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

39 The judgment in relation to the security for costs motions ([2001] NSWSC 744) sets out a number of further background facts and funding details. The reasons extend to an examination of certain parameters of the proceedings. For obvious reasons it is unnecessary to presently repeat the reasoning to be found in that judgment. 40 The plaintiff has usefully collated excerpts from a number of interlocutory judgments where the size and scope of the proceedings was referred to and where certain parameters of significance were outlined. Notwithstanding that these excerpts overlap from time to time it seems convenient to set them out in order to deal with the motions presently before the court, if only, to emphasise: (1) that the size and scope of the proceedings has been exceptional and that the extent of them is quite possibly unparalleled in a commercial case in this country; and

(2) that a number of aspects of the proceedings, as well as matters outside of the proceedings, could not have reasonably been anticipated and on my findings were not anticipated, by the plaintiff or by the defendants. 41 I proceed to set out these excerpts from previous Judgments: (a) Judgment [2001] NSWSC 868 (5 October 2001): "3. The plaintiffs claim damages from the defendants in excess of $50 billion. The general nature of the proceedings was outlined in an interlocutory judgment [(1999) NSWSC 828] delivered on 19 August 1999. Since that date there have been numerous contested motions and contested directions hearings. The pleadings have also moved on in terms of a number of further issues being raised and further particulars being furnished. More than 50 judgments have been delivered in relation to the proceedings; many of them delivered following the commencement of the final hearing. The general state of the matter as at mid-April 2000 was set out in a judgment dealing with a contested application relating to use of the Technology Court ([2000) 49 NSWLR 51). The most recent judgment on the defendants' applications for security for costs ([2001] NSWSC 744) delivered on 13 September 2001 gives further substantial detail updating the state of the matter as at that date. . . .

9 In the course of previous published judgments I have had occasion to make the point that this litigation is in my view particularly difficult for the curial process. The essential difficulty which is encountered is readily revealed when one bears in mind that the proceedings concern claims by the plaintiffs which: (a) if successful, were (during the opening) said to exceed the capitalisation of the National Australia Bank; and (b) encapsulate a number of proceedings covering a plethora of factual and legal issues - and as to the damages claims, embrace a global investigation of e-commerce markets and technology. Moreover the number of witnesses and witness statements filed by both parties in the proceedings can only be regarded as extraordinary…

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." (b) Judgment [2001] NSWSC 744 (13 September 2001): "83. The nature of the proceedings and the approach taken by each of the parties to the proceedings from their commencement has always made it crystal clear that the duration of the final hearing would be very extended indeed. Whilst the precise ambit of the plaintiffs' claims to damages may be said to have moved over time arguably from $20 billion to in excess of $50 billion, there was never any shadow of a doubt but that the defendants would defend the claim to the hilt and would do so in a careful and considered way using every resource available in that regard. It is not surprising that the defendants have retained one of Australia's largest law firms and built up a considerable legal team made up of many counsel and solicitors, no doubt backed by the National Australia Bank in every way possible. Previous judgments have described the defendants as mobilising massive legal resources in relation to the litigation. It is not surprising that the defendants would have carefully investigated any possible cross-claims and in due course determined to pursue the first cross-claim. It is not surprising that the defendants would have gone about investigation of the factual issues in the most meticulous fashion and would then have filed statements from their many witnesses. Mr Lovell's evidence was that in round terms the defendants had paid between $20 million and $30 million to legal advisers between September 1998 and 3 October 2000 and a further $10 million to $15 million since 3 October 2000. Costs were running at between $1 million and $11/2 million per month possibly excluding GST. ... 92 The statistics with respect to the statements were nothing short of staggering. On the defendants' side of the record, there are currently 177 statements [see the table Appendix "B" to this judgment]. . . .

95 In relation to the plaintiffs' statements, the evidence was that the plaintiffs have filed and/or served 104 statements from 39 witnesses namely: · between 20 November 1998 and 14 July 1999 - 13 statements and one affidavit; · between 8 March 2000 and 12 September 2000 - 57 statements; and · from 12 September 2000 up to 10 August 2001 - 34 statements."

(c) Judgment [2001] NSWSC 648 (31 July 2001): "The parties are committed to litigation of a high order. The proceedings being heard together have already continued for over a calendar year and will clearly continue well into 2003. The lead up to the actual hearing itself involved a period of years, and the issues as pleaded are clearly of the greatest significance to both parties. In terms of volume, the extent of the evidence sought to be mobilised by both parties quite probably outdistances the extent of evidence sought to be mobilised in any other proceedings in this country at any time. The issues are very complicated indeed. The defendants' resources in terms of the team conducting the litigation have previously been described by the court as "massive" ([2001] NSWSC 509 at paragraph 39). As at 1 July 2001, the evidence was that approximately 20 solicitors were working full-time on the case and some six counsel briefed. The plaintiffs' resources have previously been referred to and are of altogether a different order. Having said that, 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."

(d) Judgment [2001] NSWSC 427 (23 May 2001): "5 The litigation is in my view particularly difficult for the curial process. The Court must administer justice in terms of any proceedings before the court.. The parties are entitled to present their respective cases and to test one another's cases in accordance with well-established procedures. Evidence which is relevant to the issues will generally be admitted. The capacity of the court to test the substance of pleaded issues is limited. The ultimate judgment must take into account all of the evidence presented during the hearing and all of the submissions put by the parties to the court. Notwithstanding the seemingly inapt, in relation to the proceedings, use of the words quick' and cheap' in the expression `just, quick and cheap', the court under cover of the overriding purpose rule [Supreme Court Rules - Part 1 Rule 3] may take whatever steps are practicable to case manage the proceedings so as to expedite the hearing and bring the proceedings to a conclusion. The court has approached the hearing of the proceedings by time and time again, endeavouring to tie down the material issues and requiring that relevant issues be properly pleaded and particularised. Achieving a measure of expedition in proceedings of the current scale is exceptionally difficult for obvious reasons. Achieving a measure of expedition is likely to be all the more difficult in circumstances in which the plaintiffs have elected to call Mr Maconochie as their last witness and to intersperse expert and lay witnesses, witnesses going to damages and witnesses going to liability, in the batting order. In contradistinction to the manner in which evidence is commonly adduced by first establishing relevant assumptions and then calling expert witnesses asked to make assumptions, the plaintiffs are proceeding to in many instances reverse this order. This is the plaintiffs' forensic entitlement but clearly causes sundry case management difficulties. Whilst the Court has the power to interfere in the order of presentation by a party of a case, the Court has not up to this point in time been disposed to exercise that power. Such a step would be extreme in proceedings of the complexity of these proceedings and of course the defendants order of witnesses will (barring Court interference) generally be also a matter for them .

6 The essential difficulty which is encountered is readily revealed when one bears in mind that the proceedings concern a claim by the plaintiffs which: (a) if successful, was (during the opening) said to exceed the capitalisation of the National Australia Bank,

(b) encapsulate a number of proceedings covering a plethora of factual and legal issues - and as to the damages claims, embrace a global investigation of e-commerce markets, and technology.

