to [25AP] with the paragraphs of the judgment in ASIC v Rich .

562. Reliance was placed on what was said in Dye v Commonwealth Securities Limited (No 2) [2010] FCAFC 118 at [81], namely that:

A new factual allegation permitted by an amendment may involve putting the party against whom it is made to the expense of meeting it at trial. However, that will rarely, if ever, be a reason for refusing an amendment that enables a real issue to be heard and determined in the controversy between the parties provided that it can be done having regard to the overarching purpose in Pt VB of the Federal Court of Australia Act. The object of inexpensive determination of disputes does not require the Court to preclude a party ventilating a real dispute at all.

563. The plaintiffs seek leave to include these additional factual allegations (whether or not leave is granted to make the other amendments) on the basis that they are relevant to the existing causes of action pleaded in the Statement of Claim. In that regard, Mr D'Arcy, junior Counsel for the plaintiffs who argued the amendment application, submits that these paragraphs involve no extension to the factual matrix already pleaded (and raise facts that would, on the existing pleading, have to be explored in any event in order to understand the position and responsibilities of Messrs Packer and Murdoch within OneTel.).

564. Mr Hutley, who had the main carriage for all of the defendants on the submissions as to the pleading issues, takes issue with that proposition, predicated as it is on the assumption that the court would need to analyse everything that Messrs Packer and Murdoch did and knew going back to the time each was appointed as a director of One.Tel, for the purposes of the pleading as it currently stands. Mr Hutley contends that these amendments do not arise out of the same or substantially the same set of fact; rather, they operate to extend the matrix of facts. I am inclined to agree. However, it is not necessary to form a concluded view on this because I am of the view that if the pre 2001 events are material facts on the question as to the scope or content of the respective directors' position and responsibilities as at 2001, then, even apart from the question whether they should have been pleaded in the existing Statement of Claim, if they are now to be pleaded the relevant events need to be identified.

565. The defendants should be told with particularity what it is alleged that each did or said in that earlier period, as a result of which it is said that their responsibilities or duties as a director are modified or expanded or by reference to which it is said that they were in a position to dominate the One.Tel Board. The manner in which the additional facts are pleaded with such generality in my view makes it an objectionable pleading (particularly in light of the serious consequences said to flow for Mr Packer and Mr Murdoch as a result of the more extensive responsibilities or duties it seems to be said that they had as a result of that history).

566. By way of example, in [25H] there is a very broad allegation that, when conducting himself in and about the affairs of One.Tel (referred to in other itemised paragraphs of the pleading) Mr Packer "brought to bear his vast business experience as well as detailed knowledge and experience of One.Tel gained from his close involvement in the development and operation of One.Tel from May 1995, as pleaded in [other listed paragraphs of the pleading]". Paragraph [25I] refers, again with generality, to the regular participation and active role by Mr Packer in One.Tel's Board and Management planning discussions "as if he were a director" and its day to day business and investment negotiations and "discussed One.Tel's business with Rich on a regular basis". No particulars are provided of what activities were comprised in the "regular participation and active role" allegedly played by Mr Packer or of the discussions to which reference is made in this paragraph.

567. The complaints made in relation to this aspect of the proposed amended statement of claim cannot, in my view, be dismissed as an overly technical (or statutory construction) approach. One could not determine from these paragraphs just what it is said that Mr Packer did over the period in question that leads to the conclusion that he had some expanded or dominant role or additional responsibility when he attended the May 2001 Board meeting.

568. On that basis, I would not have permitted [25H] and [25I] to stand as part of any amended pleading. What would be necessary in my view would be for the plaintiffs to articulate the facts, matters and circumstances (or particular events or discussions) on which reliance is placed for the allegation that the responsibility and functions of Mr Packer (and for that matter Mr Murdoch) as a director were in some way (and if so how) expanded from the duties any other person in his position would have had. Is it, for example, the fact that he attended all or most of the board meetings over the period? Is it the fact that he carried out certain tasks for the company and what were they? What was the substance of the discussions with Mr Rich on which reliance is based? I consider that the level of generality with which these paragraphs are drafted takes them well beyond what could be said to give "fair notice" of the case that is to be made against Mr Packer at trial.

569. Similarly, the allegations in [25j] to [25L] as to the 'Strategic Alliance' not only fail to plead any agreement as such (rather, simply alleging the making of a 'proposal' by a statement to that effect) but then plead what the intention of the alliance was without attribution as to who held the relevant intention (assuming this is the purport of the pleading of the said alliance's intention).

Amendment/Additions to claims already pleaded

570. As far as the existing claims are concerned, the plaintiffs' submissions note that the proposed amended statement of claim retains the uncommercial transaction claims (with minor amendments); the directors' duty claims (some aspects of which have been pleaded differently) but without the shadow director claims; and the misleading and deceptive conduct claims (some aspects of which have again been pleaded differently, although it is said that the key allegations are retained). Attachments were provided of the various amendments in relation to these claims.

571. It is said that the proposed amended statement of claim "reformulates" aspects of the claims made against the 1st to 11th defendants insofar as it pleads additional facts and expresses matters in a slightly different way (for example, to plead some of the factual allegations with greater particularity and to amend how certain allegations are expressed, such as the estoppel pleading, aspects of the directors' duty claims and aspects of the misleading and deceptive conduct claims).

572. Within this category of amendment are allegations already made but now sought to be pleaded with greater particularity, of which the examples given of this are:

(i) the conduct of the Miller and Green review pleaded briefly in [26] and now outlined with greater particularity in [25AQ] to [25AT] and [28A]; and

(ii) the conduct of the Board meetings of 17, 28 and 29 May 2001 (pleaded in the statement of claim) [35] -[37], [41] and [46] for the 17 May meeting, [106] -[107] for 28 the May meeting, and [59], [116], [118], [125], [133] and [146] - [148] for the 29 May meeting; now proposed [58A] -[58H] and [58AI] (17 May meeting), [58AX], [58BA] - [58BI] (28 May meeting) and [119J] -[119N], [130A] - [130D], [130J] - [130S], [130V] and [141A] - [141Q] (29 May meeting). It is said (by way of example) that the proposed amended statement of claim sets out in detail the steps taken to amend the minutes of the meeting of 17 May 2001 so as to inform the defendants, as fully as possible, of the case they have to meet.

573. Leave is sought to replead the existing allegations (pleaded in the alternative to the principal allegation that there was such an agreement) that each of the corporate defendants is estopped from denying that there was a binding agreement with One.Tel to subscribe for shares and to underwrite the rights issue and from denying that PBL and CPH would provide One.Tel with a bridging loan. In particular, leave is sought to amend the existing estoppel allegation to clarify that what is alleged is both a promissory estoppel and an estoppel by convention.

574. The plea of promissory estoppel is contained in proposed [58W] - [58AF] and is said to reflect the six elements summarised by Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at [428] - [429]. It is said that: first, the plaintiff's assumption that a particular legal relationship then existed with the defendants or would exist is pleaded in [58W]; secondly, the fact that the defendants induced the plaintiff to adopt that assumption or expectation is pleaded at [58W] and [58X]; thirdly, the fact that the plaintiff acted or abstained from acting in reliance on the assumption or expectation is pleaded at [58Y]; fourthly, the fact that the defendants knew or intended that the plaintiff would so act or refrain from acting is pleaded at [58Z] and [58AA]; fifthly the allegation that the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled is pleaded at [58AB]; and, finally, the allegation that the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise is pleaded at [58AD].

575. (Mr Karkar notes, and it does not seem to be disputed by the defendants, that Brennan J's formulation of these elements has been consistently applied for the purposes of determining whether an equitable estoppel has been established, referring to Kellow-Falkiner Motors Pty Ltd v Christoforos Nimorakiotakis [2000] VSCA 1 at [32]; Franklins v Metcash Trading (2009) 264 ALR 15 at [555]; Elvidge Pty Ltd v BGCV Construction Pty Ltd [2006] WASC 264 at [40] and at [63]; and Tipperary Developments v WA (2009) 38 WAR 488 at [134]).)

576. As to the estoppel by convention, this is sought to be pleaded in [58AG] of the proposed amended statement of claim, the elements of which are noted as being: that the plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant (pleaded in [58AG.1] and [58AG.2]; that the defendant has adopted the same assumption (again, pleaded in [58AG.1] and [58AG.2]; that both parties have conducted their relationship on the basis of that mutual assumption (pleaded in [58AG.3] and [58AG.5]; that each party knew or intended that the other act on that basis (pleaded in [58AG.4] and [58AG.6]; and that departure from the assumption will occasion detriment to the plaintiff (pleaded in [58AG.7].

577. (Mr Karkar refers to the formulation of this form of estoppel in Moratic Pty Ltd v Lawrence James Gordon [2007] NSWSC 5 at [32]; Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 at [200]; Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407 at [573]; 264 ALR 15 at 145; and Noon v Bondi Beach Astra Retirement Village Pty Ltd [2010] NSWCA 202 at [235]-[236]. Again, there seems no dispute with the manner in which the estoppel claim is sought to be re-pleaded in this regard.)

578. Also characterised as a clarification of the existing pleading is the claim for interest, it being said that what is sought to be made clear is that the plaintiffs claim alternative forms of interest, including disgorgement interest, compound interest and simple interest.

579. The existing Statement of Claim includes a claim for damages based on the loss of One.Tel's business. This claim is said to be reflected in proposed paragraphs [351.11], [351A] and [351B.2] (and reliance is placed on decisions such as Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 and Malec v JC Button Pty Ltd (1990) 169 CLR 638). The proposed amended statement of claim contains additional claims for declaratory relief and an account of profits, the latter based on what are said to be the existing pleaded breaches of fiduciary duty by the directors. (Reliance is placed on Warman International v Dwyer (1995) 182 CLR 544 at 558 and 562; Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 32; and Dart Industries Inc v Decor Corporation Pty Ltd (1993) 179 CLR 101 at 110-111 for the proposition that an account of profits is an available remedy for such a breach.

580. As to the revisions to t he uncommercial transaction claim, this is now pleaded in [235AD] to [235AW] and does not seem in principle to be challenged at this stage. It is said by Mr Karkar that these paragraphs repeat the uncommercial transaction pleading from the original statement of claim with only minor amendments (as noted at Attachment G to the submissions). Two alternative claims are advanced in both the original and proposed amended statement of claim: first, that the Abandonment Resolution was a transaction within and for the purposes of ss 588FB, 588FC and 588FE of the Corporations Act and, secondly, that the relevant transaction for the purposes of those sections was a composite series of events comprising the Scheme, its Implementation and the Abandonment Resolution.

581. Mr Karkar notes that the first question is to ascertain whether there is a transaction and if so, to identify the transaction with precision ( Capital Finance Australia v Tolcher (2007) 164 FCR 83 at [93] per Gordon J with whom Heerey J agreed; Kails Enterprises per Basten JA at [237]).

582. He notes that the term "transaction" is very broad and submits that a transaction may be unilateral in character, referring to what Windeyer J said ( obiter ) in OneFone Australia Pty Ltd v One.Tel Ltd (in liq) (2003) 48 ACSR 562 at [16] (that " whether or not it is necessary for there to be two parties to an uncommercial transaction ... is a matter of some doubt"). Mr Karkar submits that a series of transactions, steps, events or acts, or a combination of them, can be a transaction for the purposes of Pt 5.7B; the events can occur at different times and in different forms and may involve several parties; that a company can be a party to a transaction made up of a composite of dealings even if it does not participate in all of the dealings. That is, a composite of dealings can together constitute a transaction notwithstanding that not all of its component parts considered in isolation can be said individually to be transactions, provided the events are sufficiently connected having regard to the commercial realities.

583. Mr Karkar further submits that any suggestion that the Abandonment Resolution cannot be a "transaction" because a decision of a company not to do something cannot be a transaction is misconceived in that it ignores the authorities that have considered that a transaction can involve a unilateral act and misconceives the legal consequences where one party to a contract determines that it no longer intends to be bound by that contract and the other party accepts (expressly or by conduct) that the former is no longer bound by the contract (resulting, it is said in an abandonment of the contract by both). He nevertheless concedes that the abandonment analysis is complicated where, as is here alleged, the relevant contract was a tripartite agreement (involving One.Tel, the Corporate Defendants and Messrs Keeling and Rich) but says that the doubt as to w hether two (out of three) parties can agree to abandon their rights and obligations under a tripartite contract is not critical for present purposes (what is critical, it is said, is that One.Tel's resolution not to proceed with the rights issue cannot be said to be capa ble of constituting a "transaction" for the purposes of the making of an uncommercial transaction claim.

584. As a general observation, the defendants' criticisms of the proposed amended pleading, insofar as they relate to the above aspects of the reformulated claim, largely seem to go to the deficiencies in the content of the pleading not to the suggestion that the elements of these causes of action (unlike, for example, the conspiracy allegation) have not been pleaded or are not reasonably arguable. I address the pleading deficiencies identified by the defendants (and the response by the plaintiffs thereto) in due course.

Proposed new causes of action

585. By way of introduction to the submissions in relation to the leave sought for these amendments, Mr Karkar submits that there is no requirement to "plead" a cause of action, as such, as opposed to pleading the facts on which the cause of action is based.

586. It is submitted that the new causes of action sought to be included in the amended pleading do not involve the introduction of new (or statute-barred) causes of action because those causes of action rely, and are based upon, the existing facts pleaded in the Statement of Claim. It is submitted that what is done in the proposed amended pleading is simply to assign "labels" (such as conspiracy or Barnes v Addy knowing assistance) to the underlying facts already pleaded, so as to give the defendants appropriate forewarning of the case they have to meet.

587. Alternatively, it is contended that the Court has power under s 65 of the Civil Procedure Act 2005 (NSW) to make the amendments because the causes of action arise from the same or substantially the same facts as those pleaded in the original statement of claim; and that even if the amendments do not arise from the same or substantially the same facts then the Court has power to make the amendments under s 64(1) of the Civil Procedure Act ; and/or that the amendments should be made under s 64(2) of the Civil Procedure Act (referring to Greater Lithgow at [15]-[l 8] and New Cap Reinsurance v Reasegums-Alianza SA [2004] NSWSC 787 at [94] and [106]) .

588. As to the power to grant leave to amend the statement of claim to allow a statute-barred cause of action under either s 64 or s 65 of the Civil Procedure Act , reliance is placed on s 65(4) and Greater Lithgow City Council v Wolfenden [2007] NSWCA 180 at [12] per Handley AJA (with whom Campbell JA and Young CJ in Eq agreed). Mr Karkar accepts that for an amendment to fall within s 65 the new causes of action and claim for relief must arise from the same, or substantially the same, facts as those giving rise to the existing causes of action and claim for relief set out in the original statement of claim but that s 64(1), by contrast, gives the court a general discretion unfettered by any rules of practice to allow an amendment notwithstanding that it raises a statute-barred cause of action whenever justice so requires (referring to McGee v Yeomans [1977] 1 NSWLR 273 at 280 per Glass JA (with whom Moffitt P agreed) and Fernance v The Nominal Defendant (1989) 17 NSWLR 710 at 719 per Gleeson CJ). Mr Karkar further notes that under s 64(2), all necessary amendments are to be made for the purpose of determining the real questions raised by the proceedings.

589. It is submitted by Mr Karkar that (having regard to the matters contained in the affidavits read in the plaintiffs' case, the defendants' public` statements (by which I understand him to be referring to the 'profoundly misled' statements), the evidence some of them have previously given (particularly in ASIC v Rich ), the submissions previously made to the court and correspondence from their solicitors), the defendants' defences are likely to be based on the contentions that: the Corporate Defendants did not have any binding obligations under the Subscription and Underwriting Agreement and/or Bridge Loan Agreement; alternatively, if they did, there were implied terms in those agreements (for example, no material change in circumstances) which qualified those obligations; and that One.Tel was insolvent prior to 29 May 2001; accordingly, that the rights issue could not proceed, (including because One.Tel's directors could not sign off on a prospectus); that the defendants had been profoundly misled as to the financial position of One.Tel such that the Corporate Defendants had the right to rescind the agreements; that the decision of the board of One.Tel not to proceed with the rights issue cannot be a transaction for the purposes of Part 5.7B of the Corporations Act ; and that there will be a denial of the Scheme and of the 29 May Strategy allegations.

590. It is noted by Mr Karkar that the words "the real questions raised by or otherwise depending on the proceedings in s 64(2)" refer to issues raised in the pleadings at the time of the application for leave to amend (referring to Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 at [71], where Gummow, Hayne, Crennan, Kiefel and Bell JJ said that:

... to be regarded as a real issue, and for amendment therefore to be necessary, the relevant dispute or controversy must exist at the time of the application. Amendments raising entirely new issues fall to be considered under the general discretion ...

591. Mr Karkar submits that the real questions raised by the proceedings include whether, in May 2001, there was a binding Subscription and Underwriting Agreement and/or Bridge Loan Agreement between One.Tel and any of the Corporate Defendants and whether any of the defendants determined to extract themselves from those binding obligations by engaging in a course of conduct designed and intended to cause the board of One.Tel to resolve not to proceed with the rights issue and to place One.Tel into administration; and then whether Messrs Packer, Yates, Murdoch and Macourt and/or any of the Corporate Defendants have any liability to One.Tel as a result of such conduct.

592. The authorities on s 65 (and on its former Supreme Court Rules counterpart) articulate three main principles as to the operation of this section (in addition to that referred to in Greenwood ): namely, that the power contained in s 65 is not a general discretionary power (a more general discretionary power arising under s 64(1) of the Act) ( Greater Lithgow City Council v Wolfenden [2007] NSWCA 180; Street v Luna Park Sydney Pty Ltd [2006] NSWSC 230); secondly that it will be appropriate to permit amendment under s 65 if the claim based on the "new cause of action" arises out of substantially the same set of facts as those involved in the original claim ( Chatsworth Investments Ltd v Cussins (Contractors) Ltd [1969] 1 All ER 143; McGee v Yeomans [1977] 1 NSWLR 273 at [284] - [285]); and thirdly, that the question whether the claim arises out of "substantially the same" set of facts is to be answered as a matter of general impression, rather than requiring precise similarity of factual circumstances ( Ritchie's at [65.40]) and it is not necessary that all facts be material to each separate cause of action ( Brickfield Properties Ltd v Newton [1971] 3 All ER 328 at [342]).

593. In Cement Australia , their Honours (Keane CJ, Gilmour and Logan JJ), in the context of an application in relation to the amendment of pleadings, said at [45]:

Before turning to the particular grounds of complaint agitated in this Court by the Cement Australia parties, we should observe that insofar as the trial judge gave significant weight to the consideration that the achievement of justice in the particular case before him favoured allowing the amendment, that was not contrary to the decision in Aon Risk or anything in s 37M or s 37N of the Federal Court Act. Nothing in Aon Risk or the Federal Court Act suggests that this consideration is not relevant to the exercise of the discretion to permit or refuse an amendment. Rather, the point made in Aon Risk is that this consideration must not be allowed to trump other relevant considerations, including considerations of the kind reflected in ss 37M and 37N of the Federal Court Act.

and at [51]:

Aon Risk is not a one size fits all case. Whilst various factors are identified in the judgment as relevant to the exercise of discretion, the weight to be given to these factors, individually and in combination, and the outcome of that balancing process, may vary depending on the facts in the individual case. As the plurality in Aon Risk observed at [75], statements made in cases concerning amendment of pleadings are best understood by reference to the circumstances of those cases, even if they are stated in terms of general application.

594. Turning then to the particular new causes of action now sought to be raised.

• Negligence/breach of fiduciary duty

595. For the negligence allegation, the proposed duty of care is pleaded in [156Q]; the breaches of duty are pleaded in [156R.4], in respect of Mr Packer, [156T.4] in respect of Mr Yates, [156V.4] in respect of Mr Murdoch and [156X.4] in respect of Mr Macourt.

596. These breaches are said to be established by the matters pleaded in proposed [58AL] -[58AW], [58BA] -[58BD], [58BF] - [58BI], [58BL], [58BN] - [58B0], [111] -[119A], [119F] - [119I], [119L] - [130A], [130C] - [130D] and [131] -[141R]. Those paragraphs in turn are said to reflect matters already pleaded in the original statement of claim as articulated in Attachment E to Mr Karkar's submissions.

597. It is said that the breach of the duty of care is established by the conduct pleaded in the existing Statement of Claim occurring in the period 25 to 29 May 2001. That same conduct is relied upon to establish the breaches of director's duty under ss 180 to 182 of the Corporations Act and the duty to avoid conflicts, the duty to act in One.Tel's best interests, the duty not to benefit and the duty to act with care and skill.

598. The existing Statement of Claim pleads that One.Tel's directors owed the following statutory and common law duties to One.Tel: the duty to act with care and diligence (which is defined in the existing pleading as the Diligence Duty); the duty to act in good faith in the best interests of One.Tel and for a proper purpose (defined as the Good Faith Duty); the duty not to use their position to gain an advantage for themselves or someone else or to cause detriment to One.Tel (defined as the Detriment Duty); and the duty (described as a fiduciary duty) not to act contrary to the interests of creditors (defined as the Creditors Duty).

599. Mr Karkar notes that it was only the Creditors Duty that was expressly described as a fiduciary duty, but submits that the references in [153] to [155] of the existing Statement of Claim to the duties arising at common law are sufficiently broad to encompass the other pleaded duties as fiduciary duties. Mr Karkar submits that the proposed amendments to the Statement of Claim seek to make it clear that all of the above directors' duties above are fiduciary duties.

600. The proposed amended statement of claim pleads five "fiduciary, alternatively equitable, duties": the duty to avoid conflicts and the duty not to benefit (both of which are said to correspond with the Detriment Duty pleaded in [155(a)] in the existing Statement of Claim); the duty to act in the company's best interest, (which it is said corresponds with the Good Faith Duty and the Creditors Duty pleaded in [154] and [156] in the existing Statement of Claim; the duty to exercise powers for proper purposes (which it is said corresponds with the Good Faith Duty) and the duty to act with care and skill (which it is said corresponds with the Diligence Duty).

