Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors; Idoport Pty Limited & Market Holdings Pty Limited v Donald Robert Argus; Idoport Pty Limited "JMG" v National Australia Bank Limited

Supreme Court of NSW|2001-08-07|Before: Einstein J, Mr J

CITATION : Idoport Pty Limited & Anor v National Australia Bank Limited & 8 Ors; Idoport Pty Limited & Market Holdings Pty Limited v Donald Robert Argus; Idoport Pty Limited "JMG" v National Australia Bank Limited [32] [2001] NSWSC 661 FILE NUMBER(S) : SC 50113/98; 50026/99; 3991/00 HEARING DATE(S) : 2/08/01 JUDGMENT DATE : 7 August 2001

Idoport Pty Limited (Plaintiff) PARTIES : Market Holdings Pty Limited (Plaintiff) National Australia Bank Limited (Defendant) Donald Robert Argus (Defendant) JUDGMENT OF : Einstein J

COUNSEL : Mr M Dicker, Mr R Titterton (Plaintiffs) Mr J Gleeson SC, Mr AS Bell (Defendants) SOLICITORS : Withnell Hetherington (Plaintiffs) Freehills (Defendants) CATCHWORDS : Practice and Procedure - Application to vacate judgment and reasons - Principles - Court entitled to proceed upon basis on which proceedings argued LEGISLATION CITED : Autodesk Inc v Dyason [No. 2] (1993) 176 CLR 300 Carr v Baker (1936) 36 SR (NSW) 301 Caswell v Powell Duffryn Associated Collieries Limited [1940] AC 152 G v H (1994) 181 CLR 387 Idoport Pty Limited & Anor v National Australia Bank Limited [2001] NSWSC 648 CASES CITED : Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 Martin v. Osborne (1936) 55 CLR 367. New South Wales Bar Association v Smith (unreported, NSWCA 4 July 1991) Pittalis v Sherefettin [1986] QB 868 Raybos Australia Pty Ltd v Tectran Corporation Pty Ltd (unreported) NSW Court of Appeal 8 July 1993 Seltsam Pty Limited v McGuiness (2000) 49 NSWLR 262 Smith v New South Wales By Association (1992) 176 CLR 256 DECISION : Motions dismissed. Costs reserved.

INDEX JUDGMENT - on motions to vacate 1 The Notices of Motion 1 The Principles 3 Placing the defendants submissions and the motions in context 4 Dealing with the defendants submissions 20 Short minutes of Order 26 THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION - COMMERCIAL LIST

50113/98 IDOPORT PTY LIMITED & ANOR v NATIONAL AUSTRALIA BANK LIMITED & 8 ORS

50026/99 IDOPORT PTY LIMITED & ANOR v DONALD ROBERT ARGUS

3991/00 IDOPORT PTY LIMITED ("JMG") v NATIONAL AUSTRALIA BANK LIMITED

JUDGMENT - on motions to vacate The Notices of Motion 1 Judgment was delivered on 31 July 2001 ([2001] NSWSC 648) dealing with two notices of motion in identical form filed by the defendants on 20 July 2000, the first [No 39] filed in the main proceedings [50113 of 1998] and the second [No 40] filed in the MLC proceedings [3991 of 2000] ["the original motions"]. The motions had been argued on 25 July 2001. 2 Presently before the court are 2 further motions filed by the defendants again in identical form, the first [No 41] filed in the main proceedings and the second [No 42] filed in the MLC proceedings ["the motions to vacate"]. The motions seek orders that the judgment and reasons delivered on 31 July 2001 be vacated; further or in the alternative, that the court reopen consideration of notices of motion 39 and 40; and an order that pending determination of the motions no orders be made or entered in respect of notices of motion 39 and 40. 3 Leave was granted on 2 August 2001 for the defendants to file motions 41 and 42. The motions were brought on for hearing at 2:00 pm on the same day. 4 The defendants furnished an outline of submissions in writing [MFI D 159] and addressed from the bar table. The plaintiffs addressed from the bar table in answer. 5 The basis for the motion was put in terms of the assertion that the judgment proceeded on a misapprehension of fact.

6 The judgment included as paragraph 20 the following: "It seems to me permissible in dealing with the notices of motion for the court to proceed: (a) on the basis that the subject documents do not go to any issue in the main proceedings, and (b) on the basis that the subject documents are sensitive in the extreme in terms of containing information as to the capacity/resources of the plaintiffs to continue the litigation. Clearly that form of information if falling into the hands of the defendants at this point in time may be assumed as giving a critical weapon to the defendants. The importance of knowledge in the defendants' camp of the sinews of war in the plaintiffs' war chest cannot be over-emphasised in relation to these particular proceedings. It seems to me that an acceptance of this proposition was common ground in the way in which each party addressed on the notices of motion." 7 The defendants advance the following two contentions:

(1) that the proposition which is stated in paragraph 20 (b) to be common ground was not conceded by the defendants in their written or oral submissions and indeed is inconsistent with those submissions.

