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 & Ors. - [2001] NSWSC 868 - NSWSC 2001 case summary — Zoe

NSWNSWSC

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 & Ors.

[2001] NSWSC 868

Supreme Court of NSW|2001-10-05|Before: Einstein J, Mr JJ, Mr J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2001-10-05

Before

Einstein J, Mr JJ, Mr J

Source

Original judgment source is linked above.

Judgment (50 paragraphs)

[1]

Background to this application 17 The defendants point out that the plaintiffs did not file any expert witness reports in chief on technical issues. They submit that the first expert technical evidence was adduced by the defendants in the form of the statements of Mr Hodgkinson dated 6 October 2000 and Professor Thomas dated 22 September 2000. 18 The evidence adduced from these witnesses was confined to specific systems development issues that had been raised by the plaintiffs by way of assumptions provided to their offshore commercialisation expert witnesses. The first assumption has been described as the "Technical Imperatives Assumption" and is in the following terms: "…the technical imperatives set out in paragraph 9.0 of the report by JMG entitled 'Global Commercialisation of the AUSMAQ Service' [in substance identical to the developments identified in the 1996 System Development Plan except for the addition of internet functionality] had been achieved by JMG by June 1998 and were at a state of operational readiness to support the description of the AUSMAQ Service given in paragraph 4.1 above." 19 The other assumption has been described as the "System Development Assumption" and is in the following terms: "EUROMAQ would, in system terms, have effectively been an extension of the AUSMAQ Service in Australia. Whilst local customisation would have been necessary, it would also have benefited from any enhancements to the shared core functionality. This would have included such enhancements as multi-currency capability, dealing in partial units and access via the internet." 20 The defendants say that these assumptions, together with the indicative business volumes projected by virtue of the enormous revenues anticipated from the overseas market (and in particular, the revenue estimates for the US from Mr Mack, the plaintiffs' US market expert) put the issue of the scalability of the Ausmaq Service to handle large business volumes into sharp focus. 21 As a result of these assumptions, the defendants' adduced expert technical evidence in the form of the statements of Professor Thomas dated 22 September 2000 and Mr Hodgkinson dated 6 October 2000. Professor Thomas analysed whether the developments identified in the System Development Plan and the Global Commercialisation Document could be completed by mid-1998. Mr Hodgkinson analysed the ability of the Ausmaq System to scale to meet the system loads suggested in the US offshore commercialisation effort estimates. 22 The defendants submit that the technical issues dealt with by Professor Thomas and Mr Hodgkinson are of "fundamental importance" to the plaintiffs' case. They submit that much of the plaintiffs' offshore customisation evidence is sought to be advanced on the following basis: "a) successful electronic commerce initiatives launched in 2000 and 2001 in the relevant regional and product markets considered by the experts identified;

[5]

It can therefore be seen that the elapsed time in which the initiatives identified in the System Development Plan and the Global Commercialisation Document and the ability of the system acquired by the Bank in November 1996 to scale to meet the suggested volumes of transactions are fundamental matters for the Court to consider and determine." [Defendants' Submissions, 25 September 2001, MFI D199, paragraphs 18, 19] 24 On 16 November 2000, the plaintiffs filed an Amended Notice of Motion which (amongst other things) sought orders that the statements of Mr Hodgkinson and Professor Thomas be withdrawn and removed from the Court file. By judgment dated 7 December 2000, the Court permitted the defendants to rely upon these statements subject to "appropriate conditions". Paragraph 36 of the judgment stated: "It seems to me particularly important to note that the content of the evidence which the Defendants seek to rely upon over the Plaintiffs' strenuous opposition, upon examination, is shown to be a core issue in terms of the plaintiff' claim to damages in respect of the loss of opportunity to exploit the Ausmaq System overseas. This is not an area in which the proper approach to the plaintiffs initial statements, the defendants response to those initial statements and the plaintiffs second tranche of statements could or should be measured or examined with coffee spoons. It is exceptionally difficult, as it seems to me, for the plaintiffs who wish in their second tranche of statements to put new assumptions to experts, for whatever reasons, to then deny to the defendants an entitlement to treat and to treat carefully and properly with matters thrown up by those new assumptions." 25 The appropriate conditions dealt with the period of time to be afforded to the plaintiffs to file statements in reply to those of Mr Hodgkinson and Professor Thomas. As a result of this, orders were made on 15 December 2000 which required that Mr Martin file any statements in reply by 7 February 2001 and that statements from any other witnesses on technical matters be filed and served by 28 February 2001. 26 As a result of these orders, the plaintiffs responded to the independent expert reports of Professor Thomas and Mr Hodgkinson with the following statements of Mr Martin, Mr Coleman (a former Star Systems' project manager on the Ausmaq development) and Professor Aitken: a) Statement of Mr Martin dated 8 February 2001 (Comment on report of Professor Thomas dated 22 September 2000) [P14];

