Westpac Banking Corporation & Ors v The Bell Group Ltd & Ors [2013] HCATrans 85 (23 April 2013)

Last Updated: 24 April 2013

[2013] HCATrans 085

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Perth No P18 of 2013

B e t w e e n -

WESTPAC BANKING CORPORATION ACN 007 457 141

First Appellant

SG AUSTRALIA LTD ACN 002 093 021

Second Appellant

NATIONAL AUSTRALIA BANK LTD ACN 004 044 937

Third Appellant

HSBC BANK AUSTRALIA LTD ACN 006 434 162

Fourth Appellant

STANDARD CHARTERED BANK ARBN 097 571 778

Fifth Appellant

COMMONWEALTH BANK OF AUSTRALIA ACN 123 123 124

Sixth Appellant

LLOYDS TSB BANK PLC

Seventh Appellant

BANCO ESPIRITO SANTO SA

Eighth Appellant

SEB AG

Ninth Appellant

BANK OF SCOTLAND PLC

Tenth Appellant

CREDIT AGRICOLE SA

Eleventh Appellant

UNICREDIT BANK AUSTRIA AG

Twelfth Appellant

CREDIT LYONNAIS

Thirteenth Appellant

COMMERZBANK AG

Fourteenth Appellant

KBC BANK VERZEKERINGS HOLDING NV

Fifteenth Appellant

SKOPBANK

Sixteenth Appellant

DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFTSBANK

Seventeenth Appellant

CALYON

Eighteenth Appellant

GENTRA LTD

Nineteenth Appellant

THE GULF BANK KSC

Twentieth Appellant

and

THE BELL GROUP LTD ACN 008 666 993 (IN LIQ)

First Respondent

THE BELL GROUP LTD ACN 008 666 993 (IN LIQ) AS TRUSTEE SEPARATELY FOR EACH OF: DOLFINNE PTY LTD ACN 009 134 516 (IN LIQ), INDUSTRIAL SECURITIES PTY LTD ACN 008 728 792 (IN LIQ), MARANOA TRANSPORT PTY LTD ACN 009 668 393 (IN LIQ), NEOMA INVESTMENTS PTY LTD ACN 009 234 842 (IN LIQ)

Second Respondent

BELL GROUP FINANCE PTY LTD ACN 009 165 182 (IN LIQ) (RECEIVER AND MANAGER APPOINTED)

Third Respondent

BELL GROUP (UK) HOLDINGS LTD (IN LIQ) (IN ADMINISTRATIVE RECEIVERSHIP)

Fourth Respondent

BELL PUBLISHING GROUP PTY LTD ACN 008 704 452 (IN LIQ)

Fifth Respondent

AMBASSADOR NOMINEES PTY LTD ACN 009 105 800 (IN LIQ)

Sixth Respondent

BELCAP ENTERPRISES PTY LTD ACN 009 264 537 (IN LIQ)

Seventh Respondent

BELL BROS PTY LTD ACN 008 672 375 (IN LIQ)

Eighth Respondent

BELL EQUITY MANAGEMENT LTD ACN 009 210 208

Ninth Respondent

DOLFINNE PTY LTD ACN 009 134 516 (IN LIQ)

Tenth Respondent

GREAT WESTERN TRANSPORT PTY LTD ACN 009 669 121 (IN LIQ)

Eleventh Respondent

HARLESDEN FINANCE PTY LTD ACN 009 227 561

Twelfth Respondent

INDUSTRIAL SECURITIES PTY LTD ACN 008 728 792 (IN LIQ)

Thirteenth Respondent

MARADOLF LTD ACN 005 482 806 (IN LIQ)

Fourteenth Respondent

MARANOA TRANSPORT PTY LTD ACN 009 668 393 (IN LIQ)

Fifteenth Respondent

WANSTEAD TRANSPORT PTY LTD ACN 008 775 120 (IN LIQ)

Sixteenth Respondent

WESTERN TRANSPORT PTY LTD ACN 009 666 308 (IN LIQ)

Seventeenth Respondent

WIGMORES TRACTORS PTY LTD ACN 008 679 221 (IN LIQ)

Eighteenth Respondent

W & J INVESTMENTS LTD ACN 000 068 888 ( IN LIQ)

Nineteenth Respondent

DOLFINNE SECURITIES PTY LTD ACN 009 218 142 (IN LIQ)

Twentieth Respondent

NEOMA INVESTMENTS PTY LTD ACN 009 234 842 (IN LIQ)

Twenty-First Respondent

TBGL ENTERPRISES LTD ACN 008 669 216 (IN LIQ)

Twenty-Second Respondent

WANSTEAD SECURITIES PTY LTD ACN 009 218 160 (IN LIQ)

Twenty-Third Respondent

WAON INVESTMENTS PTY LTD ACN 008 937 166 (IN LIQ)

Twenty-Fourth Respondent

WESTERN INTERSTATE PTY LTD ACN 000 224 395 (PROVISIONAL LIQUIDATOR APPOINTED)

Twenty-Fifth Respondent

GEOFFREY FRANK TOTTERDELL IN HIS CAPACITY AS LIQUIDATOR (WITH ALJ WOODINGS) OF EACH OF THE FIRST, SEVENTH, EIGHTH, NINTH, ELEVENTH, FIFTEENTH, SIXTEENTH, SEVENTEENTH, NINETEENTH, TWENTIETH, TWENTY-SECOND, TWENTY-THIRD AND TWENTY-FITH RESPONDENTS

Twenty-Sixth Respondent

ANTONY LESLIE JOHN WOODINGS IN HIS CAPACITY AS SOLE LIQUIDATOR OF THE THIRD, FIFTH, TENTH, TWELFTH, THIRTEENTH, FOURTEENTH, EIGHTEENTH, TWENTY-FIRST AND TWENTY-FOUTH RESPONDENTS AND AS LIQUIDATOR (WITH GF TOTTERDELL) OF EACH OF THE FIRST, SEVENTH, EIGHTH, NINTH, ELEVENTH, FIFTEENTH, SIXTEENTH, SEVENTEENTH, NINETEENTH, TWENTIETH, TWENTY-SECOND, TWENTY-THIRD AND TWENTY-FIFTH RESPONDENTS

Twenty-Seventh Respondent

THE LAW DEBENTURE TRUST CORPORATION PLC AS TRUSTEE OF THE BGNV TRUSTS AS DEFINED IN THE SCHEDULE TO THE WRIT OF SUMMONS IN CIV 1464 OF 2000

Twenty-Eighth Respondent

Directions hearing

FRENCH CJ

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 23 APRIL 2013, AT 10.15 AM

Copyright in the High Court of Australia

____________________

MR A.C. ARCHIBALD, QC: May it please, I appear for the Banks with MR H.K. INSALL, SC and MR D.F.C. THOMAS. (instructed by Herbert Smith Freehills)

MR N.J. YOUNG, QC: If your Honour please, I appear with MR C.G. COLVIN, SC and MR J.D.S. BARBER for the respondents. (instructed by Ashurst Australia)

HIS HONOUR: Yes, Mr Archibald.

MR ARCHIBALD: Your Honour, we provided to the Court yesterday an outline of submissions and some draft short minutes.

HIS HONOUR: Yes, I have seen those.

MR ARCHIBALD: We sought to identify, so far as we could then in the outline, the areas of agreement which were limited and in our short minutes to indicate what we say is appropriate for the further conduct of this appeal. Is it convenient to go to our short minutes, your Honour, just to identify the paragraphs?