7 In those circumstances the defendants, within the dual constraints of practicable case management and the public interest in preventing individual litigants from unduly burdening the list, have every entitlement to take care and time in defending the proceedings. And the plaintiffs have of course, a concomitant entitlement to pursue their pleaded cases with vigour.

8 The number of witnesses and witness statements filed by both parties in the proceedings can only be regarded as extraordinary. A frank and careful overview of the witnesses (lay and expert) proposed to be called on specific issues and of the evidentiary materials to be treated with through the hearing, suggests that the proceedings are likely to be completed in terms of the hearing, in early 2003. The Court may be expected to take particular care, consistently with the interests of justice, to move the proceedings along in circumstances where the issues have now been clarified and more particularly identified. A judgment will then have to be delivered and no doubt the preparation of the judgment will also take real-time." (e) Judgment [2000] NSWSC 945 (5 October 2000): "4. I venture to suggest that there would be few occasions when as much energy and time has been spent by parties to proceedings in this country in preparing for a final hearing. Presumably this is because of the significance to the parties of the issues, the plaintiffs asserting that the relief to which they are entitled, exceeds the market capitalisation of the National Australia Bank Limited ["NAB"]." (f) Judgment [2000] NSWSC 338 (14 April 2000): "45 The formal position as it has been announced and accepted by both parties without the need for further evidence is as follows: The proceedings involve a very large number of documents. The defendants have currently filed 117 statements. Those statements occupy approximately 5,700 pages of type. Additionally to that, and referred to in the defendant's statements, are some 40,000 pages of exhibits. Additionally to that the defendants have in the order of some 40,000 documents discovered or capable of requirement for use at some stage in the proceedings. It is possible and probable that some of the last mentioned figure of 40,000, overlaps with the 40,000 pages of exhibits. In short, as I understood Mr Halley of Counsel and Mr Lovell, solicitor, who have respectively addressed from time to time for the defendants today, it may be taken that there are certainly in excess of 100,000 relevant pages of materials to be arguably referred to, relied upon and/or conceivably tendered on the defendant's side of the equation.

46 The position, as far as the state which the defendant's have achieved in pre-trial preparation as announced, is that the defendants have substantially imaged discovered documents. They have not imaged documents relied upon or seen by experts, documents produced on subpoena, or documents discovered by the plaintiffs and which the defendants may determine to tender.

47 The position from the plaintiff's side of the record as announced by Mr Hancock of counsel who has addressed the court on this topic today, is that there are 15 statements which have been filed to date. There are approximately 7,500 pages of discovered materials, many already being exhibits to statements. In short, up to this point in time, as I have understood Mr Hancock, there are approximately 10,000 pages of documents which are or may be deployed by the plaintiffs for the purpose of the hearing. It is common ground, however, that in coming weeks the plaintiffs will be filing and serving a deal of material in reply. This is said to be likely to be in the order of 10,000 to 15,000 pages of documents. In short, from the plaintiffs' side of the record, the trial may have to cope with in the order of 20,000 to 25,000 pages. When one adds that it is something in excess of arguably 100,000 pages of materials which are, or may be, relied upon on the defendant's side of the record, the parameters of the case become a little clearer." 42 The affidavit made by Mr Lovell on 12 November 2001 in support of the motion to dismiss gives the procedural history of the MLC proceedings in some detail. The convenient course is to annex that affidavit to this judgment as Appendix "A". 43 Mr Lovell covers in the same affidavit, a number of issues which are relevant both to the defendants' motion to dismiss as well as to the adjournment and ancillary orders motion. 44 Clearly, if the hearing of the main proceedings continues in an uninterrupted fashion, a continuation of the present stay of the MLC proceedings with the possibility that the proceedings may (following an order to this effect) revive on payment of the security ordered, would cause real difficulty in a number of respects for the defendants. These include the problem of dealing with the existing timetable, the effect on the preparation and prosecution of the defence of the main proceedings, (the final hearing of which has proceeded up to the present) and the ability of the defendants to allocate resources to the defence of each of the main proceedings and the MLC proceedings with certainty. 45 A number of the directions and orders in the MLC proceedings are described in paragraph 30 of Mr Lovell's 12 November 2001 affidavit. These include the obligations of the defendants to file a defence in the MLC proceedings, to file statements in accordance with the orders of 5 October 2001 and to give discovery in relation to damages. It seems unarguable that if the defendants do not continue to work on these tasks then if the security is paid and the existing stay is lifted, a new directions regime would be required which is likely to include an extension of the time for compliance with such directions and orders. As Mr Lovell points out, if the defendants continue to work there is a real possibility that they would incur costs which would never be recoverable if the security was not paid and the stay not lifted. 46 Mr Lovell makes the point (which is common ground), that the final hearing is presently at a stage where a particular program is generally in place for the calling and cross-examination of a number of identified witnesses. As at the present time, the third tranche of Mr Martin's cross-examination is nearing completion. Three further witnesses were to have been called and cross-examined prior to the end of term. From the commencement of term next year, Mr Coleman was to be called and cross-examined. He was to be followed by the calling and cross-examination of Mr Hume, Mr Martin and Mr Maconochie. Mr Hume's other commitments have been taken into account by the Court, in effect, giving a 'special fixture' in relation to his cross-examination. The defendants' preparation for that cross-examination as well as for the cross-examination of Professor Aitken in the main proceedings has apparently been ongoing. Mr Lovell makes the very valid point that the preparation of the cross-examination of many witnesses will be affected if the present uncertainty as to the status of the MLC proceedings remains. Clearly the very same point may be made in relation to any adjournment of the main proceedings. 47 Mr Lovell has also made a subsequent and extremely detailed affidavit on 20 November 2001 which covers many matters including: · the status of the main proceedings; · the status of the MLC proceedings; · the progress of the hearing; · outstanding matters in the main proceedings and the MLC proceedings; and · issues of prejudice to the defendants. 48 The affidavit gives chapter and verse by way of adjectival information to the many parameters which require to be taken into account in relation to the motions presently before the Court. The convenient course is to annex the affidavit to this judgment as Appendix "B". 49 The short point which I see as unarguable, is that to grant the plaintiff's application for the adjournment and to make ancillary orders staying until further order, the orders of the Court for the provision of security for costs made on 24 September 2001 (or by whatever route, to procure an adjournment of the final hearing until some time in February of next year) will cause very considerable inconvenience and additional costs to the defendants and will present a number of extremely difficult problems in relation to the ongoing case management of and hearing of the final proceedings. These problems include the uncertainty as to: (1) the amount of court time which a continuance of the hearing would require; and

