Oztech Pty Ltd v Public Trustee of Queensland

• Jurisdiction: Australia Federal only
• Judgment Date: 21 June 2019
• Neutral Citation: [2019] FCAFC 102
• Date: 21 June 2019
• Court: Full Federal Court (Australia)

FEDERAL COURT OF AUSTRALIA

Oztech Pty Ltd v Public Trustee of Queensland [2019] FCAFC 102

Appeal from:	Oztech Pty Ltd v Public Trustee of Queensland (No 15) [2018] FCA 819
File number:	NSD 1185 of 2018
Judges:	MIDDLETON, PERRAM AND ANASTASSIOU JJ
Date of judgment:	21 June 2019
Catchwords:	CORPORATIONS – whether respondent trustee in breach of duties owed to noteholders due to failure to appoint investigative accountant ; EVIDENCE – correctness of ruling excluding line of questioning in cross-examination on ‘alternative causal thesis’ for lack of relevance – whether alternative causal thesis pleaded – whether case confined by particulars to expert evidence – whether even if exclusion incorrect, ‘alternative causal thesis’ would have been independently causal vis-à-vis the primary causal thesis – appeal dismissed ; PRACTICE AND PROCEDURE – parties’ obligation to plead all causes of action or defences explicitly
Legislation:	Corporations Act 2001 (Cth) ss 283CC, 283DA Federal Court of Australia Act 1976 (Cth) Pt IVA Trustee Act 1925 (NSW) s 85 Trusts Act 1976 (Qld) s 76
Cases cited:	Banque Commerciale S.A., En Liquidation v Akhil Holdings Limited(1990) 169 CLR 279 Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 CCL Secure Pty Ltd v Berry [2019] FCAFC 81 Coulton v Holcombe (1986) 162 CLR 1 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653 Oztech Pty Ltd v Public Trustee of Queensland (No 6) [2016] FCA 391 Water Board v Moustakas(1988) 180 CLR 491 White v Overland [2001] FCA 1333
Date of hearing:	14, 15, 18, 19 and 22 February 2019
Date of last submissions:	4 February 2019
Registry:	New South Wales
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Category:	Catchwords
Number of paragraphs:	77
Counsel for the Appellant:	Mr N C Hutley SC with Mr C H Withers and Mr A M Hochroth
Solicitor for the Appellant:	Squire Patton Boggs
Counsel for the Respondent:	Mr S Finch SC with Mr D O’Sullivan QC, Mr M O’Meara and Ms F Lubett
Solicitor for the Respondent:	Clayton Utz

ORDERS

		NSD 1185 of 2018
BETWEEN:	OZTECH PTY LTD ACN 005 907 871 Appellant
AND:	THE PUBLIC TRUSTEE OF QUEENSLAND Respondent

JUDGES:	MIDDLETON, PERRAM AND ANASTASSIOU JJ
DATE OF ORDER:	21 June 2019

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. The appellant pay the respondent’s costs of and incidental to the appeal.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

OVERVIEW

1. This appeal arises essentially from a single evidentiary ruling by the primary judge during the trial of the proceeding. The appellant says that the ruling precluded it from advancing an alternative cause of action for breach of duty (the alternative cause of action) as well as an alternative causal thesis. It submits that the ruling caused a miscarriage of the principal proceeding. It seeks a new trial of the whole proceeding before a different judge.

2. We do not agree that the primary judge erred in his Honour’s ruling.

3. The principal question in this appeal is whether the appellant was wrongly prevented from advancing the alternative cause of action. The appellant contends that the alternative cause of action was pleaded and was not abandoned nor constrained by particulars given in the course of extensive interlocutory disputes concerning the scope of the pleadings and particulars. The respondent says that the alternative cause of action was not pleaded, and alternatively that it was supplanted as a result of particulars given in response to its requests.

4. The respondent further contends that even if the appellant had been allowed to advance the alternative cause of action, the event, or series of events, causing loss would have been the same. The respondent therefore says that if the ruling was made in error, it did not preclude the appellant from obtaining an award of damages it would otherwise have been entitled to.

5. The respondent’s causation argument was put on a number of bases. One basis was that had the alternative cause of action been permitted, the breach would nevertheless have converged with later supervening events and thus the cause of action would have failed for want of causation for the same reasons that the other causes of action failed. This contention in effect posits that where two separate series of events, commencing from separate starting points and caused by separate breaches, converge with a single event directly causative of loss, the anterior events cease to have any causative effect. We do not agree entirely with the respondent’s contention. It elides the question of what other events may have occurred if the hypothetical alternative causal theory had been explored during the hearing of the proceeding. If that course had been open to the appellant, it is conceivable that the putative earlier events may have been the impetus for inquiries by the respondent and this in turn may have led to the more timely discovery of the need for protective action by the respondent. The question of whether the later supervening events would have occurred or would have had the same effect is a question that required scrutiny at the trial. Due to the evidentiary ruling this counterfactual was not examined at trial, nor analysed in the Reasons for Judgment of the primary judge: Oztech Pty Ltd v Public Trustee of Queensland (No 15) [2018] FCA 819.

6. During the appeal, senior counsel for the appellant conceded, correctly, that if the Court found that the alternative cause of action was not pleaded, the appeal should be refused. In view of that concession, strictly it is unnecessary to decide whether the alternative causal theory advanced by the appellant would have led to the same or different result. However, it is appropriate that we briefly examine the appellant’s contention concerning the effect of the ruling in relation to the alternative causal thesis.

BACKGROUND

7. The background to the proceeding and the involvement of numerous entities in relevant events are described in the Reasons for Judgment at [1]-[13]. We shall refer to only so much of the background as is necessary to provide context to the questions raised in this appeal.

8. The principal proceeding was a representative proceeding commenced under Pt IVA of the Federal Court of Australia Act 1976 (Cth). The appellant was a holder of unsecured notes issued under the arrangements to which we shall refer. The respondent was the trustee for the noteholders.

9. Between November 2006 and March 2007, a company now called Octaviar Investments Notes Limited (in liq) (OIN) issued unsecured notes with a total face value of about $348.6 million. OIN was at all relevant times a company within the Octaviar Group, the head entity of which was...