HIS HONOUR: Yes, just before we get to that, is there any dispute that the matters raised in the notice of contention are all properly matters of contention?

MR ARCHIBALD: There may be, your Honour, but we are not seeking, at this stage, to advance an argument. We are concerned that some of the matters in the notice may properly be the subject of a notice of cross-appeal for it seems, at least in some respects to us, that what is being sought in substance by the respondents is some variation of the orders below rather than simply supporting the orders below. We are giving attention to that, but at the moment, if we do wish to press a point to that effect we are contemplating that the appropriate time and place to do that will be in our written submissions. One consequence would be, your Honour, that the same proposition should be on one piece of paper rather than another and we would not want to simply - - -

HIS HONOUR: Another issue is that there is special leave required for a cross-appeal.

MR ARCHIBALD: That is what I will come to. The real point is special leave in which case we argue that without troubling too much on in which notice it is at the present. So we would raise that. But there may possibly be some proposition that some points are not open by reason of the way in which the matter has been conducted below. We see those as matters for a later step.

HIS HONOUR: Yes, you can perhaps take me through what you are proposing. I have read your submissions.

MR ARCHIBALD: Yes, thank you, your Honour. Paragraph 1, I think, between the parties is agreed and I think it is the present position within the Court. Paragraph 2 reflects what we contemplate by way of a paper appeal book. We contemplate that it is appropriate to provide, before submissions are embarked upon, a core paper appeal book which would contain the items in our paragraph 2. We have provided there in paragraph 2b for incorporation in the paper appeal book of the reasons of the primary judge. They are reported in the Western Australian Reports - - -

HIS HONOUR: It is an edited report, I think.

MR ARCHIBALD: It is a considerably abridged form. Whether the abridgement matters very much is hard to say at the moment, but it is abridged and not complete.

HIS HONOUR: I was wondering about the convenience, in terms of presentation of argument and reference on the Bench, of using the reported version. There is a reported version of the Court of Appeal judgment – I think in the Australian Companies and Securities - - -

MR ARCHIBALD: Companies and Securities Reports. That is complete, your Honour.

HIS HONOUR: I have been informed that there is about to be published, I think, a WA report – version of that.

MR ARCHIBALD: One would expect so. We did not have that information, but it must be - - -

HIS HONOUR: Obviously in terms of working through the paper, if one has in front of one a small bound volume of that kind it can be quite useful.

MR ARCHIBALD: Yes. We would certainly be amenable to using the reported version of the Court of Appeal reasons rather than incorporating the material in the paper appeal book. It occupies about two volumes.

HIS HONOUR: Yes.

MR ARCHIBALD: But how we deal with - - -

HIS HONOUR: That is something which, perhaps, can be the subject of further discussion.

MR ARCHIBALD: Yes, but certainly anything that makes the paper management easier is something we would endorse. If we include the reasons at first instance and the reasons of the Court of Appeal in the paper appeal book there are probably about 11 or 12 volumes, really about the size of the application book on the special leave application.

HIS HONOUR: Yes.

MR ARCHIBALD: But that would reduce by – if we were to take out Justice Owen’s reasons we would get rid of about seven volumes and if we took out the Court of Appeal, as I indicated, it is probably two.

HIS HONOUR: Yes.

MR ARCHIBALD: Then, your Honour, we contemplated for our part that the way in which submissions might proceed would be by way of what I call two streams of submission.

HIS HONOUR: You seem to have been a bit ungenerous with the page allocation for the respondents.

MR ARCHIBALD: We have a total of 55 pages overall for each.

HIS HONOUR: Their written submissions in respect of notice of cross-appeal and contention have no more than 15 pages.

MR ARCHIBALD: Yes. If they want to adjust them, of course we would not try to constrain, but if we go up to 60, 65 – I do not think we have a particular problem, but we had thought that - - -

HIS HONOUR: You want 35 pages for your submissions on the appeal.

MR ARCHIBALD: Yes, 35 pages each on the appeal and I think we have a total of 20 pages each on the contentions.

HIS HONOUR: Yes, all right.

MR ARCHIBALD: Could I provide a little table we have prepared to your Honour just showing - - -

HIS HONOUR: As I understand it, 3a and b are designed to bring in the submissions, as it were, in-chief that each party wishes to make – you on the appeal and they on their notice of contention and cross-appeal.

MR ARCHIBALD: That is so, yes.

HIS HONOUR: It says in parentheses here:

the Respondents are to file and serve their written submissions in relation to the Notice of Cross-Appeal and Notice of Contention (of no more than 15 pages) –

Is that an error?

MR ARCHIBALD: I am sorry, I was distracted, your Honour. Your Honour was referring to - - -

HIS HONOUR: I am looking at 3b. Perhaps I am missing something.

MR ARCHIBALD: Yes, that is what we did have. Now, if we have been insufficiently generous - - -

HIS HONOUR: Well, they are raising a number of grounds in relation, I think, to the statutory claims, equitable fraud - - -

MR ARCHIBALD: Equitable fraud might take a bit of space. Ground 6, the Barnes v Addy point, we thought was really in the appeal but - - -

HIS HONOUR: Yes, all right. I will hear from Mr Young on that.

MR ARCHIBALD: Your Honour, does your Honour have a table we have prepared?

HIS HONOUR: Yes, I do, thank you.

MR ARCHIBALD: That tries to bring together dates, page allocations, et cetera, for the submissions and so your Honour sees the 35/15 allocation. Our proposition is on the right-hand side. So that would occur six weeks from now.

HIS HONOUR: Yes.

MR ARCHIBALD: Then in mid-July the responses to the primary submissions would occur. We would have 15 pages on the contention and cross-appeal. They would have 35 on the appeal. Then three weeks later replies – 10 on the appeal and five on the cross-appeal. So that is anticipating, your Honour, that the Court may find it convenient to fix the hearing of the appeal in September.

HIS HONOUR: Yes.

MR ARCHIBALD: And would have the parties, in effect, usefully – both the parties usefully occupying the time until mid-August with submissions. Then we would contemplate that a supplementary appeal book - - -

HIS HONOUR: That would pick up all the documents in the submissions.

MR ARCHIBALD: Yes, that is the contemplation. That would occur, on our timetable, 10 or 12 days later and then the appeal might occur in, perhaps, the second week of the September sittings. Now, the differences, perhaps, appear from the left-hand side of this sheet, your Honour.

HIS HONOUR: Does your reference, in order 6, to “additional material to which specific reference is made” that would pick up also transcript references if necessary?

MR ARCHIBALD: Yes, anything not in the core appeal book that the Court would be taken to in the course of oral argument.

HIS HONOUR: Yes. Now, I think you mentioned in your submissions that the respondents were proposing a chronology setting out findings of fact relevant to the issues.

MR ARCHIBALD: Yes, as we understood it, the respondents were saying each party simultaneously with their submissions should provide a document of no more than 25 pages they said setting out chronologically findings of fact. That, as we would see it, departs from the Court’s general conception of what a chronology should be which is a simple, neutral statement of key dates and events.

HIS HONOUR: Would it be beyond the wit of the parties to have a combined chronology with that sort of information?