(2) when the final hearing could practicably resume following a new regime in terms of directions. 50 The problems concerning the situation with respect to the Court are very real for a number of reasons. Special arrangements have obviously had to be made to make one of the three Commercial List judges available to hear the final hearing over the last 18 months and available to be in a position to continue that hearing through the whole of next year and quite probably thereafter until its conclusion. Those arrangements have included use of the Technology Court with its ancillary complex document management facility. The arrangements as in fact used in this litigation are broadly summarised in a paper entitled "Technology in the Court Room-2001" to be found on the Supreme Court 'Lawlink' website at http://www.agd.nsw.gov.au/sc\sc.nsf/pages/einstein-201101. The short point is that uninterrupted use of the Technology Court cannot of course, be taken as a given, where other pending litigation may require use of that Court room with its special facilities. 51 It is also important to bear in mind the recent judgments and orders in relation to the appointment of an examiner to 'take' the cross-examination of identified experts and to do so wherever possible in parallel with the continuance of the final hearing before myself. Those orders were made in a context in which it would clearly take some time before the examiner would actually commence to sit and in a context in which it seemed likely that the defendants might seek leave to appeal. The position of the plaintiff in that regard was by no means clear although I gained the impression (which may be entirely incorrect) that the plaintiff may have determined not to pursue an appeal. If the final proceedings are to continue it is particularly important that if the examiner judgments and orders are to be tested, this take place very soon so that the administrative and other arrangements necessary to be made to further the procedure can progress. The applications and general approach to the way forward now pursued by the plaintiff with the resultant anticipated stay of all proceedings, will have an additional and very real drawback in that if acceded to, those applications will simply set back considerably the timetable which was achievable in terms of the putting into place of the examiner appointment and procedure. I see this matter as an important consideration to bear in mind particularly in terms of the length of any adjournment which may be granted and in terms of the considerable inconvenience involved in an interference with what had been the status quo (qua the running of time for leave to appeal; the courts administrative situation; the need to obtain concurrence of the Chief Justice &c.) in relation to the whole of the examiner procedure orders. 52 Further, the ability of the defendants to ready themselves to cross-examine all of the witnesses presently in line to be cross-examined towards the end of this year and from the commencement of term next year at least until the middle of next year, may be affected by such a course in several ways. These include: · the fact that outstanding discovery, subpoena and notice to produce requirements/directions are necessary to be attended to prior to certain of these witnesses being called; · the fact that preparation for cross-examination of the plaintiff's remaining lay and technical witnesses takes considerable time. Hence, for example, the Court clearly accepts that Mr Bathurst QC, all other things being equal, would over coming months have been extensively engaged in preparing to cross-examine Mr Hume and Mr Maconochie. Uncertainty over the next few months as to the future of the litigation and as to whether it is to be prosecuted on and after some date in February next year is calculated to cause very considerable difficulties of this nature as the defendants could simply not be certain as to whether or not to continue their regular preparation for an ongoing rollout on and after February, of the plaintiff's case; and · the many other matters detailed by Mr Lovell in his 20 November 2001 affidavit. 53 The central proposition which emerges from Mr Lovell's 20 November 2001 affidavit concerns the dimensional difference between the Court granting an adjournment on the basis that the defendants are not required to incur any costs, or any substantial costs, during the period of the adjournment on the one hand, and the Court now imposing a regime which requires the defendants and their legal representatives to continue to prepare for a continuance of the final hearing on the assumption that the final hearing would immediately recommence on 15 February 2002 (or shortly thereafter) on the other hand. 54 The position is reasonably clearly summarised in paragraphs 71 - 74 of Mr Lovell's 20 November 2001 affidavit as follows: "71. If the Court grants an adjournment on the basis that the Defendants are not required to incur any costs, or any substantial costs, during that period, I am of the view that the Defendants will need a reasonable period in which to properly prepare for the resumption of the hearing after the adjournment. 72. If the Court grants an adjournment on those terms, I anticipate that the following will occur during the period of the adjournment. (a) Counsel currently briefed by the Defendants will cease to work on the matter, and will seek to take on other briefs, including briefs to appear in other proceedings following the commencement of the Court term in February 2002. (This is because no certainty would be able to be provided to counsel that hearing of these proceedings will resume on 15 February 2002). (b) Partners and solicitors at Freehills will cease to work on the matter, and will be re-deployed to other work. In my view, it would be difficult, if not impossible, to ensure that all of the solicitors currently working on the matter are re-deployed to short-term work which can immediately be halted or passed on to another solicitor if the Plaintiff indicates on 15 February 2002 that it is in a position to resume the hearing immediately. (c) Experts currently briefed to provide statements will be directed to cease working on those statements. They may then take on other work commitments. 73. If the Plaintiff indicates to the Court on 15 February 2002 that it is in a position to resume the hearing, the Defendants would then require a period in which to properly prepare for resumption, including resourcing the proceedings with appropriate counsel and solicitors. That would also include a completely revised timetable to allow the Defendants to complete the tasks in paragraphs 40 and 41 above and to prepare for cross-examination, as referred to in paragraph 50 above. 74. If the Plaintiff is not, on 15 February 2002, in a position to resume the hearing the position in relation to the availability of counsel and solicitors will become even more acute." 55 In circumstances where the very continuance of major litigation of the scale and significance to the parties of these proceedings falls for consideration, it is absolutely plain that the task of the Court is to stand back from the detail and to assess the proper exercise of the discretion as to the way forward in the light of all of the relevant circumstances. Clearly those circumstances include an examination of the expenditure by both parties in terms of funding the litigation and importantly also include the considerations which the plaintiff had in mind as at the commencement of the main proceedings and as at the commencement of the final hearing. The reasonableness of those considerations is also in focus. The changes in the anticipated manner in which the final hearing would likely go forward are in focus. And of course it is equally important to look at the considerations which the defendants must be assumed to have had in mind as at the commencement of the main proceedings as to the commencement of the final hearing, as the anticipated manner in which the final hearing would likely go forward. 56 Mr Maconochie in his affidavit of 16 November 2001 has carefully dealt with a number of these matters in paragraphs 3, 6 and 7: "3. Since 24 September 1998 the plaintiff has expended the following sums of money directly on the proceedings. I am informed as to the approximate amounts by Mr Hetherington of Withnell Hetherington, the plaintiff's solicitors as shown in Withnell Hetherington's trust account records:- (a) Witnesses (including expert witnesses) - $ 805,200.00 (b) Counsel's fees - $3,977,000.00 (c) E-Court and Real Time transcript - $ 483,000.00 (d) Miscellaneous disbursements - $2,700,000.00 In addition to this total of $7,965,200.00, I estimate an additional amount of about $2 million has been directly disbursed on the proceedings and which I have estimated as follows:- Proceedings funding: (i) Efficiency Investments BV $ 7,500,000.00 AIIL ("OAMPS) $ 1,550,000.00 North & South Group $ 1,900,000.00 Total $10,950,000.00 Less approximate amount expended directly from Withnell Hetherington Trust Account $ 7,965,200.00