(2) that the plaintiff did not ask the Court to adopt the proposition said to be common ground and indeed is inconsistent with the plaintiffs' submissions. [Defendants' submissions MFI D 159 paragraph 13]

The Principles 8 It is convenient to commence with a consideration of the principles. Clearly the court has jurisdiction under part 40 rule 9 to entertain a motion to set aside or vary a judgment provided that the motion is filed before entry of the judgment. As was pointed out by the defendants in their written submissions the position at common law as stated in Smith v New South Wales By Association (1992) 176 CLR 256 at 265 was as follows: "It has long been the common law that a court may review, correct or alter its judgment at any time until its order has been perfected" 9 I accept as correct the defendants' submissions as to the circumstances in which a court will recall or reopen a judgment. Those submissions were as follows: "In Autodesk Inc v Dyason [No. 2] (1993) 176 CLR 300 at 302-3, Mason CJ identified various circumstances in which, under the authorities, the Court has exercised the jurisdiction to reopen a judgment which has apparently miscarried. One of the circumstances identified was the case of New South Wales Bar Association v Smith (unreported, NSWCA 4 July 1991) in which the New South Wales Court of Appeal reconsidered orders previously made in view of an argument that the Court had mistakenly assumed that particular evidence had not been given at earlier hearings. Another example given was Pittalis v Sherefettin [1986] QB 868 in which a judge recalled orders the day after the day they were made upon determining that he had erred in a material matter in his approach to the case. The guiding principle, as stated by Mason CJ (at 302) is as follows: "These examples indicate that the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue where a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law." In the present case, the judgment is given in respect of an interlocutory question, namely the regime which is to govern access to certain documents pending the hearing of a motion. In such a case, if it be established that the Court has proceeded on a misapprehension, the Court should not be slow to take the step of reviewing or rehearing an issue: see for example Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 at 447-448; Raybos Australia Pty Ltd v Tectran Corporation Pty Ltd (unreported) NSW Court of Appeal 8 July 1993, Priestley JA (BC9301787 at 6)."

Placing the defendants submissions and the motions in context 10 It is plain that the court was asked by the defendants to deal with a difficult question described in paragraph 24 of the judgment. That question required to be determined prior to access being granted to the documents in question. If that question is answered so as to permit employees or officers of the defendants as well as the defendants solicitors or counsel involved in the ongoing conduct of the proceedings to have access to the documents, the position can never be undone. On the other hand, if that question is answered so as to restrict access to those documents to nominated employees or officers of the defendants, as well as nominated solicitors or counsel not involved in the ongoing conduct of the proceedings, then one can move forward with the question of whether such access should be expanded remaining live and capable of being argued. 11 The defendants sought by the orders which they proposed in notices of motion 39 and 40, a regime which would have had the net effect of necessarily pre-empting the matter to which I referred in the previous paragraph. 12 The next matter to note is the somewhat curious manner in which the motions were conducted on 25 July. An examination of the documents is usually of the essence in terms of the court being in a proper position to deal with whether, and if so to what extent, the particular documents were in fact confidential and why, and to what degree, and depending upon the answer to these questions, to deal with what are the discretionary considerations to be taken into account by the court in determining what form of confidentiality regime should be imposed as the conditions upon which the defendants and their legal representatives should be given access to the documents. Short of the documents being examined the court may proceed upon the basis of evidence adduced as to the same matters. The documents were not produced to the court on 25 July. Evidence was not lead as to the claimed confidentiality. Instead Mr Gleeson SC made clear that the defendants were prepared to proceed upon the basis that the court should make two relevant assumptions:

Assumption 1: that the materials produced or to be produced included documents which included arrangements or agreements entered by one or other of the plaintiffs in the main proceedings (or by companies related to those plaintiffs) with persons providing funding for the conduct of those proceedings, together with documents recording the implementation of such arrangements.