MR ARCHIBALD: We would have thought not for a true chronology, but what we apprehend the respondents are seeking to do is to have a document put forward that really is not a simple chronology. It may be in chronological order, but it would be some formulation, a reformulation by the parties respectively of findings of fact that the Court of Appeal has made and that would depart from the notion of a chronology. We were given, a few minutes ago, a - - -

HIS HONOUR: The question is is it useful, not whether it departs from the notion of a chronology.

MR ARCHIBALD: Yes. We understand what the respondents now say is that there should be an agreed chronology but, in addition to an agreed chronology, there should be this 25-page document in addition to the parties’ submissions in which the parties set out findings of fact upon which they wish to rely. We, for our part, think that that is an unnecessary further addition to what should ordinarily be contained, and can here be contained in the extended submissions that the parties are seeking to have the Court allow them.

So, on the respondents’ version there would be 65 pages of submissions and an additional 25 pages of this document, so you would end up with 90-odd pages of material, 25 of which would be separately from submissions setting out factual material. We would submit that that is excessive and unnecessary.

HIS HONOUR: I am just wondering about the utility of a document of that kind which had combined the findings of fact upon which both sides were relying – a single document, in effect, setting out which would give us the full compass, if you like, of the findings of fact in issue which are underpinning the appeal and the contentions.

MR ARCHIBALD: Yes, well I suppose there might be difficulties encountered in trying to formulate agreement on what really are facts. Often these documents end up as conclusions or disguised argument and that might create its own difficulties.

HIS HONOUR: A finding of fact is something which is referenced to a statement in the Court of Appeal judgment.

MR ARCHIBALD: Yes, it should be faithful to the reasons for judgment.

HIS HONOUR: It may be an encapsulation of what is said or a one-line reference and then a paragraph reference.

MR ARCHIBALD: Yes, something that I have submitted is - - -

HIS HONOUR: Almost an index of the findings of fact which are relied upon in each side.

MR ARCHIBALD: Yes, yes, but how that relates to submissions – and there could be a schedule to submissions perhaps, but we are just troubled that we have both a chronology - - -

HIS HONOUR: All right, I will hear further from Mr Young on that.

MR ARCHIBALD: - - - which ought to be covering that ground and this extra document.

HIS HONOUR: Yes, very well.

MR ARCHIBALD: That is our concern. So the Bell proposition is that there should be sequential submissions with these additional chronological documents. In an earlier form there was a more distorted timeframe, but from the document we received a few minutes ago we think that the respondents are now suggesting the dates in the right-hand column of the Bell part of this document which would have us put on our appeal submissions and the 25-page document in three and a half weeks which we submit is too tight, unnecessarily tight.

Bell would do nothing until mid-June, at which point it would provide its answering submissions on the appeal and its submissions on the contentions and cross-appeal and the chronology. Then, for a reason that we are presently unable to understand, a six-week gap would occur where nothing would happen but at the end of the six weeks we would put in replies and answers and then Bell, in two weeks after that, would put in its reply contentions.

So they end up round about the date that we contemplate submissions should conclude, but they have us starting two and a half, three weeks earlier than we have our program starting and they have a big hole in the middle between 17 June and 29 July.

HIS HONOUR: Maybe people are going somewhere.

MR ARCHIBALD: Yes, I have to say our timetable causes its own difficulties of that kind which we are seeking to manage. It does show a distortion which we submit is unnecessary and inappropriate. It is trying to force us on early and then having nothing occurring from 17 June to 29 July and Bell coming in two weeks after that.

HIS HONOUR: In any event, you both think you can finish by roughly the same time.

MR ARCHIBALD: End date, yes. Yes, that is so, your Honour. Then there are a couple of other things I should draw your Honour’s attention to. In our minutes we contemplate that the supplementary appeal book would be prepared by reference to what one finds in the various written submissions, drawing out the documentary references and putting them in a supplementary appeal book.

The respondents seek to have a step after the conclusion of submissions whereby each party notifies the other of additional documents that are to be included in the hard copy appeal book. As we understand it, they contemplate that as a step that would occur after submissions had finished. They would be sequential steps and the documents that might be included in such a notification would not be confined to documents within the written submissions.

We submit that it is appropriate for the parties to include in their written submissions, expanded as they would be on these proposed minutes, all transcript and documentary references and the supplementary book would be taken from that material.

At present, your Honour, while it is not easy for us to gauge, we think our additions might only involve a very few volumes additionally. We cannot speak for the respondents. We have not inquired of them at the moment, but we would not see very much being added to the core appeal book for our part, perhaps one, two, three volumes. That might change when we see what is relied upon in the contentions and cross-appeal but it would not be, on our present estimation, a vast addition.

We see no reason why there needs to be any extra step and even if the notifications are to occur outside the submissions we do not see the need for them to occur after the submissions. They could occur simultaneously with the final submissions being delivered by the parties.

Then, your Honour, the other difference between the parties is the oral hearing time that should be allocated. We have identified three days.

Maybe we could finish a bit shorter than a full three days, but we think three days is appropriate, no more. The respondents are seeking, as we understand it, five days oral hearing. The issues are now refined. There may be some legal complexity. We think by and large the factual matters should not need to be canvassed extensively in oral argument so three days should be quite sufficient.

HIS HONOUR: Thank you, Mr Archibald. Yes, Mr Young.

MR YOUNG: If your Honour please. Your Honour, can I hand your Honour the set of minutes that we provided to the other side? What I want to do, your Honour, is just focus on the differences between us. In the draft minutes we have the major differences relate to our proposal that there be a summary of factual findings. That is paragraphs 3b and 4b. That was not intended to be a chronology of the kind provided for by the rules. It was intended to serve a different function of providing the relevant context of findings for the Court to consider the issues.

There are differences about dates and timetabling, but if I can put that off for a moment. The other major difference concerns the proposal by us mentioned in paragraphs 9 and 10 to the effect that there may be a need to notify additional documents for inclusion in the hard copy appeal book beyond those specifically referred to in the written submissions, but which are, for instance, referred to in passages of the judgment that reliance is placed upon.

HIS HONOUR: Why could not those be mentioned in the written submissions?

MR YOUNG: The factual findings that may be relevant are so extensive, your Honour, but it may be difficult to refer to all of the relevant materials in the written submissions whilst those submissions are maintaining a certain understandability.

HIS HONOUR: Yes.

MR YOUNG: Your Honour, the other major difference concerns our proposal for a single set of sequential submissions rather than parallel submissions. Can I address a number of issues where differences arise? Before I come to that, perhaps I should mention the question about cross-appeals versus notices of contention, your Honour.

HIS HONOUR: Yes.

MR YOUNG: We have considered that, your Honour. When one looks at the relevant rules it seemed to us that notices of contention were appropriate because we were not seeking to appeal from any part of the judgment, nor were we seeking to vary any part of the judgment.

HIS HONOUR: Now, is there any part where you are relying upon a cause of action which did not succeed?

MR YOUNG: Yes, equitable fraud, for instance.

HIS HONOUR: That was the one I was wondering about.

MR YOUNG: Yes, but we are not seeking to vary the judgment. We took the view, your Honour, that the cross-appeal rules did not contemplate a conditional cross-appeal as it were and that the way the rules run if you are contending that there has been an error of law or fact, even one relating to a different cause of action, but you are not seeking to vary the orders that were made, then a notice of contention is appropriate.