Less approximate amount in Idoport Pty Limited's Bank West Account $ 867,000.00 Total $2,117,800.00 4. I refer to the evidence of Mr Damian Lovell given on 30 August 2001 concerning the costs of the defendants of and incidental to the proceedings until the time of the application for security (see Transcript pages 12358 to 12362). 5. At the time of commencement of the Main Proceedings on 24 September 1998 and at the time of the trial (24 July 2000), the plaintiff did not consider that the trial would or could proceed as long as it has to date and be only at the present stage of hearing of the evidence, or be of the likely continuous duration of at least 3.5 years and possibly one or more years longer and which has been the subject of recent discussion in Court, that is a trial proceeding at least until the end of 2003 and possibly one or more years longer. I refer to the following estimates of the trial given by senior counsel for the defendants in the course of the Opening:- (a) "at least a year", Mr Bathurst QC, 24 August 2000, T 1563 lines 18-19; (b) "my best guess is that this case would take two years from the time it commenced [24 July 2000]", Mr Bathurst QC, 16 October 2000, T 2566 lines 36-37. 6. Further, at the time of commencement of the Main Proceedings in September 1998 or at the commencement of 2000 as the case may be, the following matters were not apparent and were not taken into account by the plaintiff: (a) that the volume of evidence filed or permitted to be filed on behalf of the defendants could be near the volume which has been filed or permitted to be filed on behalf of the defendants and which required substantial responses from the plaintiff including additional expert witnesses. In particular I refer to the evidence on behalf of the defendants filed shortly before the commencement of the trial of the proceedings, and subsequently after the commencement of proceedings in accordance with the schedules annexed to Mr D'Emilio's affidavits of 26 and 27 September 2001 filed in the defendants' recent application for adjournment and in support of the plaintiff's application for directions; (b) the extent of the Opening Addresses; (c) that the defendants' counsel would proceed to cross-examine in the manner and to the extent they have done; I refer in particular to the cross-examinations of Mr Campbell and Mr James and to the cross-examination of Mr Martin which is still continuing; (d) the appointment by the Court of an examiner to hear substantial cross-examination in the proceedings at the same time as the trial of the Main Proceedings and the preparation and contemporaneous trial of the MLC Proceedings; (e) the extent of the defendants' objections to evidence and the requirement for supplementation occasioned by rulings on those objections; (f) the number and frequency of interlocutory applications by or on behalf of the defendants or the extent to which the defendants contested interlocutory applications by the plaintiff; (g) the number of counsel and solicitors engaged or retained by the defendants and occupied in the conduct of the proceedings and the discrepancy between the personnel and other resources employed by or on behalf of the defendants in and in relation to the conduct of the proceedings as compared with the solicitors and counsel retained or engaged for the plaintiff; (h) that it would be necessary to contemplate and to commence the MLC Proceedings or that the trial of these would be joined and proceed with the trial of the Main Proceedings and security for costs ordered in respect of the MLC Proceedings, either at all or as for a trial; and (i) the applications the subject of the judgment and orders in proceedings No 4091 and 4694 of 2000 and the proceedings heard before Hodgson CJ in Equity; (j) the failure of the plaintiff's application for a separate trial on liability and related orders, with the consequent inability to resolve liability in a reasonably short trial period; and (k) that the defendants would by use of the funds of a public company expend moneys in the conduct of the litigation approximately at a rate six times or more as great as that of the plaintiff and employ and multiply resources and legal representation accordingly. 7.1 I refer to the evidence before the Court on the application for security for costs concerning the plaintiff's funding and seek to maintain the confidentiality thereof. At the respective times funding was arranged with the various entities referred to in that application the plaintiff and I did not contemplate the matters to which I have referred in paragraph 6 above. Since the orders for security for costs in the proceedings and the hearing of the defendants' application for an adjournment and the plaintiff's applications for directions and the Court's judgments and orders thereon, the plaintiff has endeavoured to but has been unable to obtain continued access to its funds in the plaintiff's Idoport Account at Bank West in Sydney to meet the payment of security for costs in the MLC Proceedings and the costs of continuing with the Main Proceedings for the time being including the payment of security after the first payment. The plaintiff does not itself have other funds on which it can draw to meet these payments…….. 7.2 Were it not for the matters referred to in paragraph 7.1 above, the plaintiff would have met the payment of security for costs in the MLC Proceedings and the costs of continuing with the Main Proceedings including the payment of security after the first payment and would not have had to bring this application for an adjournment and related matters. 7.3 The plaintiff has not previously been in a position to explain to the Court why security has not been paid in the MLC Proceedings as it has been endeavouring to secure access to its funds in the Idoport Account and which has substantial funds sufficient at least to pay that security and the costs of continuing with the Main Proceedings for the time being at least including the payment of security after the first payment and has not wished to prejudice its position in relation to obtaining access to those funds or disclosure of the other matters referred to in Confidential Exhibit A. I and the plaintiff have not wished to seem discourteous to the Court in not previously proffering an explanation and on 1 November 2001 I informed the Court through senior counsel (transcript page 14718) that it might take up to 14 days to be able to inform the Court." 57 It is convenient to turn to certain aspects of the procedural position.

The procedural position 58 The security orders in the main proceedings and the MLC proceedings put in place a regime whereby in the absence of compliance with those orders, an automatic stay of proceedings would be triggered. This in fact occurred in relation to the MLC proceedings at midnight on 31 October 2001 when security in the sum of $479,305.50 was not paid or covered by bank guarantee by that date. 59 Idoport has now clearly telegraphed that it will not provide the security which it has been ordered to provide in the main proceedings on 1 December 2001. Indeed, in a number of its submissions presently before the Court in relation to its sundry applications, it has relied upon the proposition that this payment will not take place as a given. In the event that Idoport fails to provide that security then as and from midnight on 1 December 2001, an automatic stay of the main proceedings will be triggered. 60 On this scenario and absent the Court presently dismissing the MLC proceedings, the position on and after 2 December 2001 will of course be that the whole of the proceedings will be stayed. Procedurally the future would then presumably involve the occurrence of one of two events, both of which may take place at the same time. The first (which is a certainty), is the pressing of an application by the defendants to dismiss all proceedings [the defendants having already, by the current motion to dismiss, sought to dismiss the MLC proceedings, on this scenario, by definition, that motion would be adjourned to be further heard when a similar motion would be pursued for dismissal of the main proceedings]. The second event would arguably, depending upon the circumstances, be an application by the plaintiff for an order lifting the stay in respect of the main proceedings and/or the MLC proceedings and for orders permitting a continuance of the final hearing. 61 Clearly, in the event that the plaintiff did pursue such an application to lift the stay and continue the final hearing, the Court would require to hear such an application and deal with it on its merits. No doubt the application would involve any number of parameters. It may or may not be acceded to. If at the same time as the Court was hearing such an application made by the plaintiff, the defendants' applications to dismiss the main proceedings and the MLC proceedings were before the Court, it would seem probable that a concomitant of the Court's rejection of the plaintiff's application, would be the Court acceding to the defendants' applications with a resultant dismissal of all proceedings. Importantly, part and parcel of any adjudication of the plaintiff's application to lift the stay and continue the final hearing, would include the Court's discretion to make such orders but only subject to compliance by the plaintiff with stringent conditions. Clearly it would be probable that those conditions would treat with many matters including arguably: · The quantum of costs effectively "thrown away" by the defendants' in having been occasioned by reason of the period of time when the stay of proceedings had been in operation - such as costs of and occasioned by the necessity to effectively close down the defendants' sundry teams of legal advisers; to halt in midstream the preparation of cross-examination; to likewise suspend continuance of preparation of any necessary statements as well as the numerous other presently ongoing activities concerned with locating documents or continued discovery or production on notices to produce; and · Questions going to when the final hearing could effectively and practicably be continued. Presently as I have said, there are many closely interrelated steps which require to be taken in order for the present timetable, (which, in present form, contemplates a continued rollout of witnesses) to be followed. An example is the necessity for Mr Maconochie to exercise the leave which has been granted to the plaintiff to supplement his evidence in certain respects. Another example is the necessity for Mr Martin to prepare further statements going to the plaintiff's similar and equivalence 'modifications' cases. Other examples, most of which appear to be covered in detail in Mr Lovell's affidavits, concern ongoing discovery and production of documents on notice to produce. 62 In short, the triggering of the stay orders would undoubtedly have a radical and substantial effect on the regular continuance of the final hearing and on the defendants having a reasonable opportunity to continue their out of court preparation in uninterrupted fashion.