601. A comparison between the directors' duties pleaded in the original statement of claim and those pleaded in the proposed amended statement of claim was set out in Attachment F to the submissions. It is submitted that the amendments merely raise issues of law and do not raise any new factual matters.

602. The plaintiffs also rely upon the statutory duties contained in ss 180-182 of the Corporations Act and the tortious duty of care, skill and diligence. The statutory duties in ss 180-182 are pleaded in [153] -[155] of the existing statement of claim and the breaches of the directors' fiduciary, statutory and tortious duties are pleaded at proposed [156R] to [156Y].

603. As to the manner in which the fiduciary duties are sought to be pleaded, it is submitted that the duty to avoid conflicts and the duty not to obtain an unauthorised benefit are plainly fiduciary duties ( Breen v Williams (1996) 186 CLR 71 at 93 (per Dawson and Toohey JJ), at 113 (per Gaudron and McHugh JJ) (cited with approval by McHugh, Gummow, Hayne and Callinan JJ in Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165 at [74]) and [78] at 135 and 137 (per Gummow J); and that the conflicting duty or interest has been sufficiently identified ( Pilmer at [83]) in [151A] and [156A] to [156G] of the proposed amended statement of claim. Mr Karkar submits that the Conflicted Directors' self-interest pleaded in those paragraphs is neither "too remote" nor "too feeble" or "trifling" an inducement to give rise to an actual conflict or a real or substantial possibility of a conflict of interest and the fact that "different minds may reach different conclusions as to the presence or absence of a real or substantial possibility of conflict between duty and interest or between duty and duty" is irrelevant: ( Pilmer at [79]).

604. Mr Karkar also notes that the duties to act in good faith in the best interests of the company and for proper purposes have been held to be fiduciary duties ( The Bell Group Ltd (in liq) v Westpac (2008) 225 FLR 1 per Owen J at [4573]-[4582]).

605. Insofar as the Statement of Claim pleaded the Creditors Duty as a fiduciary duty not to act contrary to the interests of creditors, Mr Karkar says that this duty has been re-pleaded in accordance with the formulation in Bell Group at [4418] and [4435]-[4450] and Kails Enterprises Pty Ltd (in liq) v Baloglow (2007) 63 ACSR 557 at [162] (per Giles JA with whom Ipp and Basten JJA agreed) to make it clear that the duty is only a duty to consider the interests of creditors as part of the duty to act in the company's best interests, and not a duty not to act contrary to the interests of creditors.

606. Mr Karkar accepts that characterising the duty to act with care and skill as a fiduciary duty is contrary to authority (referring to Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187 at 237-240, which holds that a director's duty to exercise care and skill is both a legal and equitable duty but not a fiduciary duty) but says that the plaintiffs wish to contend that Permanent Building Society (in liq) v Wheeler was wrongly decided. They rely upon the matters addressed by Heydon J, writing extra-judicially in his article "Are the Duties of Company Directors to Exercise Care and Skill Fiduciary?", in Degeling and Edelman (eds) Equity in Commercial Law (2005) , to support their argument that the duty to act with skill and diligence is appropriately characterised as a fiduciary duty. Reference was also made to the observations of Kirby P (as his Honour then was) in Wickstead v Browne (1992) 30 NSWLR 1 - at 6:

One hundred and twenty years after the Judicature Acts in England it might be expected that our legal system would be moving towards the dismantlement of the rigid demarcations between the provinces of law and equity. In conceptual principle there is no reason why a trustee should not owe a duty of care at common law additional to the duties owed in equity by the law of trusts.... If the relationship would ordinarily attract a duty of care it is pure historicism to deny that a tort can arise out of such a relationship.

607. Mr Karkar submits that the plaintiffs should not be precluded from arguing that Wheeler was wrongly decided and that it is more efficient and just to consider the viability of the plaintiffs' cause of action once the facts have been adduced and the action can be judged with a full understanding of all the relevant evidence ( Wickstead v Browne at 5).

608. The objection, as I understand it, to the proposed introduction of the claim in negligence (which by now is clearly statute-barred) goes (with one exception) not to the question whether it can properly be the subject of leave (as arising out of the same or substantially the same set of facts) but, rather, as to the manner in which it is pleaded. (The one qualification is that the additional pre 2001 facts said to inform the content of the duty of care are said by the defendants not to arise out of the matrix of facts already pleaded.)

Mr Bathurst points to the allegation of negligence against Mr Packer in proposed [156R.4] as a particularly egregious example of the inadequacy of the pleading in that the allegation that Mr Packer breached the duty of due care and diligence that he owed One.Tel is said to be established "By reason of the matters referred to in paragraphs 58AL to 58AW, 58BA to 58BD, 58BF to 58BI, 58BL, 58BN to 58BO, 111 to 119A, 119F to 1191,119L to 130A, 130C to 130D and 130G to 141R above, taken individually, together or in any combination". It is submitted that this an inadequate way in which to plead a claim in negligence (or for that matter a contravention of a civil penalty provision in the Corporations Act ), since it fails to plead any particulars of negligence or to put Mr Packer on notice of any respect in which he is alleged to have been negligent (instead pleading a chronology of events, and then asserting, without further elaboration, that some, all, or any combination of those events means that he was negligent). The plaintiffs' response to this (in their 2 November 2010 reply submissions is, in effect, to repeat the allegation and assert that the defendants are taking an overly technical and artificial approach to the pleading. However, where there are a number of defendants and it is not clear precisely what allegation is made against each, a broad brush approach is not in my view the answer to the complaints that have been made. Serious allegations are made against the defendants and they should be left in no doubt what combination of particular matters and events is said to render each of them liable. I think the criticism made of the pleading in this regard (and the complaint as to cross-referencing) is well-founded.

Tort of conspiracy

609. The conspiracy claim is pleaded in [156Z] -[156AJ] and the conduct relied upon to constitute the conspiracy is said to consist of the conduct pleaded in the existing Statement of Claim in the period 27 to 29 May 2001, namely the facts underpinning the Scheme and Implementation of the Scheme allegations in the existing Statement of Claim.

610. It is the plaintiffs' case that, between 27 and 29 May 2010, the defendants conspired together to extract the Corporate Defendants from the Subscription and Underwriting Agreement and/or the Bridge Loan Agreement and thereby to deprive One.Tel of the benefits of those agreements. It is submitted that this claim is the same as the case advanced in the existing Statement of Claim, referring to [86] of the Statement of Claim (which alleges that on and from 25 May 2001 PBL, CPH and News determined that they would undertake a course of conduct designed and intended, amongst other things, to extract those defendants from their contractual obligations) and also to the Implementation of the Determination allegations in [87] to [139]. This conduct is alleged to have deprived One.Tel of the benefits under the said agreements ([63], [348], [350] and [351] of the existing Statement of Claim).

611. It is submitted that the conspiracy pleading in the proposed amended statement of claim thus reflects what has already been pleaded in the Statement of Claim.

612. The conspiracy sought to be alleged is a conspiracy to injure by unlawful means. The plaintiffs accept that the elements of that cause of action are an agreement or combination between two or more persons to engage in conduct amounting to "unlawful means'' with the intention of injuring the plaintiff; as a result of which the plaintiff suffers loss (referring to Fatimi Pty Ltd v Bryant (2004) 59 NSWLR 678 at [13], [17], [27] (per Handley JA, with whom McColl JA agreed), and at [44] and [70] (per Giles JA); Balkin and Davis The Law of Torts , 4th ed (2009) at [21.43]; Vout (ed) Torts, The Laws of Australia , 2nd ed at [33.8.1220].)

613. It is the plaintiffs' submission that the agreement or combination between the defendants (constituting the conspiracy) is adequately pleaded in proposed [156Z], [156AA] and [156AB]. As will be seen, this is the subject of much contention on the part of the defendants.

614. The relevant paragraphs are as follows:

156Z Between on or about 27 May 2001 and 29 May 2001, the Defendants, or any two or more of them together, wrongfully and with intent to injure One.Tel and/or to cause loss to One.Tel by unlawful means conspired and combined together to extract the Corporate Defendants from the Subscription and Underwriting Agreement and/or the Bridge Loan Agreement respectively and thereby deprive One.Tel of the benefit of the Subscription and Underwriting Agreement and/or the Bridge Loan Agreement respectively.

156AA The Defendants expressly agreed to combine together to extract the Corporate Defendants from the Subscription and Underwriting Agreement and/or the Bridge Loan Agreement respectively and thereby deprive One.Tel of the benefit of the Subscription and Underwriting Agreement and/or the Bridge Loan Agreement respectively.

Particulars

The Plaintiffs refer to paragraphs 58AN, 58AO and 58BL above.

156AB In the alternative, the Defendants' agreement to combine together to extract the Corporate Defendants from the Subscription and Underwriting Agreement and/or the Bridge Loan Agreement respectively and thereby deprive One.Tel of the benefit of the Subscription and Underwriting Agreement and/or the Bridge Loan Agreement respectively may be inferred from the overt acts carried out pursuant to and in furtherance of the conspiracy.

Particulars

The Plaintiffs refer to paragraphs 58AH, 58AM to 58BI, 58BL to 141R and 141V above and paragraphs 156AC and 156AE below.

615. Thus, it can be seen that the express agreement alleged in [156AA] is one identified by incorporating the allegations in the cross-referenced [58AN], [58AO] and [58BL]. Those paragraphs, however, do not contain a pleading of the essential elements of an agreement as such. Paragraph [58AN] pleads that:

From and after that private meeting, Packer and Murdoch, on behalf of the Defendants, wanted to extract those Corporate Defendants which had binding obligations to One.Tel under the Subscription and Underwriting Agreement and/or the Bridge Loan Agreement respectively, from those obligations. They therefore agreed to embark upon a scheme to undertake such steps and actions as may be necessary to procure that the Corporate Defendants be extracted from their binding obligations under the rights issue, the Subscription and Underwriting Agreement, and/or the Bridge Loan Agreement respectively ("the Scheme") knowing that the Scheme was not in the best interests of One.Tel which needed $132 million from the rights issue if it was to remain solvent. (my emphasis)

616. There are no particulars as to how this agreement was concluded. Paragraph [58AO], headed Implementation of the Scheme, then pleads that the defendants "decided" to and did take steps to implement and give effect to the Scheme (through the conduct pleaded in [58AP] to [141R] and then pleads what the Scheme "was intended" to do (in [58AO.1] to [58AO.21]).

617. Paragraph [58BL] pleads that, in implementing the Scheme, "the Defendants determined to undertake a strategy that was designed and intended to do the things set out in [58BL.1] - [58BL.8] (including approaching ASIC to "assist, encourage and support" it to prosecute proceedings against, inter alia , Mr Rich (without disclosing to ASIC the matters in [58AN] (ie the Scheme) to [58BL.7], which include the matters pleaded as to the implementation of the Scheme and the strategy that the defendants "determined" to undertake.

618. Pausing there, the pleading contains no allegation (and no particulars) as to the facts relied upon as giving rise to the alleged 'determination' made by the defendants (pleaded in [58BL]) nor of the decision of the defendants (pleaded in [58AO]), those paragraphs focussing on the design and intention of the strategy [58BL] and the intention of the Scheme [58AO] respectively. So the only pleading of facts from which it is alleged that the "agreement" pleaded in [156z] is based (that being the principal foundation for the conspiracy claim) is in [58AN] and that is an alleged agreement between Mr Packer and Mr Murdoch "on behalf of" the defendants "to embark upon a scheme" allegedly with the knowledge there pleaded that it was not in One.Tel's best interests.

619. The "unlawful means" relied upon by the plaintiffs are pleaded at proposed [156AC] and [156AD] and comprise the breaches of fiduciary, tortious, and statutory duties pleaded at [156R] to [l56Y]; the implementation of the 29 May Strategy on and from 30 May 2001; the breaches of the Trade Practices Act, Fair Trading Act and Corporations Act pleaded at [235K] to [235P]; the unconscionable conduct in breach of s 51AA of the Trade Practices Act pleaded at [156AN]; the breaches of contract pleaded at [156AO] to [156AR]; the knowing assistance and participation in the breaches of fiduciary duty pleaded at [235U] to [235AA]; and the procurement of the breaches of fiduciary duty pleaded at [235AB] to [235AC].

620. In Australian Wool Innovation Ltd v Newkirk [2005] FCA 290, Hely J said:

'Unlawful means' includes crimes and tort and breaches of statutory provisions: Trindade & Cane, The Law of Torts in Australia , 3 rd edn, Oxford University Press, Melbourne, 1999 at p 230. A person is using unlawful means if they are doing an act which they are not at liberty to commit: Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169.

621. As to the 'unlawful means' alleged, these are said to include the alleged tortious conduct, breach of the Trade Practices Act, Corporations Act or Fair Trading Act and breach of fiduciary duty.

622. As to the allegation that tortious conduct can be sufficient to amount to unlawful means in this context, reliance is placed on Williams v Hursey (1959) 103 CLR 30 at 76-79 (per Fullagar J with whom Dixon CJ and Kitto J agreed), at 104-109 (per Taylor J) and at 122-127 (per Menzies J). Reference is made to the statement in JD Heydon, Economic Torts 2nd ed (1978) at 67 that 'unlawful means' in the tort of conspiracy by unlawful means includes torts (the examples given being of assault or battery) and in Balkin and Davis Law of Torts , 4th ed (2009) at [21.54] that "While there is no doubt that an agreement to commit another tort ... may constitute the necessary 'unlawful means' to establish this tort it is a matter of considerable difficulty to establish what other conduct may come within this head of liability".

623. As to the alleged breaches of the Trade Practices Act. Fair Trading Act and Corporations Act , it is submitted that unlawful conduct is not confined to tortious conduct (referring to Fatimi at [27] where Handley JA, with whom McColl JA agreed, said that "there is no requirement in the common law of Australia that the unlawful means for the purpose of this branch of the law of conspiracy must itself be tortious". Reference is also made to Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169; (2004) ATPR 1(42-013) as taking a broad view of what constitutes "unlawful means" for the purposes of this tort. There, Kiefel and Jacobson JJ said at [16]:

The intimidation of an employer, inducing a breach of contract and the breach of statutes dealing with restrictive trade practices, has been held to involve the use of unlawful means ...J D Heydon in Economic Torts, 2 nd edn, Sweet & Maxwell, London, 1978 at pp 67-69 goes further. In addition to crimes and torts the learned author lists defamation, trespass, breach of the rules of natural justice, abuse of confidential information and misstatements as unlawful means. It is said that the unlawful means may be constituted by actions which are improper although not actionable in themselves (at 70). Clerk and Lindsell on Torts, 18th edn, gen ed AM Dugdale, Sweet & Maxwell, London, 2000 at [24-77] states that the general approach appears to be that a person is using unlawful means if they are doing an act which they are not at liberty to commit.

624. Mr Karkar notes that in that case it was considered to be arguable that a breach of s 52 of the Trade Practices Act could constitute unlawful means (at [34]-[36] per Kiefel and Jacobson JJ and at [66] per Marshall J); a breach of undertakings given under s 87B(1) of the Trade Practices Act could constitute unlawful means (at [19] per Kiefel and Jacobson JJ, Marshall J dissenting); and false statements could constitute unlawful means (at [28]-[29] per Kiefel and Jacobson JJ, Marshall J dissenting).

625. As to breach of fiduciary duty reference is made to the statement in Heydon JD's text Economic Torts 2nd ed (1978) at p.69 that "breaches of fiduciary duty are unlawful means".

626. Mr Karkar contends that the requirement that the defendant intend to injure the plaintiff will be satisfied "if the conspiracy and the unlawful means were aimed at or directed at the plaintiff... If the conspiracy and the unlawful means were aimed at the plaintiff damage to the plaintiff that was foreseen or foreseeable or was necessarily caused in carrying out the conspiracy will satisfy the requirements for this branch of the tort" ( Fatimi at [13] (per Handley JA (quoting Fullagar J in Williams v Hursey (1959) 103 CLR 30 at 78) with whom McColl JA agreed). Thus, it is said that while there must be an intention to injure the plaintiff, that does not need to be the defendant's predominant motive ( Fatimi at [17]-[18]). The requisite intention is pleaded at proposed [156Z] (which I have extracted above), by reference to the intention of the Scheme itself. The final element (that damage was caused by the conspiracy and unlawful means) is pleaded at proposed [156AF ].

627. Criticism is made of the conspiracy pleading on two bases: first, that it is not open to the plaintiffs to plead both a conspiracy to commit a tort and the tort itself; secondly, that as a pleading it is bad in law (because it fails to plead an agreement to injure by unlawful means - simply pleading an agreement to embark upon a scheme). For Mr Yates, there is the added objection that it does not plead that he was a party to the alleged agreement constituting the conspiracy.

628. In the Australian Wool Innovation case, Hely J (having noted that, like fraud, conspiracy is not an allegation that should lightly be made, referring to Hughes v Western Australian Cricket Assn Inc (1986) 69 ALR 660 at 700,Toohey J) and set out the elements of the cause of action, said:

...It is not open to a party to plead as an alternative to a substantive cause of action already pleaded the tort of conspiracy to commit the substantive wrong, nor can there be a common law conspiracy to contravene the TPA outside the form of conspiracy expressly provided for in s 75B(1)(d) of the TPA: McKellar (above) at [195] and [197].

629. In Canberra Data Centres Pty Ltd v Vibe Constructions (ACT) Pty Ltd [2010] ACTSC 20, Refshauge J adopted that proposition, saying:

It seems to me, further, that it is not open to plead as an alternative to a substantive cause of action already pleaded, namely the damage done by the submission of claims which are alleged to be false and misleading under s 52 of the Act, the tort of conspiracy to commit the substantive wrong [citing Hely J in Australian Wool Innovation ].

630. In Pancontinental Mining Ltd v Posgold Investments Pty Ltd and Ors (1994) 121 ALR 405, Beaumont J had earlier struck out a pleading of conspiracy as his Honour found it to be "'mere surplusage and should not be permitted to stand as an attempt to obtain an impermissible forensic advantage", where the statute in question made the act in question unlawful and appointed a specific remedy such that the party must pursue that remedy and no other (cited in Porter v Oamps Ltd and ors (2005) 215 ALR 327).

The tort requires an intention to injure. As Kiefel and Jacobson JJ observed in Dresna Pty Ltd v Misu Nominees Pty Ltd (supra, at [7]) an agreement to do an unlawful act that results in damage to another party is not the same as a conspiracy to injure that party. In order to prove a conspiracy a claimant must show that the wrongful act complained of was done with a design of injuring the claimant and that it did so. According to their Honours, a conspiracy could be directed not only at a particular individual, but also at a class, in the sense of all members of the class. Their Honours went on to say (at [123]) that the test for an action in conspiracy is: 'what was the object of those combining when they acted as they did'. They must have acted in order that, not with the result that, the claimant should suffer damage.

631. However, as Mr Hutley acknowledged in his oral submissions (T 186.23), there has been some debate as to the question whether, where wrongdoers are joint tortfeasor, a conspiracy between them merges in the tort. In State of New South Wales v McCloy Hutcherson Pty Ltd (1993) 116 ALR 363, Beazley J (as her Honour then was), referring to Galland v Mineral Underwriters Ltd [1977] WAR 116, Drummond J), said at [112] - [114]:

Although entitled to the fullest respect, Galland does not bind me. It represents but one of two conflicting judicial views on whether, where the wrongdoers are joint tortfeasors, the conspiracy merges in the tort. See Law of Torts , 2nd ed, Balkin & Davis at p627 - p629 and E Goodman, Civil Conspiracy: Better Dead than Alive? (1991) 3 Bond LR 66 at 79 - 78.

There seems to me no convincing reason why it should not be open to a plaintiff to sue in the alternative both on a conspiracy to commit a tort and on the joint tort. It is true that, by suing on a conspiracy, the plaintiff may obtain procedural advantages not available if it were to sue only on the joint tort ultimately committed. See, eg, Ward v Lewis at 56. But it is not apparent why that must necessarily involve an abuse of the process of the court that warrants striking out the conspiracy claim. A plaintiff obtains the advantage of not having to prove actual or threatened damage if it claims an injunction under the Trade Practices Act on the basis that the defendant has contravened s52, whereas he must prove damage if he brings a passing off action on the same conduct: see Central Equity Ltd v Central Corporation Pty Ltd (1995) ATPR 41-443 at 40,997 - 40,998. But that does not justify confining the plaintiff to the cause of action upon which it is more difficult for it to succeed. There are many instances where the courts have countenanced an action on an unlawful act conspiracy to commit a joint tort, without any concern that the so-called doctrine of merger prevents that course being followed. In Jervois Sulphates (NT) Ltd v Petrocarb Explorations NL (1974) 5 ALR 1 at 33, Forster J saw nothing wrong with the plaintiff suing on such alternative causes of action, so long as it did not have two sets of damages in respect of the same tortious acts "one for the acts themselves, another for the conspiracy to commit them". Concerns, often well founded, about the fairness of prosecutors charging criminal conspiracies when they can rely on charges of substantive offences are not, in my opinion, sufficient to justify denying an injured plaintiff the right to choose its remedy. It is those concerns that may be at the root of this so-called doctrine of merger, as Goodman , ibid, suggests.

This is not to say that, in particular circumstances, a plaintiff may, by suing on a conspiracy to commit a joint tort rather than on the tort itself, abuse the process of the Court. It was submitted by the fourth and fifth respondents that the conspiracy claim was here brought to gain a forensic advantage in so far as it was suggested that damages for conspiracy can be recovered on a more generous basis than damages for the underlying joint tort: see McGregor on Damages , 16th ed, para1936. However, even if this is so, I cannot see why a plaintiff should be denied a full remedy for the defendant's wrongful conduct because a less generous one is available. I reject this submission.