We are conscious that your Honour made an observation about this matter in Campbell v Backoffice Investments. Justice Heydon made an observation to the opposite effect in another case. They are the only references we can find, but on the face of the rules it does remain our submission that notices of contention were the appropriate vehicle.

We would suggest this course, your Honour. We would seek to rely upon our notices of contention alternatively as if they were standing as notices of cross-appeal. That would, of course, mean that ultimately, if the right view is that a cross-appeal were appropriate, we would need to persuade the Court that special leave should be granted, but matters should not turn on whether the correct form of notification has been adopted.

So if it were necessary, your Honour, we would file the same documents with a different heading, or seek leave to do so, and have the alternative available to us that we raise the same points either by way of notice of contention or by way of cross-appeal.

HIS HONOUR: Well, just taking the equitable fraud ground, that is conditional, I think, upon ground 2 being upheld relating to the statutory claims arising out of the main refinancing agreements and associated bank - - -

MR YOUNG: No. Your Honour, the reference is to appeal ground 2 so the conditionality relates to the appellants’ success - - -

HIS HONOUR: I am sorry, I apologise. Yes, of course. I was looking back at your own notice.

MR YOUNG: That is why we thought a cross-appeal was not appropriate because this ground only arises if the appellants are successful in overturning the findings concerning Barnes v Addy and breach of directors’ duties.

HIS HONOUR: Yes.

MR YOUNG: Our alternative position by the notice of contention is that - - -

HIS HONOUR: You say you are entitled to the same relief on a different cause of action?

MR YOUNG: Yes. I should add, your Honour, for completeness, if I take the ground relating to ground 2 of our notice of contention relating to the statutory claims, that seeks to affirm the Court of Appeal’s orders on an alternative basis.

HIS HONOUR: Yes.

MR YOUNG: But if we only were to succeed on that statutory claim basis, then there might need to be an adjustment in the form of the order, not the substance of the order made by the Court of Appeal because a statutory avoidance would operate from a slightly different date than a rescission based on Barnes v Addy. So there might be some variation of the order but it would be to effectively reduce the scope of the order from that which the Court of Appeal made because it is based on a different cause of action and a different date of avoidance.

Nonetheless, the view we took was that a notice of contention was appropriate because we are not seeking to overturn any order made by the Court of Appeal below. This again deals with the situation that if the principal orders fail and we only succeed in relation to statutory claims then there might need to be some variation of the orders.

HIS HONOUR: Now, I am right, I think, am I, in saying that all of the grounds in the notice of contention – that is the statutory claims, the equitable fraud and the Barnes v Addy second limb ground, I think it is – I am sorry, the Barnes v Addy liability for directors’ duties ground – are all resting upon facts as found?

MR YOUNG: Yes, they are and they are all interrelated to the same factual findings that are relevant on the appeal.

HIS HONOUR: Yes.

MR YOUNG: That is one of the reasons, your Honour, that we submit that sequential submissions are appropriate because the grounds raised by the notice of contention are all interrelated and inextricably linked to the same factual findings that are relevant on the appeal to the issues concerning Barnes v Addy and directors’ breaches.

HIS HONOUR: Yes.

MR YOUNG: So, your Honour, if any point is going to be taken concerning the appropriateness of the notice of contention, our position, to make it clear, is that we would seek to rely upon the same grounds standing as the notice of cross-appeal and, of course, we recognise that that would raise the special leave issue to be considered at the hearing. We do not want to be disadvantaged by effectively the form of notification of the grounds.

HIS HONOUR: Yes, all right. Let me think about that.

MR YOUNG: Your Honour, can I endeavour to explain why, in our submission, the Court would be assisted by a document separate from the submissions that sets out the findings of fact that each party relies upon and in the case of the appellants the findings of fact that they seek to re-characterise as not involving a breach of a duty not to act for improper purposes or not to act otherwise than bona fide in the interests of the company as a whole.

We do submit that such a document would assist the Court, notwithstanding that our learned friend has said a number of times that there are no factual findings or factual inferences that are contested. The reasons are these. The Court will not be able to consider the issues that are raised by both parties without an understanding of the context for the decisions that were made by directors to enter into the transactions.

Secondly, the relevant factual findings are spread throughout the judgment of Justice Owen and, indeed, the judgments of the members of the Court of Appeal. They are not conveniently located in one section of the judgment. For instance, many factual findings by Justice Owen relevant to directors’ breaches are found in the section dealing with insolvency in the transactions. Next, thirdly, can I illustrate the kind of issue we see arising that might be assisted by such a document by reference to the appellants’ notice of appeal? Does your Honour have that handy?

HIS HONOUR: Yes.

MR YOUNG: Can I ask your Honour to turn to paragraph 4(a). The ground there advanced is:

The substantive, relevant grounds adopted by the court for intervening in the decision of the directors –

were – and I insert that word “were” –

(lack of reasonable grounds and failure to guarantee a pari passu outcome for all creditors) –

Now, at the threshold immediately of the appeal, that contention is going to be one that is in dispute. The substantive relevant grounds adopted by the court were not, in our submission, either a lack of reasonable grounds or a failure to guarantee a pari passu outcome.

There are very extensive findings, both by Justice Owen and by the members of the majority in the Court of Appeal, that make it clear that there is a large set of findings that were the basis for the findings of directors’ breach. They do not fall within those two descriptions of lack of reasonable grounds and failure to guarantee a pari passu outcome.

It appears to us, your Honour, that immediately the parties are going to be pointing to different factual findings. We are going to be pointing to factual findings canvassing a wide area where the courts have made findings as to the conduct of the directors, their knowledge, the effect of the transactions, the circumstances in which they were entered into, the consequences of the transaction in imposing insolvency on what were perfectly solvent companies within the Group and so forth.

Now, there is a risk, your Honour, that the submissions might not adequately identify all of the relevant factual findings that need to be brought to the attention of the Court if there is no order for a document requiring the parties to identify relevant factual findings.

HIS HONOUR: What do you mean by factual findings? Factual findings can encompass event X happened on such and such a date or person Y had such and such a state of mind at a particular date, and findings of that kind.

MR YOUNG: Yes.

HIS HONOUR: Do you extend the concept of factual findings to characterisations of fact?

MR YOUNG: No, your Honour. I am speaking about the first category. There are extensive factual findings that at the time of contemplating entry into the transaction, for instance, the directors knew facts A, B, C, D, E, F and G.

HIS HONOUR: So that is the level at which you are talking about factual findings.

MR YOUNG: Yes, and factual findings of that kind were the relevant ground for the court’s findings below. Now, there is a higher level at which the sum total of all those factual findings are to be characterised as amounting to a breach of a duty not to act for an improper purpose. But what I am speaking about, your Honour, is the need to identify the factual findings concerning matters such as the consequence of the transactions, the knowledge of the directors - - -

HIS HONOUR: You refer in your notice of contention I think to interdependent steps as part of a scheme and so forth.

MR YOUNG: Yes, your Honour, yes. There were factual findings - - -

HIS HONOUR: They are characterisation matters in a sense, are they not?

MR YOUNG: There are some characterisation aspects to the findings. Let me take Justice Owen’s findings about the effect of the scheme, that is to say, the group of transactions as a whole.

HIS HONOUR: Yes.

MR YOUNG: They are findings that involve, to some extent, findings of fact and to some extent the characterisation of the effect of those factual consequences. So there are findings at these different levels, your Honour, but the - - -

HIS HONOUR: I am just trying to identify the level at which this document would operate.