The prospects of Idoport obtaining sufficient funding to continue the final hearing to conclusion 63 A deal of evidence was adduced on the hearing of the motions going to the question of the prospects of Idoport obtaining sufficient funding to permit it to continue the final hearing up to conclusion. That evidence includes the fact that Idoport and others have commenced separate proceedings No. 5539 of 2001 in the Equity Division against Efficiency Investments BV ["Efficiency"]. In effect Idoport seeks specific performance of an alleged contractual obligation whereunder Efficiency is said to be obliged to take all necessary steps to transfer moneys held in a particular bank account held with Bank West, Bank of Western Australia Ltd [an amount of $867,000], to the trust account of Idoport's solicitors in the name of Idoport and to be held on trust for Idoport. The proceedings further seek an order that Efficiency pay the sum of $1 million to Negubo Pty Ltd pursuant to the Negubo Loan Agreement. The proceedings have been fixed for final hearing to commence before Justice Palmer on 11 December 2001. 64 It is clear enough from the Court's orders of 24 September 2001 that on the first of each month for the period commencing 1 November 2001 up to 1 June 2003, Idoport was required in proceedings No. 50113 of 1998 to pay (or make arrangements for the payment of) the sum of $48,178.00. The orders made on the same day also required Idoport in the MLC proceedings on or before 31 October 2001 to pay (or make appropriate arrangements for the payment of) the sum of $479,305.50. The same orders required Idoport on the first of each month for the same period from 1 November 2001 up to 1 June 2003 to make payment (or appropriate arrangements for the payment) of $48,178.00. 65 In the result the total amount to be paid (or in respect of which appropriate arrangements were to be made) is $1,835,098.00. 66 Appendix "A" to the security for costs judgment [2001] NSWSC 744 (which is no longer confidential and has now been included on the internet version of the security for costs judgment), set out in considerable detail what the evidence had then disclosed in relation to the funding arrangements/agreements. Certain of the additional evidence now before the Court on the motions presently for hearing completes some of the picture. 67 A short summary of what appeared in Appendix "A" so far as is relevant to contractual arrangements concerning Efficiency follows:

Analysis of Appendix "A" to security for costs judgment qua funding arrangements between Efficiency and Idoport: the opportunity for termination by Efficiency

The initial agreements 68 On 18 September 2000, Idoport, Market Holdings, Mr Sheahan (as liquidator of Market Holdings) and Mr Maconochie entered into a Partnership Agreement [DX5, pp 96-119]. On the same day, Market Holdings, Mr Sheahan (as liquidator of Market Holdings) and Efficiency entered into the Market Holdings Participation Agreement [DX5, pp 120-143] (The "initial Agreements"). 69 A condition precedent of each Agreement (or part thereof) was that a court of competent jurisdiction approved of the entry into and performance of the other Agreement. Because Market Holdings are no longer party to the current proceedings, it is assumed for these purposes that the conditions precedent have not been met and the initial agreements are not operative.

The current agreements 70 The funding arrangements in relation to Efficiency currently involve three separate agreements that operate as a back-to-back structure for the lending of money from Efficiency to Idoport. They are: a) The Idoport Loan Agreement between Negubo and Idoport; b) The Negubo Loan Agreement between Negubo and Efficiency; and c) The Shareholder Agreement between Negubo, Efficiency and Mr and Mrs Maconochie. 71 The Idoport Loan Agreement was entered into by Idoport and Negubo (DX7, pp 25-40). Under the Agreement, Negubo agreed to provide loan monies to Idoport for the purpose of the legal proceedings. 72 The Negubo Loan Agreement was entered into by Negubo and Efficiency (DX7, pp 3-18). Under this Agreement, Efficiency agreed to provide loan monies to Negubo for the purpose of enabling Negubo to preserve and/or realise its shares in Market Holdings, Idoport and IBS (its "assets"). 73 The Shareholders Agreement was entered into by Efficiency, Negubo and Mr and Mrs Maconochie (DX7, pp 95-110). The Agreement becomes operative once Efficiency gives notice in writing to the other parties that the conditions precedent to the initial agreements have not been satisfied: clause 3.

Rights and obligations under the Agreements 74 Under the Idoport Loan Agreement, Negubo's obligations (the "Idoport Loan Amount") consists of: (i) the "Initial Loan Amount" - the costs and expenses of the proceedings and administration costs (clause 4); and (ii) the "Additional Idoport Loan Amount" - monies for purpose of posting security for costs in connection with the proceedings - up to $1m (as long as Efficiency fulfils Negubo's request for the monies) (clause 8). 75 Under the Idoport Loan Agreement, Idoport must provide Negubo with notice when each of the following amounts of expenditure have been reached, upon which time Negubo has an option to terminate its obligation to advance the initial loan amount (clause 6):

Negubo's options, rights and obligations Total outlay for Negubo i) Once Idoport has spent $6.5m: - Negubo has an option to terminate its obligation to advance the initial loan amount; $7.5m - If Negubo decides to terminate: it must provide a further $1m whereafter its obligation ends. ii) Once Idoport has spent $9m: - Negubo has an option to terminate its obligation to advance the initial loan amount; $10m - If Negubo decides to terminate: it must provide a further $1m whereafter its obligation ends. iii) After this point: - Negubo has a quarterly option of terminating its obligation to advance the initial loan amount $11m - If Negubo decides to terminate: it must provide a further $1m whereafter its obligation ends;

76 For the purposes of understanding the respective rights and obligations of the parties under each of the Agreements, it is necessary to consider two alternative possibilities: (a) where the Shareholders Agreement has not come into operation; or (b) where the Shareholders Agreement has come into operation.