[29]

h) the architectural advantages of Progress Version 9." [Defendants' Submissions, 25 September 2001, MFI D199, paragraph 21] 48 The defendants submit and I accept that these issues trespass into the following areas of expertise: " 23. a) software development; b) the architecture and design of real time securities trading systems; c) benchmark tests of system performance; d) developments in Progress." [Defendants' Submissions, 25 September 2001, MFI D199, paragraph 23] 49 The defendants submit and I accept that up until this time, the plaintiffs: "…made no attempt to deal with what must be a critical element in their causation case, namely the manner in which they assert the Ausmaq System could, as a matter of fact, have been brought to a state of readiness sufficient to enable it to take advantage of the alleged commercial opportunities." [Defendants' Submissions, 25 September 2001, MFI D199, paragraph 22] 50 The defendants submit and I accept that this was a matter which should have been raised in chief, but was instead raised in a manner which was manifestly unfair to them in that they: "…have had to consider the issue immediately prior to and during the time that a principal (if not the principal) witness for the Plaintiffs on this issue is being cross-examined." [Defendants' Submissions, 25 September 2001, MFI D199, paragraph 22] 51 The defendants submit that the Court should exercise its discretion in allowing them to rely upon the Technical Reports in order to respond to the plaintiffs' new technical case on causation. The defendants submit that if leave were not granted, this unfairness would be compounded and severe prejudice to them would result. 52 In reply, the plaintiffs submit that on a proper analysis of the evidence, the matters identified by the defendants as giving rise to the need for the Technical Reports are not in fact new matters. They submit that these issues have, in substance and in fact, always been issues of significance in the proceedings and accordingly, that the defendants should not be granted leave to rely on the Technical Reports. 53 The plaintiffs further submit that the alleged "new matters" are really attempts by the defendants to further reply to the plaintiffs' reply to matters raised by the defendants, essentially by way of "confession and avoidance" to the plaintiffs' claim. They submit that these were not matters which the plaintiffs raised or were obliged to raise in their case in chief.

[36]