632. The plaintiffs have also referred me to the authorities referred to in the 4 th edition of Balkin and Davis, Law of Torts , 4th ed (2009) at [21.51], including the decision of the High Court in William v Hursey (1959) 103 CLR 30.

633. In light of the scope for academic and judicial debate as to which approach is correct, it does not seem to me that it would be appropriate at an interlocutory stage of proceedings to preclude the plaintiffs from contending that Australian Wool Innovation is wrong in this respect and, therefore, if this were the only basis of the objection to the conspiracy allegation then that would not have persuaded me against the grant of leave so to amend.

634. However, that does not address the difficulties identified with the manner in which the conspiracy allegation has been pleaded. In Australian Wool Innovation , Hely J noted what was required to be pleaded for a conspiracy to injure by unlawful means (that being the type of conspiracy that the plaintiffs here allege):

Bullen & Leake identifies the necessary elements in an action in conspiracy at [50-01.1]:

The claimant must plead and prove the following necessary elements:

(i) a combination or agreement between two or more individuals (required for both types of conspiracy);

(ii) an intent to injure (required for both types of conspiracy but must be shown as the sole or predominant purpose for [conspiracy to do a lawful act by unlawful means];

(iii) pursuant to which combination or agreement and with that intention certain acts were carried out;

(iv) resulting loss and damage to the claimant.

A conspiracy can be proved without evidence of an express agreement. A court is entitled to have regard to the overt acts pleaded, and to infer from those acts that there was an express agreement to further the common object of the combination . All of those said to be parties to the conspiracy should be sufficiently aware of the surrounding circumstance, and share the same object, for it properly to be said that they are acting in concert. (my emphasis)

635. Mr Hutley points to the fact that the only pleaded allegation of an agreement to do a lawful act by unlawful means (that being a required element of a claim of conspiracy to injure by unlawful means) is contained in [156Z]. As I have noted [156Z] itself contains no particulars of the alleged agreement or the case that the defendants have to meet in that regard, nor do the cross-referenced paragraphs to [156AA] and [156AB] assist in that regard.

636. In the February Response, the plaintiffs respond to the pleading criticisms made of the conspiracy allegation by proffering further particulars to [156Z] - [156AJ]. As to the complaint that the material facts relied upon to establish the agreement pleaded in [156Z] are not identified, it is said (in essence simply directing attention to the paragraphs under the heading "Conspiracy" in the pleading) that particulars of the defendants' "agreement to combine together in the manner pleaded in paragraph 156Z" are provided in [156AA] and [156AB]. (I have extracted those paragraphs earlier above and noted the absence of particulars of the making of an agreement as such.)

637. It is said that the plaintiffs' primary case [156AA] is that the defendants "expressly agreed to combine together to extract the Corporate Defendants" from their obligations to One.Tel and that this express agreement is pleaded in [58AN], [58AO] and [58BL] (which I have summarised earlier above). Paragraph [58AN] is the only plea of an agreement as such. In the February Response it is said that this "pleads an express oral agreement between Messrs Packer and Murdoch to embark upon the Scheme". As a pleading of an express agreement, let alone an express agreement to injure by the use of unlawful means, it seems to me to be clearly deficient. I accept Mr Hutley's submission that, even read with [156AA] and [156BB] as particulars to [156Z], the conspiracy pleading at 156Z is inadequate.

638. In the February Response it is said that the agreement arose as a result of the discussions between Messrs Packer and Murdoch at Mr Murdoch's house on 27 May 2001 and that the substance and effect of the agreement is expressly pleaded, namely it was an agreement "to embark upon a scheme to undertake such steps and actions as may be necessary to procure that the Corporate Defendants be extracted from their binding obligations under the rights issue, the Subscription and Underwriting Agreement and/or the Bridge Loan Agreement respectively ("the Scheme") knowing that the Scheme was not in the best interests of One.Tel which needed $132 million from the rights issue if it was to remain solvent".

639. According to the February Response, the plaintiffs' alternative case is that the conspiracy is to be inferred from conduct (that pleaded in [156AB]). The plaintiffs there seek to prove the essential "agreement" requirement of a conspiracy by inference rather than by direct evidence, noting what was said by the High Court in this regard in Ahern v The Queen (1988) 165 CLR 87 at p 93:

Conspiracy is the agreement of two or more persons to do an unlawful act.... This fact can seldom be proved by direct evidence of the making of an agreement and must in almost all cases be proved as a matter of inference from other facts, that is to say, by circumstantial evidence.

640. However, I do not understand Ahern to be suggesting that it is not necessary to plead with particularity each of the facts on which the plaintiff relies for the allegation of conspiracy and from which the court will be asked that inference, in such a manner as to enable the alleged conspirators to know the case they have to meet; and those facts would have to permit the inference that the agreement or combination was to injure the company by the use of unlawful means (as this is the type of conspiracy alleged).

641. Mr Hutley accepts that a conspiracy may be inferred from conduct but draws the distinction between facts from which one might infer an agreement and facts which might be consistent with an agreement having been made, but which are equally consistent with no such agreement having been made (referring to the example given in Ahern (at 93-94 [6]) of facts from which one may infer a common enterprise, there to commit a crime). Mr Hutley submits that, here, the plaintiffs do not plead facts from which one can infer that there was a prior agreement to injure by unlawful means; they simply make allegations as to what occurred and then assert that those acts were "decided" in advance.

642. The conduct pleaded in [156AB] from which the inference of the alleged agreement to extract the corporate defendants from their alleged obligations and thereby deprive One.Tel of the benefit of the agreements is identified as "the overt acts carried out pursuant to and in furtherance of the conspiracy". In the plaintiffs' own pleading, therefore, the allegation is that the acts said to comprise the putting into effect of the conspiracy are the acts relied upon to found the inference that there was a conspiracy in the first place. In the particulars, reference is then made to a series of paragraphs [58H], [58AM] - [58BI], [58BL] - [141V] and [156AC] - [156AE], not all of which in its terms relates to conduct of all of the defendants (and where it is not clear to which of the defendants, together or separately, the allegation refers), not all of which are dependent on the use of any unlawful means or taking of any unlawful act, and where reliance is placed in places on the attribution of that conduct or of knowledge from one co-conspirator to the other (but where the basis of that attribution seems to be the conspiracy in the first place). Little wonder that the defendants allege that they do not know what precisely is being alleged against each of them and where they complain that this should not be permitted in the case of a very serious allegation such as that of conspiracy.

643. Mr Hutley maintains that the February Response misunderstands the deficiency identified in [58AN], namely that it is not simply an absence of particulars of an "agreement"; it is that in the absence of a pleaded agreement to do an illegal act or a legal act by unlawful means , this is not in its terms an allegation of conspiracy. It is said that the "Scheme", as pleaded, does not amount to a pleading of conspiracy, noting the summary of what must be pleaded to prove a conspiracy claim given by Hely J in Australian Wool Innovation at [60]-[61]. Thus, it is said that the absence of an allegation of an agreement to do an unlawful act or a lawful act by unlawful means is not merely a matter of infelicitous pleading that can be addressed through the provision of particulars (the function of particulars not being to plead a different agreement from that appearing on the pleading). I refer in due course to the role of particulars in a pleading such as this.

644. For Mr Yates (and by analogy this would apply to Mr Macourt), a further complaint is raised, on the basis of which it is submitted that the conspiracy claim against him is defective and cannot stand. Mr Young QC notes that although it is alleged that Mr Yates was part of a conspiracy, it is not alleged that he was party to the agreement said to constitute the conspiracy and, in particular, is not alleged to have been present at the meeting on 27 May 2001 at which it is alleged Messrs Packer and Murdoch agreed to embark upon the Scheme ([58AN]) (that being, as noted above, the only actual agreement alleged to have been reached other than by inference from conduct).

645. It is submitted by Mr Young that the February Response to this complaint (namely that Mr Yates was party to the agreement pleaded in [58AN] because Messrs Packer and Murdoch were his agents in entering into the agreement, such agency said to arise from the fact that they were all co-conspirators), relying upon Ahern v The Queen (at 95) is deficient due to the circularity of that proposition. In other words, it is said that where the only thing said to connect Mr Yates (or Mr Macourt) to the agreement of Messrs Packer and Murdoch to injure One.Tel is that he was a co-conspirator, that assumes the conclusion that Mr Yates was party to the conspiracy (that being the very matter the plaintiffs seek to establish by the alleged agency). There is considerable force in that submission. Furthermore, insofar as inferences are sought to be drawn from Mr Yates' subsequent conduct (such as his conversation with Ms Kekalainen-Torvinen) as to the existence of a conspiracy with others not participating in that conversation, to which conspiracy he must on that hypothesis have become a party at some earlier unidentified time, this highlights the inadequacy of the pleading from the perspective of Mr Yates (and Mr Macourt). What are the material facts on which those who were not present are alleged to have become aware of and then agreed to join in the alleged conspiracy? I consider this further in the context of the complaints made by all defendants as to the manner in which knowledge is sought to be attributed to them of various matters. Suffice it at this stage to note that I am not satisfied that there has been an adequate pleading of conspiracy to injure by unlawful means against any of the defendants but particularly against Mr Yates and Mr Macourt who, on any version of events, were not present at the critical meeting when this so-called conspiracy is said to have been agreed.

646. Mr Young submits that this circularity affects every occasion on which it is alleged that one of the participants engaged in conduct "on behalf of the defendants ", since the only basis on which the plaintiffs say the conduct was on behalf of Mr Yates is because all the defendants were engaged in a conspiracy, thus rendering objectionable not only the conspiracy allegations against Mr Yates (and Mr Macourt) but also the claims for breach of director's duties, misleading or deceptive conduct, knowing involvement in the misleading or deceptive conduct of the corporate defendants and breach of fiduciary duty pursuant to a dishonest and fraudulent design (because each of those claims depend to some extent on attributing to the said individuals the acts or knowledge of other defendants and the only basis relied on for that attribution is an agency said to arise from the conspiracy between the defendants). Thus, it is submitted that if the conspiracy allegation cannot stand against Mr Yates (or Mr Macourt), the remaining allegations now sought to be introduced into the Statement of Claim against them also cannot stand in their present form. I agree.

Complaints made as to way in which attribution of knowledge/conduct is pleaded

647. Before turning to the next of the new claims, I note that the defects identified in the conspiracy pleading (by way of the circularity of the logic according to which the knowledge of the conspiracy is sought to be attributed to the defendants other than Messrs Packer and Murdoch) are said to affect other aspects of the pleading (in the manner adverted to above) where allegations are broadly made that actions taken by particular individuals were taken "on behalf of" all of the defendants. Mr Hutley notes that the principal basis for attribution of conduct/knowledge to the defendants as evident from the February Response is that anything said by one conspirator should be attributed to all other conspirators relying on Ahern . Therefore, if, as is contended, [58AN] is a pleading of joint enterprise short of conspiracy (because the agreement there pleaded is not to do an unlawful act or a lawful act by unlawful means), it is said that there is no conspiracy pleaded which can support the "on behalf of" allegations and this affects the allegations of breach of duty and misleading or deceptive conduct made against the other director defendants and also, it is said, the corporate defendants.

648. Mr Hutley contends that because the "Scheme" as pleaded does not involve an allegation of an agreement to do illegal acts (or legal acts by unlawful means), Ahern is not engaged and no attribution of knowledge can take place on the basis of the pleaded "Scheme". Further, he takes issue with the suggestion that, as a general proposition, the acts and knowledge of any co-conspirator are for all purposes treated in law as the acts and knowledge of all co-conspirators (as opposed to the principle as applied in Ahern being restricted more narrowly to the admissibility into evidence against one alleged co-conspirator the words and conduct of other co-conspirators to prove the former's participation in the conspiracy). Mr Hutley contends that Ahern cannot be read as the basis for extending to each conspirator substantive liability for every other wrong committed by other co-conspirators. Annexed to the News defendants' pleading submissions is a list of each of the paragraphs which the News defendants contend are embarrassing by reason of the attribution of conduct/knowledge invoked by the "on behalf of" terminology.

649. Thus it is submitted that the basis for each of the "on behalf" of allegations falls away (with the exception of those limited instances where it is alleged that Mr Packer's conduct was on behalf of the PBL entities or that Mr Murdoch's or Mr Macourt's conduct was on behalf of the News entities).

650. This raises the issue to which I adverted earlier as to the function of particulars (particularly in a pleading which alleges serious misconduct of the kind comprised in the proposed amended statement of claim).

651. Each of the defendants has raised issues as to the adequacy of the proposed amended pleading insofar as it alleges fraud, dishonesty and conspiracy not previously levelled against them. By letter dated 21 September 2010 (to which it is fair to say only a dismissive response was received), Atanaskovic Hartnell, writing on behalf of Mr Yates, addressed the SPL's attention to the fundamental deficiencies they saw in the proposed amended statement of claim and to the requirement that allegations of that kind should be clearly pleaded and properly particularised ( Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279). (The particular allegations of deliberate and intentional wrongdoing in the nature of fraud alleged against Mr Yates were identified in paragraphs 4(a)-(v) of the letter by reference to the following paragraphs of the proposed amended statement of claim ([58BL], [58BN], [58BS], [111]-[112], [119H]-[119I], [119L], [119M]-[119N], [129]-[130],[130A]-[130C], [130I], [130L], [130S], [130T], [130V], [141A], [141D]-[141F], [141G]-[141K], [141U], [156T], [156Z]-[156AC], [156AK]-[156AN], [235L]-[235P], [235K], and [235U]). I agree that those paragraphs contain serious allegations going to the probity and honesty of Mr Yates and that it was incumbent on the plaintiffs properly to plead them.)

652. I agree that the defendants are entitled to know the precise factual basis on which it is asserted that they have acted dishonestly or with a deliberate intention to mislead and deceive (which amounts to a clear allegation of fraud) and the precise factual basis on which it is contended that one or more of them have conspired to cause harm or to injure One.Tel. I am not satisfied that the proposed amended statement of claim does so and I do not accept that this is a matter that can be remedied by the provision of the particulars now provided.

653. The February Response asserts that "At best, the bulk of the pleading complaints amount to a request for further particulars or seek the provision of evidence. Those complaints can be met, if necessary, either by the provision of further particulars or by incorporating those particulars in the body of the pleading."

654. Rule 15.3 of the Uniform Civil Procedure Rules requires that a pleading contain appropriate particulars of allegations of any fraud, misrepresentation, breach of trust, wilful default or undue influence on which the relevant party relies Rule 15.4 imposes a similar requirement that pleadings include particulars of any alleged "condition of mind", which expression includes a state of mind, such as intention ( Ritchie's Uniform Civil Procedure Rules 2005 at [15.3.5]).

655. Fraud is recognised to be a serious allegation, involving an explicit allegation of dishonesty, and one that should not lightly be made. It requires proper pleading and particularisation. Thus, in Davy v Garrett (1878) Ch D 473, the Court of Appeal said (at [489]) that:

The Plaintiffs say that fraud is intended to be alleged, yet it contains no charge of fraud. In the Common Law Courts no rule was more clearly settled than that fraud must be distinctly alleged and as distinctly proved, and that it was not allowable to leave fraud to be inferred from the facts. It is said that a different rule prevailed in the Court of Chancery. I think that this cannot be correct. It may not be necessary in all cases to use the word "fraud" - indeed in one of the most ordinary cases it is not necessary. An allegation that the Defendant made to the Plaintiff representations on which he intended the Plaintiff to act, which representations were untrue, and known to the Defendant to be untrue, is sufficient.

656. In Wallingford v Mutual Society (1880) 4 App Cas 685, Lord Hatherley said (at [45]) that:

Now I take it to be as settled as anything well can be by repeated decisions, that the mere averment of fraud, in general terms, is not sufficient for any practical purpose in the defence of a suit. Fraud may be alleged in the largest and most sweeping terms imaginable. What you have to do is, if it be matter of account, to point out a specific error, and bring evidence of that error, and establish it by that evidence. Nobody can be expected to meet a case, and still less to dispose of a case, summarily upon mere allegations of fraud without any definite character being given to those charges by stating the facts upon which they rest.

657. The requirement for proper pleading and particularisation has been repeatedly upheld ( Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at [573]; 130 ALR 1 at [8]; Banque Commerciale SA (in liq) v Akhil Holdings at [285], [295]; Rajski v Bainton (1990) 22 NSWLR 125 at [135]; Pickin v British Railways Board [1972] 3 All ER 923; [1973] QB 219 at [229]; and Leitch v Abbott (1886) 31 Ch D 374).

658. The pleading must specifically allege the acts involved and that they were done in a fraudulent manner. In Lawrance v Norreys (1888) 39 Ch D 213, the House of Lords referred (at [221]) to the ordinary rule of pleading applicable to cases of fraud as that expressed by Earl Selborne in Wallingford v. Mutual Society : "General allegations, however strong may be the words in which they are stated, are insufficient to amount to an averment of fraud of which any Court ought to take notice" and went on to say:

In my opinion, a plaintiff who desires to avail himself of the provisions of sect. 26 is not released from the ordinary rule It is not a sufficient compliance with the rule to state facts and circumstances which merely imply that the defendant, or some one for whose action he is responsible, did commit a fraud of some kind. There must be a probable, if not necessary, connection between the fraud averred and the injurious consequences which the plaintiff attributes to it; and if that connection is not sufficiently apparent from the particulars stated, it cannot be supplied by general averments. Facts and circumstances must in that case be set forth, and in every genuine claim are capable of being stated, leading to a reasonable inference that the fraud and the injuries complained of stood to each other in the relation of cause and effect. (my emphasis)

659. Recognising that it will sometimes be impossible to prove fraud by direct evidence and that the tribunal of fact may be invited to draw an irresistible inference of fraud from the facts proved, nevertheless the Court of Appeal in Ghazal v GIO (NSW) (1992) 29 NSWLR 336 emphasised that an allegation of fraud must be made with a proper basis and in proper form, having regard to the serious consequences that the making of a public allegation of fraud may have. (In this context I refer also to Associated Leisure Ltd (Phonographic Equipment Co Ltd) v Associated Newspapers Ltd [1970] 2 QB 450 at 456; [1970] 2 All ER 754 at [757] - [758]; Protean (Holdings) Ltd (recs and mgrs apptd) v American Home Assurance Co [1985] VR 187 at [213], [234]; White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 at [241] -[242]; and Medcalf v Mardell [2003] 1 AC 120; [2002] 3 All ER 721.

660. As a general matter, pleadings must give such particulars of any claim, defence or other matter pleaded as are necessary to enable the opposite party to identify the case the pleading requires to be met. What is necessary in this regard depends both on judgment and on the circumstances of the individual case ( Phillips v Phillips (1978) 4 QBD 127 at [139]; Ratcliffe v Evans [1892] 2 QB 524 at [532]; see also Ritchie's states (at [15.1.5]).

661. The suggestion that the deficiencies identified in relation to the pleading of the fraud and conspiracy allegations (namely that no agreement has been pleaded of an intent to injure by unlawful means; there being simply an allegation of an agreement to embark upon a scheme that would have a particular result and might well have been able to be effected by lawful means) can be met simply by the provision of particulars (even if those were otherwise adequate) cannot in my view be sustained for the reasons set out below, by reference to the particular role and function of particulars. (On the other hand, the provision of proper particulars of knowledge, for example, could in my view remedy the deficiencies as to the "on behalf of" allegations, were it not for the circularity identified therein.)

662. In Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712-713, Scott LJ considered the function of particulars (as distinct from the requirement to plead material facts), particulars having the function of filling in the picture of the cause of action with sufficiently detailed information to put the defendant on guard as to the case has to meet and to enable preparation for trial, whereas the pleading of material facts being necessary for the purpose of formulating a complete cause of action. Scott LJ said the following, at 712-713:

The cardinal provision in r 4 is that the statement of claim must state the material facts. The word "material" means necessary for the purpose of formulating a complete cause of action; and if any one "material" fact is omitted, the statement of claim is bad; it is "demurrable" in the old phraseology, and in the new is liable to be "struck out" under Order XXV, r 4: see Philipps v. Philipps 4 QBD 127; or "a further and better statement of claim" may be ordered under Order XIX, r 7.

The function of "particulars" under r 6 is quite different. They are not to be used in order to fill material gaps in a demurrable statement of claim - gaps which ought to have been filled by appropriate statements of the various material facts which together constitute the plaintiff's cause of action. The use of particulars is intended to meet a further and quite separate requirement of pleading, imposed in fairness and justice to the defendant. Their function is to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial. Consequently in strictness particulars cannot cure a bad statement of claim. But in practice it is often difficult to distinguish between a "material fact" and a "particular" piece of information which it is reasonable to give the defendant in order to tell him the case he has to meet; hence in the nature of things there is often overlapping. And the practice of sometimes putting particulars into the statement of claim and sometimes delivering them afterwards either voluntarily, or upon request or order, without any reflection as to the true legal ground upon which they are to be given has become so common that it has tended to obscure the very real distinction between them.

663. In Pinson v Lloyds and National Provincial Foreign Bank Ltd [1941] 2 KB 72 at 75-76, Scott LJ reiterated the views expressed in Odhams and said:

... All the material facts constituting the cause of action ought already to have been plainly stated in the pleading itself, as required by Order XIX, r 4, the plainest and most fundamental of all the rules of pleading. The proper function of particulars is not to state the material facts omitted from the statement of claim in order, by filling the gaps, to make good an inherently bad pleading, however common that pernicious practice may have become. On this topic I made some observations in Bruce v Odhams Press Ltd , and will not repeat them beyond saying that I still hold the opinion that it is not the function of particulars to take the place of necessary averments in the pleading . Their function is to put the opposite party on his guard and prevent him being taken by surprise at the trial of an action, the "material facts" of which should have been already averred. Nor have mere statements of evidence as such a place in particulars, any more than in the pleading, although the dividing line between statements which contain sufficient indication to prepare the opponent's mind for what he will have to meet at the trial and mere statements of evidence is sometimes hard to draw and should not invite meticulous criticism.