(a) Where the Shareholders Agreement has not come into operation 77 Under the Negubo Loan Agreement, Efficiency is obliged to advance monies to Negubo as requested from time to time (the "Negubo Loan Amount") in order for Negubo to pay its costs and expenses in preserving or realising its assets (clause 4.1). This in an unconditional promise by Efficiency. The defendants' submission during the security for costs application was that this distinction is significant, in that whilst Idoport has a power to request Negubo to make advances, Negubo has an absolute ability to compel Efficiency to make the advances. Furthermore, there is no ceiling to the amounts that can be requested by Negubo under this Agreement. 78 It would appear that in this first scenario, where the Shareholders Agreement has not come into operation, Efficiency has no right to terminate the funding arrangements with Negubo.

(b) Where the Shareholders Agreement has come into operation 79 Once this Agreement becomes effective, Negubo is released from all liability to Efficiency under the Negubo Loan Agreement in exchange for Negubo issuing one partly paid share in Negubo to Efficiency: clause 4. In this way, Efficiency can chose to swap from debt to equity. 80 Upon issue of the partly paid share, it will have been partly paid to an amount equalling the Negubo Loan Amount. Efficiency is then to pay further calls on the share as made by Negubo from time to time. 81 Once this Agreement becomes operative, Efficiency has the ability to cap its liability: clause 5.4. In this way, Efficiency may elect to cease paying calls on the share if and when the following events occur and it gives 15 days written notice to Negubo:

Efficiency's options, rights and obligations Share fully paid at: i) Upon the share being partly paid to $6.5m: - Efficiency may elect to cease paying calls on the share $7.5m - If Efficiency elects to cease payment: it must pay calls to a further $1m whereafter its liability terminates. ii) Upon the share being partly paid to $9m: - Efficiency may elect to cease paying calls on the share $10m - If Efficiency elects to cease payment: it must pay calls to a further $1m whereafter its liability terminates. iii) After this point: - Efficiency has a quarterly option of ceasing to pay calls on the share; $11m or more - If Efficiency elects to cease payment: it must pay calls to a further $1m whereafter its liability terminates.

82 It is significant to note that the "exit points" at which Efficiency can cap its liability are exactly the same as those given to Negubo under the Idoport Loan Agreement. The points at which Efficiency elects to cease paying calls on the share will determine the dividend they are entitled to (as a percentage of the Net Tangible Assets of Negubo). 83 In this second scenario, where the Shareholders Agreement has come into operation, it would appear that Efficiency has the right to cap its liability at certain points and thereby terminate the funding arrangements with Negubo.

Additional parameters which may now be taken into account to complete and as necessary, vary the above summary to bring the position up-to-date by reference to the evidence now before the Court 84 The evidence before the Court now discloses the following: · that on 15 September 2001 Efficiency served notice under clause 3.2 of the Shareholders Agreement advising that the conditions precedent to the Partnership Agreement and the Market Holdings Participation Agreement had not been satisfied; · that by letter dated 28 October 2001 Efficiency advised that pursuant to clause 4 of the Shareholders Agreement, Negubo was obliged to issue the partly paid share in Negubo to Efficiency; · that Negubo had not issued the partly paid share to Efficiency despite repeated requests to do so; · that Efficiency asserted that its obligations were to pay calls on the partly paid share as made by Negubo from time to time subject to the provisions of clause 5.4; · that Efficiency's position as at 28 October 2001 was that if Negubo issued the share to Efficiency forthwith, then Efficiency "would sit down to negotiate such changes to the existing contractual regime as may be mutually agreeable to the parties"; and · that Efficiency's position as at 28 October 2001 was that until Negubo complied with what Efficiency asserted to be Negubo's contractual obligations, Negubo was not entitled to call upon Efficiency to pay further monies to it. 85 In consequence of the changed position it appears clear that the Shareholders Agreement has now come into operation. It seems unnecessary to refer to additional parameters of the correspondence as between Efficiency and Negubo. 86 The new proceedings will presumably determine the specific performance issues raised and may or may not go further in examining some other questions of construction which may be of significance in relation to further compliance by the parties to the Shareholding Agreement. 87 It now appears from the affidavit of Mr Maconochie made on 16 November 2001, that Efficiency has advanced $7.5 million up to this point in time towards funding the proceedings. 88 The Idoport Loan Agreement appears to only deal with the "Additional Idoport Loan Amount" in clause 8, which essentially covers obligations of Negubo in certain circumstances to advance the necessary monies or post the necessary bond or collateral where security for costs is ordered. The identified limit of Negubo's such obligation is $1 million. 89 A question may be thought to arise as to whether in circumstances in which Negubo at some material point in time would have advanced the Additional Idoport Loan Amount up to the aggregate amount of $1 million limit, a shortfall which nevertheless arose (in that Idoport had been obliged to pay security for costs in excess of $1 million), would, for the purpose of the proper construction of clause 4.1 of the Idoport Loan Agreement, be appropriately described as falling within the expression "Idoport's obligations to pay the Costs and Expenses of the Proceedings and Administration Costs." 90 Presently as I see it, there is a considerable cloud as to whether or not Idoport will prove to be in a position to continue to fund the proceedings to the conclusion of the final hearing. Insofar as this may depend upon the result of the new proceedings where as I have said, the relief would appear to seek an order permitting disbursement of the sum of $867,000 and either a judgment in the sum of $1 million, or an order that Efficiency pay the sum of $1 million; the defendants make what appears to be the valid point that a substantial portion of that amount would already be committed to known liabilities, as follows: Security for costs in the MLC Proceedings $479,305.50 1st instalment of MLC Proceedings security (1/11/01) 23,179.50 2nd instalment of MLC Proceedings security (1/12/01) 23,179.50 3rd instalment of MLC Proceedings security (1/1/02) 23,179.50 4th instalment of MLC Proceedings security (1/2/02) 23,179.50 2nd instalment of Main Proceedings security (1/12/01) 48,178.00 3rd instalment of Main Proceedings security (1/1/02) 48,178.00 4th instalment of Main Proceedings security (1/2/02) 48,178.00 Main Proceedings costs for "Court"* 356,198.00 Main Proceedings costs for "Experts"* 44,576.00 Withnell Hetherington costs for "Company matter"* 26,175.00 Total $1,143,506.50