Case Management Directions - Idoport's Notice of Motion 45/Defendants Notices of Motion 44 and 43 63 There is no doubt that there are significant case management difficulties in relation to the present stage of the proceedings. It is now a matter of documented history that there have been significant case management difficulties at every stage of the period starting from the interlocutory receivership injunctive proceedings heard and determined in mid 1999 up until the commencement of the final hearing in late July 2000 and ever since. Further, there is no doubt that the proceedings are of a "one off" nature; and this has been the subject of observations in past interlocutory judgments (most recently the [2001] NSWSC 744 judgment dealing with the security for costs applications). It cannot be gainsaid that the capacity of the curial process to deal with the scale of these proceedings is stretched to the limit. Moreover, further factors to be considered in relation to the case management of the proceedings concern the respective positions of each of the parties to the proceedings. The position of the plaintiffs and the pressing significance and urgency attaching to the proceedings, was generally outlined in the interlocutory judgment [1999] NSWSC 828, where reference was made in paragraph 355 to "JMG's claims of an ongoing and radical undermining of its contractual rights". The position of the defendants is that a very substantial verdict against the National Australia Bank which is probably the largest bank and one of the largest corporations in this country, would potentially have a marked effect upon the value of shares held by numerous shareholders and a potential flow on effect upon the economy of this country. The other corporate and individual defendants are also facing very substantial damages claims indeed. It cannot be gainsaid that the plaintiffs have every entitlement to pursue the defendants in terms of an attempt to prove their pleaded cases to the hilt, and that the defendants have a concomitant entitlement to defend the proceedings and to take every step necessary to firstly understand and then to be permitted to deal with the cases pursued against them. The proceedings simply have to be determined at the earliest practicable time in the interests of all parties to the proceedings 64 The task of the Court to administer justice in hearing and determining the proceedings is beyond doubt, and notwithstanding the nature and scale of the proceedings, the Court requires to take into account and to tailor proper case management procedures so as to give effect to the overriding purpose of the Rules. 65 In all of those circumstances and notwithstanding the many loose ends which are pointed up by the defendants' evidence on these motions, it is very plain to me that there being no particular matter raised by any of the defendants' submissions which mandates a hiatus/adjournment of 12 months, the final hearing of the proceedings which has now run for over a year must continue. 66 The fact that sundry amendments to the plaintiffs' pleadings and presumably the raising of the patent case/regulatory issues [see 7 December 2000 judgments], have led to a requirement for the filing of further evidence by the plaintiffs and evidence in answer by the defendants, which evidence in part remains outstanding, [whether from either side of the bar table], is simply a matter which requires to be accommodated by case management directions. Further, the fact that particular witnesses may conceivably be required to be recalled from time to time for reasons related to the reading of late statements is also a matter which requires to be accommodated by case management directions. 67 If one uses the forensic approaches taken by both parties up until this point as a yardstick, I would have absolutely no difficulty in making a calculated guess that even if the 12 months adjournment was granted, there would be any number of continued and continuing loose ends and complaints from each side of the bar table about any number of issues upon the resumption of the final hearing. Hence, although the directions for which the defendants (by their motions) contend, may on paper and if complied with, suggest a considerable "tidying up" exercise in terms of housekeeping and completion of the preparation and service outstanding statements by each party, in the real world the approaches to this litigation taken by the parties up until this point give me no real assurance that further major problems would not continue to be the order of the day. To accede to the defendants' application as sought in the motion would therefore simply relocate the emergence of such problems forward some 12 months, during which period the final hearing would have been interrupted with the logistical and other difficulties that this course would involve. 68 Another relevant parameter in adjudicating upon the proper exercise of the Court's discretion in relation to the defendants' application as sought in the motion concerns the position of the Court. The Technology Courtroom has been made available to the parties who to this extent, enjoy a number of very special facilities generally intended to be made available to all litigants in cases requiring use of those facilities. Very importantly, it could not be denied that that there is a huge burden placed upon a single judge required to absorb all of the detail and hopefully within a reasonable period of time following final address, to produce a reasoned judgment dealing with the legal principles as well as applying these principles to the evidence, on present estimate, of 166 witnesses [285 statements] as well as voluminous documentation. To my mind, the suggestion that the regular continuation of the final hearing should now be interrupted by a 12 month period would make what is already an exceptionally difficult task for one judge hearing these proceedings all the more difficult. Whilst I accept that: (1) the Court has up to date received and clearly requires to continue to receive, very special assistance in terms of the careful preparation of statements and submissions from both parties; (2) a 12 month adjournment may permit a great deal of that preparation to take place; and (3) the day-to-day continuation of the final hearing means that this form of assistance becomes somewhat more difficult for the parties,

[41]

