Australian Retirement Group Pty Ltd v The Commonwealth Bank of Australia Ltd (No 2)

These proceedings were commenced on 20 March 2016 as representative proceedings under Pt 10 of the Civil Procedure Act 2005 (NSW). They have thus been on foot for over six years.

The proceedings have reached the stage where each party has given discovery and the evidence, including expert evidence, is almost complete. In substance, the allegations made by the plaintiff on behalf of the group members concerns the conduct of Bankwest, now owned by the defendant, the Commonwealth Bank of Australia (“CBA”), after the plaintiffs and group members entered into the relevant facility agreements. The allegations focus on a review that Bankwest did of the loans after they had been acquired by the CBA.

Now by Notice of Motion filed on 26 February 2022 the plaintiffs seek to amend their Second Further Amended Statement of Claim to add a further proposed common question:

The proposed amendment is also to add a section Q, "Claim in the Alternative" as follows:

There are a number of reasons why leave to amend must be refused. The first is that the pleading is bad in form and is, from a pleading point of view, embarrassing. No attempt is made to plead material facts. Rather, assertions of a broad and conclusionary nature are made.

For example, in par 105 it is alleged that the various "credit facility agreements" were "a form of non-prudential lending" and a "form of lending" that "Bankwest ought not to have entered into." Paragraph 106 speaks of valuations which were "unsatisfactory" in circumstances where "serviceability was not viable." Paragraph 108 refers to matters that were "realised" by CBA in selling various matters. Paragraph 109 refers in general terms to an “overvaluing” and of security property and the engagement "in a form of lending that was non-prudent lending” and of lending that a "competent and accomplished financial institution … would not have engaged in." Paragraph 110 makes the sweeping assertion that Bankwest's conduct in “extending credit” to Group Members was done in circumstances “in which it ought never have properly done” and was "unconscionable."

While the manner in which the pleading is formulated is itself a sufficient reason to deny the amendment, there are more substantial issues that arise. The first is that no explanation is given for the making of the amendment at this very late stage of the proceedings.

Finally, and perhaps most importantly, if the amendments were allowed it would open up a completely new area of inquiry, namely whether the loans should have been made at all.

That is made clear by the nature of the allegations proposed to be made but also by the evidence given by the plaintiffs' solicitor in support of the application. Paragraph 11 of Ms Lee's affidavit is as follows:

It would be most unjust to impose upon the defendant bank, at this late stage of the proceedings, the need to embark on a wholly new area of inquiry likely to be wide ranging in the extreme.

Furthermore, it is very likely that the allegations, even if properly pleaded, would now be out of time. That alone might not be a reason to deny leave to amend at this stage but, when taken in combination with the matters to which I have referred, confirms to my mind that the correct conclusion is that leave to amend should be refused.

The plaintiffs' Notice of Motion of 26 February 2022 is dismissed with costs.