Assumption 2: that some or all of the documents may be entitled to a claim of confidentiality. 13 At the same time as conceding that for the purposes of the motions the court should proceed by making assumption 2, Mr Gleeson reserved the defendants position to have the question of confidentiality of the subject documents tested either closer to or more likely on the motion itself. 14 The consequence of the approach taken on the hearing of the motions was therefore that the court was asked to exercise its discretion on assumed bases and in the absence of the critical underlying question of the precise degree of confidentiality of the subject documents being or being able to be examined. This meant that the court was required to deal with the motions and to in effect give such interpretation to the assumptions as seemed necessary and reasonable in the context in which the matter arose. The court was entitled to take into account the submissions from counsel for both parties in this regard. A degree of common sense was required in terms of the obvious fact that at some stage the court may be required to assess the question of confidentiality in the real world when the documents in question would be produced to the court for the purpose of that assessment or when some evidence on the subject would be given. The defendants clearly reserved their right to have the claimed confidentiality tested. 15 The plaintiffs for their part through Mr Dicker who argued the motions for them, used terms submitting that the documents were 'highly sensitive' and that the financial capacity of the plaintiffs and Idoport in particular, was of 'crucial importance' to the defendants in determining their approach and strategy to the proceedings. [MFI P 208 at paragraph 7] Mr Dicker also said: " …in a long-running matter the defendants inevitably in performing, and their legal representatives in performing their duty to their client must be interested in the capacity of the plaintiffs to continue the litigation and its capacity to maintain the sinews of war for that litigation over a number of year …." [Transcript page 11338] 16 During the course of the hearing of the motions to vacate Mr Dicker submitted that the plaintiffs had seen the application in terms of the undertakings annexed to the motions as: "being based clearly on the assumption that the documents in question may be confidential and sensitive". [Transcript 11852] . This was precisely the approach taken by the court reflecting the essential context in which the motions were heard. 17 There was no address from the bar table on 25 July in terms of a close examination of precisely what the court was to make of assumption 2 referred to above. However during the course of argument on 2 August Mr Gleeson submitted that the defendants had intended to offer: "a concession that there was or may be such an element of confidentiality as might justify garden variety confidentiality undertakings that were being proffered." [Transcript page 11851]. As he then conceded, the words 'garden variety' were not used in his submissions on 25 July. Indeed this throws up the very point which it seems to me underlies the defendants now concerns. Once the court was asked to proceed upon the original motions by making assumption 2 in the context of the documents to be assumed to be properly described in assumption 1, the ambit of assumption 2 falls to be taken into consideration. That ambit necessarily extends to the proposition that some or all of the documents may be, as Mr Dicker suggested, "highly sensitive". When Mr Gleeson submits that he intended that the concession be regarded as a concession that there may be such an element of confidentiality as might justify the garden variety confidentiality undertakings that were being proffered, that intention was to my mind never made express. If it was an implicit intention then so be it but I did not regard the reach of assumption 2 as so constrained. The court is entitled to have proceeded upon the basis on which a matter is argued. 18 I certainly accept that Mr Gleeson on 25 July submitted in reply: "that to the extent that the plaintiffs rely on the significance of the material, or perhaps its asserted extremely confidential nature, that is not a point that distinguishes this from any other case because the material has not been tendered and your Honour, as I said, has no affidavit to assert the claim of confidentiality. So the material itself does not have some special claim that should be borne in the equation." [Transcript page 11357] 19 The problem with this submission is that there is an obvious tension between the submission and assumption 2 read in context. But the assumption was neither withdrawn nor qualified. The making of assumption 2 avoided the need for the court to treat with the real-world question of whether or not, and if so to what extent, the material was of an extremely confidential nature. The very words used by Mr Gleeson in making the assumption: "We are prepared to make that assumption for the purpose of moving the matter forward, rather than asking your Honour to devote some number of hours to assessing the strength of the claim for confidentiality but we do it by reserving the matter I have mentioned". [Transcript page 11312] made the point that the court was not to be required to assess the strength of the claim for confidentiality. As already stated, Mr Dicker had taken the court to his written submissions which included the submission that the documents were highly sensitive. I read this submission as permitting assumption 2 to be interpreted in the sense that some or all of the documents may be entitled to a claim of confidentiality for the reason that at one extreme they should be assumed to be highly sensitive. 20 Nor did Mr Gleeson in making the reply submission excepted in paragraph 18 seek to refer to assumption 2, for example by suggesting a particular meaning that was appropriate or that the wording of the assumption should be altered. Whilst the submission so extracted refers to "the material itself" as not having a special claim to the borne in the equation, the motions were being heard not by reference to the materials, but by reference to an assumption as to the content of some or all of the materials. 