MR YOUNG: Yes. It is intended to operate at the level of factual findings as I first describe, your Honour: facts known, factual events that were caused by the transaction, the state of mind of the directors at relevant times, the effect of the transactions on the solvency of various companies. There are factual findings at that level. Then there are factual inferences or conclusions at a slightly higher level.

In our submission, factual findings at both levels will need to be drawn to the attention of the Court because if our learned friend’s argument is ultimately the relevant factual findings did not add up to a breach of a duty to act for improper purposes, that finding cannot be advanced without the appellants identifying all of the relevant factual findings and how they bear upon that argument.

If we were to follow the course adopted in intermediate courts of appeal, it is standard practice where someone attempts a characterisation argument or attempts to challenge factual findings that the appellant is required to identify all relevant factual findings and to address submissions as to the way in which those factual findings will be impinged upon by the argument.

Now, it appears to us that the appellants do not intend to adopt that course and so the burden would fall on the respondents of trying to search out effectively the factual findings that the other side say need to be re-characterised.

HIS HONOUR: I am just wondering whether – and I put this to Mr Archibald – there would be any advantage in a single document - on your approach, a single document encompassing factual findings relied upon by both parties as distinct from separate documents, in other words, a single document which maps out the factual territory we are concerned with.

MR YOUNG: Our submission, your Honour, would be that as a matter of process the way to arrive at that result would be to first require an exchange of each party’s documents.

HIS HONOUR: Yes, you would have a process to get to it, obviously.

MR YOUNG: Yes, otherwise I do not think it could be achieved.

HIS HONOUR: No.

MR YOUNG: To the extent to which any disagreement existed, then at least we will have the documents that each party - - -

HIS HONOUR: It is difficult to imagine, at least at a certain level of abstraction, what scope for disagreement there would be. You have certain facts you want to rely on, they have certain facts they want to rely on, some of those will be common to both of you and some of them will be in separate pieces; it would be a matter of just bringing it together. That is, no doubt, oversimplifying. I have read some of Justice Owen’s laments.

MR YOUNG: Yes, your Honour. As I said, the factual findings are spread across different sections of the judgment.

HIS HONOUR: Yes, I appreciate that. That is a matter of extracting them and you would want to put them together in one document. I can see the virtue of that.

MR YOUNG: Yes, your Honour.

HIS HONOUR: Well, really, you would want them to be put together into two documents, yours and theirs.

MR YOUNG: Yes, but the additional advantage, your Honour, of some kind of process of the kind we are suggesting would be that it would expose what characterisations are involved in our learned friend’s argument, because it would require the appellants to identify what are the relevant factual findings and then to identify the ways in which they seek to re-characterise them, otherwise it is very elusive to determine precisely what the argument is and whether it is available in the face of the very many factual findings that were made in the courts below.

HIS HONOUR: Is this really largely in the field of the Barnes v Addy ground?

MR YOUNG: It is director’s duties feeding into Barnes v Addy, but then the same facts would become relevant to the different legal analysis of those facts that founds equitable fraud.

HIS HONOUR: All right.

MR YOUNG: So that is why, your Honour, in our submission, a separate documentary process would be of assistance in exposing the key issues. It would assist the Court and it will effectively ease the process of oral submissions because the Court will know what the range of factual findings are that are in contest and are said to be relevant to the appellants’ characterisation arguments. We would submit the appropriate process, your Honour, is that there be direction that each party file such a document and then there be a direction that the parties consult with each other with a view to agreeing a composite document that can be agreed and jointly filed for the Court’s assistance.

HIS HONOUR: Yes.

MR YOUNG: Next, your Honour, can I explain why we submit there should be a single set of submissions - - -

HIS HONOUR: I am sorry, just before we leave the document setting out factual findings - the management of the length of such a document, whichever way it proceeds, whether it is separate or composite, would be of some importance and the question is how the factual findings would be reported or “summarised”, to use your - - -

MR YOUNG: To the extent possible, using language from the judgments would be my first level of response, your Honour.

HIS HONOUR: In other words, I think there is a concern that a sort of argumentation element might enter into this.

MR YOUNG: No, we are not looking for an argumentative document, your Honour.

HIS HONOUR: No.

MR YOUNG: We were looking for a document that identifies the relevant factual findings by reference to the judgment, being all those factual findings that we say are relevant or that the appellants say are relevant and need to be re-characterised, by reference as much as possible to the language used in the judgment. It may be necessary in the jointly agreed final document to try and agree perhaps an abbreviation of the words, but the important thing is to direct the Court to the findings and where they are.

HIS HONOUR: Well, this would be the virtue of it if it provided, as it were, an index of the factual findings so that the document itself would contain statements, if you like, encapsulating but not in an argumentative way but just in an indicative way with a reference to the appropriate paragraphs of the judgment.

MR YOUNG: Yes, your Honour, that was our intention, and the reference to a chronological sequencing for such a document was simply to provide an order - - -

HIS HONOUR: Well, that would be sensible if you are going to do it.

MR YOUNG: Yes, your Honour, rather than grouping it under issues, because the same facts are relevant to just about every issue.

HIS HONOUR: Multiple issues – yes, all right.

MR YOUNG: So, if I may turn to our reasons for submitting that there should be a single set of submissions rather than two parallel streams, the reason is a practical one. A single set of submissions is likely to provide the greatest assistance to the Court and it will be the most efficient way of dealing with the issues.

All of the issues raised by the appeal and the cross-appeal are interrelated and it will assist communication if the relevant factual matters can be dealt with once in a single document. The appellants could then frame their submissions by reference to a single set of facts, drawing on those findings that they consider to be important, and when we prepare a document canvassing both our response on the appeal and the grounds for cross-appeal and contention we can address all of the relevant facts and do so in a way that meets the appellants’ submissions as well as advancing our grounds of cross-appeal and notice of contention.

Can I illustrate what I mean, your Honour, by going to our notice of cross-appeal and then our contentions? As your Honour knows, the cross-appeal relates to the intersection between compound interest and an account of profits. They are dealt with together in the judgments, both at trial and in the Court of Appeal. They are both remedies directed at the same objective, that is, on the facts found they are directed at requiring a disgorgement of the profit that was made by the taking and retention of moneys flowing from property that was taken.

It is not sensible to deal separately with an account of profits, as raised by the cross-appeal, without in the same section of the submissions dealing with the arguments concerning compound interest. It is clearly most efficient and sensible that they be dealt with in a single set of submissions.

Now, can I then turn to our notice of contention? Ground 1 relates to compound interest under the statutory claims. That founds itself upon a single set of factual findings concerning the wrongdoing found by the courts below. In this case, it is the entry into transactions for no value with intent to defraud that founds the statutory claims. The question is whether equity would come to the assistance by providing in addition to the legal remedy of avoidance a remedy that allows for compound interest calculated on a profit-stripping basis. We submit that that remedy would be available, but the reasons why are totally tied in with the reasons for the grant of the original equitable relief.

In relation to ground 2 concerned with the question whether the main refinancing agreements and, ground 3, whether the guarantees and indemnities affected the disposition of property, the question of a disposition of property is interconnected with one of the heads of factual finding relevant to Barnes v Addy and directors’ breaches – namely, what was the effect of the transaction, did it impose insolvency on otherwise solvent companies within the Group, did it allow any time to the directors to which the courts below said no; no value, no time was given? That is the view of the Court of Appeal.