Time limits on cross-examination 75 As to the imposition of cross-examination time limits, this can only be dealt with on an instant specific basis and is, for obvious reasons, a highly sensitive area. The matter will be dealt with as and when it arises and Mr Smith's ongoing cross-examination of Mr Martin is likely to involve the first of such directions. The case management requires to deal with approximately 160 plus witnesses (one of whom, Mr Martin, is presently being cross-examined), for this reason, who have between them produced some approximately 280 plus statements. For this reason, a general regime is likely whereunder, prior to commencing cross-examination of any particular witness and at appropriate periods during such cross-examination, the Court will require a detailed statement of the topics/further topics proposed to be covered and a detailed estimate of the time anticipated (all other things being equal) for cross-examination on those topics. Having heard such statements and estimates, the Court will then identify a period of time which it sees as appropriate for that cross-examination. In the absence of a special case made on an appropriate occasion by formal application, no cross-examination in excess of the Court-imposed period of time will be permitted in respect of any witness. 76 The need for this form of discipline becomes very clear when one considers the parameters of the litigation. Assuming that an average court year includes forty-two working weeks (making due allowance for variable and end of term leave) and assuming that each of the 160 witnesses was to be cross-examined for say five days, then allowing only for the cross-examination, 3.8 court years would be required. Naturally, this does not take into account any time for supplementation of evidence in chief, where rulings on objections may permit such supplementation. Nor does this take into account any time for re-examination. 77 When one adds time for the taking of objections to the tender of documents, the taking of addresses and the need to deal with a multitude of interlocutory matters such as subpoena, notice to produce, confidentiality, further discovery, legal professional privilege issues, the amount of court time potentially required for these proceedings becomes apparent. Natural justice is one thing, however special efficiency in cross-examination in order to move the hearing along is another thing. It simply cannot be the case that such efficiency is inconsistent with the according of natural justice to both parties. 78 A very strict discipline to be generally applied across the board, is calculated to ensure that very great care indeed is taken to identification of particularly important areas for cross-examination and to avoid meticulous cross-examination of every piece of paper ever written or seen by a witness. Whilst this form of cross-examination in relation to early witnesses has assisted the Court in becoming familiar with background issues, it can no longer be the order of the day. I do not propose to repeat the public interest considerations dealing with the availability of the court to other litigants (see the judgment being delivered today on the appointment of an examiner). 79 In light of the efficiency being so terribly important even in litigation of this scale, the Court may be expected to play a particularly proactive role in monitoring the continued conduct by both parties in these proceedings. Cross-examination is presently in focus for special treatment, but all aspects of the proceedings may be expected to be treated in the same way. Naturally the rules of natural justice will continue to be the lodestar for the administration of justice in the case.

Cases Cited (6)

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 & Ors. [38] [2001] NSWSC 868 FILE NUMBER(S) : SC 50113/98; 50026/99; 3991/00 HEARING DATE(S) : 28/09/01, 2/10/01 JUDGMENT DATE : 5 October 2001

COUNSEL : Mr JJ Garnsey QC, Mr M Dicker, Mr R Titterton, Mr R Alkadamani (Plaintiffs) Mr T Bathurst QC, Mr R Smith SC, Mr H Insall SC, Mr J Halley (Defendants) SOLICITORS : Withnell Hetherington (Plaintiffs) Freehills (Defendants) CATCHWORDS : Practice and procedure - application for leave to amend - exercise of discretion to permit amendments - overriding purpose rule - just, quick and cheap resolution of the real issues - whether amendments involve additional questions of fact - application for leave to file further statements - whether statements respond to "new issues" raised by the plaintiffs - whether leave to file statements will cause prejudice to the plaintiffs - application by defendants by motion to adjourn proceedings for 12 months for "tidying up exercise" - application not ultimately pursued during submissions - case management procedures - large-scale litigation - substantial verdict sought - use of technology court - imposition of time limits on cross-examination - requirement of detailed statement of topics to be covered during cross-examination - appointment of an examiner to take cross-examination LEGISLATION CITED : Supreme Court Rules (NSW) 1970 Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187 Clough v Rogers (1974) 48 ALJR 481 CASES CITED : Cropper v Smith (1884) 2 6 CH D 700 Idoport Pty Limited & Anor v National Australia Bank Limited [2001] NSWSC 744 State of Queensland v J L Holdings Pty Ltd (1996) 189 CLR 146 DECISION : Orders made in accordance with short minutes of order.

(1974) 48 ALJR 481

(1996) 189 CLR 146

[2001] NSWSC 744

[1999] NSWSC 828

Cited By (4)

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

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

IDOPORT PTY LTD v NATIONAL AUSTRALIA BANK LTD & ORS; IDOPORT PTY LTD v ARGUS; IDOPORT PTY LTD v NATIONAL AUSTRALIA BANK LTD & ORS