[*Referred to in memorandum from Mr Maconochie to Withnell Hetherington dated 25 October 2001, being a document produced by the plaintiff in answer to a notice to produce and included in MFI P263(b).] 91 It does seem that even if the suit against Efficiency was wholly successful, the plaintiff could by no means, on that basis alone, continue the hearing to its regular conclusion without obtaining further funding. 92 A great deal may depend upon the approach taken by Efficiency and upon Idoport's ability to reach a consensual arrangement with Efficiency, for example, by way of varying certain of the provisions of the current contracts. It does however appear that Efficiency already has a considerable stake in Idoport's success in the proceedings, having advanced at least $7.5 million in that regard. It is simply not possible for the Court to do more than speculate as to whether or not Idoport by early or mid-February 2002 will have sufficient funding to prosecute the proceedings to the end of the final hearing. There is no certainty about the matter at all. On the other hand it cannot be said that Idoport has no prospect of achieving further funding from Efficiency. And of course Idoport may endeavour to procure other funding arrangements providing it can either do so consistently with the current contractual regime, or is able to have that regime varied to permit this course. 93 As the defendants point out in their written submissions, in circumstances where a litigant seeks an adjournment on the basis that it is without funds to enable it to be legally represented, the Court will require evidence that there is a realistic possibility that, following the adjournment, the party will be in funds and be able to continue the litigation with such representation (see, for example, Parras Holdings Pty Ltd v Commonwealth Bank of Australia (unreported, Federal Court, 14 October 1998) where the Full Federal Court refused to grant an adjournment and noted (per Spender J) that it had no confidence that the appellants' stretched financial resources would be likely to be improved by any adjournment; see also Sealby v Obelisk Securities Pty Ltd [1999] NSWCA 368). In this regard it might seem somewhat surprising that the defendants have seen fit not to actively oppose the plaintiff's application for the adjournment on the basis that the plaintiff has simply failed to show with sufficient precision that the adjournment sought even if granted involves a realistic possibility of a sufficient improvement in the position to warrant the Court accommodating the plaintiffs application. Presumably the defendants in circumstances where the end of term is so close, adopt the pragmatic position that the stay of the MLC proceedings now in force, and the stay of the main proceedings which is anticipated to commence in operation in a few days time, will in any event (regardless of whether or not an adjournment would have been granted), lead to a freezing of almost all further preparation for the final hearing. However as the defendants accept, the matter is at the end of the day, one for the Court. And in exercising the appropriate discretion it must be said that the many extremely unusual aspects of the proceedings suggest that the Court, albeit for obvious reasons approaching the matter (where it should never be forgotten that the proceedings are 'commercial', and that it has not been shown that all of the persons standing behind the plaintiff or who stand to benefit from the litigation if the plaintiff succeeds, are not capable of meeting the orders for security for costs) with a real sense of rigidity, should strain to give the plaintiff at least some reasonable period in which to clarify its funding position.

The appropriate exercise of the relevant discretion 94 At least in one respect there can be no serious debate. I refer here to the undoubted fact that the administration of justice is always and necessarily remains the touchstone or lodestar, in any exercise of the Court's discretion. 95 The administration of justice requires the Court to strain to permit a party with an arguable case to prosecute that case so that it is ultimately determined upon its merits. This is so even in circumstances such as now obtain in these complex proceedings, where substantial inconvenience may result from a break in the continued final hearing. 96 I accept without question that the proceedings constitute major litigation, and raise arguable issues at many levels. During a number of interlocutory applications the defendants (albeit for the purposes only of those applications) have accepted this proposition. During the course of the hearing of the current motions, the defendants albeit for the purposes only of those motions, again accepted that proposition. The substance of the causes of action pursued by the plaintiff, as well as the cross claims pursued by the defendants, can of course only be weighed and assessed following completion of the taking of all evidence and following final addresses. There is however, a world of difference between a specious case and an arguable case and I would not accept any characterisation of the current proceedings as specious as opposed to arguable. Having said that, no reader of this judgment should be in any doubt but that the Court's decision can only be reached following the adducing of all evidence and the taking of all submissions. In many ways and notwithstanding the amount of time since the final hearing commenced, the hearing remains in its infancy. 97 A further factor, which must be and is recognised, is that it has been necessary for the plaintiff to make extremely complex arrangements for the funding of the proceedings in order to meet the vastly superior resources of the first defendant, the National Australia Bank, which is one of the largest financial corporations in this country and which it appears has by now expended in excess of $60 million in defending the proceedings and in prosecuting its cross-claim. 98 I accept that it is in the interests of the administration of justice that a much less affluent litigant seeking to enforce rights against a much wealthier party should be afforded a reasonable opportunity to secure funds to enable the enforcement of those rights. To act otherwise would be against the public interest of ensuring, in a practical sense, open access to the courts. 99 The proceedings are certainly of such complexity that it would be manifestly unjust to compel Idoport to continue with the proceedings without legal representation or without affording to it the opportunity to ensure the continuation of or to obtain fresh legal representation 100 Further, it is necessary for the Court to recognise as it does, that the plaintiff has carried out very extensive preparation indeed prior to the commencement of the final hearing and has acquitted itself in terms of the detailed and conscientious way in which its evidence has been forthcoming. Without adjudicating for a moment (i) on the substance of the evidence which the plaintiff seeks to mobilise; or (ii) on arguably difficult costs questions going to whether or not evidence put forward as 'reply' evidence was in truth, evidence in chief,

the complexity of the evidence and the detailed preparation involved in collating and putting it forward is plain. Precisely the same comments may be made in terms of the defendants' approach to the preparation of the evidence which they propose to adduce. 101 Idoport relies inter alia upon the following submissions and factors in support of its central application for an adjournment of the proceedings: · "In view of (i) the nature and size and duration of the Defence which has been put forward in these proceedings to date, and the monies expended by the JMG Parties to date (the raising of funds being the manner by which reasonably the Plaintiff could seek to prosecute its claim and uphold its rights under and in relation to the Consulting Agreement); and