That issue as to the effect of the guarantees and the effect of the refinancing agreements is, again, factually interconnected with the findings that are relevant to Barnes v Addy and directors’ breaches. So sensibly it is best if all those relevant facts can be set out in a single document and then their implications for these contentions can be drawn out without unnecessary duplication or repetition.

The next ground relates to the non-plaintiff transactions. This is a contention that the injunctive relief granted should also be extended in aid of the statutory claims if that is the sole basis for success. It is inextricably tied in with the factual findings and the considerations that led to the grant of equitable relief by way of injunctive relief in aid of the Barnes v Addy findings. So, again, it is sensible if it is dealt with in a single set of submissions. Equitable fraud - - -

HIS HONOUR: Just before you move on from that, what is the consequence of success under ground 4?

MR YOUNG: The consequence is that the transaction documents cannot be enforced against certain non-plaintiffs to alter the distributions that would otherwise flow through the various companies in their liquidation.

HIS HONOUR: I understand that. I am just looking at “the Court of Appeal erred” in “failing to grant injunctive relief in aid of the statutory claims”. Does that go anywhere? You are not affecting the orders of the Court of Appeal.

MR YOUNG: It is the same injunctive relief, but the injunctive relief was granted in aid of the Barnes v Addy judgment.

HIS HONOUR: I see. Again, it is a different cause of action issue.

MR YOUNG: Yes, your Honour, it is. We are simply saying if we succeed only on statutory claims and those findings are not challenged then equivalent relief should go in aid of the statutory claims.

HIS HONOUR: All right.

MR YOUNG: I was going to turn to ground 5, your Honour.

HIS HONOUR: Yes.

MR YOUNG: In relation to equitable fraud, the simple contention is that all of the factual findings that led to the findings of breach of directors’ duty and Barnes v Addy liability can be analysed under a different cause of action. Those factual findings do add up to a situation where the court ought to have found that there was an imposition and deceit upon the creditors of the Bell companies. If that is a correct conclusion then the same equitable relief would flow on the ground of equitable fraud, as distinct from Barnes v Addy.

But in terms of writing the submissions, your Honour, when we are doing our submissions, if it is in one document, we would address all of the issues relevant on the principal appeal and the reasons why it was correctly concluded that there were breaches of duty sounding in Barnes v Addy liability and then, having gone through all those matters, we would bring out the reasons why on those factual findings alternative relief could have been granted under the principle of equitable fraud.

But if we are forced to put on, out of order, as it were, the submission about equitable fraud before we put our principal submissions about Barnes v Addy and directors’ breaches then we are going to be dealing with the facts in a piecemeal fashion in different documents and trying to relate them to different causes of action.

HIS HONOUR: Yes.

MR YOUNG: The last ground, ground 6, your Honour, traverses the whole ground of Barnes v Addy liability for directors’ duties by contending that a breach of directors’ duties has always been considered to be a breach of a kind that will attract Barnes v Addy liability, regardless of how you want to describe it. That obviously is a submission that resides within the framework of submissions on the principal appeal.

We are not trying to gain any advantage; we are trying to make it clear that the submissions will be most helpful, most efficiently prepared and most understandable if all of our submissions can be in a single document. If we are forced to do it in a piecemeal fashion in different documents, it will not really assist the Court and will have disadvantages for ourselves. We are frankly saying that we would be forced to traverse the same set of facts a couple of times in different documents. That is the practical reason for the course we propose, your Honour. The third of the points of difference I mentioned, your Honour, was that we felt that in preparing the supplementary appeal book - - -

HIS HONOUR: There was an earlier point of difference identified, I think, in relation to the filing of an upfront appeal book. That is no longer a point of difference.

MR YOUNG: No, that was a misunderstanding, your Honour, between us. It was not that we are objecting to a basic court book. The only difference between us was that we considered that in the supplementary court book difficulties might arise if the only documents that can be included are documents that have been specifically referred to in the by then filed written submissions of the parties. The reason is not that we necessarily expect a significant number of documents to be referred to that are not mentioned in the written submissions.

It is hard to know what position will transpire. But it may be that the submissions give references to factual findings and passages of the judgment. Those passages might refer to a number of documents. For instance, findings concerning the actions of the directors mention various sets of minutes that were prepared for the directors’ meetings by the banks. Inferences are drawn by the courts about the knowledge of the directors having regard to the contents of those minutes.

Your Honour may have seen a reference to the banks’ view that they could recite their way into a position of identifying a corporate benefit when none otherwise existed by the recitals in the minutes they drafted. Now, it may be that we will need to refer the Court to various sets of minutes – I am not sure we will – depending on how the argument goes. It may be that there are documents that, when all the submissions have been exchanged, we may suggest or notify the other side that we think that certain documents should be added to the index of the supplementary court book.

The prescriptive rule our learned friends suggest would prevent any reference to any document that may well be mentioned in the judgment, but if you have not given a specific reference to where it is to be found in the electronic court book the suggestion seems to be it cannot be included in the supplementary court book.

We do not really want to turn, your Honour, the submissions into a document that has excessively long footnotes or endnotes simply to refer to all the relevant documents when that can be easily done by a separate notification between the parties and then the documents are included in the supplementary court book.

HIS HONOUR: Yes, I understand.

MR YOUNG: Can I then take your Honour to our set of minutes and deal with the remaining differences between the parties? There are no differences in paragraphs 1 and 2. In paragraph 3 and in paragraph 4 and the following paragraphs we set out a different timetable. This is not a case where, as Mr Archibald suggested, we are trying to force the submissions to be filed early. In fact, under the rules, the normal position is that submissions are filed 35 days after the grant of special leave. The date we propose of 17 May is 63 days after the grant of special leave, so there is already a very considerable extension of the time for filing written submissions that that date provides to the appellants.

As we understand their case, they have been at pains to point out more than once during the special leave application that there are no factual findings or inferences that are challenged. Now, in those circumstances, there should not be any particular difficulty in filing written submissions in support of the appeal on or before 17 May. It is close to a month from now, just under, but it is a long time after the grant of special leave.

HIS HONOUR: Yes.

MR YOUNG: In relation to paragraph 4, we have submitted there that the date for the respondents’ submissions, one set of submissions covering all issues, should be 17 June. The rules provide for the respondents’ submissions to be filed 21 days after the appellants’ submissions. That is slightly greater, it is a month, but that is not an unfair length of time given the amount of time since the grant of special leave that the appellants have had.

We did take the view that the ordinary chronology – this is the simple set of dates and events – should be filed as an agreed chronology and probably the best timing for its filing is after the principal submissions have been exchanged so the relevant dates and events can be chosen to accommodate both parties’ principal cases. I do not think there is any issue about filing such a chronology and there never has been.

Now, Mr Archibald referred to the “hole in the middle”. We have provided for the appellants to file and serve written submissions in response by 29 July. We are conscious that both parties, as we understand it, have some difficulties with the availability of counsel and other members of the legal team in July. We certainly do. One of the very real difficulties for us in the appellants’ proposal was that they were proposing that our submissions go in on 19 July and that their submissions only be filed on 7 June. That timetabling would cause us great difficulties because people have plans relating to July and we have availability issues, your Honour.

