Judgment Summary Supreme Court New South Wales 27 November 2014 Commonwealth Bank of Australia v ZYX Learning Centres Limited  NSWSC 1676 Hamill J Today in the Supreme Court, Hamill J refused applications by five defendants for summary judgment in relation to a civil claim brought by the Commonwealth Bank and Commsec in the aftermath of the collapse of ABC Learning Centres. At the same time leave was granted to the Bank to file a further amended statement of claim. The claims arise from statements made by the defendants which the Bank and Commsec claim were relied upon in deciding whether to underwrite the issue of $600 million worth of reset convertible notes. One of the defendants was the Company Secretary and General Counsel for ABC Learning Centres. The claim against her arises from statements said to have been made in the course of a management questionnaire and management interviews conducted as part of the due diligence process leading to the Bank’s decision to underwrite the notes issue. The other four defendants were non-executive directors of ABC Learning. The claims against them arise from their signing a number of Directors’ Declarations in relation to the company’s accounts. The defendants argued variously that the Bank’s statement of claim did not disclose a reasonable cause of action against them; that the representations relied upon were not properly pleaded; that the representations were not statements of fact but were statements of opinion; that such statements of opinion did not carry with them implied representations; that the opinions were held on reasonable grounds or following the exercise of diligence; that the acts alleged were not “in trade or commerce” or “in relation to financial products or services”; and that the amendments were brought outside of the relevant limitation period. A number of other arguments were made in relation to the nature of the pleading. There were also arguments about the appropriate test to be applied when a party seeks summary disposal of a civil claim. It was held that the appropriate test was whether the claim was destined to fail, hopeless or untenable. The Court rejected a submission that it was sufficient for the party seeking summary dismissal to establish that the case did not have “reasonable prospects of success”. Hamill J held that the case was an appropriate one to go to final trial. In spite of the various complaints made by the defendants, it could not be said that the basis of the claim was so untenable that it was destined to fail. This summary has been prepared for general information only. It is not intended to be a substitute for the judgment of the Court or to be used in any later consideration of the Court’s judgment.
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