664. Scott LJ's conclusion that "in strictness particulars cannot cure a bad statement of claim" was cited with approval in Rubenstein v Truth and Sportsman Limited [1960] VR 473, at 476 by Adams J (who considered that the preferable course there, where there had been a clear infringement of the rule as to the pleading of all material facts and not merely a failure to give sufficient particulars of facts which have been pleaded, was to strike out the offending pleading (albeit with liberty to amend) rather than to order particulars).

665. In Goldsmith v Sandilands (2002) 190 ALR 370 at 371 [2], Gleeson CJ stated:

The facts in issue in a civil action case emerge from the pleadings, which, in turn, are framed in the light of the legal principles governing the case. Facts relevant to facts in issue emerge from the particulars and the evidence. The function of particulars is not to expand the issues defined by the pleadings, but "to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial".

666. In H 1976 Nominees Pty Ltd v Galli (1979) 30 ALR 181, Northrop J, on a motion to strike out misleading an deceptive conduct allegations in a pleading, adopted the distinction drawn by Scott LJ and held that the particulars there in question could not cure the defects contained in the statement of claim as they were prolix and confusing and "It cannot be said that in themselves they contain statements of material facts which show the nature of the applicant's claim based on s 52 of the Act". His Honour considered that if the particulars there sought to be pressed were allowed to perform that function, they would have a tendency to cause prejudice, embarrassment or delay in the proceeding and would constitute an abuse of the process of the court.

667. By the time the application for leave to amend was heard, the plaintiffs had been on notice for some time of the objections to the pleading. No attempt was apparently made to remedy that until after the luncheon adjournment on the final day of the hearing before me when written submissions were handed up by Junior Counsel for the SPL (Mr D'Arcy) responding to the pleading complaints (said to be by way of an aide-memoire), in which further particulars were provided and the suggestion of further amendments to the proposed amended statement of claim was foreshadowed. Not surprisingly, there was objection from Counsel to that course (particularly to the suggestion that leave should be granted to amend the pleading in circumstances where further amendment was conceded to be required and there had been no application made in advance for any further amendment). Those were the circumstances in which I gave leave for the filing of further written submissions going to the complaints made as to the proposed amended statement of claim as it then stood (Mr D'Arcy having confirmed that no application for further amendments was pressed).

668. I am of the view, having regard to the authorities referred to above, that inadequately or improperly pleaded complaints should not ordinarily be determined by what is contained in the particulars. (There are occasions when particulars have been allowed in effect to expand the scope of a pleaded case but I consider that those can best be seen as an application of the principle that parties may by their conduct of the case acquiesce in a departure from, or may disregard or enlarge, a pleaded case or, as it was put by Spigelman CJ in Vines v Australian Securities and Investments Commission (2007) 73 NSWLR 451; ( 2007) 62 ACSR 1 ; [2007] NSWCA 75, at 17 [57], may choose to fight the case on a different basis).

669. Therefore, at the very least, any leave to amend to include the proposed conspiracy and fraud allegations would require, in my view, a clear allegation as to the material facts on which it is alleged that each of the defendants became a party to an agreement or combination to injure One.Tel by unlawful means. I do not believe that the proposed pleading (even supplemented by the particulars belatedly provided) does so. The agreement itself goes no further than an agreement to embark upon a "scheme" (a word that of itself seems to carry perjorative connotations but which is in essence no more than an allegation that there was a proposal to do something) that might have been lawfully carried out. The pleading of an agreement itself is inadequate - it being comprised apparently of a statement or proposal made followed by a 'decision' without elaboration as to how that decision was expressed. Insofar as the agreement is said to be inferred from overt acts, the cross-referenced paragraphs are confusing to the extent that they group the defendants jointly but seem to be intended also to apply to each individually. The circularity of the attribution of knowledge and conduct to the conspirators by reference to the conspiracy which is sought to be proved is also a difficulty.

670. For those reasons, had I not reached the conclusions in (ii) above, I would not have given leave to amend the pleading to include the allegations of conspiracy in the form in which they currently appear nor would I have been inclined to allow the so-called "on behalf of" allegations at least without proper clarification of how it is said that the conduct/knowledge is to be attributed to the defendants in circumstances where (by reason of the ruling on the conspiracy allegation) reliance cannot be placed on any principle derived from Ahern to permit such attribution.

Barnes v Addy knowing assistance

671. The Barnes v Addy knowing assistance claim is contained in proposed [235U] - [235AC].

672. The facts relied upon to establish the dishonest and fraudulent design and the participation in that design with the requisite degree of knowledge are said to be the same as the facts which establish the directors' breaches of duty, which, in turn, are based on the facts pleaded the existing Statement of Claim in the period 25 to 29 May 2001 (noted in Attachment E to the plaintiffs' initial written submissions).

673. It is said that the breaches of fiduciary duty incorporated by proposed [235U] and [235V] are the same breaches relied upon to establish the breaches of ss 180 to 182 of the Corporations Act (other than an erroneous reference to [110] rather than [111] in proposed [235U] and [235V]) with the exception that the Barnes v Addy claim also encompasses [141V], namely the steps to implement the alleged 29 May Strategy.

674. The cause of action for knowing assistance is pleaded at proposed [235U] to [235 AA]. Insofar as the elements of a claim under the second limb of Barnes v Addy are concerned (the existence of a fiduciary duty; a dishonest and fraudulent design by the fiduciary; the assistance by the third party in that design; with knowledge, as articulated in Farah Constructions at [160], [179] and [181] and Ingot at [20] and [23]), Mr Karkar refers to the pleading of: the existence of the fiduciary duties at [151A]; the breach of those duties pursuant to a dishonest and fraudulent design at [235] (said to be in a form consistent with the requirements of Farah Constructions and Power v Ekstein [2009] NSWSC 130 at [52]); assistance in that design at [235V]; and the requisite degree of knowledge at [235V] to [235Z]. Mr Karkar notes that the knowledge element for liability under the second limb of Barnes v Addy is satisfied by any of the first four Baden categories of knowledge (Farah Constructions at [174]-[178]) and says that the knowledge pleading at [235W] to [235Z] conforms with the approach laid down by Austin J in NCR Australia v Credit Connections Pty Ltd [2004] NSWSC 1 at [168] and approved by McDougall J in Ingot at [66]-[67]: namely that actual knowledge is pleaded at [235W]; wilful blindness at [235X]; wilful and reckless failure to make inquiries at [235Y]; and knowledge of circumstances which would put an honest and reasonable person on inquiry at [235Z].

675. In the context of the response to criticisms of the pleading in relation to the alleged knowledge of the Conflicted Directors, the plaintiffs submit (as must be the case) that the actual knowledge of Messrs Packer, Murdoch, Yates and Macourt can be established not simply by positive proof that they in fact knew the matters alleged but that it can also be established "negatively" by proving the existence of "Nelsonian blindness" arising from their wilfully shutting their eyes to the obvious; and/or wilfully and recklessly failing to make such enquiries as an honest and reasonable man would make about the matters in question (the formulation of actual knowledge reflect the second and third Baden Delvaux categories of knowledge, which were recently approved by the High Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [174] in the context of Barnes v Addy accessorial liability). The plaintiffs also submit that wilful ignorance and the failure to make inquiry can fix a person with knowledge of the matters that would have been discovered had those enquiries been undertaken in the unconscionable conduct context (referring to what Deane J said in Amadio at 479 to the effect that the bank could not there shelter behind its failure to make inquiry). However, the question is whether that is adequately pleaded here.

676. As a matter of pleading, insofar as the allegation by the plaintiffs is that Mr Packer, Mr Murdoch, Mr Yates and Mr Macourt may have wilfully shut their eyes to the obvious, such that they in fact knew the matters alleged, (i.e. presumably that $132 million was sufficient) or that they may have wilfully and recklessly failed to make such enquiries as an honest and reasonable man would make about the matters in question, Mr Hutley maintains that if this is to be relied upon, then there would need to be a pleading of what it was that is said to be "obvious", to which they shut their eyes, or of the enquiries that they should have made. I agree. (Mr Hutley notes that as to whether it was "obvious" that $132 million would be sufficient, even on the plaintiffs' pleaded case, One.Tel's management was representing that at least between $137m and $147m was needed [58BR], which represented a substantial change in the position as understood as at 17 May 2001 as the proposed capital raising of $132m included a buffer of $50m [28N.4].)

Procuring or inducing a breach of fiduciary duty

677. Mr Bathurst and Mr Hutley both point to what they emphasise is the fundamental flaw (or non sequitur) in relation to the pleading of conflict of interest (this being Mr Hutley's fourth category of complaint as to the pleading in [156L]), referring to the allegations contained in [16.3], [17.3], [18.2], [19.2] and [20.2] (that the PBL defendants held almost 30% of the issued share capital in One.Tel); [141T.1] and [141U] (that they knew that, had the rights issue proceeded, One.Tel would have raised $132 million, which "would have been sufficient to ensure the continuation of One.Tel's business" ; [141S] and [141U] (that they knew that without those moneys, One.Tel would become insolvent); [351.10] and [351.11] (that in losing the use of these funds, One.Tel lost the opportunity to have prospered, to have made profits, and today to have a valuable and profitable business with a substantial market capitalisation) and [351.11], including particulars (that had it not been for the defendants' conduct, PBL/CPH and News would have consolidated their control of One.Tel without paying a premium for control, and would have received the benefits of the substantial profits and the substantial market capitalisation of One.Tel) - namely, that the defendants deliberately embarked on a course of conduct which they knew would destroy a company in which they had a very substantial shareholding at a time when they also knew that an alternative course of action would have allowed that company to survive, leading them to gain control over a valuable and profitable business, with a substantial market capitalisation, without having to pay any premium for control. It is said to be illogical that they would deliberately have embarked on a course of conduct which they knew to be adverse to their own interests. (Thus Mr Bathurst submits that if it be the case that the plaintiffs will ask the Court to infer an "agreement", "decision" or "determination" to embark on such a course of conduct, then the above facts alone would mean that no such inference was capable of being drawn.)

678. It is said that this flaw undermines the "conflict" allegation that underlies many of the claims. Thus, in [156L] of the proposed amended statement of claim, it is pleaded that at all material times there was a conflict, and that Mr Packer knew there was a conflict, between the interests of One.Tel in having the benefit of the rights issue, and his personal interest in extracting the Packer Companies from the rights issue; however, it is submitted that if the matters set out above are correct (as pleaded in the proposed amended statement of claim) , then there was no such conflict at all, because it was in Mr Packer's personal interest for One.Tel to have the benefit of the rights issue, which would have allowed One.Tel to continue to trade, and would have led to the Packer Companies (as that term is used in the pleading) gaining control over a valuable and profitable company with a substantial market capitalisation, without having to pay any premium for control.

679. For the same reasons, it is said that the pleading that the Packer Companies benefited from the rights issue being abandoned is (on the basis of the material facts pleaded in the proposed amended statement of claim) , not able to be sustained, because the proposed amended statement of claim alleges that, by this resolution, those companies in fact lost the opportunity to control a valuable and profitable company without having to pay a premium for control. Consequently, it is said that on the material facts pleaded in the proposed amended statement of claim , their actions were to their financial detriment, and not their benefit.

680. The plaintiffs contend that there is no fundamental flaw in the plaintiffs' case and there is no inconsistency between the plaintiffs' pleading within the meaning of rule 14.18 of the Uniform Civil Procedure Rules . They contend that the Conflicted Directors were in a position of conflict: that being that it was in One.Tel's interests to receive $132 million from the rights issue and it was therefore not in One.Tel's interest for the Abandonment Resolution to be passed but that it was in the interests of the Corporate Defendants to pass the Abandonment Resolution because the passing of that resolution meant that the Corporate Defendants did not have to pay $132 million to One.Tel (that is, the practical effect of the resolution was to release them from their obligation to One.Tel).

681. Mr Karkar notes that it is the plaintiffs' case that what One.Tel lost was the opportunity to prosper (that is that if the defendants had not done what they did, One.Tel would have received $132 million and that this was sufficient to enable One.Tel's business to continue in operation for some time) a contention said to be supported by the observations of Austin J in ASIC v Rich at [7323] (which I have extracted earlier in these reasons). As part of its claim for loss and damage the plaintiffs seek damages for the loss of that opportunity. The plaintiffs submit that as the claim for loss and damage in [351.11] says nothing about the Conflicted Directors' belief about this lost opportunity and, in particular, there is no allegation that the Conflicted Directors believed that One.Tel would have prospered, there is thus no conflict between the allegation that the Conflicted Directors acted in a position of conflict when causing the Abandonment Resolution to be put and the allegation that, as a result of that resolution being put One.Tel lost an opportunity to prosper.

682. I am not persuaded that this meets the defendants' assertion that there is a flaw in the plaintiffs' case in this regard. The fact that an allegation is put as to one matter (alleged loss flowing from breach of directors' duties) does not mean that the fact so asserted cannot be called in aid in resisting another allegation elsewhere in the pleading. However, I do not need to determine this issue because it seems to me that the fundamental flaw criticism is one that goes to the merits of the claim (not whether there is an arguable claim and whether it has been properly pleaded). Therefore, I would not have refused leave to plead the conflict allegations based on this perceived flaw in the logic underlying those allegations.

683. The allegation as to procuring a breach of fiduciary duty is contained in proposed [235AB] and [235AC], the facts relied upon to establish that cause of action being the same as those relied upon in relation to the Barnes v Addy pleading.

684. Mr Karkar notes that in Farah Constructions the High Court noted at [161] that the second limb of Barnes v Addy was not "an exhaustive statement of the circumstances in which a third party who has not received trust property and who has not acted as a trustee de son tort nevertheless may be accountable as a constructive trustee" and went on to refer to "a line of cases in which it was accepted that a third party might be treated as a participant in a breach of trust where the third party had knowingly induced or immediately procured breaches of duty by a trustee where the trustee had acted with no improper purpose".

685. The plaintiffs rely on this line of authority in support of their procuring or inducing breach of fiduciary duty claim.

Unconscientious conduct

686. The proposed unconscientious conduct pleading is contained in proposed [156AK] to [156AN] and the facts relied upon for this claim again are said to arise from the same facts as pleaded in the Statement of Claim, namely the Scheme and the Implementation of the Scheme allegations.

687. Mr Karkar refers by way of example to the shadow director claims in the existing pleading (namely that in the period 17 to 29 May 2001 PBL and CPH controlled the management and financial affairs of One.Tel and that the Board of One.Tel was accustomed to act at the direction of PBL and CPH).

688. Paragraphs [58AI] and [58AJ] of the proposed amended statement of claim allege that on and from 17 May 2001 PBL and CPH took over management control of One.Tel (said to rely on substantially the same facts as those contained in the particulars to [221] and [224] of the existing Statement of Claim).

689. A key element of the unconscientious conduct case is the proposition that One.Tel was under a special disadvantage because it was not able to make an independent and worthwhile judgment as to what was in its best interests. One of the matters relied upon in the proposed amended statement of claim to establish One.Tel's special disadvantage is that there was no one looking after One.Tel's interests because the Conflicted Directors (Messrs Packer, Yates, Murdoch and Macourt) acted in breach of their fiduciary duties in implementing the Scheme (as particularised in [156AK(a)(vi)]. Another is the allegation that PBL and CPH had taken over management control of One.Tel as particularised in [156AK(a)(v)]).

690. It is said that substantially the same factual substratum would need to be examined to establish the allegations in the proposed amended statement of claim that no one was looking after One.Tel's interests after 17 May 2001 because PBL/CPH had taken over management control of One.Tel and its directors were pursuing the Scheme as would need to be examined to establish the allegations in the existing Statement of Claim that on and from 17 May 2001, by reason of the conduct giving effect to the Determination, PBL and CPH effectively controlled One.Tel and its Board acted at their direction. I accept that the proposed unconscientious conduct claim arises out of the same or substantially the same set of facts as facts alleged in the existing claim. I turn then to the pleading of the unconscientious conduct claim itself (at [156AK] to [156AN]).

691. The elements of the cause of action for unconscientious conduct are noted by Mr Karkar as being that the plaintiff was under a special disadvantage; that this disadvantage was sufficiently evident to the defendant; and that the defendant unconscientiously took advantage of the plaintiff whilst it suffered from the disadvantage (citing Louth v Diprose (1992) 175 CLR 621 at 637 (per Deane J, with whom Mason CJ at 626 and Brennan J at 630 agreed); Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 461-462 (per Mason J) and at 474-475 (per Deane J)).

692. One.Tel's special disadvantage is pleaded in proposed [156AK]. It is particularised as being that "its ability to make an informed and worthwhile judgment as to what was in its own best interests was seriously affected" by a series of matters including the fact that it would become insolvent if the rights issue did not proceed; the 'surreptitious' acting and conspiring of its directors; its abstention from pursuing other options for funding or for reducing costs; the gross inequality of bargaining power; that PBL/CPH had taken over management and that the Conflicted Directors had acted in breach of various duties owed to the company.

693. Mr Karkar submits that the essence of a special disadvantage is that the condition (or circumstances) constituting the special disadvantage "seriously affects" the ability of the weaker party (One.Tel) to make an informed and worthwhile judgment as to what is in its own best interests (referring to Amadio at 462 per Mason J; Micarone v Perpetual Trustees Australia Ltd (1999) 75 SASR 1 at [586] per Debelle and Wicks JJ; Bridgewater v Leahy (1998) 194 CLR 457 at [39] per Gleeson CJ and Callinan J; and Australian Competition and Consumer Commission v CG Berbatis (2003) 214 CLR 51 at [12] per Gleeson CJ, at [55]-[56] per Gummow and Hayne JJ and at [184] per Callinan J.)

694. It is submitted by Mr Karkar that a company can suffer from a special disadvantage (relying upon what was said in Commonwealth Bank of Australia v Ridout Nominees Pty Ltd [2000] WASC 37 at [55] per Wheeler J and in Bell Group per Owen J at [8987] and [4930]).

695. Of the factors relied upon to establish that One.Tel's ability to make an informed and worthwhile judgment as to what was in its own best interests was seriously affected (pleaded at [156AK]), Mr Karkar notes in particular the following: first, One.Tel's financial position and the fact that, unless the Corporate Defendants complied with their respective obligations, One.Tel would become insolvent (referring to particular (a)(i) and noting that a plaintiff's financial circumstances are relevant in determining whether it suffers from a special disadvantage - Bell Group at [4931]; Ridout Nominees at [55] and that "financial need" was listed as one of the well accepted categories of special disability by Kitto J in Blomley v Ryan (1956) 99 CLR 362 at 415.); and, secondly, to the alleged gross inequality of bargaining power between One.Tel and the Corporate Defendants (referring to particular (a)(iv) and noting that a gross inequality of bargaining power can constitute a special disadvantage - Amadio at 464 per Mason J).

696. One.Tel's financial position is clearly a matter raised by the original Statement of Claim. The defendants' knowledge of One.Tel's special disadvantage is pleaded at [156AL]. It is submitted that this formulation of the defendants" knowledge reflects the test laid down by Mason J in Amadio at 467 (reference also being made to Micarone at [600]-[601]). The unconscientious advantage said to have been taken of One.Tel's special disadvantage is pleaded at [156AM].

697. The proposed amended statement of claim also includes a plea that the Corporate Defendants were in breach of s 51AA of the Trade Practices Act which proscribes unconscionable conduct (at [156AN]) and re ference is made to Australian Competition and Consumer Commission v Radio Rentals Pty Ltd (2005) 146 FCR 292 at [11] in this regard.

698. Mr Bathurst submits (and I agree) that the claim based on unconscientious conduct is one which appears patently unable to succeed, in that it rests on the allegation that a public company, having the benefit of professional advisers retained by it at the relevant board meeting, is alleged in [156AK] to have suffered from a "special disadvantage" in the Amadio sense, by reason that the particular circumstances meant that it was unable " to make an informed and worthwhile judgment as to what was in its own best interests". (For similar reasons, it is said that the claim in [141K] that the Conflicted Directors put One.Tel in a position where it was unable to obtain any independent legal advice at the 29 May Board Meeting about its ability to enforce obligations under the Subscription and Underwriting Agreement and/or the Bridge Loan Agreement is bound to fail.) It seems to be accepted that there were three partners of a large commercial law firm at the relevant meeting as the solicitors for One.Tel as pleaded in [119J.13]).

699. In Ridout, Wheeler J accepted the proposition that it was possible that a company could be a "victim" of undue influence and unconscionability (in the Amadio sense) in circumstances where the offending behaviour had been exerted over the "directing mind and will of the company". Her Honour discussed this (at [51] - [57]), noting that the majority of the disadvantages referred to by Fullagar J in Blomley v Ryan (1956) 99 CLR 362 (at 405) could only be suffered by a natural person and that there had been few cases in which the principle had been applied to a corporation. Her Honour noted that the learned authors of Cheshire and Fifoot on Contract (Butterworths 1997 p560) had suggested that it was "not difficult to imagine a commercial transaction involving a small one person or family company which might attract equitable relief". (I interpose to note that One.Tel could hardly be described as such a company.)

700. Reference was made to two cases in which it appeared to have been assumed that the principle would apply to a corporation ( Brooks v Sunlife Properties Pty Ltd , unreported; SCt of WA (Scott J, 21 February 1996) and NZI Capital Corporation Ltd v Fulton [1998] FCA 667.

701. Her Honour said at [54] - [57]:

If it is correct to say that the focus of equity's inquiry in relation to unconscionable dealing is the conduct of the stronger party in dealing with one who is under a special disability ( Commercial Bank of Australia v Amadio (1983) 151 CLR 447 at 474 per Deane J) then there would appear to be more than one sense in which it is possible for such conduct to occur in relation to a corporation.