So we have tried to structure a timetable that accommodates that potential problem for both parties, gets the principal submissions in before the July vacation and then deals with the responding submissions in late July and August. Those dates roughly end up finishing at the same time, so that is why we have chosen 29 July and 12 August. We have tried to fairly accommodate potential July difficulties that we certainly face and we think the appellants may face. As to the additional documents, I have indicated why we think that should not be constrained to only those documents referred to in the written submissions.

Now, as to page limits, your Honour, paragraph 3 adopts the appellants’ submission that there be 35 pages for their own submissions. We do not have a difficulty with that. In relation to ours, we have proposed a total of 55 pages because our submissions would address all issues - the appeal, cross-appeal and contentions. The chronological summary of factual findings we have proposed 25 pages.

Following your Honour’s discussion with me, it may be that there should be an extra step that the parties consult and agree a combined summary of factual findings by a particular date, and we think that is a sensible course.

Now, in relation to the hearing, we are content with the Court’s indication that there be a hearing in I think the second week of September. We do consider, having been through the Court of Appeal process, that the scale of the judgments and the extent of the relevant factual findings does mean that as many days as possible should be allocated by the Court within that particular week. We have said five here, but if it were possible to allocate four, in our submission, that is a better course than three.

HIS HONOUR: I think you are going to have to work on the basis it will be a three-day hearing, bearing in mind the purpose of the written submissions and, of course, the oral submissions. I think I foreshadowed that in any event.

MR YOUNG: Yes, your Honour. It does though lend weight to our submission that if there is a separate document addressing relevant factual findings - - -

HIS HONOUR: I understand that.

MR YOUNG: - - - that would assist.

HIS HONOUR: That may be part of the trade-off.

MR YOUNG: If your Honour please.

HIS HONOUR: I am still concerned about this notion that sitting in the notice of contention are grounds crouching ready to leap across into notice of cross-appeal and that procedurally it would be better to be reasonably clear as to what is properly in the notice of cross-appeal and what is properly in the notice of contention. I am worried about a case in which you say, by way of contention, that you failed on a cause of action you should have succeeded on and the only reason it is contention rather than cross-appeal is because the relief is much the same.

MR YOUNG: It is slightly deeper than that, your Honour.

HIS HONOUR: Yes.

MR YOUNG: Rule 42.08 provides that you file a cross-appeal only where you are appealing from a part of the judgment below or you are seeking a variation of part of a judgment. There is no provision for a conditional cross-appeal. We are not seeking to appeal from any part of the judgment that was delivered and we are not seeking a variation of it. We are content with the judgment that exists. It is only if part of that judgment is to be set aside that our grounds of contention kick in, as it were. That is why we took the view we did, your Honour.

HIS HONOUR: What does it mean to appeal from a part of the judgment below?

MR YOUNG: Well, sometimes one can envisage cases, your Honour, where there has been partial success and certain separate claims have failed and a cross-appeal is pressed in respect of the unsuccessful aspects, regardless of the outcome of the - - -

HIS HONOUR: That is right.

MR YOUNG: That is not our situation, your Honour.

HIS HONOUR: So the equitable fraud contention does not fit within that?

MR YOUNG: No, your Honour, because - - -

HIS HONOUR: You say that just leads to a tweaking of the rescission dates?

MR YOUNG: A form of relief. It is the same relief with equitable fraud. Statutory claims, it is a slight tweaking of the form but not the substance of the relief. That was our dilemma, your Honour, that if we were to try and frame a notice of cross-appeal it would have to be cast in conditional terms.

HIS HONOUR: Yes.

MR YOUNG: If something, then we cross-appeal.

HIS HONOUR: Well, it may be that the best course is to see what comes out of the appellants’ submissions in that respect.

MR YOUNG: Yes, your Honour. I mean, if necessary, we would seek to file an identical document but in the form of a notice of cross-appeal, and it is clear under the rules, your Honour, that if it is properly classified as a cross-appeal then we have the hurdle of special leave.

HIS HONOUR: You have to get special leave, that is right.

MR YOUNG: Yes.

HIS HONOUR: Well, I mean, that is the point that would be raised against you, I guess.

MR YOUNG: Yes, so long as there is no point, your Honour, that they are not aware of the grounds and our desire to rely upon them, whichever way it goes.

HIS HONOUR: No, no, I understand. Yes, all right. Thanks, Mr Young.

MR YOUNG: If your Honour please.

HIS HONOUR: Yes, Mr Archibald.

MR ARCHIBALD: Your Honour, there might be some utility in the respondents filing an amended notice of cross-appeal. If they do that, they would be obliged to set out the orders sought, and one of the things we have been trying to consider is whether when one looks at the consequences of the ground one finds some variation in the order.

HIS HONOUR: Now, what ground are you talking about in that context, anything other than the equitable fraud ground?

MR ARCHIBALD: Well, equitable fraud is one. One notices, your Honour, from the grounds advanced in relation to equitable fraud, paragraph 9, that they are urging that the transactions were void - - -

HIS HONOUR: As distinct from a rescission order.

MR ARCHIBALD: Yes, so that might be one change. My friend referred himself to a timing change that would flow from, I think, ground 2. He submitted it would be an order that would have a later date in it than the current orders, but again filling it out in a notice of cross-appeal might expose issues of that kind. So we can see in the present context that this process might crystallise what is involved in these propositions and may aid us in our understanding as to whether we should pursue any complaint that the ground is not properly to be characterised as a contention as distinct from a cross-appeal, so that occurs to us in light of what we have heard from our learned friend this morning.

HIS HONOUR: Yes.

MR ARCHIBALD: Secondly, the separate factual document. My friend submitted, as we understood it, as the real foundation for this document that there was a risk that the submissions might not adequately identify the factual findings. We say there should not be such a risk. One should within the submissions identify precisely what it is that is being relied upon and there is no reason why it cannot be satisfactorily encompassed within the submissions.

If we are to have this separate document, your Honour, inevitably, as we would see it, the submissions will need to refer across to that document in any event, so they need to be integrated even if one were to try to isolate the separate factual matters, so that we do see difficulties being created - - -

HIS HONOUR: The submissions will go on an issue-by-issue arrangement, I imagine.

MR ARCHIBALD: One would expect that that is so; yes, your Honour.

HIS HONOUR: Yes, and I can see some attraction in, as it were, a chronological factual landscape for the Court - - -

MR ARCHIBALD: Well, one can understand that, your Honour. One of the further difficulties we still see is whether the material that will end up in such a document when prepared unilaterally by a party will confine itself to what are called primary factual findings. My friend said, well, there may be some matters of inference or conclusion, and that is where we get into difficulty.

HIS HONOUR: I think he was talking about - there may be matters of contested interest, but my understanding was he accepted that at the lowest level of factual finding he is talking about primary factual finding.

MR ARCHIBALD: That is where it should be, and that is - - -

HIS HONOUR: He nods affirmatively.

MR ARCHIBALD: That is all that there should be, but one often finds in intermediate Courts of Appeal, your Honour, when an agreed chronology is ordered the parties fail to agree because either they are, in seeking to telescope a finding, putting some spin on it that is departing from the purity of the factual finding and/or it has a conclusory element in it. One ends up with a document that has extensive separate paragraphing where the parties have simply failed to agree, and we are just concerned we may end up in that area with this.

HIS HONOUR: Yes, its function, as I understand it, would be to provide us with an index, as it were, to findings of fact in the judgment with not great slabs of quotations from the judgment - - -

MR ARCHIBALD: Yes, your Honour.

