Technical Requirements and Timing
14 The defendants seek to rely upon the expert witness reports of Dr Thomas dated 22 September 2000 and of Mr Hodgkinson dated 6 October 2000 which deal with limited systems and software development issues. These reports are said not to deal with technical matters generally but only with specific systems development issues raised by the plaintiffs in relation to their case on global commercialisation
15 The essential burden of the defendants submissions is that a very close examination of the statements relied upon by the plaintiffs in their first tranche of statements as compared to the statements relied upon by the plaintiffs in their second tranche of statements discloses a material departure by the plaintiffs from the way in which they either put or seek to support their case.
16 It is common ground that the defendants statements which deal with limited systems and software development issues, go into very great detail in terms of addressing the issue of systems development for the purposes of global commercialisation. The defendants submit that they are entitled to address this issue by reason of the departure by the plaintiffs in their second tranche of statements from their previous first tranche statements which are said to have been tethered to a particular assumption (the "Technical Imperatives Assumption") put to two of the plaintiffs' expert witnesses. The defendants draw attention to an important additional assumption (the "System Development Assumption") supplied to the plaintiffs' witness Mr Joslin as well as to three plaintiffs' new witnesses, all of whom first put on statements as part of the second tranche. The defendants submission is that the plaintiffs are seeking to steal a march on the defendants by both relying upon evidence based upon the System Development Assumption and at the same time seeking to deny the defendants an entitlement to answer this evidence in the form of the statements of Dr Thomas and Mr Hodgkinson.
17 The issue raised for decision requires a very close examination indeed of the paths taken by both parties in their preparation of statements over an extended period. It is necessary to appreciate as explained in the judgment delivered today in the patent issue, that the plaintiffs initial tranche of statements were responded to by the defendants initial tranche of statements and that the plaintiffs then produced very extensive statements said to be in 'reply'. The defendants have generally adopted the stance that the plaintiffs so called 'reply' statements in fact sought to mobilise considerable materials which should properly have been adduced by way of the plaintiffs statements in chief. Notwithstanding that attitude of the defendants, the defendants have elected to respond to so much of the plaintiffs second tranche statements as are said to have raised new material, the present issue being simply a subset of the defendants election to so respond.
18 I am satisfied from the defendants submissions that the Technical Imperatives Assumption raised a limited systems issue in the plaintiffs first tranche of statements. That assumption was supplied to two of the plaintiffs expert witnesses mainly Professor Pruden and Mr Skelton for the purposes of preparing their first reports. The assumption was in the following terms:
"… the technical imperatives set out in paragraphs 9.0 of the report by JMG entitled "Global Commercialisation of the Ausmaq Service" 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 Paragraph 9.0 of that report sets out over approximately 12 pages, a very detailed statement of the posited development of a number of features of the Ausmaq System, including for example the inclusion of shares in the Ausmaq product listing and the development of the Ausmaq Message Interface (the AMI). The paragraph imports a number of assumptions as to the date by which the additional features would have been completed but for the suggested misconduct of NAB
20 I am satisfied that given the areas of expertise in which each of Professor Pruden and Mr Skelton profess to have specialised knowledge, the purpose of supplying the assumption appears to have been to inform those persons as experts, of what general functionality would have been available on the Ausmaq System by mid-1998. I am further satisfied that the purpose of supplying the assumption to those experts does not appear to have been to invite comments upon any systems development issues in the context of global commercialisation. It seems that neither of those experts treated with the systems area utilising the technical imperatives assumption.
21 It then appears that system scalability and testing were referred to in the statement of Mr Pozzobon filed for the defendants in the context of the findings of the NAB IT review undertaken in February 1998
22 Turning to the second tranche of the plaintiffs witnesses statements, I accept as correct the defendants submission that more specific issues relating to the manner in which the Ausmaq System is said by the plaintiffs to have been capable of being commercialised overseas, and hence its scalability to cope with business volumes in foreign markets, were raised by the plaintiffs, in part, through assumptions supplied to the plaintiffs new batch of expert witnesses retained for the purposes of preparation of their second tranche expert witness statements.
23 The Systems Development Assumption which was supplied to the plaintiffs witnesses Mr Joslin, Ms Mackay, Mr Heller and Mr Davies was in the following terms:
"Euromaq would, in systems 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"
24 The Technical Imperatives Assumption was also supplied to Mr Joslin, apparently for the first time, for the purpose of preparing his second report but not for the purpose of preparation of his first report. It was also supplied to Ms Mackay, Mr Heller and Mr Davies. In relation to the damages issue in the United States markets, the assumption was also supplied to Mr Mack for his report of 5 June 2000.
25 I accept as correct the defendants submission that the plaintiffs experts in relation to the United Kingdom and Europe all appear to rely on the above described assumptions to state that the Euromaq system would have been ready to launch (at least in the United Kingdom) by mid 1998 and would have been capable of functioning in multiple markets.
26 The gravamen of the defendants submissions is that, read together, the Technical Imperatives Assumption and the Systems Development Assumption throw the issue of systems development for the purposes of global commercialisation into sharp focus.