21 In the result the court was placed (a) in the position of having been asked to make an assumption and (b) putting the defendants submissions on the motion to vacate at their highest, in the position of a proposition being advanced in reply which if read in the way in which the defendants put the matter on the motions to vacate would raise a seeming conflict in terms of the court's entitlement to weigh in the balance the assumption upon which it had been asked to proceed. The matter becomes artificial in the extreme and more particularly so when one considers what is that the nature of an inference. I turn to examine this. 22 The Macquarie Dictionary (Third Edition) defines "inference" in the following terms: "The process of deriving the strict logical consequences of assumed premises…the process of arriving at some conclusion which, though it is not logically derivable from the assumed premises, possesses some degree of probability relative to the premises…a proposition reached by a process of inference." 23 The High Court in G v H (1994) 181 CLR 387 was asked to reconsider the reasoning process adopted by the Full Court of the Family Court in relation to the drawing of an inference of paternity from an unreasonable failure to comply with a parentage testing order made under the Family Law Act 1975 (Cth). 24 In disagreeing with Court's approach, Brennan and McHugh JJ discussed the meaning of "inferences" in the following terms: "An inference is a tentative or final assent to the existence of a fact which the drawer of the inference bases on the existence of some other fact or facts. The drawing of an inference is an exercise of the ordinary powers of human reason in the light of human experience; it is not affected directly by any rule of law. Legal principle may confine the basic facts in order to exclude irrelevancies and, where proof beyond reasonable doubt is required, the legal standard of proof precludes the drawing of an inference for the purpose of determining an issue in litigation when the basic facts are consistent with an innocent inference ((1) Martin v. Osborne (1936) 55 CLR 367 .). But the drawing of an inference is part of the process of fact finding: it has to do with the minor premiss in the syllogism of judgment, not with the major premiss of legal principle..." 25 What the court had been asked to do when asked to make an assumption for the purposes of the motions was to assume the existence of certain facts. Although assumption 2 was put in the alternative, the court was entitled to assume that each limb of the disjunctive to be possibly correct. That assumption therefore permitted the court to proceed by assuming that all of the documents as described by assumptions may be entitled to a claim for confidentiality. 26 The question for examination appears then to be whether or not the court in assuming the existence of the facts put in assumptions 1 as well as 2 was, as Mr Gleeson submits, obliged "to regard the material as not having some special claim that should be borne in the equation". I do not see that this was the case. The court was entitled to take into account the whole of the matrix of circumstances against which the original motions were heard. To submit that the words "a claim of confidentiality" appearing in assumption 2 should effectively be regarded as if reading "a claim of confidentiality of low order" or "a minimal claim of confidentiality" or some such words, would seem to my mind to treat with an important subject with a degree of technicality as was and is entirely inappropriate. The words are clearly fairly capable of being construed to include a claim of confidentiality of high order. More particularly was this the case in circumstances where the nature of the documents was as consensually described in assumption 1, where the documents been described by Mr Dicker as "highly sensitive", and where the plaintiffs had submitted that the financial capacity of the plaintiffs and Idoport was of: "crucial importance to the defendants in determining their approach and strategy to the proceedings" and had referred to the defendants interest in "the capacity of the plaintiffs to continue to litigation and to maintain the sinews of war for that litigation over a number of years". 27 In the result subject to the last sentence to which I will return, the court by reason of the way in which the original motions were argued was entitled to proceed on the bases set out in paragraph 20 (b) of the 31 July judgment. Those bases were: (a) that the subject documents should be assumed to be sensitive in the extreme in terms of containing information as to the capacity/resources of the plaintiffs to continue the litigation; (b) that that form of information if falling into the hands of the defendants at this point in time may be assumed as giving a critical weapon to the defendants; (c) that the importance of knowledge in the defendants camp of the sinews of war in the plaintiffs' war chest cannot be over-emphasised in relation to these particular proceedings. 28 Each of these matters flowed logically from the manner in which the original motions were presented to the court, including the making of the subject assumptions; the context in which the motions were pursued; and the clear importance of the issue to the plaintiffs. The drawing of the inferences from the assumed facts and the context was unexceptional. The fact that the proceedings had continued for over a calendar year in actual hearing and were due to continue for at least two more years and other parameters going to the nature of the case, the pleadings, the openings and general case management of the proceedings, was taken as a given. The court was entitled, bearing in mind the particular proceedings, to approach the judgment given on the assumed bases in this way. 29 The original motions proceeded in the way in which the counsel addressed, by tendering the issue of whether there was any special reason to differentiate the subject security for costs application in these proceedings from any other interlocutory applications made in any proceedings. The issue was summarised in paragraph 35 of the 31 July judgment [see also transcript page 11327.54-11328.10]. It is simply not possible to locate in the transcript of argument any debate as to the proper construction of assumption 2. Had the defendants wished to advance the proposition as to a limited construction of assumption 2, then this ought to have been squarely advanced and the plaintiffs would doubtless have acted as contradictor. Certainly the court would have closely tested any such proposition in argument and dealt with it in the judgment. 30 It is now appropriate to return to the last sentence of the judgment paragraph 20 (b). In that regard the defendants submissions MFI D 159 were in the following terms: " E What is the misapprehension? [Paragraphs 20(b) and 25 of the reasons for judgment are set out] The submissions which follow read:

12 It is apparent when one considers the crucial paragraph in the reasons, namely paragraph 38, that the matter which was believed to be common ground in paragraphs 20(b) and 25 has been held to lead, almost inexorably, to the conclusion that the plaintiffs must succeed on the motion. In particular, paragraph 38 includes the follows passages: "• The extent of the possible and it seems to me likely, as well as probable, prejudice which would be suffered by the plaintiffs if the defendants' suggested regime for dealing with the confidential documents was accepted, is very great. It extends to the clear possibility that the entirely unexceptional [in terms of compliance with the rule in Harman] forensic use by the defendants of the confidential information could lead to the plaintiffs being forced to abandon the whole of the litigation.

• In those circumstances, it is particularly important for the court to avoid taking a step which may have a logical consequence of placing a weapon in the hands of the defendants, with the clear capacity of being used to force the plaintiffs to their knees." 13 The defendants make two contentions in respect to the allegation that the matters in paragraph 20(b) were common ground: (1) the proposition which is stated in paragraph 20(b) to be common ground was not conceded by the defendants in their written or oral submissions and indeed is inconsistent with those submissions; (2) further, the plaintiff did not ask the Court to adopt the proposition said to be common ground and indeed is inconsistent with its submissions. These two contentions will now be elaborated. 14 As to the defendants' submissions: (a) there was nothing in the defendants' written submissions on the motions which conceded the proposition in paragraph 20(b); (b) the defendants' oral submissions in chief on the motion did not make any such concession. Thus: "GLEESON: Now, the fourth point is that: there is before your Honour no evidence of either the content of the documents, or the reasons why they are entitled to confidentiality protection, or indeed, if they are confidential, how great is their confidentiality or sensitivity. HIS HONOUR: That is really my point. GLEESON: Yes, and I want to address that shortly. The fifth point is that: at least some of the documents have never been seen, it would appear, by anyone on the defendants' side of the case. To that extent, we do not know how strong is the claim for confidentiality. The sixth point is that: the defendant is prepared to assume that some or all of the documents maybe entitled to a claim of confidentiality, whilst reserving the defendants' position to have that matter tested, either closer to or more likely on the motion itself. That is the security for costs motion. So we are prepared to make that assumption for the purpose of moving the matter forward, rather than asking your Honour to devote some number of hours to assessing the strength of the claim for confidentiality. HIS HONOUR: Yes. GLEESON: But we do it by reserving the matter I mentioned." (T11311.47-11312.20). (It may be observed that paragraph 22 of the judgment records the submission described as the fourth point and paragraph 23 summarises the submission described as the sixth point. What is not expressly recorded in the judgment is the fifth point namely that because at least some of the documents have never been seen by anyone on the defendants side of the case, the defendant was incapable of knowing how strong was the claim for confidentiality). 15 The defendants' oral submissions in reply, although brief, expressly included as the first point the following: "The first point to make is that to the extent the plaintiffs rely on the significance of the material, or perhaps its asserted extremely confidential nature, that is not a point that distinguishes this from any other case because the material has not been tendered and your Honour, as I said, has no affidavit to assert the claim of confidentiality. So the material itself does not have some special claim that should be borne in the equation." 16 In short the submission of the defendant was that the plaintiff had not established, and the Court should not infer or conclude, that the material had any special claim which should be borne in the equation. This followed because, as the defendants submitted: (a) the material had not been tendered by the plaintiffs on the application and had not been inspected by the Court; (b) the defendants had never seen, even in the other proceedings, some of the material; (c) there was no affidavit to assert the claim of confidentiality or even to identify the contents of the document. 17 The defendants say that to the extent that the propositions in paragraph 20(b) were found to have been conceded by the defendants, that was a conclusion based upon a mistake. A review of the transcript shows that these matters were not conceded. This of itself would be sufficient to establish a case for the judgment to be recalled.

18 As an additional ground, the defendants submit that not even the plaintiffs asked the Court to proceed on the basis of the proposition set out in paragraph 20(b) or consequentially 25 or 38. Mr Dicker said the following: "In saying that, we do not concede that - and we do not ask your Honour to draw the inference - there is any limitation on the capacity of Idoport to run these proceedings." (T11341.17-.20). 19 What follows from this statement is that where a party says to the Court it should not infer there is any limitation on its capacity to run the proceeding, that party is not urging the Court to find that the documents would give the defendant a "critical weapon", let alone enable the defendants to use the documents to force the plaintiffs to abandon the whole of the proceedings (para 38) or to force the plaintiff to their knees (para 38). On what the plaintiffs asked the Court to infer, if the defendants saw the documents they would learn that the plaintiffs were amply cashed up to run the proceedings in the same way as the plaintiffs could inspect the publicly available balance sheet of the defendants to ascertain their cash resources.