First, to a limited extent a corporation may itself suffer from a "special disadvantage". For example, on occasion individuals have been held to suffer from such a disadvantage where they are in a desperate financial position and, attempting to escape from that position, act without legal advice (eg Morlend Finance Corp (Vic) v Luke (1991) ASCR 56-095). A corporation too may be in a desperate financial position and may act without advice. ...[noting that there the alleged disadvantage had been said to be that of one of the two directors and it was sought to impute that director's disadvantage to the company].

It seems to me that there are principles which would justify taking the view that it is not appropriate to look behind the corporation to the natural persons who are its directors for the purpose of considering whether there has been unconscionable conduct. The first is that the corporation is self-evidently a means adopted for the purpose of engaging in commerce. While there are obviously large, well resourced, well advised, corporations which could not conceivably be suffering any relevant disability, it will not always be easy to discern whether a corporation is, or is not, so run that a disability in one or more key directors would amount to a disability of the corporation itself. Even if one confined the rule to "family" corporations, there is a very wide range of such corporations. It may be a substantial impediment to reasonable commercial activity if those dealing with the corporation must look behind it to consider the abilities of its directors before dealing with it. Small corporations could be adversely affected if they are not in a position to take action quickly where commercial circumstances require it, because of the need to convince lenders or others that their directors are not under a relevant disability.

Additionally, while a corporation is an artificial person, it is in law an entity distinct from those who are its directors and shareholders and is employed for commercial purposes precisely because it has that independent and distinct existence. There is much to be said for the view that those who choose to conduct their affairs through the medium of a corporation should not, for the purposes of avoiding obligations undertaken by the corporation, be permitted to rely upon characteristics which pertain to them as the natural persons who lie behind the corporation : Hobart Bridge Co Ltd v Federal Commissioner of Taxation (1951) 82 CLR 372 at 385 per Kitto J, Tate Access Floors Inc v Boswell [1991] Ch 512 at 531, Morgan v 45 Flers Ave Pty Ltd (1986) 10 ACLR 692 at 694-5 per Young J. (my emphasis)

702. While her Honour (at [61]) was prepared for the purposes of her reasons to assume that " Amadio " unconscionability would be available in respect of a corporation in some circumstances, on the facts of the instant case her Honour was not satisfied that the director in question suffered from any relevant special disability that should be imputed to the company (thus her Honour's observations as to the applicability to corporations of the concept of a special disadvantage in the Amadio sense were strictly obiter ).

703. On appeal ( Ridout Nominees Pty Ltd v Commonwealth Bank of Australia [2003] WASCA 158), the Court noted the fundamental problem with granting relief to a company under the doctrine of unconscionable conduct is that, in accordance with Amadio , the company (as an entity) would have to demonstrate that it suffered from a "special disability" which resulted in its vulnerability, noting that to attribute such a "special disability" to the company by imputing a disability of its directors to the company itself would involve a lifting of the corporate veil.

704. (In the present case, the question as to who should be taken to be the directing mind and will of One.Tel could well be a complex task but in any event if the relevant directing mind and will is that of the Conflicted Directors then there is no allegation that they were under a special disadvantage that should be imputed to the company - as opposed to being in breach of the various duties alleged against them.)

705. The question as to whether a corporation can obtain relief under the unconscionable dealing doctrine was considered in Ford's Principles of Corporations Law at [14.170], the authors there recognising that there may be problems for a corporation in satisfying the need to show a special disability and expressing the view (contrary to that for which the plaintiffs contend) that want of financial resources cannot of itself be a special disability in the context of a corporation. The authors commented that:

Another possibility of a corporation itself being disabled is where it was not able to judge where its interests lay because the persons responsible for managing its business proved unable to do so. Given that officers of a corporation within the Corporations Act are required under s 180 of that Act to exercise reasonable care and diligence, and under s 181 to exercise their powers and discharge their duties in good faith in the best interests of the corporation, it may be against public policy to allow a corporation to rely on facts showing a dereliction of their duty : see Hammond C, (2001) 19 C&SLJ 74 at 79-80.

though postulating situations (such as illness of a sole director) when officers may be disabled from managing by something outside their control as possible situations where such a disability may arise (recognising again that to impute the director's disability to the corporation would call for the lifting of the corporate veil and questioning whether it should be done for imputing a disability of a director to the corporation). The authors note that the unconscionable dealing doctrine is not concerned with the effect of the conduct on the intention of the party under a disability (citing Amadio (1983) 151 CLR 447 at 474; 46 ALR 402 at 423 per Deane J) and concluding that the justification for lifting the veil to examine the process of formation of the corporation's intention is not available.

706. Ford also points to the fact that in the course of considering the allegations of special disability Wheeler J (at [74]) noted that a corporation could not point to the director's lack of business experience and non-involvement in the management of the company as a special disability in view of the requirement in s 180 that an officer shall exercise reasonable care and diligence and, relevantly in the current situation, that Wheeler J had been of the view (at [62]) that in a company with multiple directors the doctrine could not be attracted merely because one who was not a governing director was known to be under a special disability.

707. It seems to me that it cannot realistically be suggested (and, in fairness, this was not put by the plaintiffs) that the factual situation in Ridout (a family company with two directors where the wife of the governing director was said, though not found, to be under a special disability in dealings with a bank which it was said should be imputed to the company) is analogous to the current situation (where there was a large commercial corporation with multiple directors none of whom was said to be suffering a special disability as such and where the company itself had the benefit of advice from a large firm of commercial lawyers). I therefore cannot see any reasonable prospects of success of the unconscientious conduct (and related unconscionable conduct) claims even accepting that the plaintiffs could ultimately establish that One.Tel was in a dire financial position and that the Conflicted Directors were acting in breach of duties owed to the company.

708. Insofar as these claims arise out of the same set of facts as those raised in the existing pleadings, there nevertheless remains a discretion as to whether to permit an amendment in these circumstances and in my view where the claim is so patently doomed to failure it would not be appropriate (having regard to the case management objectives under ss 56-59 of the Civil Procedure Act ) to grant leave to amend to include such claims.

Breach of contract

709. The breach of contract claim is contained in proposed [156AO] to [156AR]. The contracts alleged to have been breached are the Subscription and Underwriting Agreement and the Bridge Loan Agreement, both of which are pleaded in the existing Statement of Claim. Mr Karkar notes that the plaintiffs' claims in both the existing Statement of Claim and the proposed amended statement of claim are based on the fact that the various defendants did not discharge their obligations to One.Tel under these agreements.

710. The proposed amended statement of claim alleges that various defendants breached the implied terms pleaded in particular (f) to [58E.2] and particular (d) to [58E.3] to do all things necessary to secure performance of the Subscription and Underwriting Agreement and Bridge Loan Agreement and to ensure that One.Tel received the benefit which it was intended that One.Tel would receive under those agreements.

711. The pleading of these implied terms is said to be based upon and supported by the observations of Mason J (with whom Gibbs and Stephen JJ agreed) in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607:

But it is common ground that the contract imposed an implied obligation on each party to do all that was reasonably necessary to secure performance of the contract. As Lord Blackburn said in Mackay v Dick :

'as a general rule ... where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect'.

It is not to be thought that this rule of construction is confined to the imposition of an obligation on one contracting party to co-operate in doing all that is necessary to be done for the performance by the other party of his obligations under the contract As Griffith CJ said in Butt v McDonald :

'It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract'.

712. I accept that the breach of contract claims arise out of the same set of facts the subject of the existing pleading and, had the question fallen for determination in light of the finding made in (ii), I would have allowed the amendment of the pleading to include a claim for breach of contract of this kind.

713. The News defendants requested particulars of the acts that it is alleged the PBL corporate entities were obliged by the implied term to do, but which they failed to do. It is said that this overlooks the words of [156AO], that pleads the breach of the implied term in [58E.2]. Paragraph [58E.2] particular (f) pleads the implied term to do all things necessary to secure the performance of the Subscription and Underwriting Agreement and to ensure that One.Tel received the benefit which it was intended that One.Tel would receive under that agreement. Thus, it is said to be clear on the face of the pleading what the implied term obliged the relevant defendants to do. The implied term was said to be breached because PBL, Robbdoc, News and Leteno entered into the Scheme which deprived One.Tel of the benefit of the Subscription and Underwriting Agreement.

714. It is said that no further particulars are required but even if they were, this would not be grounds to deny leave to the plaintiffs to amend the statement of claim.

Defendants' complaints as to the proposed amended pleading

715. Having outlined the various new claims sought to be made and various issues raised in relation thereto, I turn to the particular complaints made as to paragraphs not otherwise dealt with above. In summary, the defendants contend that in various respects the proposed amended statement of claim is inadequately pleaded and particularised, and as such is embarrassing (even if it does disclose a reasonable cause of action).

The contrived view allegations

716. I have referred above to the criticisms made of the allegations of conspiracy and, in that context, noted the complaints made as to the adequacy of the pleading of the serious allegations of dishonesty contained in the proposed amended statement of claim. A number of these turn on the allegations as to the expression by one or more of the defendants of a 'contrived view'. The relevant allegation in [58AK] is that the view expressed at the 25 May 2001 meeting attended by Messrs Packer, Jacob and Yates (and the late Mr Packer Snr) that $300 million was required for One.Tel to achieve a break even position in its cash balance was a contrived view.

717. Mr Bathurst points to the allegations in [58AK]-[58AO] of the proposed amended statement of claim, identifying [58AK] as the first allegation of dishonesty. In [58AK], the plaintiffs allege that about a week after agreements were entered into in relation to the rights issue, there was a meeting at PBL's offices at which the "contrived view" was expressed that it would take at least $300 million for One.Tel to achieve a break even position in its cash balance. The person who expressed the said 'contrived view' is not identified (other than it is said not to have been Mr Packer).

718. Mr Bathurst notes that the use of the word "contrived" appears to suggest conscious dishonesty, but complains that there is no indication of who sought to deceive in this way, what they knew, or the basis on which the statement is said to be deceitful; there is no pleading that anyone else at the meeting (ie other than the person who expressed the "contrived" view) understood it to be contrived.

719. In [58AL] it is alleged that at a meeting of PBL and News representatives, "one of Packer, Jacob or Jalland" expressed the "contrived view" that $132 million was insufficient to fund One.Tel's cash needs, and Mr Jacob expressed the "contrived view" that One.Tel's cash requirements could exceed $300 million. Mr Bathurst notes that there is no pleading of the basis on which these views were said to be "contrived", what the person who expressed them in fact knew to be true, or whether anyone other than the person who expressed the "contrived views" understood them to be contrived.

720. In [58AM] it is then alleged that Mr Packer and Mr Murdoch had a private conversation during which Mr Murdoch told Mr Packer that it was pretty clear that neither the PBL related companies nor the News related companies would put $150 million each into One.Tel. It is noted that there is no pleading that Mr Murdoch or Mr Packer understood the $300 million to be a "contrived" figure (in which case this is said to amount to a pleading that they were themselves misled by the 'contrived views' about cash needs that had allegedly been expressed to them).

721. As to the references in the pleading to 'contrived views' ([58K], [58L] and [58AM], in addition to the other complaints made by the defendants, the essential gravamen of Mr Hutley's complaint (as expressed at T-170.30-172.15) is that the pleading is embarrassing because it does not indicate who contrived the view and who believed it was contrived; and there is no articulation of the facts known to the person or persons who believed that it was a contrived view such that made the view contrived.

722. There is no pleading of facts known to the relevant person or persons on the basis of which it is alleged that they knew that the view was a contrived view.

723. The February Response addresses in some detail the complaints made as to the 'contrived view' allegations and identifies Mr Packer (in paragraphs 22, 27.1 and 29 of the Response), Mr Yates (paragraph 23), and Messrs Murdoch and Macourt (paragraph 30) as the persons who knew that the view was contrived. (There is some suggestion that Mr Jacob (paragraph 27.2) and Mr Jalland (paragraph 27.3) may also be alleged as having had that knowledge.)

724. The reasons that is said that the view was (to the knowledge of the respective defendants) contrived (which Mr Hutley notes were not pleaded) are set out in paragraphs 22-32 of the February Response and I do not proposed to reproduce them in these reasons. They include, in Mr Packer's case, the allegation that he had had an intimate involvement with and detailed knowledge of the affairs of One.Tel gained over six years as pleaded in [25H], [251], [25P] to [25S], [ 25V], [25Y] to [25AC], [25AI], [25AJ], [25AL] to [25AQ], [25AS] and [28A].

725. In summary, Mr Hutley's complaint is that paragraph 22 of the February Response, which sets out the basis on which it is alleged that Mr Packer knew that the view was contrived, contains a lengthy recitation of matters none of which is pleaded in [58AK] by cross-reference or otherwise and many of which are said not to appear anywhere or to the same detail in the pleading, reference in that regard being made in that regard to the following assertions:

• that Mr Packer had caused the Miller and Green spreadsheets to be presented to the 17 May Bard meeting [58C] and it can be inferred he would not have done so had he not genuinely believed that the opinion about the cash requirements (that $132 million was sufficient) was correct, based on reasonable grounds and arrived at after a thorough investigation; and that he knew of the final version of the spreadsheets and that Messrs Miller and Green had expressed that opinion (paragraph 22.5 of the February Response).

• that on and from 17 May 2001, PBL/CPH employees assumed management responsibility for One.Tel and took charge of the cash management of One.Tel's business [58AI] and [58AJ] (paragraph 22.7 of the February Response).

• There had been no material change in One.Tel's financial circumstances between 17 May 2001 (when Mr Packer believed that $132 million was sufficient) and 25 May 2001 (when the view was expressed that at least $300 million was required). (As to the fact that there had been no material change in One.Tel's financial circumstances in this period this is said to be clear from [58BQ] and [58BR] (paragraph 22.8 of the February Response); and

• that Mr Packer knew that the view expressed at the 25 May 2001 meeting was expressed by either Messrs Packer Snr, Jacob or Yates [58AK]; that neither Mr Packer Snr nor Mr Jacob was a director or executive of One.Tel; that Mr Yates had only been appointed a director of One.Tel a week earlier on 17 May 2001; and that Mr Packer, as a director of One.Tel since April 1999 [16A.1] knew this; that Mr Jacob had received twice daily updates from Messrs Miller and Green about the progress of their investigation [25AS]; that, from about 14 May 2001, Mr Packer Snr was determining PBL/CPH's strategy in relation to One.Tel [33A.1], from which it is said that it is reasonable to infer that Messrs Packer Snr and Jacob received the same reports from Messrs Miller and Green about the financial requirements of One.Tel as Mr Packer did; and that Mr Yates received the Miller and Green spreadsheets at the 17 May Board Meeting [58C] (paragraph 22.9 of the February Response). (It is further said in the February Response that for the various reasons set out therein (varying according to whoever it was that did express the view - Mr Packer Snr, Mr Jacob or Mr Yates) there were no reasonable grounds for the view and hence it was contrived.)

726. Similar comments are made by Mr Hutley in relation to the allegation of Mr Yates' knowledge that the view was contrived, contained in paragraph 23 of the February Response and for Messrs Murdoch and Macourt (contained in paragraph 30 of the February Response).

727. The plaintiffs' response to this, apart from simply asserting that the defendants well know the case they have to meet on the contrived view allegations is that under rule 15.4(2) of the Uniform Civil Procedure Rules a pleading that alleges knowledge (as the proposed amended statement of claim does) is specifically excluded from the description of "a condition of mind" in relation to which particulars are required to be given. The proposed amended statement of claim is said not to be deficient simply because it does not provide particulars of allegations of knowledge (the plaintiffs contending that the appropriate course if the defendants consider that further particularisation is required is to request such particulars under rule 15.10 after leave has been granted to file the proposed amended statement of claim. It is submitted that the absence of those particulars (even if it is assumed in favour of the defendants that there is such an absence, which is not conceded) is not a ground to refuse leave to amend the statement of claim.

728. Mr Hutley's response is that the pleading of the "contrived view" is used as a platform to make very serious allegations of serious misconduct, deliberate breach of duties owed to the company, conspiracy and other matters tantamount to fraud. (Mr Hutley notes that the pleading of the "scheme to extract", which commences from [58AK], leads to a variety of allegations which depend upon establishing that the defendants held a belief as to the financial state of the company that was wholly inconsistent with the view about the financial state of the company that they thereafter expressed to members of management and independent directors.) In these circumstances, it is said to be incumbent upon the pleader (and I agree) to identify the material facts relied upon to support the allegation that the views that were expressed by the defendants to management and the independent directors were in fact false (and were known to be false).

729. Further, it is noted that [58AK] is one of the paragraphs cross-referred to in the "Agency" pleading in [25N]. Mr Hutley points to the uncertainty as to what knowledge of Mr Packer is said to be attributed to Mr Murdoch and the News defendants (knowledge that it would take at least $300 million for One.Tel to achieve a break-even position in its cash balance; or knowledge that that view was a "contrived view"). This leads to the difficulty identified with the pleading in [58AL] that representatives of the Murdoch Companies were informed of the discussions referred to in [58AK].

730. It is further submitted in the February Response that the proposed amended statement of claim makes it clear that Messrs Packer and Yates knew that the view expressed at the 25 May 2001 meeting regarding the $300 million was a contrived one and that there can be no doubt about the case that the defendants have to meet in this regard. It seems to me that what the pleading makes clear is that it is alleged that the view was contrived but that what it does not make clear are the material facts on which the plaintiffs rely for the allegation that the relevant individuals said to have held that knowledge knew that the view so expressed was false. I think this was a matter that should have been pleaded. To the extent that it seems now to have been particularised (albeit not pleaded) that would in my view address the thrust of the pleading complaint in this particular regard but I would have considered it appropriate to direct that those particulars be included in any amended pleading so as to avoid any doubt as to what was being alleged. I consider that in circumstances where very serious allegations rest upon such a factual foundation it should be made very clear and there should be no room for doubt as to what is contended.

731. Part of the potential for confusion arises because the plaintiffs are unable to identify who it is that is said to have expressed the allegedly contrived view referred to in [58AL]. In passing, I note that in relation to one of the potential makers of the statement in question (Mr Jalland) the basis for the assertion that (if it were he who expressed the view) he knew it to be contrived was said in the February Response to be that Mr Jalland was not a director or executive of One.Tel; that he therefore had no first-hand knowledge or experience of the business of One.Tel; that the most recent (detailed) investigation of the financial position of One.Tel conducted by Messrs Miller and Green had concluded that as at 17 May 2001 $132 million was sufficient; and that there had been no material change in One.Tel's financial circumstances between 17 May and 25 May 2001. It is said that it follows that Mr Jalland could have had no reasonable basis for expressing the view (assuming that he in fact did express the view).

732. If, indeed, that is the sole basis for the allegation that if Mr Jalland expressed the view he did so knowing it to be contrived, then that seems to me to assume, among other things, not only that Mr Jalland accepted as likely to be correct the Miller/Green analysis (which may well on its face be a reasonable assumption but does not leave open the possibility that he might have formed his own assessment or later changed his mind as to the position) but also that he was aware that there had been no material change in the financial circumstances thereafter and that he had no further information to hand on which to rely when forming any relevant view (if indeed he did form such a view). The fact that a view may be unreasonable or may have no reasonable basis is something very different from a conclusion that the view was not honestly held. To suggest that the alleged lack of a reasonable basis for the said view means that Mr Jalland dishonestly expressed a false or contrived view on the basis of those assertions alone seems to me to be problematic. If it is indicative of a preparedness to draw conclusions as to the honesty of some of the persons involved in the relevant events based on a very thin factual foundation (and I have no way of determining this and therefore draw no conclusions in that regard), then this would be a matter of concern bearing in mind the caution expressed in the authorities not lightly to make such serious allegations.

733. Similar comments could be made as to the assertion that Messrs Murdoch and Macourt (as experienced businessmen) "must have known" that neither Mr Jalland nor Mr Jacob had reasonable grounds for expressing the contrived view (even assuming that it was either one of them who had done so), that assertion seemingly based in part on the speed with which a further report was to be prepared as to the financial position.

Agency allegation

734. As noted earlier, complaint is made as to the inadequacy of the pleading insofar as it fails to identify the knowledge attributed to various of the defendants. This was addressed in the February Response but it is said that it does not meet the criticisms in relation to a number of the paragraphs, as noted below.

735. First, it is said that the "agency" pleading in [25M] and [25N] is embarrassing because what is pleaded in [25N] (namely that as a result of the matters pleaded in [25M] Mr Packer was the agent of Mr Murdoch and the Murdoch companies "for the purpose of receiving the Information and the knowledge of Packer referred to in [various identified paragraphs]") does not follow from the facts pleaded in [25M] (namely, that on 5 February 1999, Mr Murdoch, his father and Mr Packer agreed that the latter would monitor and receive information concerning the business operations and financial performance of One.Tel on their collective behalf and would communicate it from time to time). This is said to be because the only effect that the pleaded agreement in [25M] could have on Mr Murdoch's knowledge is that Mr Murdoch would know that information which Mr Packer actually received and passed on to him. It is submitted that any such agreement cannot be a basis for alleging that any information that was received by Mr Packer but not so passed on is to be attributed to Mr Murdoch.

736. Further, it is submitted that the "agency" pleading is misconceived in any event because there is no allegation of any ability on the part of Mr Packer to affect or alter legal relations involving any of the News parties. Reliance was placed on the decision of Gummow J in Scott & ors v Davis (2000) 204 CLR 333, where, at [227], his Honour said:

The reliance by the present appellants upon agency affirms the force in Lord Herschell's observation in Kennedy v De Trafford (repeated by Dixon J in Colonial Mutual Life Assurance Statement of Claimiety Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd ) that "[n]o word is more commonly and constantly abused than the word 'agent.'" There is considerable terminological confusion in this area. The term "agency" is best used, in the words of the joint judgment of this Court in International Harvester Co of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Co , "to connote an authority or capacity in one person to create legal relations between a person occupying the position of principal and third parties".