27 The defendants claim, and I accept, that their entitlement to respond on these issues is further heightened by the additional opinions expressed by Mr Joslin in his second report. It is in that report that Mr Joslin seeks to express opinions in relation to systems development and global commercialisation based upon the above described assumptions, purportedly in response to the evidence given by Ms Lehane.
28 It seems that it was the statement of Ms Lehane of 15 March 2000 (appearing in volume 9) which alerted the plaintiffs to the all important question of precisely how the plaintiffs wish to posit the software being utilised off shore. On the one hand, so Ms Lehane suggests, the proposal could have been to customise existing systems for exploitation off shore. On the other hand, so Ms Lehane suggests, the proposal could have been to rebuild from 'scratch' or, to use Mr Sackar's expression, to adopt a bespoke system tailored to the particular off shore target market.
29 In the result Ms Lehane in the first tranche of the defendants statements was apparently responding to the assumption of Mr Joslin that Euromaq would have been operationally ready and would have cleared all regulatory hurdles by mid 1998. Ms Lehane touched upon systems issues in a general manner only, stating that customisation of an existing system to meet local regulatory requirements would be one of many considerations for any foreign entrant to the United Kingdom and European markets. I do not read her statement as expressing the opinion, as stated by Mr Joslin, that it would be more cost effective to develop Euromaq "from scratch" rather than to customise the existing Ausmaq system. Rather there is substance, as it seems to me, in the defendants' submission that Ms Lehane asserted that this would be one option for any entrant, in the context of the need to fulfil regulatory requirements.
30 It is important to note that Mr Joslin in his second report expresses a number of opinions and "understandings" in relation to systems issues in the context of global commercialisation. These include the following:
'(a) EUROMAQ "was designed to run as an integrated global system" and central core functionality had been designed to be applicable to all major world markets.
(b) EUROMAQ's potential would have been "completely destroyed" had a new system been built from scratch, or had an existing system been bought and modified.
(c) "It would not have made economic sense to build or acquire new systems for each new geographical market EUROMAQ wished to enter or new product it wished to list…"
(d) "the additional time taken" to either build or customise an existing system "would have meant that EUROMAQ would have lost its first mover advantage."
(e) "On the assumption that EUROMAQ had successfully built or bought a PEP and ISA sub-system [these apparently being two United Kingdom financial products] to link into the core EUROMAQ system, I consider it would have had little difficulty in adhering to the client money regulations."
(f) few customisations would have been required, given the nature of the EUROMAQ proposition, which would have imposed a "standard way of business' upon all participants in the same way that this has been achieved by such internet players as Amazon, E-bay, and E*trade.
(g) the need to customise would also have been reduced by fact that EUROMAQ would have dealt with the product provider on a wholesale basis so that "many of the local features that related to the retail sale of the market would not have applied" and because EUROMAQ would have dealt with the product providers on an institutional basis", so that the volume of information passing between them "would not have been particularly high and could, if necessary, be dealt with by more flexible manual interfaces."
(h) the AUSMAQ system had been "designed to be a global system from inception" and "was designed to be scaleable (it would be able to process progressively larger volumes of business at little additional effort and finally it was planned to be a true multi-currency system".
31 It seems that Mr Joslin who had never before dealt with any degree of specificity, then descended into considerable detail and specificity as to what the capabilities of the Ausmaq or Euromaq system would have been.
32 It also seems that these customisation issues were issues that neither Professor Pruden nor Mr Skelton had touched upon although they had been given the Technical Imperatives Assumption.
33 It is also the case that in the sixth statement of Mr Maconochie of 14 July 1999 [volume 15] Mr Maconochie in paragraph 9.2.2 (d) sought to express the opinion that by reason of particular expressions of interest in the Ausmaq service expressed by United Kingdom interests, "the functionality [of Euromaq] in systems and commercial terms, would likely have at least satisfied if not exceeded the minimum operational requirements of the users of the system". This is, I accept, hardly dealing with specifics in terms of precisely how the system was proposed to be exploited outside of Australia.
34 When one follows carefully the progression of statements as identified in the very useful chart prepared by the defendants and marked for identification D23, it seems to me difficult to see why the defendants should now be shut out from addressing by means of the evidence of Dr Thomas and Mr Hodgkinson, the Systems Development Assumption that the core software was sufficiently developed architecturally in the first instance to make off shore exploitation relatively simple and hence to make the so-called 'window of opportunity', relatively easy to attain.
35 It may well be that the defendants would be entitled to call the evidence of Dr Thomas and Mr Hodgkinson grounding their entitlement to do so upon the simple proposition that if the plaintiffs were entitled to supply their new experts with a new assumption, then the defendants must be entitled to respond to treat with both the viability or validity of that assumption.