20 The statement made on this issue by the plaintiffs to the Court is consistent with the Court's observation at para 37: ".. the Court has not been able to discern any overt signs of the plaintiffs being unable to handle the continued litigation, notwithstanding the extent of the hearing nor the need to deal with innumerable issues at an evidentiary level." 21 It follows that the matter stated to be common ground was not the position conceded or admitted by the defendants and is inconsistent with the express position of the plaintiffs.

22 If the Court exercises the discretion to recall the judgment there is then the further question of the nature of the reopening to be allowed by the Court and what should be the consequences of the reopening.

23 In the present case there is no additional evidence required for the reopening (other than the tender of the transcript of 25 July 2001). What the defendants wish to do on the reopening is to make the following further submissions.

24 Once the finding that the propositions in paragraph 20(b) were common ground is removed, the defendants contend that the other evidence on the motion could not and did not logically justify the drawing of the inference recorded in those paragraphs or subsequently in paragraph 38 of the reasons for judgment.

25 The relevant circumstances in which the Court should draw any inferences are then the following: (a) the Court has no information as to the contents of the documents (other than the general description recorded in paragraph 8) that the documents include "arrangements or agreements entered by one or other of the plaintiffs in the main proceedings (or by companies related to those plaintiffs) with persons providing funding for the conduct of those proceedings, together with documents recording implementation of such arrangements."; (b) the Court has no affidavit evidence further describing the nature of the claim for confidentiality or the harm that would be suffered by the plaintiffs were the documents inspected by persons involved with the ongoing litigation for the defendant; (c) the plaintiffs have asked the Court not to draw the inference there is any limitation on its capacity to conduct the proceedings; (d) the fact that there were no overt signs from the conduct of litigation that the plaintiff being able to handle litigation; (e) the recent action taken by the plaintiffs to substantially amend the statement of claim with a consequential significant additional amount of necessary evidence and of significant lengthening of the estimated hearing date. 26 In those circumstances the Court cannot infer on the probabilities that the documents would provide the defendants with the so-called critical weapon which would enable them to bring the plaintiff to their knees. Had the plaintiffs wished to advance such a proposition they should have done so squarely and they should have supported it by affidavit evidence which could have been appropriately tested under cross-examination. The deliberate decision of the plaintiffs not to call any evidence on this issue leads to the conclusions in paragraph 20(b) and 38 being, with respect, merely conjectural or speculative: Carr v Baker (1936) 36 SR (NSW) 301 at 306 and by Lord Wright in Caswell v Powell Duffryn Associated Collieries Limited [1940] AC 152 at 169-170 (see also Seltsam Pty Limited v McGuiness (2000) 49 NSWLR 262 at 276).

27 Based on the extremely scanty evidentiary material before the Court there were a number of other inferences that could be drawn equally, if not more, powerfully. Those inferences include (and this list is not exhaustive): (i) the funder or funders have agreed to fund the proceedings either to an unlimited extent or to an extent more than adequate to see the trial out; (ii) the funder or funders have made express provision for the payment of an amount by way of security for costs; and (iii) there may be other funders whom the plaintiffs could successfully approach in the future. 28 The conclusions then on the motion should be as follows: (1) the general rule is correctly set out in paragraph 28 of the judgment; (2) any departure from the general rule (if such could ever be permitted) would require cogent evidence as to matters including the contents of the documents, and the likely harm to the plaintiffs; (3) the more radical the departure, the more cogent that evidence must necessarily be; (4) the plaintiff having chosen to call no evidence to justify the departure, the general rule should prevail; (5) certainly the evidence did not justify a condition that persons who see the documents cannot be involved in the proceedings again. 29 It follows that the plaintiffs' regime should be rejected. The defendants' proposed regime more than adequately protects the plaintiffs, bearing in mind the general rule and the asserted confidentiality of the documents up until the hearing of the motion. The defendants' regime ought be accepted.

30 In respect of the outcome on motion 41 and 42, there may need to be further debate upon the form of orders being made. Given time constraints, the defendants will deal with this matter orally."