737. In Scott , both Gummow J and Hayne J approved the statement in International Harvester Co of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Co (1958) 100 CLR 644 at 652 that:

Agency is a word used in the law to connote an authority or capacity in one person to create legal relations between a person occupying the position of principal and third parties.

738. Reliance is placed by the plaintiffs on the comments made by Owen J in Bell Group Ltd & Ors v Westpac Banking Corporation & Ors (No 9) (2008) 70 ACSR 1 (that case being currently the subject of appeal) in relation to agency. There, his Honour at [6166] - [6189] noted as relatively uncontroversial the general principles of agency, referring to Carrigan's case , and the proposition that acts by the agent that do not relate to the defined matter are beyond the scope of the agency relationship. His Honour observed that the application of those general principles would lead to the arguable conclusion that the banks in question were merely "conduits", "facilitators" or "administrators" in the negotiations to refinance the Bell Group's borrowing; the banks' argument being that they were not agents of the other syndicate banks (in the course of the negotiations with the Bell Group) because they had no authority to affect the other banks' legal relations with third parties other than for a very limited purpose (for example, that of seeking legal advice). At [6169] his Honour said:

However, it seems to me intuitively strange that if an agent is granted actual or ostensible authority by another to accept information on its behalf, the principal can avoid the imputation of knowledge acquired by the agent acting in that capacity simply because the agent has no power to affect legal relations. There are some cases that support the view that an agency arrangement can arise where the alleged agent has authority that falls short of the ability to create legal relations between the principal and third parties. (my emphasis)

739. His Honour referred to obiter of Dixon J in Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41 at 48-9 ; [1932] ALR 73 at 78 and noted that his Honour had referred to a difficulty arising "when the function entrusted is that of representing the person who requests its performance in a transaction with others, so that the very service to be performed consists in standing in his place and assuming to act in his right and not in an independent capacity". Dixon J had there contrasted the authority to accept proposals and premiums in relation thereto on behalf of the company with an authority to conclude a binding contract on behalf of the company and had been of the view that in the former case this was done as a "representative" of the company "which accordingly must be considered as itself conducting the negotiation in person".

740. Owen J also referred to obiter dicta of Handley JA in Permanent Trustee Australia v FAI General Insurance Co Ltd (2001) 50 NSWLR 679 ; 187 ALR 380 ; [2001] NSWCA 20 as to the difference between ordinary cases of agency and cases where the agent is an "agent to know" (and where material knowledge acquired outside his capacity as agent may in some cases be imputed to the principal). Handley JA at [87], in a passage quoted by Owen J had said:

In many of the imputed knowledge cases, the agent concerned had no authority to commit the principal to the transaction in question and was not engaged in negotiating that transaction. The duty, if any, of the agent in what I will call mere notice cases was simply to communicate information to the principal so that it could be acted on by others. It is understandable that in cases of that description the agent would ordinarily have no duty to pass on information received otherwise than in the course of his agency. The situation is quite different where the agent has active duties to perform and has knowledge present to his mind, however, acquired, which is relevant to their performance. (my emphasis)

741. At [6173] Owen J said:

It must be asked, then, whether the ability merely to receive and communicate information on behalf of another is enough to constitute a power to affect legal relations with third parties. Although receipt of information may be said to have legal implications (as is evident from the present case), it does not, by itself, demonstrate an ability to create legal relations. Of course, there may be situations in which an "agent" is vested with authority to receive information that does affect legal relations. An example is the authority to receive contractual offers and acceptances. But such examples involve a conferral of authority above and beyond the ability to receive merely factual information, which is all that exists (on the banks' argument) in the present case.

742. His Honour then referred to the conclusion in Henderson v Amadio Pty Ltd (No 1) (1995) 62 FCR 1; 140 ALR 391 that a party who is engaged to pass on information but nothing else and who had no ability to affect legal relations was not an agent, though there the misleading and deceptive information passed on by them to others (where it was known would be relied upon by prospective investors) was actionable against the solicitors.

743. At [6176] Owen J said that the notion that, critical to the concept of agency is that the agent represents the principal, points to a possible resolution, focussing not on the ability of the "agent" to create legal relations on behalf of the principal with third parties in those particular terms but on the ability of the agent to represent the principal in law. His Honour said:

A party who is given authority to receive notice or communications on behalf of another may not have the power to create legal relations with third parties. This party, however, is acting in the capacity of the "principal" by receiving communications from the third party, such that the communication to the "agent" is taken to be communication to the "principal". If such a view is taken, it would avoid the difficulty where a party could be permitted to hold out another as being legally capable of receiving communications on its behalf, then disclaim knowledge of the information received by that party on the basis that the party had no authority to act in a way that would bind it to a third party.

744. Having observed at [6181] that it would seem logical that, where a solicitor obtains information in the course of advising a client, that knowledge should be imputed to the client because the solicitor is, in effect, acting as the representative of the client in obtaining that information, went on at [6182] to suggest that the answer might be to take a broad view of the phrase "affect legal relations" "so that it includes receiving knowledge of facts that would affect a party's legal "situation"" adding that "In other words, if knowledge or information is received that would have the effect of making a particular course of action more (or less) legally desirable, it could conceivably be said to fall within the category of affecting a party's legal relations".

745. Noting at [6186] that the general principles that explain the circumstances in which the knowledge held by an agent may be imputed to the principal are well settled and at [6187] that a principal will only be fixed with knowledge held by the agent if the agent acquires knowledge of something material to the transaction for which he is responsible whilst acting in the course of, and within the scope of, his authority and where there is a duty on the agent to communicate that information to the principal, Owen J concluded at [6189] that:

Where an agent has actual or apparent authority to receive formal notification from a third party, notification to the agent within the scope of that actual or apparent authority will effectively bind the principal regardless of whether the principal actually receives the information: F M B Reynolds , Bowstead and Reynolds on Agency , 16th ed, Sweet & Maxwell, London, 1996, El Ajouat All ER 703; BCLC 481 per Hoffman LJ. The situation is different where the third party knows that the information will not be passed on to the principal.

746. It is submitted by Mr Hutley that the principle that the knowledge of an agent may be imputed to the principal is one that flows from the concept of agency in the classic sense ( Ford Excavations v Do Carmo [1981] 2 NSWLR 253 at 266-7 per Hutley JA) and that nothing said by Owen J in Bell Group at [6166]-[6189] alters that analysis (since there what Owen J was considering was whether or not an agency arrangement could arise where the alleged agent had authority that fell short of the ability to create binding legal relations between the principal and third parties [6169] in the context of the entry, or the potential entry, by the principal into transactions with third parties - a situation said to be distinguishable from the present where the attribution of knowledge by reference to the "agency" alleged in [25M] and [25N] is in order to establish an independent cause of action against the principal, unrelated to any alleged dealing or transaction entered, or proposed to be entered, into between the principal (through the agent) and a third party).

747. It is submitted by Mr Hutley that the statement at [6182] that the concept of an ability to affect legal relations being extended so that it includes receiving knowledge of facts that would affect a party's legal "situation" is probably expressed too broadly and does not follow from the cases to which his Honour had referred. It is submitted that it is unlikely that Owen J intended to extend the concept such that all knowledge received by an "agent", whether imparted or not to the principal, is attributed to the principal so long as they are facts that might in some generalised way affect the principal's "legal situation".

748. In any event, Mr Hutley submits that there is no pleading that the News defendants held Mr Packer out as their agent (for the receipt of information or otherwise).

749. While it seems to me that there are difficulties in the argument that the plaintiffs seek to raise on the basis of the alleged agency, they would not be such as to preclude the allegations being considered in due course with the benefit of all of the facts. What does, however, concern me is as to the generality with which the alleged agency is pleaded and the broadly expressed scope of the information said to be covered by that arrangement. In any event, what I consider would need to be pleaded is what precisely was said to be the information received and passed on - and as will be seen below, I do not consider that to have been adequately pleaded or particularised.

Allegations that conduct was "on behalf of" the defendants

750. In relation to the "one behalf of" allegations it is said that [22D], [22G], [22J] and [22M] plead that Messrs Packer, Yates, Murdoch and Macourt, in their dealings with and in respect of One.Tel, did not differentiate between their personal interests and the corporate interests of the Packer Companies (in the case of Messrs Packer and Yates) and the Murdoch Companies (in the case of Messrs Murdoch and Macourt). Accordingly, it is said that all of Messrs Packer, Yates, Murdoch and Macourt's conduct in relation to One.Tel was undertaken in both a personal and representative capacity. Thus, for example, the investments in One.Tel could be described as investments by Messrs Packer and Murdoch or investments by CPH and News regardless of the actual corporate entity which held the shares. Similarly, Messrs Yates and Macourt represented the Packer group of companies and the Murdoch group of companies respectively and their knowledge and conduct bound not only those companies but also Messrs Packer and Murdoch respectively [22H] and [22N].

751. Thus it is alleged that Mr Packer's conduct in relation to the affairs of One.Tel was engaged in on behalf of himself and the Packer Companies [22D] and [22E]; that Mr Yates' conduct in relation to the affairs of One.Tel was engaged in on behalf of the Packer Companies and Mr Packer [22G] and [22H]; that Mr Murdoch's conduct in relation to the affairs of One.Tel was engaged in on behalf of himself and the Murdoch Companies [22J] and [22K]; and Mr Macourt's conduct in relation to the affairs of One.Tel was engaged in on behalf of the Murdoch Companies and Mr Murdoch [22M] and [22N].

752. Further, it is said that the representative nature of Messrs Packer and Murdoch's conduct arose from the circumstances that, as pleaded in [25N], Mr Packer's knowledge of the matters referred to is to be attributed to Mr Murdoch by reason of the agreement pleaded in [25M]. In turn, Mr Packer's knowledge of those matters is to be attributed to the Packer companies and, similarly, Mr Murdoch's knowledge of those matters (imputed from Mr Packer) is to be attributed to the Murdoch companies.

753. Secondly, Messrs Packer and Murdoch's knowledge and conduct is to be attributed to the other defendants by reason of [56AJ]. The allegation is that once the defendants embarked on the Scheme, anything done in pursuance of the Scheme by any defendant was an act done on behalf of (and therefore by) all of the defendants. In Ahern at 95 the court said:

... anything said, done or written by one in furtherance of the common purpose is admissible in evidence against the others.... Thus anything said or done by one conspirator in pursuit of the common object may be treated as having been said or done on behalf of another conspirator. That being so, once participation in the conspiracy is established, such evidence may prove the nature and extent of the participation.

754. It is submitted that the agreement between Messrs Packer and Murdoch pleaded in [58AN] was made on behalf of the defendants because Mr Packer's conduct bound himself and the Packer companies; Mr Murdoch's conduct bound himself and the Murdoch companies; and their conduct bound Messrs Yates and Macourt. It is said that Messrs Packer and Murdoch's conduct on behalf of the defendants extends to all of the matters pleaded in [58AN].

755. There are a series of paragraphs in which allegations are made as to conduct engaged in by particular individuals which is said to be on behalf of the defendants ([58AQ], [58AS], [58AR], [58AT], [58AU], [58BB], [58BS], [111], [112], [119A], [119D], [119G], [119H], [119I], [119M], [119N], and [129]. Complaint was made by one or all of the defendants as to the lack of particularisation of how the conduct is said to have been engaged in on behalf of the defendants. In essence, leaving aside attribution of conduct of directors of PBL corporate entities to the PBL defendants by reason of the corporate authority they had, the attribution of conduct to PBL and thence to all other defendants is on the basis of the alleged Scheme and the assertion that knowledge on one conspirator is knowledge of them all.

756. So, for example, one of those paragraphs is [58AQ]. Objection was taken to it on the basis that it seeks to attribute to the defendants conduct of persons not said to be parties to the alleged conspiracy based on the fact that those were steps that the defendants had decided would be carried out in pursuance of the Scheme. Mr Hutley contends that there is nothing in Ahern which suggests that conduct of non-conspirators can be attributed to conspirators.

757. In relation to the allegation in [58AQ], which attributes conduct of Mr Cubbin (a director of PBL and various of the PBL defendants) to the defendants, it is said that Mr Cubbin was authorised to conduct the business of PBL/CPH in relation to the affairs of and dealing with One.Tel on their behalf [16A.3.9] and [17A.3.7]) and that the other PBL corporate defendants carried on their business with respect to One.Tel in accordance with the interests of CPH and at the direction of individuals (such as Mr Cubbin) acting for and on behalf of CPH [19B] and [20B]. Thus it is said that Mr Cubbin's conduct was engaged in on behalf of the PBL defendants and it is alleged that his conduct was also engaged in on behalf of the other defendants for the reason that they were engaged in the Scheme pleaded in [58AN] and that one of the steps comprised in the Scheme was to communicate certain matters to Mr Long of Ernst & Young [58A0.8] to [58A0.12]. In turn, Mr Cubbin's conduct was said to be on behalf of the defendants because the defendants had agreed to embark upon the Scheme by undertaking the various steps pleaded and Mr Cubbin's conduct was one of those steps.

758. Mr Hutley notes that there is no allegation, in the context of [58AQ], that Mr Cubbins was acting on the direction of one of the defendants in making the representation to Mr Long and thus contends that the pleading of attribution is based on no more than a coincidence between the conduct of one individual and a separate decision by another individual that such conduct should occur. (Mr Hutley similarly criticises the reasoning underlying the February Response to [58AS], [58BB], [119D], [119G], [129.3.1] on this basis.) In relation to this issue, if (as I would have found had the issue fallen for determination) the conspiracy allegation falls then so must this allegation of conduct by a non-conspirator being attributable to parties to the conspiracy simply because it is knowledge imputed to one of them by reason of their corporate association with Mr Cubbin. Even had the conspiracy allegation been maintained, I would have had difficulty with the reasoning underlying this allegation but provided the particulars of the attribution of knowledge made clear the case that had to be met, I would have considered the question whether such attribution should properly be made to be a matter for determination by the trial judge. A similar position follows in relation to the other paragraphs in which conduct of non-conspirators is said to be attributed to co-conspirators.

Complaints as to particularisation of knowledge

759. Complaint is made as to the lack of particularisation of the facts said to have been known to Mr Packer (which knowledge is in turn deemed to be known to Mr Murdoch and the News defendants) (the News companies being defined in the proposed amended pleading as "the Principals"). Mr Karkar submits that the knowledge that Mr Packer had is clear from the various cross-referenced paragraphs in the pleadings. Mr Hutley contests that proposition and does so by reference to various of the paragraphs in the proposed amended statement of claim.

760. As to [25N] the plaintiffs (by way of the provision of further particulars in their February Response) say (but the defendants still dispute) that the knowledge of Mr Packer, as a result of the matters referred to in the cross-referenced paragraphs, is clear from those paragraphs. The contest between the parties in this regard can be set out as follows.

761. As to [25P] , Mr Packer's knowledge is said to be knowledge of the findings which the PBL/CPH employees reported to him (those being said to be a matter for evidence). Mr Hutley complains that in [25P] there is no identification of the 'findings' alleged to have been reported to Mr Packer following the investigations and monitoring "included" in the paragraphs particularised in 25P(b).

762. Mr Hutley notes that what is pleaded in [25N] is that the knowledge of Mr Packer referred to in [25P] is attributed to Mr Murdoch and the News companies (that allegation then being cross-referenced through [28S], which alleges knowledge of Mr Packer as to the requirement for additional cash and the existence of "options available" to One.Tel) to [141F] (that the Conflicted Directors and therefore the Corporate Directors knew that the representation that there were no alternative funding options available to One.Tel was misleading or deceptive because to their knowledge it was untrue) and to other allegations identified by Mr Hutley in oral submissions (T-165.39-47; T-168.26 - T-169.15.) Mr Hutley submits (and I agree) that if there is to be pleaded as a material fact that the News defendants (or, for that matter, Mr Packer) knew something, then that should be identified in the pleading (ie the material fact that must be pleaded is what they actually knew).

763. As to [25V] , Mr Packer's knowledge is said to be of the findings which Mr Kleemann reported to him (again said to be a matter for evidence), including the findings contained in the written reports referred to in the particulars to this paragraph. Mr Hutley contends that the reference to reports by Mr Kleeman to Mr Packer as to "his findings" following "extensive investigation into the affairs of One.Tel" suffers from the same difficulty. Mr Hutley maintains (and I agree) that it is not sufficient to state that the findings are "the findings contained in the written reports", first, because the February Response notes that the findings contained in the written reports are only some of the relevant findings to which the pleading refers and, secondly, because the pleading must identify the particular facts said to be known to Mr Packer and thus the Murdoch entities, and not just refer to what might be contained in a written report.

764. As to [25Y] , Mr Packer's knowledge is said to be of the matters stated at the meeting (the substance and effect of which is said to be adequately pleaded in accordance with rule 14.9 of the Uniform Civil Procedure Rules ). No issue is now taken with this paragraph

765. As to [25Z] , Mr Packer's knowledge is said to be of the matters agreed with Mr Rich (the substance and effect of which is said to be pleaded in this paragraph). Mr Hutley submits that it is not sufficient to assert that the relevant knowledge is Mr Packer's knowledge of the matters agreed with Mr Rich; what is unclear is whether the relevant knowledge is the knowledge that an agreement to the pleaded effect was reached or knowledge of the factual matters stated within 25Z. (It seems to me that this is a pleading issue that could be dealt with by a direction for the production of further particulars in that regard.)

766. As to [25AA] , Mr Packer's knowledge is said to be of the matters contained in and said at the presentation by One.Tel's management and his knowledge of the matters discussed at the meeting with Messrs Rich, Macourt and Hartigan (the substance and effect of which is said to be pleaded in this paragraph). Mr Hutley complains that the substance and effect of the matters presented by One.Tel's management, and the matters discussed at the meeting referred to in [25AA.2], are not pleaded (so that it is not known what it is alleged that Mr Packer knew about One.Tel's international, fixed line and Next Generation businesses, as referred to in [25AA.1] or what it is said that Mr Packer knew about One.Tel's financial performance for the first half of the 2000-2001 financial year as referred to in [25AA.2]. Those seem to me to be valid complaints.

767. As to [25AB], Mr Packer's knowledge is said to be of the ASX announcement and its contents. Mr Hutley complains that this is not apparent from the pleading (on the face of which, the relevant knowledge might be the matters stated in the announcement or the knowledge that Mr Packer had caused One.Tel to make that announcement, or both; alternatively, on the face of the pleading, the relevant knowledge might be not the fact of the announcement, but the matters of fact stated in the announcement). If the plaintiffs are held to the February Response (then the relevant knowledge would seem to be limited to the fact that the announcement had been made and its contents) there would seem to be no prejudice in the fact that this is contained in a particular and not the pleading itself.

768. As to [25AC], Mr Packer's knowledge is said to be of the Daily KPI Reports which he received by email (said to be a matter for evidence, but including reports for the period 1 to 12 April 2001 as pleaded in [25AN] and [25AO]. A similar issue is raised as was raised with [25AA]. Mr Hutley's complaint is that it is not apparent from the pleading what the particular knowledge is (ie, what particular facts referred to in the daily KPI reports are said to have been known by Mr Packer). It is submitted that the relevant facts said to be the material facts must be identified. I agree.

769. As to [25AI] , Mr Packer's knowledge is said to be of the matters discussed at the meeting (the substance and effect of which is said to be pleaded in this paragraph). As to [25AI], although the February Response identifies the relevant knowledge as knowledge of the matters discussed at a meeting, Mr Hutley submits that it is not clear from the pleading that that is what is alleged and it remains unclear whether the relevant knowledge is knowledge that someone said something at the meeting or knowledge as to the fact said to have been communicated that One.Tel would run out of cash. (A similar complaint is made in relation to [25AM], [25AP], [28B], [28C], [28G], [28H], [28)], [33A], [33E].) I accept that there is a valid complaint that this was not made clear in the pleading but again think that this is something that could appropriately be addressed by a direction to provide further clarification by way of particulars.

770. As to [25AJ] , Mr Packer's knowledge is said to be of the matters which Messrs Kleemann and Miller reported to him (said to be a matter for evidence). Mr Hutley notes that a similar issue arises to that above, namely whether the relevant knowledge is knowledge of the fact that Messrs Kleemann and Miller continued to monitor and review One.Tel's business and report material matters to Mr Packer or (as stated in the February Response) it is knowledge of the matters which Messrs Kleemann and Miller are said to have reported to him. It is submitted that these are not simply matters of evidence but rather that if there is some relevance to the Murdoch entities knowing some particular matter of fact, then the alleged fact said to be known must be identified. I agree.

771. As to [25AL] , Mr Packer's knowledge is said to be of the matters contained in and said at the presentation (the substance and effect of which is said to be pleaded in this paragraph). Again, Mr Hutley complains that it is not clear what knowledge is said to be attributed to the News entities. Further, Mr Hutley notes that a statement that the presentation was "concerning One.Tel's Next Generation business" is not a pleading of the substance and effect of the matters contained in and said at the presentation. The complaint that the material facts are not alleged is in my view well founded.

772. As to [25AM] , Mr Packer's knowledge is said to be of the matters which were discussed at the meeting with Messrs Rich and Yates (the substance and effect of which is said to be pleaded in this paragraph).

773. As to [25AN] and [25AO] , Mr Packer's knowledge is said to be of the decline in One.Tel's cash balance from approximately $69.2 million to $33.1 million in the period 1 to 12 April 2001 as a result of receiving the Daily KPI Reports for this period. The complaint as to the lack of particularisation in these paragraphs has been withdrawn or is not pressed.

774. As to [25AP] , Mr Packer's knowledge is said to be of the matters discussed at the meeting (the substance and effect of which is said to be pleaded in this paragraph). A similar complaint is made as was made in relation to [25AI] and could in my view be dealt with in the same way.