36 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 plaintiffs claims 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. And in a real sense this is what the plaintiffs apparently seek to do at the same time as objecting to the number and volume of the defendants' statements which seek very thoroughly to cover many aspects of the issue. The plaintiffs' wish to assert, as I understand it, that albeit that the subject matter goes to the core of the plaintiffs' extra Australia/New Zealand loss of opportunity case, the limited and arguably ambiguous manner in which the plaintiffs had treated with evidence on the subject, and the suggested equally limited manner in which the defendants had first responded, by definition and notwithstanding the terms of the plaintiffs second tranche statements treating with that subject matter, requires that the defendants be tied down so as not to be permitted to respond. I simply do not accept that this approach would be an appropriate exercise of the court's discretion in the circumstances.
37 I further accept as correct, the defendants' submission that it is difficult to characterise the opinions which Mr Joslin expresses as a "response" to the evidence given by Ms Lehane. It is clearly impermissible for Ms Lehane's opinion to be misconstrued and for Mr Joslin to then purport to respond to that misconstrued opinion.
38 The issue of scalability of the Ausmaq Service to handle the large business volumes projected by virtue of the huge revenues anticipated by the plaintiffs from the overseas markets is also of importance. This issue is raised also by the plaintiffs experts reliance upon the Systems Development Assumption.
39 Further the plaintiffs' expert witness in its second tranche statements in relation to the Australian market, Mr McMullan, another new witness who had not given evidence earlier, seeks to give evidence that the Ausmaq System was capable of being "scaled up" to handle larger business volumes.
40 In the context of that approach the defendants submit and I accept that the following specific questions arise and are dealt with by Dr Thomas and by Mr Hodgkinson:
(a) Assuming that the core AUSMAQ system was to be deployed overseas effectively as an extension of the AUSMAQ service in Australia, what software development implications would this have?
(b) Whether it was reasonable for the plaintiffs to maintain that the enhancements set out in the Global Commercialisation document (and hence in the System Development Plan) could have been completed by mid 1998;
(c) Whether the estimates of time and effort for undertaking these enhancements as set out in the 1997 System Development Plan were reasonable, and what would generally be involved in planning for such enhancements;
(d) Whether the AUSMAQ Service had the capacity or could have been "scaled up" to meet the requirements of handling the business volumes implicit in the plaintiffs' offshore revenue projections.
(e) Whether the plaintiffs' reliance on "regression testing" in MFI P20 could reasonably have provided any useful information about the actual capacity and scalability of the AUSMAQ system.
41 In the result and again as a matter of common fairness, the plaintiffs could not possibly be entitled to both rely upon their new and in some cases changed approaches to the issues dealing with technical requirements and timing for development of the Ausmaq Service for Australia, New Zealand, the United Kingdom, Europe, North America and Asia and at the same time permitted to prevent the defendants from responding to those issues.
42 Ultimately the plaintiffs (outside of their stance on foreign law issues now determined and outside of their pressing their costs claims), save to the extent that the statements listed in Annexure "A" to the defendants notice of motion 24 dealt with technical or patent issues, did not oppose the making of order 1 as sought in that motion. As I understand the plaintiffs' position with respect to order 3 as sought in that notice of motion it was that the notice of motion should be stood over until the further statements were available as the plaintiffs might well not oppose the making of that order. As to order 2 as sought in the motion I did not ultimately understand the plaintiffs to oppose the making of that order.
43 I have given close consideration to so much of the plaintiffs' detailed written and oral submission on these matters as were ultimately pressed.
44 To my mind for reasons given in more detail in the judgment delivered today dealing with patent issues, these proceedings stand apart from most other proceedings for a number of reasons, the principal amongst these being the magnitude of the claims made by the plaintiffs, the significant amount of time set aside for the hearing, the commercial interests of the respective parties and the public interest in the outcome.
45 The very wide ambit of the plaintiffs' claims, the gravity of the allegations made by the plaintiffs, the joinder of a number of individual defendants against whom extremely grave allegations are made and the number and complexity of issues which having been pleaded, are to be litigated, are all legitimate factors to be taken into account in adjudicating upon the motion.
46 The plaintiffs very particularly do not put forward as a relevant prejudice to the plaintiffs, the proposition that the plaintiffs financial resources are such as to make it difficult or impossible for the plaintiffs to meet the issues raised by the defendants new statements. They do however rely upon the approach they have taken as to resources, submitting that the Court may and should take into account that the plaintiffs have a team comprising one solicitor working full time on the case, one solicitor working half of his time on the case and five counsel.
47 The issues going to foreign law principle have been dealt with in the separate judgment [2000] NSWSC 1077 delivered on 23 November.
48 Leaving aside the patent case question which is dealt with in the separate judgment, the stage which the litigation has presently reached is such that the court is in a position, by appropriate costs orders and by the imposition of appropriate conditions, to permit the regulatory, technical and timing issues raised by the new statements to be read by the defendants and to permit the plaintiffs a practicable and reasonable opportunity to properly answer those materials. Hence as the plaintiffs do not submit that the new issues are not relevant to the proceedings, to my mind, subject to imposing appropriate conditions, the exercise by the court of its discretion should clearly be in favour of allowing the defendants to mobilise the new statements.
49 The appropriate conditions will deal with the period to be afforded to the plaintiffs to file responsive statements. An appropriate period will be identified and ordered when short minutes are brought in.