Dealing with the defendants submissions 31 There are on occasion, difficulties in endeavouring to connect different sections of counsel's submissions, some in writing and some given orally. The fact is that in paragraph 7 of Mr Dicker's written submissions [MFI P 208] he used the words: "The financial capacity of the Plaintiffs and Idoport in particular to prosecute these proceedings is, of course, of crucial importance to the Defendants in determining their approach and strategy to the proceedings . It is also relevant to issues that may arise in the security for costs applications. Having regard to the lack of relevance to other issues in the Commercial List and the MLC proceedings, the highly sensitive nature of the documents and possible use which may be made of those documents , it is submitted by Idoport that it is only appropriate that the confidentiality undertaking restricts the use of the confidential documents to the security for costs application only". [Emphasis added] 32 In his submissions on the motions to vacate, Mr Dicker referred to the common ground before the Court on 25 July in terms where Mr Gleeson had given the description of the subject documents. Mr Dicker said at transcript 11852 on the motions to vacate: "The plaintiffs understood that discussion, and what fell from my learned friend, as casting a shadow over everything that went on after that in the course of the applications, in terms of submissions, in terms of the approach. Nothing was intended by us to be said to detract from that common ground. [Emphasis added] 33 This was precisely how the court understood the approach taken on the motions. 34 As has been pointed out by the defendants on the motions to vacate, during the course of Mr Dicker's further address on 25 July following his being asked by the Court whether the question was in essence really whether the Court should impose a "separate team" notion upon the defendants in the circumstances, he replied at transcript 11341 as follows: "Certainly, your Honour. We say that having regard to the fact the application is made, which would [sic] infer the defendants being satisfied that they can prove the inability of Idoport to meet the costs order, and the fact that materials will come into the possession of those persons intrinsically involved in the main proceedings who will then be able to look at certain financial documents bearing the quality Mr Gleeson referred to, are factors which inevitably cannot be avoided taken into account by those same very persons in providing advice [to] their client, both in relation to the ongoing conduct of the proceedings, the possibility of settlement of the proceedings, and such matters. In saying that, we do not concede that-and we do not ask your Honour to draw the inference-there is any limitation on the capacity of Idoport to run these proceedings" 35 During his address on 2 August Mr Dicker said: "Much emphasis has also been placed on the comments from me at 11341.17-.21. First, is [sic] a submission that any such comments must be seen in the light of the common ground established earlier on. Secondly, such comments have to be seen in the context of what is about to occur in the next couple of weeks when the Court adjourns, and a concern on my part to ensure that there was not perceived to be any false apprehension by the defendants in relation to the position of the plaintiffs. But what was said was not intended, and in our submission could not fairly be seen, to be qualifying or compromising the common ground which was the appropriate way for your Honour to deal with the entirety of the application." 36 As Mr Dicker then confirmed, his oblique reference to what was to occur in the next few weeks was a reference to the mediation due to commence on 6 August 2001. 37 The question concerns documents to be regarded as including arrangements or agreements entered into by one or other of the plaintiffs in the main proceedings (or by companies related those plaintiffs) with persons providing funding for the conduct of those proceedings, together with documents recording the implementation of such arrangements. The fact that the plaintiffs at the same time as referring to the highly sensitive nature of the documents and possible use which may be made of the documents, did not ask the Court to infer that there was any limitation on the capacity of Idoport to run the proceedings does not negative the proposition that the court was entitled to infer from the context and the assumed facts that at one end of the range the documents should be regarded as sensitive in the extreme in terms of containing information as to the capacity/resources of the plaintiffs to continue the litigation. It does not negative the proposition the court was entitled to infer from the context and the assumed facts that this form of information if falling into the hands of the defendants on the eve of the mediation may be assumed as giving a critical weapon to the defendants. It does not negative the proposition that the court was entitled to infer from the context and the assumed facts that at one end of the range the importance of knowledge in the defendants' camp of the sinews of war in the plaintiff's war chest cannot be over-emphasised in relation to the proceedings. The drawing of the inferences did not miscarry. 38 Notwithstanding that the plaintiffs did not use each and every word set out in the first three sentences of paragraph 20 (b), the Court was entitled on the basis of the plaintiffs submissions set out above, from the context and from the manner in which the motions were presented and argued to proceed upon the basis described in those three sentences. The fact that the fourth sentence identified what appeared to the Court to be "common ground in the way in which each party addressed on the notices of motion" simply flows from the way in which the matter was argued. The wording of the fourth sentence which would have conveyed the very same meaning and intent would be "It seems to me that this proposition was necessarily inherent from the assumptions seen in context and put forward as common ground in the addresses on the motions". As Mr Dicker submitted on the motions to vacate, the words of the judgment are not construed in the same manner as would be an act of Parliament. The whole of the judgment is looked at in order to follow the reasons. 39 The plaintiffs have submitted that there has been no misapprehension or error of fact on the part of the court which would justify a vacation or withdrawal of the reasons for judgment. 40 A further parameter which the court is entitled to take into account in terms of the motions to vacate are the further submissions which the defendants have indicated that they would wish to address on any reopening. The problem with those submissions is that they appear to proceed without returning to the fundamental question which was and remains, the interpretation which the court might reasonably give in context to the assumptions which it was asked to make for the purposes of the motions. The matter has been dealt with earlier in this judgment. 