775. As to [25AS] , Mr Packer's knowledge is said to be of the matters which Messrs Miller and Green reported to him (said to be a matter for evidence). A similar complaint is made by Mr Hutley in relation to [25AS] as was made for [25AL]. The complaint that the material facts are not alleged is in my view well founded.

776. As to [28A], Mr Packer's knowledge is said to be that Messrs Miller and Green advised him that it was likely that One.Tel would need a capital raising. Mr Hutley draws a contrast here with [25Y.1] (which pleads that Mr Rich explained that there had been delays in relation to Next Generation and explained the cash flow consequences of those delays). Mr Hutley notes that in the February Response to [28A] the relevant knowledge is identified as the fact that Messrs Miller and Green had advised that it was likely that One.Tel would need a capital raising (as opposed to the fact being that One.Tel would need a capital raising), whereas in relation to [25Y.1] it is said that the knowledge is not that Mr Rich explained that there had been the said delays but rather that the knowledge is of the factual matters stated at the meeting. Mr Hutley notes that this highlights the difficulty that the defendants do not know whether the alleged matter said to have been known in various of the paragraphs is the fact that something was said (which might be correct or might not be) as opposed to the fact itself. I accept that there is room for confusion. I think it could be appropriately clarified by a direction to provide further particulars.

777. As to [28B] , Mr Packer's knowledge is said to be of the matters discussed with Mr Rich during the telephone conversation (the substance and effect of which is said to be pleaded in this paragraph). Mr Hutley makes a similar complaint in this regard to that made in relation to [25AI] and this could in my view be addressed in the same way.

778. As to [28C], Mr Packer's knowledge is said to be of the matters discussed at the meeting (the substance and effect of which is said to be pleaded in this paragraph). Again, the complaint made is the same as that made in relation to [25AI] and this could in my view be addressed in the same way.

779. As to [28G], Mr Packer's knowledge is said to be of the matters discussed at the meeting (the substance and effect of which is said to be pleaded in this paragraph). Again, the complaint made is the same as that made in relation to [25AI] and this could in my view be addressed in the same way.

780. As to [28H] , Mr Packer's knowledge is said to be of the matters discussed with Mr Rich during the telephone conversation (the substance and effect of which is said to be pleaded in this paragraph). Again, the complaint made is the same as that made in relation to [25AI] and this could in my view be addressed in the same way.

781. As to [28M], Mr Packer's knowledge is said to be of Messrs Miller and Green's report to him, namely his knowledge of the spreadsheets entitled "PBL/CPH Adjustments to One.Tel Cash Flow" and what Messrs Miller and Green told him about those spreadsheets. Mr Hutley says that the explanation now provided introduces additional confusion because it is now said that the knowledge in [28M] is not just the knowledge of the spreadsheets but knowledge of what Messrs Miller and Green told Mr Packer about those spreadsheets (although [28M] on its face says nothing about Messrs Miller and Green telling Mr Packer anything about the spreadsheets). Insofar as the plaintiffs rely on statements made by Messrs Miller and Green at the meeting (and the substance of those statements are pleaded) then it seems to me that this allegation is sufficiently particularised. Insofar as the complaint (as it was in relation to [25AI]) is as to what in the relevant spreadsheets is said to have been known and whether the relevant knowledge is knowledge that someone said something at the meeting or knowledge as to the fact said to have been communicated, I consider that this could be dealt with by a direction of the kind referred to in relation to [25AI].

782. As to [28N], Mr Packer's knowledge is said to be of the matters contained in Miller and Green's First Report (the substance and effect of which is said to be pleaded in this paragraph). I note that the complaint in this regard was not pressed.

783. As to [280], Mr Packer's knowledge is said to be of the matters discussed at the meeting (the substance and effect of which is said to be pleaded in this paragraph). There does not seem to be a further complaint as to this paragraph.

784. As to [28S], Mr Packer's knowledge is said to be that One.Tel was likely to require additional cash, and that there were options available to One.Tel to secure additional funding from sources other than the Corporate Defendants and/or by reducing expenditure. As to this paragraph, the complaint is that it suffers from the deficiency that it makes cross-references to a number of earlier "agency" paragraphs which themselves suffer from pleading deficiencies.

785. As to [33A], Mr Packer's knowledge is said to be of the matters discussed at the meeting (the substance and effect of which is said to be pleaded in this paragraph). Mr Hutley presses a similar complaint to that in relation to [25AI] as to whether the knowledge is that this was said at the meeting or that this was knowledge as to the fact communicated. It could be dealt with by a direction to provide clarification on that issue.

786. As to [33B], Mr Packer's knowledge is said to be that entry into the bridging facility would enable One.Tel to receive the benefits of the One.Tel Restructure Agreement and enable each of PBL/CPH and News to receive the benefits of the One.Tel Restructure Agreement. Mr Hutley maintains that it is unclear as to whether the relevant matter said to be known by the Murdoch entities by attribution is the fact that entry into the bridging facility would have the impacts pleaded or the fact that Mr Packer considered that entry into the bridging facility would have those implications (noting that the February Response suggests that what is intended to be pleaded is that the Murdoch entities had knowledge that entry into the bridging facility would have those outcomes but that this does not appear from the face of the pleading). This could be dealt with by an appropriate direction for clarification.

787. As to [33E], Mr Packer's knowledge is said to be of the matters discussed at the meeting (the substance and effect of which is said to be pleaded in this paragraph). A similar complaint is made here as was made to [25AI], namely that it is unclear whether the knowledge is that this was said or as to the fact communicated. It could be dealt with in the same fashion as [25AI].

788. As to [58AE] and [58AG.1], the earlier complaints were not pressed.

789. As to [58AK], I have dealt with the complaints as to this paragraph in relation to the conspiracy allegations earlier. I think it was incumbent on the plaintiffs, when alleging fraud and conspiracy, to make clear the material facts on which they rely for the allegations made as to what the parties knew or should have known, irrespective of the fact that the rules might not mandate particulars of knowledge ordinarily to be provided.

Lack of Particularisation of "Agreement", "Decision", "Determination"

790. Complaint is made by Mr Bathurst that there are no particulars of the alleged "agreement", including when, how, or by whom it was reached nor are there particulars of the allegation in [58AO] that the defendants "decided" to take steps to give effect to this Scheme. Mr Bathurst notes that those steps allegedly included "misrepresenting" the matters pleaded in [58A0.2] to [58A0.6] (such as, for example, that $132m of share capital was insufficient to render or maintain One.Tel solvent), though there is no allegation that, in deciding to embark on this course, any of the defendants knew these to be misrepresentations, or the basis on which they knew them to be misrepresentations; and also included the communication to Mr Long of Emst & Young of the purported views and contrived ideas pleaded in [58A0.8] to [58 AO.11]. Mr Bathurst notes that there is no pleading of what the "purported view" of the defendants was as to the financial position of One.Tel (that is alleged to have been communicated to Mr Long) or as to why it was not an honestly held view or as to which of the defendants knew the financial position of One.Tel was other than that which it is alleged they purported to indicate.

791. Similar complaints are made as to defects in the other central allegation of conspiracy contained in proposed [58Bl], that being the allegation that the defendants "determined" to undertake a strategy to take certain steps, including "publicly proclaiming falsely" that they had been "profoundly misled" in order to create "the false impression that the Defendants had been the victims of misleading conduct" rather than "perpetrators of serious breaches". Mr Bathurst notes that there are no particulars of this "determination" (just as there were none of the "agreement" in [58AN] or the "decision" in [58AO], and no pleading of the basis for the allegation that each of the defendants knew that the statement that they had been misled was false.

792. Mr Hutley similarly complains that [58AO] is in form and substance embarrassing because it is inconceivable that the defendants could ex ante have "decided" to take the steps pleaded in [58AP] to [141R] (T-173.38-47); and it is obscure as to whether it is being alleged that each of the defendants formed some view that the Scheme was intended to do certain things or involve certain things and, if so, when (T-173.49- T-174.3).

793. In their February response, the plaintiffs refer to the express terms of paragraph 58AO as identifying the date of the decision (on and from 27 May 2001), the parties to the decision (the defendants), and the nature of the decision that was made (to take steps to implement and give effect to the Scheme through the conduct and actions pleaded in [58AP] to [141R]). It is said that insofar as the steps pleaded in [58AP] to [141R] were steps taken by Mr Packer or by employees of Packer Companies, that conduct was conduct by the defendants because (apart from the allegation that the conduct of Mr Packer was conduct on behalf of the Packer Companies, which does not appear to be the subject of a pleading objection) the defendants engaged in a conspiracy. Reference is made to [156AJ] which pleads that by reason of the conspiracy, the knowledge and conduct of all conspirators is to be attributed to all the others. Thus it is said that the decision pleaded in [58AO] to undertake those steps was a decision taken by the defendants.

794. Insofar as complaint is made that [58AO] does not identify which defendants are said to have had which of the pleaded intentions; what parts of the conduct pleaded at [58AP] to [141R] are relied upon as against each defendant; and what parts of the conduct are relied upon for the purpose of inferring a state of mind on the part of each defendant, the plaintiffs contend that the response to these criticisms is to be found in the words used in [58AO], namely that "the Defendants" decided to do certain things. It is said that this is an allegation that each of the defendants decided to do those things and it follows that the conduct referred to in [58AP] to [141R] is relied upon as against each defendant.

795. Mr Hutley contends that the February Response fails to address the defendants' criticisms of this paragraph (in that it simply asserts that each of the defendants "decided" to do each of the things pleaded in [58AP] to [141R]). Mr Hutley, in effect, submits that one is required to make an assumption that each defendant decided this separately from each of the others. I agree that the pleading is unhelpful in this respect. Furthermore, it is not clear to me that one can have an imputed 'decision' as opposed imputed knowledge, but as I read the February Response what is being asserted is that if Mr Packer decided to do something then falling within the rubric of the alleged conspiracy then so did all the defendants because of the fact that they were co-conspirators (and irrespective of whether they in fact did anything).

Decision pleaded in [58AW]

796. Paragraph [58AW] pleads that, having received advice from Minter Ellison, each of the defendants decided "to implement the Scheme by undertaking the course of conduct referred to in paragraphs 58A0.2 to 58A0.21 above". Complaint was made as to this allegation and the February Response is that the pleading itself makes it clear when the decision was made (after the receipt of Minter Ellison's advice), who the 'parties to the decision' were (the defendants) and the nature of the decision made (namely that the relevant PBL/News entities - PBL, News, Robbdoc and Leteno - should not rescind or terminate the Subscription and Underwriting Agreement and should instead continue to implement the Scheme). It is submitted that there is no doubt about the case that the defendants have to meet.

797. To the extent that complaint is made that the cross-references in [58W], [58AE] and [58AG.1] to paragraphs [580], [58P], [58S], [58T] and [58V] are embarrassing because all of the conduct referred to in these paragraphs was conduct of PBL representatives and not News/Leteno representatives. Accordingly, it is said, that there is no nexus between the pleaded conduct and News/Leteno sufficient to found the allegation that News/Leteno induced an assumption or expectation in One.Tel. The plaintiffs contend that this complaint is premised on an incorrect reading of the proposed amended statement of claim.

798. Further, it is said that the complaint overlooks the terms of [58H.2], which is cross-referenced in [58W]. Messrs Murdoch and Macourt attended One.Tel's Board meeting on 17 May 2001 [58A.1] and [58A.4]). Paragraph [58H.2] alleges that the Conflicted Directors (who included Messrs Murdoch and Macourt) were present when the Board authorised Messrs Yates and Packer to contact One.Tel's major suppliers, financiers and creditors to inform them of the rights issue, the Subscription and Underwriting Agreement and the Bridge Loan Agreement.

799. The matters pleaded in [580], [58P] and [58V] relate to the approaches made to Toronto Dominion pursuant to the authority conferred by the Board at its meeting on 17 May 2001 (to the knowledge of Messrs Murdoch and Macourt, who attended that meeting and were present when the authority was conferred). The matters pleaded in [58S] and [58T] all relate to the approaches made to ANZ Bank pursuant to that authority.

800. It is these approaches, together with Messrs Murdoch and Macourt's knowledge that these approaches would be made as a result of the Board's resolution, combined with the other matters pleaded in [58F] to [58L], that is relied upon to found the allegation in [58W] that News and Leteno induced the pleaded assumption in One.Tel on and from 17 May 2001. This applies equally to the complaints made about [58AE] and [58AG.1].

801. As to [58AW], Mr Hutley emphasises that the complaint is not simply an absence of particulars; rather, it is a complaint that in form and substance, the allegation is embarrassing for a number of reasons: first, because it is impossible to understand with any precision what is being alleged against the News defendants; secondly, because it is plain from [58AU] that the News defendants are not alleged to have received the advice from Minter Ellison (and thus the attribution of knowledge of that advice seemingly rests on the agency pleaded at [25M] or on the conspiracy pleaded at [156Z] and suffers from the same flaws earlier identified in that regard; thirdly, on the basis that even if Mr Packer did receive advice from Minter Ellison on behalf of the News defendants, the pleading does not make clear when and by what means it is alleged it was received nor is there any pleading that he communicated it to the News defendants (accordingly, it is said that the allegation at [58AW] that they "considered" it, and then subsequently made a decision on the basis of it, is embarrassing); fourthly it is unclear whether it is said that each of the defendants separately reached the same "decision" on the basis of advice or reached it together (and that it is implausible that each of the defendants separately made such a decision when some are not alleged to have seen the advice). It seems to me that if the plaintiffs seek to contend that decisions were made after receiving the advice then it ought to be made clear who received the advice and, if it was not received by all, how that advice was communicated to those who did not receive it. To suggest that a decision should be imputed on the basis of the imputed receipt of advice all based on the underlying allegation of a conspiracy has the problems adverted to earlier. I would not have permitted amendment to include this allegation or the earlier allegation as to the making of decisions in relation to the Scheme without further particularisation.

Allegation as to knowledge of Conflicted Directors

802. The complaints as to [58BA] were that there was no identification as to what was "to the knowledge of the Conflicted Directors" as therein pleaded (T-177.40-41); it was said to be obscure what facts, matters and circumstances were relied upon to support that allegation (T-177.46-48) (an allegation that Mr Packer was responsible for bringing about a result not being sufficient); and that it was not alleged (nor was it particularised) how the document produced by Messrs Miller and Green was false (T-177.50 -T-178.1). For Mr Yates it is contended that there is no pleading as to how he knew that Mr Packer had caused Messrs Miller and Green to "reverse engineer" their conclusions to arrive at an outcome that One.Tel's cash needs were significantly greater than $132 million.

803. The February Response focuses on the position of Mr Packer and Mr Yates. The former is said to have known that he had caused Messrs Miller and Green to reverse engineer their conclusions because that is what he did (reference being made to the particulars to [58BA]).

804. Mr Yates is said to be fixed with that knowledge as a co-conspirator [156AJ].

805. Further, it is said that Mr Yates had actual knowledge that Mr Packer had caused Messrs Miller and Green to reverse engineer their conclusions arising from the allegations made in respect of his belief as to the correctness of and reasonable grounds for the Miller/Green opinion on 17 May 2001 that One.Tel's cash requirements were $132 million and lack of any material change as at 25 May 2001 (to which reference was made in the particulars as to his knowledge of the contrived view) and that he knew of the Scheme because he was a participant in it [58AN and 58AO].

806. In addition it is said that Mr Yates' actual knowledge that Mr Packer had caused Messrs Miller and Green to reverse engineer their conclusions can be established by his wilful ignorance and failure to make relevant enquiries about these matters (reference being made to particular (e) to [58BD] as to the fact that the Conflicted Directors (including Mr Yates) "remained silent" when the Miller/Green Schedules were presented to the 28 May Board Meeting. Such silence is said to constitute Nelsonian blindness and wilful ignorance for the purposes of fixing Mr Yates with actual knowledge of the matters alleged.

807. Mr Hutley submits that this response does not address the deficiencies identified in relation to [58BA]. He submits that insofar as the conspiracy pleading is said to be the basis for the Conflicted Directors' alleged knowledge of what Mr Packer is said to have caused Miller and Green to do, this is not a proper basis for attribution of knowledge for reasons adverted to earlier and that insofar as what is asserted is wilful blindness on the part of Mr Yates, any such case should have been pleaded and not left to particulars. I agree.

Allegation as to expression of contrived view by Miller/Green

808. Objection was made as to the allegation in [58BB] that "During the 28 May Board Meeting, Miller and Green, on behalf of the Defendants, expressed the contrived opinion that One. Tel's cash needs were significantly greater than $132m", along the lines of the earlier objections to allegations that conduct of non-conspirators is attributed to the defendants.

809. The February Response asserts simply that the conduct engaged in by Messrs Miller and Green was conduct on behalf of the defendants as pleaded in [58AN] because the defendants had agreed to embark upon the Scheme and the pleaded conduct was in furtherance of the Scheme.

810. Implicit in that response, as I read it, is that there is some (unpleaded and unparticularised) link between the conspirators and the conduct in question, since wholly unconnected conduct by third parties not involved in the conspiracy could surely not be in furtherance of any scheme even if it happened to coincide with the conspirators' aims or objectives.

811. Mr Hutley contends that this does not address the objection that no facts, matters or circumstances are identified to support the assertion that the News defendants (having invested over half a billion dollars in One.Tel, and knowing on the plaintiffs' case, that $132 million was sufficient to make the business viable), nonetheless decided to embark on the irrational course of putting it into insolvency (T 178.25-30); and that no facts, matters or circumstances are identified to support the implicit allegation that the News defendants did not have an honest belief that $132 million was inadequate (T 178.39-45).

812. Mr Hutley contends that what is put in response by the February Response highlights the inherent inconsistency in the case sought to be put: the flaw being that if the sum of $132 million would have been enough to ensure solvency then there is no reason (and none is pleaded) why the Conflicted Directors would have desired to write off PBL and News' substantial investments in OneTel.

813. Be that as it may, the difficulty I see in this allegation is that it is dependent not only on the conspiracy allegation being properly pleaded but also on that extending to attribution of conduct by non-conspirators.

Misleading Miller/Green Schedules Allegation

814. Paragraph [58BC] alleges that the Miller/Green Schedules were misleading because they materially overstated the predicted future cash requirements of One.Tel and [58BD] pleads that the Conflicted Directors knew that the Schedules were misleading.

815. Mr Yates (as do the News defendants) objects to these paragraphs because, he says, the plaintiffs must plead the particular items in the Miller and Green Schedules that are alleged to be misleading and the reasons why those items are misleading. This, he says, requires identification of the predicted cash requirements that were overstated, the amount by which they were overstated and the reason they were overstated. The plaintiffs contend that the rules do not require such an approach; that there can be no doubt that the case that the defendants have to meet is that Messrs Miller and Green overstated the predicted future cash requirements and that the Conflicted Directors knew this to be the case.

816. As to [58BD], Mr Hutley contends that it is embarrassing for the following reasons: that it is, in substance, an allegation that the News defendants deliberately misled the company but no material facts are pleaded which enable the News defendants to understand the particular entries in the Miller and Green schedules which are alleged to be inaccurate; the "true" position that those entries should have shown; or the basis on which it is alleged that the News defendants knew that those particular entries were inaccurate.

817. Mr Hutley contends that, as a result, the News defendants cannot identify the basis upon which each is alleged to have perpetrated a fraud (T-180.1-19) and that the February Response (simply asserting that the Miller and Green schedules overstated the predicted future cash requirements) is not sufficient when what is being alleged is that something tantamount to fraud has occurred.

818. Further, it is submitted that insofar as knowledge of the matters upon which it is contended that all of the Conflicted Directors knew that the Miller and Green schedules were misleading and deceptive were matters known to all directors; they cannot therefore cannot support an allegation that the Conflicted Directors misled the other directors (T 180.21-43).

819. Mr Hutley's complaint is that the allegation at [58BD] is an allegation of dishonesty on the part of the individual defendants without pleading of the matters, facts or circumstances on which that allegation is made (T180.45-49).

820. As to [58BH], Mr Hutley again submits that it is deficient because each of the matters said to have been known by the Conflicted Directors would have been known by the entire One.Tel board (with the possible exception of the alleged view that $132m was insufficient) (T-181.9-16) and thus the allegation cannot advance the claims against the Conflicted Directors. (Mr Hutley notes that there is nothing put in opposition to that in the February Response.)

821. As to [58BK], Mr Yates complaint is that it fails to particularise the respects in which it is alleged that Messrs Silbermann, Beck and Hodgson believed that the Miller/Green Schedules were inaccurate and/or misleading. The plaintiffs by their February Response contend that this paragraph is sufficient in pleading the substance and effect of what Messrs Silbermann, Beck and Hodgson did but that if the Court is of the view that additional particulars of the "respects" in which they believed that the Miller/Green Schedules were inaccurate and/or misleading then those particulars can be provided (asserting however that this does not mean, however, that leave to amend the statement of claim should not be granted).

822. In this regard, I am concerned that with an allegation of fraud, the defendants are entitled to be provided with full particulars of the facts matters and circumstances on which the allegation is made. If the plaintiffs are capable of providing particulars, for example, of the respects in which the directors referred to above believed the schedules to be misleading or inaccurate, then I see no reason why they could not have been provided. Presumably, if the plaintiffs rely on this for the allegations as to the misleading nature of the schedules then there is no difficulty in them providing the details sought of the earlier paragraphs in that regard. The financial position of One.Tel at the relevant time is a central allegation in the pleadings. If it is alleged that the defendants acted fraudulently in relation to the provision or reliance on the Miller/Green schedules then they should be required to identify the particular respects in which it is said that they were misleading. (Whether they are obliged to go further and particularise why it is said that particular entries are misleading is another issue - I am inclined to see that as a matter for evidence - but at the very least the particular inaccuracies or misleading items should be identified.)