HIS HONOUR: - - - embodying those findings of fact, but brief encapsulations. Now, I understand one can always end up having arguments about whether this is a fair encapsulation or not - - -

MR ARCHIBALD: Yes.

HIS HONOUR: - - - but it seems to me that if the function of it is understood as an index and will not necessarily be – would not be treated, as it were, as a statement of all the facts, then it may have some utility and there should not be really much concern about the kind of question that you have raised.

MR ARCHIBALD: Experience makes one wary; that is all I think I can say, your Honour.

HIS HONOUR: Yes, I appreciate that, and I know that one can always find things to argue about, but - - -

MR ARCHIBALD: Yes, but it really ends up, your Honour, as an allowing to each party an expanded number of pages for submission but the Court directing that there be within its submission an index of factual findings arranged chronologically - that is really what it amounts to – and then at the end of it the parties would try and put something together. We are still not certain for our part that it is going to be productive.

HIS HONOUR: All right, thank you.

MR ARCHIBALD: Thank you, your Honour. Your Honour, then as to whether there should be twin streams of submissions or a single sequential set, our friend submitted in substance that all the issues are interrelated and that a single set would avoid unnecessary duplication or separation out of our propositions. Without seeking to take much time about it, your Honour, we submit that is not so when one runs through the matters raised in the cross-appeal and notice of contention.

The cross-appeal, of course, is not about the substantive aspects of an account of profits on the one hand and equitable compensation of whatever character on the other hand. The ground of cross-appeal is that the respondents were denied an election. Now, that is entirely discrete. The factual material is probably three or four lines, no more than that, and does not cut across anything that would be raised on the appeal.

HIS HONOUR: The notice of contention is really the territory of - - -

MR ARCHIBALD: Yes, but even there, your Honour, ground 1 is the proposition that, as a matter of principle, it was open to the Court of Appeal to award compound interest for the statutory claims. The issue is: are they confined to simple interest under the relevant Supreme Court Act or can equity intervene in support of the statutory claim? That is a matter of principle, again separate from our claims which do not enter into the statutory arena. The grounds in relation to the setting aside of the refinancing agreements and the guarantees revolve around the notion as to whether those transactions did relevantly constitute dispositions of property. That is the essence of those grounds.

The non-plaintiff transactions issue, ground 4, is directed not to the detailed facts and circumstances but to whether, because of the integration of transactions, there should have been an order that would support the statutory ground by bringing in the non-plaintiff transactions – again, not concerned with the primary facts.

Equitable fraud, we accept, is more in the territory where one is getting into factual matters that might arise elsewhere, but all of that would mean that the respondents would deal at an earlier time, in relation to equitable fraud, with facts that they might otherwise address in relation to directors’ duties. They do not need to duplicate. All they are doing is dealing with it at one point on one topic and, having dealt with it on one topic they do not need to repeat it on the other, so there should not be a problem of that kind in any event.

Ground 10 shows what the focus of the equitable fraud claims is: 10(a), it is the relationship, the character of the relationship, between the parties to the transactions and their creditors, so it is a relationship point; (b) is a control point and (c) is a public policy point. We do not see that there is an overlap of the kinds of issues at immediate factual level that arise on the directors’ duties points because relationship with creditors does not matter, control does not matter and public policy does not matter.

In any event, to the extent of any overlap, that should not cause what is otherwise an efficient and appropriate course not to be adopted. The Barnes v Addy ground – ground 6 – we accept, your Honour, is really more

appropriately dealt with in relation to the appeal, but that is not going to take up any space as we would understand it. We will deal with it in our appeal submissions. The respondents would naturally deal with it in theirs. So we submit that what our friend advanced is not a reason for abandoning what is otherwise in the circumstances an appropriate way to approach the matter. On the timetable consequences - - -

HIS HONOUR: So far as the timetable is concerned, if I accept the single stream argument being put by the respondents then I would have been inclined to adjust the timing that they have suggested.

MR ARCHIBALD: Could we provide your Honour with an adjusted sheet which addresses that possibility?

HIS HONOUR: .....hear what I have got to say, obviously, Mr Archibald.

MR ARCHIBALD: Yes, your Honour. It still works overall in a satisfactory way, your Honour, if the starting step is 7 June, bringing it forward a bit. I am not quite sure when our friends’ exigency arises in July. I do not know if we can work around that. We have some difficulty with a May date in any event, your Honour, by reason of some members of our legal team. We have our own July difficulties; 29 July would not quite solve our July difficulties, but 5 or 6 August would. It is perhaps the July date that is the problem one, your Honour.

HIS HONOUR: All right.

MR ARCHIBALD: That is, I think, the most we can say. We will try to work around those matters. As to additional documents, your Honour, if, of course, a party by error overlooks something, naturally it could be added in later but the prospect of some matters being considered on reflection as apt to go in should not impede the efficient preparation of a supplementary appeal book based on what the parties say in their submissions.

HIS HONOUR: Thanks very much. I will just adjourn briefly to consider what course I should take.

AT 11.40 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.58 AM:

HIS HONOUR: What I propose to do is to indicate the orders that I would make and I will ask the parties to reduce them into a minute and present them to me.

In summary, I accept the single stream submission. I accept that there should be a combined chronologically ordered index of factual findings relied upon by both sides. I am of the view that the supplementary appeal book should comprise only the documents referred to in the submissions and I will be proposing that the case be listed for hearing for three days in the September sittings.

Now, if we can just work off the respondents’ minute. I would propose an order in terms of order 1 of the respondents’ minute, order 2 of the respondents’ minute, order 3a of the respondents’ minute altering the time to 7 June, order 4a of the respondents’ minute altering the time to 12 July, order 6 of the respondents’ minute altering the time to 5 August and order 7 of the respondents’ minute altering the time to 15 August. Then order 8 will be as in order 6 of the appellants’ proposed orders.

Order 9 – and this is to deal with the factual chronology – would be that (a) on or before 7 June 2013 the appellants are to provide to the respondents a referenced chronological index of fact findings upon which the appellants rely, not exceeding 25 pages; and, (b), on or before 12 July, the respondents in the same terms.

Order 10 would read “The parties to file a combined referenced chronological index of the factual findings upon which they rely on or before 21 August”. Order 11 – the hearing will be listed for three days in the September sittings. Order 12 – costs of these directions as costs in the appeal.

Now, I have not made any provision there for an agreed chronology. I am not sure whether that falls away or still has a separate useful function to fulfil. Mr Archibald.

MR ARCHIBALD: We doubt that it will if the separate documents are faithful to the concept - - -

HIS HONOUR: Yes.

MR ARCHIBALD: Perhaps because those documents will be relatively early in the steps towards the hearing the parties could review that position when they have their own separate documents - - -

HIS HONOUR: Yes, if there is a variation then obviously the parties can put in an agreed minute.

MR ARCHIBALD: Yes.

MR YOUNG: We agree, your Honour.

HIS HONOUR: Yes, all right. Now, it would be useful, I think, if you were to have some discussions with Registrar Carlsund after the hearing – or your instructors – so that we are all on the same page in terms of the electronic filing and so forth. Could I mention that I am contemplating that we will probably be – although it is not set in concrete yet – listing the appeal for hearing in Perth – the Perth sittings in September? Thank you.

The Court will adjourn.

AT 12.03 PM THE MATTER WAS ADJOURNED