41 In my view, no section of paragraph 38 was exceptional in terms of the way in which the original motions had been argued. It is clear that the judgment, read as a whole, could give the reader no doubt but that the 3rd sentence is not put in terms of the court having had access to or being in a position to adjudicate upon the degree of confidentiality which may attach to the documents in question. The sense in which the sentence would be read in terms of the whole of the judgment is really as follows: "If the documents are shown to have the degree of confidentiality permitted to be inferred from the assumptions the court was required to make for the purpose of deciding, at this stage (and in advance of the documents being made available to the court for its assessment as to confidentiality), what regime should govern the defendants access to the documents, then the extent of the possible and it seems to me likely, as well as probable, prejudice which would be suffered by the plaintiffs if the defendants' suggested regime for dealing with the confidential documents was accepted, is very great indeed." 42 The same may be said in relation to the sense in which the 4th and 8th sentences would be read in terms of the whole of the judgment. 43 One further matter ought be mentioned. During the argument on the motions to vacate Mr Gleeson submitted that the court should infer from the fact that the plaintiffs had not adduced evidence as to the confidentiality of the subject documents that no such confidentiality in terms of special sensitivity could be proven by evidence. However the court has no way of following precisely at what stage and by what arrangement or agreement assumption 2 was reached. The matter simply proceeds upon the basis that the parties are agreed that this assumption is to be made court. The criticism which followed to the effect that the plaintiffs had not adduced evidence of the special confidentiality or sensitivity is misplaced where assumption 2 is the assumption which the court is required to make. For all the court knows, the plaintiffs may have been proposing to call evidence to prove the degree of confidentiality and been approached by the defendants in terms of the suggested assumption 2 and for forensic reasons elected not to call such evidence but to simply proceed upon the basis of the suggested assumption as read in context it carries the plaintiffs far enough. 44 Notwithstanding the discretion of the court to permit the reopening of the original motions it is clear that the step of permitting such a reopening is an exceptional step. No good reason for the taking of that step has to my mind been established by the defendants. The so-called misapprehension of fact cannot be established by the submission by one party that its intent was misunderstood. The court looks at the way in which a hearing, or in this case the hearing of a motion, was conducted and needs to be satisfied that there is good reason to consider that in its earlier judgment it proceeded on a misapprehension as to the facts. In the light of those principles I am satisfied that no good reason has been shown for the court to consider that the earlier judgment proceeded on a misapprehension as to the facts. In reaching this decision I take into account the artificial way in which the motions were proceeded with, the nature of the assumptions which the court was asked to make, the entitlement of the court to draw inferences from the assumptions, the special and unusual context in which the court was asked to determine the motions on an assumed state of affairs and finally, the fact that the defendants have failed to establish either that any argument on the proper construction of assumption 2 took place (see above at paragraph 29) nor that the court was compelled to regard assumption 2 as being only a concession that there was or may be such an element of confidentiality as might justify the garden variety confidentiality undertakings as proffered. I further take into account that the decision being interlocutory and the defendants having reserved their entitlement to have the confidentiality question tested, the occasion for such testing lies in the defendants' hands. As I made plain during the argument which took place on the motions to vacate, the terms of the relief sought by the defendants in each of the original notices of motion commenced with the words "until further order". That matter was always understood. The orders, which will flow from the judgment delivered on 31 July 2001, will also be until further order. This means that, as with any other interlocutory judgment, a matter may be revisited as and when the circumstances justify such a course. However none of this suggests that the defendants have made good the claims pursued on the motions to vacate. Subject to the confidentiality regime to be made following the reasons for judgment of 31 July, the defendants will have an opportunity through those nominated employees or officers of the defendants as well as nominated solicitors or counsel not involved in the ongoing conduct of the proceedings, to inspect the subject documents and to further test their confidentiality in the light of the real-world reading of the documents. That step ought not prejudice the plaintiffs presently. Clearly once the documents have been inspected it is possible that the defendants will seek to test the suggested confidentiality which had been the subject of the assumptions made on the original motions. That testing may or may not include an attempt to lead evidence in relation to the content of the documents and of course may include an attempt to tender the documents themselves. Indeed the defendants may elect not to follow the course of inspecting the documents and to simply require the plaintiffs to proffer the documents for the court's private examination in the same way as documents in respect of which claims to legal professional privilege are often dealt with. It is particularly at the point in time when the court would be in the real world position to rule on the extent of any confidentiality shown, that the court should be in a position to review the regime to be set in place by the orders to be made following the 31 July judgment. The very fact that these procedural options would remain open was plain at the time the original motions were heard and is itself a factor to be taken into account as part of the matrix of circumstance against which the motions to vacate are decided.

Short minutes of Order 45 In the result, the motions to vacate are dismissed. Costs may be the subject of further submission.

I certify that paragraphs 1 - 45 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 7 August 2001

  Susan Piggott
  Associate
  7 August 2001

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