Determination to undertake 29 May Strategy

823. Complaint was made as to [58BL], which pleads the determination of the defendants to undertake the 29 May Strategy. Insofar as the complaint related to particulars of the "determination", the plaintiffs' February Response notes that the express terms of [58BL] identify the date of the determination (on or about 28 May 2001), the parties to the determination (the defendants) and the nature and effect of the determination (to undertake the 29 May Strategy).

824. However, as to [58BL], again Mr Hutley contends that the complaint is not simply as to the absence of particulars. It was submitted that there is no particularisation of the allegation that the defendants determined (noting the choice of word in this paragraph as 'determined' not 'agreed') to undertake the strategy (T 181.26-29); and that if it were to be alleged that the defendants had conceived of the strategy identified at [58BL] (that being a strategy involving serious matters), that should be stated with some particularity (T 181.43-45). (It is submitted that the proposition that each defendant separately and independently 'determined' to engage in the deceitful conduct pleaded in that paragraph is implausible.)

Agreement to embark on Scheme/alleged fraud by Mr Yates

825. As to [58BN] and [58BO], the complaint made again is that they involve an allegation of fraud by the News defendants without any particularisation (T 181.47 to T 182.8). In particular, it is noted that no particulars are provided of the allegation that the News defendants believed that $132 million would be sufficient to satisfy One.Tel's cash requirements (and no response is provided by the plaintiffs as to those complaints). Mr Yates similarly objects to this paragraph on the basis that there is no pleading that any of the alleged matters were false or the basis upon which they were false.

826. The plaintiffs' February Response to these complaints is that [58BN] make it clear that the matters asserted by Mr Yates to Mr Butcher were false (saying that it follows from the ordinary meaning of "false" that the matters asserted by Mr Yates were not true).

827. In relation to [58BS], Mr Hutley notes that it alleges in effect that Mr Yates in effect engaged in a fraudulent deception but that the basis for that allegation is not articulated (T-182.15-17) and that he is said to have done so "on behalf of all the Defendants" (T-182.18). Mr Hutley contends that, absent particularisation, the allegations of fraud should not be permitted nor should the allegation that Mr Yates' conduct was "on behalf of" all the defendants be permitted.

828. The plaintiffs' response is the same as that for the other complaints in relation to paragraphs alleging conduct "on behalf of" the defendants. The conduct of Mr Yates is said to have bound Mr Packer and the Packer companies by reference to his role with PBL [22H] and to have been conduct on behalf of the defendants because of their agreement to embark upon the Scheme [58AN] and the pleaded conduct was in furtherance of the Scheme. Mr Yates' conduct is also said to be attributed to the defendants by reason of the pleading in [156AJ].

829. As to the objection by Mr Yates on the ground that there is no pleading of facts making Mr Yates' opinion contrived, it is said that the use of the word "contrived" "means what it says", namely, that Mr Yates' opinion was artificial and not genuinely held.

Allegation re changes to board minutes

830. Complaint is made as to [130L] which contains the allegation that the changes to the board minutes were made "at the behest of the Defendants". It is said that this is embarrassing (T 182.23-31) it being unclear at whose behest the changes were made or what actions were alleged to have been taken by that person.

831. In the February Response, the plaintiffs say that the expression "the Defendants" means exactly what it says and that Mr Yates' complaint that the pleading should identify which defendant directed the amendment of the minutes is misconceived.

832. Mr Hutley complains that this response is inadequate in there is no explanation as to who put forward the changes to the board minutes or when; that the case that the defendants are required to meet in this regard remains obscure and that no facts are pleaded to support the inherently improbable allegation that the changes were made at the separate behest of each defendant. It seems to me that if the plaintiffs' contention (improbable as it may be) is that all of the defendants requested the changes then it is for them to prove that was the case. However, in circumstances where various steps or decisions are said to have been made by one defendant on behalf of another by reason of there being a conspiracy in furtherance of which such a step or decision was taken, it is not unreasonable for the defendants to require the plaintiffs to identify the basis on which they contend (if that is what is really meant) that all of the defendants made such a request.

S 195(1) pleading

833. Mr Yates contends that [130R] is bad on its face because consideration of minutes of a prior meeting by a director entitled to attend that meeting cannot give rise to a material personal interest within the meaning s 195(1) of the Corporations Act 2001 (Cth). The plaintiffs contend that this construction of [130R] is unduly restrictive and ignores the other paragraphs which are cross-referenced in [130R]. In the February Response it is said that the plaintiffs' case is not that redrafting minutes, without more, constitutes a personal interest; rather, it is their case that Mr Yates' material personal interest arose from the matters pleaded in [130R] (namely that the Redrafted Minutes were intended to convey the impression, contrary to the alleged fact, that there was no binding obligation on the Corporate Defendants pursuant to the Subscription and Underwriting Agreement and/or the Bridge Loan Agreement [58BL.2] and that Mr Yates had an interest in achieving this outcome because a significant component of his remuneration consisted of discretionary emoluments). It is alleged that Mr Yates acted to pursue the interests of PBL (which had an interest in extracting its subsidiaries from their binding obligations to One.Tel) because such conduct was likely to enhance the prospect of Mr Yates receiving these emoluments [156D].

Long Report alleged deficiencies

834. Paragraph 130T pleads that the Conflicted Directors knew that the Long Report could not reasonably be relied upon for the reasons stated in that paragraph. Mr Yates complained that the pleaded paragraph failed to identify the precise figures in the Long Report which were said to be wrong, the reasons why those figures were said to be wrong and the facts known to the Conflicted Directors which established their knowledge of the misleading nature of these matters. The plaintiffs deny that the pleading rules impose an obligation on the plaintiffs to plead the statement of claim in the manner alleged by Mr Yates. They assert that the case has been clearly stated and there can be no doubt about the case that the stated defendants have to meet. They assert, and I am inclined to agree, that the approach suggested by Mr Yates is in substance a request for particulars. Nevertheless, if it is asserted that the Long Report is misleading, then the plaintiffs should in my view plead the facts on which they rely for that allegation. At the very least, I would have assumed that this would encompass what it is said is incorrect in the report. If not, and the assertion is simply that the conclusion is wrong (for unknown reasons) then that would be a relevant matter for the defendants to know.

Misleading conduct pleading

835. It is submitted that the pleading in [141A] that Mr Yates misrepresented to the Board "the views of One.Tel's management expressed at the meeting referred to in paragraphs 58BQ to 58BS" is embarrassing because it alleges that representations made by Mr Yates were misleading without pleading the making of the representations. The plaintiffs assert that there is no doubt as to the case that the defendants have to meet in this regard.

836. I accept that in its terms [141A] does not actually plead what was represented. The paragraph does in my view implicitly set out what was said insofar as it then goes on to plead various matters that are said to be "contrary to Yates' misrepresentations" but I accept that in circumstances where allegations of such a serious nature as are being made against Mr Yates (and the remaining defendants) there is a need for it to be made clear precisely what is said to have been said (allegedly amounting to a misrepresentation).

837. The cross references to the other paragraphs do not necessarily inform the allegation in [141A]. Paragraph [58BQ] simply pleads the meeting; [58BR] pleads the distribution at that meeting of the "One.Tel Alternative Strategy" document identifying particular strategic initiatives available to One.Tel for raising cash and cutting costs" and [58BS] alleges that Mr Yates "on behalf of the Defendants" expressed "the contrived opinion that in order to reach the reduced cash flow position which management's Alternative Strategy Document contemplated, One.Tel would need an additional $75 million to $100 million beyond the $137 million to $147 million which the Alternative Strategy Document stated was One.Tel's cash requirement". It is therefore not immediately apparent what views of One.Tel management were expressed at the meeting and are said to have been misrepresented by Mr Yates.

838. I consider that if there is to be an allegation of fraudulent misrepresentation, then at the very least what must be pleaded is what the particular representation was.

Misleading and deceptive conduct alleged against Mr Yates

839. Mr Yates' complaint about [235N] is that it alleges a series of misrepresentations without pleading any facts establishing the basis upon which those representations were misleading or deceptive. It is said that this complaint overlooks the terms of the paragraphs to which reference is made in [235N]. For example, it is said that [235N] alleges that the misrepresentation pleaded in [58BA] was misleading and deceptive. Paragraph [58BA] alleges that Mr Packer represented to the Board that the conclusions reached in the Miller/Green Schedules were an appropriate basis for the deliberations of the Board when he knew that they were not. That is, it identifies the basis upon which it is said that Mr Packer's representation was misleading; namely, because he knew that the Schedules were not appropriate ones on which the Board should rely. The position is said to be the same in relation to each of the cross-referenced paragraphs in [235N] (namely [58BB] - the basis for saying that Messrs Miller and Green misrepresented the position is that their opinion was contrived; [58BC] - the basis for saying that the Miller/Green Schedules were misleading is that they materially overstated the predicted future cash requirements of One.Tel and there were no reasonable grounds for making the representations; [58BD] - the basis for saying that the conduct was misleading is set out in the particulars to [58BD]; [58BS] - the basis for saying that Mr Yates' conduct misrepresented the position is that his views were contrived; [111] and [112] - the basis for saying that Mr Yates' conduct was misleading is pleaded in [112]; [119H] and [1191] - the basis for saying that Mr Yates' conduct was misleading is pleaded in [1191]; [119L] - the conduct was misleading because it concealed that the defendants had agreed upon the Scheme and the 29 May Strategy; [119M], [119N] and [129] - the basis for saying that Mr Yates' conduct was misleading is pleaded in [119N]; [130A] to [130D] - the basis for saying that Mr Yates' conduct was misleading is pleaded in [130C]; [130G] and [130H] - the basis for saying that Mr Packer and Mr Murdoch's representation was misleading is pleaded in [130H]; [1301] - the basis for saying that the conduct was misleading is that the meetings held by the Conflicted Directors with Lucent were not a genuine attempt to obtain financial assistance from Lucent but were a mere pretence; [130T] to [130V] - the basis for saying that the conduct was misleading is that the Conflicted Directors allowed the Long Report to be presented to the Board when they knew that the report could not reasonably be relied upon; [141A] and [141B] - the basis for saying that Mr Yates misrepresented the position is that the representations made by Mr Yates were "contrary to " the fact; [141C] to [141F] - the basis for saying that the conduct was misleading is pleaded in [141E] and [141F].

840. Mr Yates' complaint about [235U] is that the plaintiffs, in order to make out the breaches of duty, rely upon 74 cross-referenced paragraphs in what he describes as a "rolled up" allegation. It is the plaintiffs' case that the breaches of duty are established by the matters referred to in those cross-referenced paragraphs. To the extent that the complaint made is one of form; namely, that rather than plead the breach in one paragraph cross-referring to 74 other paragraphs, the plaintiffs should have pleaded 74 separate paragraphs of breach, the plaintiffs submit that such an approach is not mandated by the rules of pleading and that such an approach is contrary to rule 14.8, which requires a pleading to be as brief as the nature of the case allows. It is said that the approach favoured by Mr Yates would add to the complexity and understanding of the statement of claim and would be a victory of form over substance. (I make no comment as to the merits of the respective approaches other than to note that, inevitably, a cross-referencing approach required a considerable amount of re-visiting of the pleading and suffers in terms of ease of reference and use as a pleading; whereas the alternative approach will no doubt mean a longer pleading.)

841. As to the complaint based on particularisation, the plaintiffs' primary position is that the approach in the proposed amended statement of claim is sufficient. However, the plaintiffs' Response confirms that if the Court is of the view that matters should be included in the body of the pleading rather than in the particulars this can be accommodated. In the circumstances I would have been inclined to order that the matters be incorporated in the pleading in circumstances where the claim would have to be repleaded in any event having regard to the other matters required.

Mr Yates' knowledge

842. Mr Yates objects to [141D] to [141F] on the ground that the basis upon which Mr Yates' knowledge that there were alternative funding options available is not pleaded. In the February Response, it is said that this complaint overlooks the terms of [141E.2], that alleges that the Alternative Strategy Document contained alternative funding options and that this document was provided to the Conflicted Directors (including Mr Yates) at the meeting held at about 12 noon on 29 May 2001 [58BQ]. It is said that Mr Yates' knowledge of this funding option arises as a result of his receipt of this document.

843. As to [141H], the complaint is that no particulars are given as to when or how the Conflicted Directors agreed the matters alleged. The February Response asserts that [141H] identifies who the parties to the agreement were (the defendants) and the substance and effect of the agreement (that Mr Yates would conduct the meeting in the manner pleaded). It is said that the case that the defendants have to meet is clear.

844. As to [1411], this pleads that Mr Yates caused the Abandonment Resolution to be formulated (with the concurrence of the other Conflicted Directors) so as to suppress the defendants' primary purpose and intended effect of the resolution (that purpose being pleaded at [141I.1] and [141I.2] as the extraction or release of the PBL/News companies from their obligations in relation to the rights issue. Mr Yates contends that this pleading is vague and ambiguous and that the plaintiffs should be required to plead what Mr Yates did to formulate the resolution and what form the resolution would have been put, but for Mr Yates' conduct. Similarly, Mr Hutley submits that this allegation is unintelligible because the pleading does not identify the form of words that the plaintiffs contend should have been used (T-183.39 to T-184.4). In any event, he submits that where a resolution of One.Tel could not, and should not, have included another person's intentions, the allegation as to suppression of the defendants' primary purpose is unintelligible.

845. The plaintiffs contend that there is no requirement that they plead the matter in the way contended for by Mr Yates (and do not accept the criticism of Mr Hutley). They submit that their case is clear, namely that the resolution which Mr Yates propounded did not identify the purpose of the defendants (ie, their intention to extract relevant companies from their obligations to One.Tel). It is said that the resolution suppressed that intention. Further, it is the plaintiffs' case that putting the Abandonment Resolution to the meeting was a breach of duty by the Conflicted Directors. Thus, it is said that it is not the plaintiffs' case that the Abandonment Resolution should have been put in another form; but, rather, that the Abandonment Resolution should not have been put at all. The plaintiffs submit that the suggestion that it is incumbent on them to identify the alternative form in which the resolution would, but for Mr Yates' conduct, have been put, proceeds on a misunderstanding of the plaintiffs' case. Whether or not that is the case, I am of the view that the proper pleading of this allegation requires the pleading of the facts on which the plaintiffs contend that Mr Yates caused the resolution to be propounded in the way it was for the purpose contended, but not that they are obliged to contend what other resolution should have been formulated.

Embarrassing/oppressive nature of allegation re assistance to ASIC

846. Complaint is further made as to proposed [141V] which alleges that unspecified "assistance" provided to ASIC in relation to its proceedings against Mr Rich over a period of more than 4 years amounted to the implementation by the defendants of a dishonest design. In particular, it is noted that there is no pleading that ASIC was misled by any of the defendants or that any damage to the plaintiffs flowed from any such conduct. It is said (and I agree) that this paragraph is embarrassing, oppressive and vexatious in that it opens up for enquiry in this Court the conduct of a lengthy ASIC investigation and the conduct of its proceeding against Mr Rich, without any cause of action arising from those matters. Thus Mr Bathurst submits that, even apart from the other matters raised in relation to the submissions, no leave should be granted in respect of the proposed amended statement of claim unless this paragraph is struck out. I agree.

847. The complaint is also made that this impermissibly expands the scope of the factual enquiry compared with the existing Statement of Claim and is therefore not authorised by s 65(2)(c) of the Civil Procedure Act 2005 (NSW) ( T185). The plaintiffs seek to justify this by reference to the opening words of [141V], namely that the conduct alleged was pursuant to the 29 May Strategy (that being defined by [58BL] and hence the allegations in [141V] involving the assistance provided to ASIC arise out of the events of 28 and 29 May 2001 and are not new. Be that as it may, I consider that the ambit of the enquiry this paragraph would involve and its lack of specificity makes it objectionable (and the suggestion that it would open up the ASIC conduct of the Rich proceedings to review renders it embarrassing). I would not grant leave for this paragraph on that basis.

848. Mr Hutley submits that [141V] introduces as part of the conspiracy allegation an allegation of conduct post-dating the 29 May 2001 Board meeting, namely that the defendants misled ASIC and wrongfully encouraged ASIC to prosecute Messrs Rich, Keeling and Silbermann, relying on conduct extending out until "at least September 2005" (see [141V.4]. As does Mr Bathurst, Mr Hutley objects to this allegation on the basis that it would require the investigation of some four years of conduct or more, introducing effectively the whole of the period of the ASIC v Rich proceedings as an issue in the case that cannot possibly be justified under s 65(2)(c). Mr Hutley contends that this allegation is entirely new. The plaintiffs contend that the conduct post-dating the 29 May 2001 board meeting is pleaded as having been done "pursuant to the 29 May Strategy". Mr Hutley contends that this does not constitute a justification under s 65(2)(c) and notes that nothing done on and from 24 July 2001, when One.Tel was placed into liquidation, could give rise to any loss to One.Tel.

849. Mr Hutley also submits (T187.37-48) that the pleading in [141V.3] (which refers to Mr Murdoch's affidavit sworn on 7 June 2001) is bad because the giving of evidence in court proceeding, including by way of affidavit, is subject to the principle of witness immunity and cannot found any private cause of action, including an allegation of conspiracy (referring to Commonwealth v Griffiths (2007) 70 NSWLR 268 (NSWCA) at [41]-[46]; Cabassi v Vila (1940) 64 CLR 130 at 141).

Conclusion as to pleading claims

850. In summary, had the question of amendment to the process arisen for determination, I would have:

(a) given leave for the amendment of the Statement of Claim by the deletion of the claims made against the 12 th to 18 th defendants (with consequential amendments to the pleading to reflect the discontinuance of the claims made against those defendants);

(b) been prepared to permit appropriately pleaded amendments to raise the proposed new claims of negligence, breach of contract, breach of fiduciary duty and knowing involvement in breach of fiduciary duty. Insofar as the common law claims are statute-barred (and to the extent that, by analogy, might a claim for breach of a fiduciary duty owed by the directors in respect of which relief corresponding to that available for breach of statutory directors' duty is sought), I consider that these arise out of substantially the same set out facts (although the factual matrix has, in the case of the negligence/breach of duty allegations, been sought to be substantially expanded by reference to pre-2001 conduct). I am not satisfied that the delay is such as would necessarily preclude a fair trial on those issues and I would have found that it was in the interests of justice that amendment be permitted to raise those allegations. However, I would only have permitted amendment of the process to include these claims if appropriate particularisation and/or amendment to the pleading was made to address the pleading deficiencies identified above and, in particular, I would not have permitted the broad allegations as to pre-2001 conduct without proper identification of the particular facts, matters or circumstances in relation to the defendants' conduct in that period that were alleged to give rise to the 'dominant' position and/or expanded duties of the relevant directors;

(c) not given leave to plead the new unconscientious conduct and unconscionable conduct under s 51AA of the Trade Practices Act , because I consider these to be doomed to failure (not because of the fact that they are sought to be brought by a corporation as such, but because they are sought to be brought by a large commercial trading corporation which had, at the relevant meetings, independent advice and the ability to obtain independent advice from qualified and experienced professionals against whom no allegations of breach of duty are sought to be made). In this regard, I note that Mason P in Page v McKensey [2004] NSWCA 437 emphasised that the court will not permit an amendment that is doomed to fail (at [92]);

(d) not given leave to amend to include the claims in conspiracy or the allegations (tantamount to fraud) of knowingly deceptive conduct as presently pleaded (as I consider those to be inadequately pleaded and/or particularised in the proposed Amended Statement of Claim), and particularly having regard to the seriousness of the allegations and the recognised need for such allegations to be pleaded with specificity; and

(e) not granted leave for the inclusion of [141V] that I consider to embarrassing or oppressive insofar as it seeks to open up for consideration what "assistance" was rendered to ASIC as part of the alleged conspiracy or "Scheme" (assuming that allegation otherwise survived deletion of the conspiracy of fraud pleadings) and is in any event too broadly pleaded.

851. As to the various other drafting issues referred to above, suffice it to say that I do not consider that particulars should be permitted to supplement deficiencies in a pleading such as this. Defendants against whom allegations of fraud ("concealed fraud" as it was described) and conspiracy are made are entitled to be told very clearly precisely what is alleged against them. I do not consider that the proposed amended statement of claim does so and I share the criticism of it as convoluted by reason of the copious cross-referencing. Given the extent of the re-drafting that I think would be necessary to address the defendants' pleading complaints (which in broad terms I consider to be justified), had the pleading remained on foot I would not have attempted a blue pencil (or, in perhaps more modern parlance, "red pen") exercise as such but, rather, would have made directions as to the scope of any permitted amendments and required the plaintiffs to file a further proposed amended statement of claim before giving final consent to the filing of an amended pleading. As it is, however, this question does not arise; the originating process is stale and the proceedings should be dismissed.

Orders

852. Accordingly I make the following orders:

1. Pursuant to rule 12.11(1)(e) of the Uniform Civil Procedure Rules 2005 (NSW), I discharge the orders made on 16 November 2009 and 20 May 2010 extending the time for service of the Statement of Claim in these proceedings.

2. I dismiss the plaintiffs' application for leave to amend the Statement of Claim.

3. I dismiss the proceedings.

853. In the circumstances it seems to me, subject to any submissions that may be made by Counsel, that the appropriate order is that the plaintiffs pay the defendants' costs of the proceedings. I will hear any submissions that the parties wish to make on the question of costs at a convenient time.

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Amendments

06 June 2011 - Typographical errors.
Amended paragraphs: 153, 163, 214, 272, 332, 340, 346, 356, 382

06 June 2011 - Typographical errors.
Amended paragraphs: 418, 424, 425, 428, 434, 442, 483, 492, 497

06 June 2011 - Typographical errors.
Amended paragraphs: 506, 552, 617, 645, 750, 834, 836.

08 May 2015 - Changed "Agricultural & Rural Finance v Kirk [2011] NSWCA 54" to "Agricultural & Rural Finance v Kirk is [2011] NSWCA 67". Coversheet and paragraph 139

Decision last updated: 08 May 2015