(ii) the JMG Parties having commenced the proceedings, proceeded to commence the trial of the proceedings and the prosecution of its claims in these proceedings for over 3 years since the commencement of the proceedings and for over 1 1/2 years since the commencement of the trial of the proceedings, the JMG Parties should be permitted a reasonable opportunity to obtain resources to continue with its claims and cross-claims and defences of cross-claims. · Should the JMG Parties not be permitted this opportunity, then the MLC proceedings and presumably the Main Proceedings may be dismissed with consequent orders for costs against the JMG Parties, without their having had a reasonable opportunity to obtain funds for the continuance of the proceedings. · The JMG Parties sought and continue to seek to have funding to continue with the trial of the proceedings to the end of the proceedings. However the increase in the projected duration of the trial of the proceedings has been such, it is submitted, as could not reasonably have been expected by the JMG Parties (see JM Aff para 6). It has been largely, if not entirely due to the volume of material propounded by the Defence and the extent of evidence and cross-examination propounded by the Defendants. This has increased the risk that (whatever might be the legal position between the Plaintiff and the funder) funding might cease. · In the circumstances indicated above, for the JMG Parties to be deprived of a reasonable adjournment, would be in substance to deprive the JMG Parties of a reasonable opportunity to pursue their legal rights and claims before the Court. The JMG Parties have sought to date to do this responsibly in relation to the obtaining of funds and the retainer of legal representation and the obtaining and preparation of evidence. Considering the disproportion between the resources available and employed by the JMG Parties and the Defendants respectively, and the volume of material which the Defendants have sought to place before the Court, the JMG Parties' conduct has been reasonable and proper. · Given these matters and the length of the trial to date, the adjournment sought by the JMG Parties is reasonable and does not involve any disadvantage to the Defendants which is unreasonable, in the circumstances, given the nature of the proceedings and their length and duration to date, and the matters which have been referred to in paragraphs 7 to 17 above. The Defendants have already sought a 12 month adjournment albeit one which was rejected by the Court in the circumstances then prevailing."[emphasis added] 102 Subject to one qualification, each of these submissions seems to me to be of substance. The qualification concerns the proposition that the increase in the projected duration of the trial has been largely, if not entirely, due to the volume of material and the extent of evidence and cross-examination propounded by the defendants. Whilst it is certainly true that this has to be seen to be believed, I do not accept that the defendants have not been legitimately entitled to mount this form of defence to proceedings of the nature prosecuted by the plaintiff, taking into account the way in which the plaintiff has seen fit to conduct the proceedings. Whilst the plaintiff might complain at the scale and approach taken by the defendants in defending the proceedings, a mere glance at the 232- page Further Amended Statement of Claim in proceedings No. 50113 of 1998 or the volume and content of the statements relied upon by the plaintiff makes plain the difficulties faced by the defendants in dealing with the issues. 103 When one weighs the prejudice to the defendants if the adjournment and ancillary orders be made [or effectively the same result is achieved by another route, as for example by the Court adjourning until 2 December, such that the automatic stay of the main proceedings would become effective], as against the prejudice to the plaintiff if the MLC proceedings are now dismissed [including the then high probability that the main proceedings will also be dismissed in due course following the inability of Idoport to meet an order that it pay security for the defendants' costs of the MLC proceedings], it becomes clear that the latter prejudice is of a dimensionally different kind to the former prejudice. The latter form of prejudice involves the plaintiff, having expended enormous sums of money on the litigation for many years, now having the proceedings dismissed without their merits having been determined. The former form of prejudice involves only parameters of time, cost and inconvenience. 104 At the same time it is necessary for the Court to make quite clear to the plaintiff that this one chance being granted to it will almost certainly not be repeated on a subsequent occasion. There is a very real limit to the extent to which the Court may be expected to accommodate a "stop-start" regime in litigation of this order. The effective deferral of the further hearing until next year carries with it a clear indication that should the funding problems remain pervasive or should the Court not be satisfied that the plaintiff has shown that it can realistically continue the final hearing, the stay may very well not be lifted (a matter to be determined as part of the merits of an application to lift the stay) and the proceedings will very likely be dismissed on appropriate application next year.

Dealing with the several motions 105 The above reasons generally serve to explain why the proper exercise of the court's discretion is to simply adjourn the main proceedings as well as the defendants' motion to dismiss the MLC proceedings to an appropriate date at/or soon after the beginning of term next year or to simply adjourn the main proceedings for a few days. On the evidence Idoport will not be making the monthly security for costs payment due to be made in a few days time, on 1 December 2001. This will then mean that the main proceedings will also be automatically stayed by operation of the orders of 24 September 2001. Because all proceedings will be stayed in that fashion, it is clear that both parties will be relieved from having to comply with any past order or direction in relation to the matters which had required to be carried out as part of the procedural steps of and related to the continuance of the final hearing. 106 It being also clear that Idoport [subject to its submission dealt with below that the defendant ought be obliged, in any event, to be required to produce on notice to produce or to discover documents relating to Project Badger and/or Project Endeavour] in effect seeks as 'the price' of the proceedings being adjourned until early next year, that the defendants be relieved from having to comply with any past order or direction in relation to the matters which had required to be carried out as part of the procedural steps of and related to the continuance of the final hearing, it is appropriate to make an order to that effect in respect of the period between the delivery of this judgment and midnight on 1 December 2001. 107 In the event that Idoport, to the contrary of the evidence adduced before the Court, in fact proceeds to make the security for costs payment (or payment arrangements required to be made) on or before 1 December 2001 such that no automatic stay operates on and from that date, I propose to grant leave to the defendants to apply on 2 December 2001 for a stay of the main proceedings. Such a payment by Idoport would amount to a radical change to the whole of the approach taken by it to these current motions. In that circumstance, the defendants would have a clear entitlement, as it seems to me, to apply for a stay of the proceedings in any event as, one way or another, some real certainty does require to obtain in terms of what the defendants may legitimately anticipate being required to do between the present time and the commencement of term next year. 108 Insofar as the orders sought in paragraph 4 of motion 52 are concerned, there is no substance in Idoport's application. Orders of a substantive nature made after a contested hearing in contemplation that they would operate until the final disposition of the proceedings require a plaintiff to show a material change of circumstances in order for them to be varied or stayed or vacated (see Brimaud v Honeysett Instant Print Pty Ltd (unreported, Supreme Court of NSW, 19 September 1988, McLelland J); Amalgamated Television Services Pty Ltd v Marsden [1999] NSWCA 313). Orders in respect of security for costs fall within such a class of orders that require such a material change of circumstances (see Darling Harbourside (Sydney) Pty Ltd v Sanirise Pty Ltd (unreported) Full Federal Court, 17 May 1996; Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Limited [2001] FCA 1603). 109 The orders for security for costs of 24 September 2001 were made on a considered basis following a strongly contested hearing. None of the matters referred to in Exhibit "A" to the affidavit of Mr Maconochie sworn on 16 November 2001 and none of the matters referred to in paragraphs 12 (j) and (k) or in paragraphs 14.3 - 14.5 of Idoport's written submissions establish a material change in circumstances since the applications for security were heard and determined or any new material sufficient to justify the orders for security being vacated or stayed, or stayed until the duration of any adjournment. Problems with funding may on this one occasion, justify the adjournment sought for the reasons already given. There is however a dimensional difference between granting the adjournment and vacating or staying the orders already made in respect of security. Almost by definition, funding issues are likely to remain and to remain pervasive, wherever orders for security for costs are made. No reason of any substance whatever has been advanced to make good the proposition that the Court ought now, by further orders, vacate or stay the existing orders for security. Nor do the submissions or any of the evidence in relation to Project Badger and Project Endeavour justify any such radical step nor any step which would oblige the defendants to carry out work of a discovery or notice to produce or subpoena to produce nature in relation to Project Badger and/or Project Endeavour. 110 Insofar as the orders sought in paragraph 5 of motion 52 are concerned, there is absolutely no substance in any suggestion that the reasons for judgment ([2000] NSWSC 1215) delivered on 18 December 2001 should be departed from. The defendants' submissions are of substance in this regard. There has been no material change in circumstances since the Judgment of 15 December 2000 that would warrant that decision being revisited. The various matters referred to in the plaintiff's written submissions, including the length and complexity of the litigation, were matters considered at the time of that Judgment. The matters which led to the Court dismissing the plaintiff's notice of motion on 15 December 2000 are still applicable. As the defendants submit, these matters include the following: 'i. the Courts' general reluctance to accede to applications under part 31 rule 2 of the Supreme Court Rules . In this regard, the Defendants refer to: a) paragraphs 7(1) and (6) of the Separate Hearing Judgment; b) paragraph 4 of Rolfe J's judgment in ABB v Freight Rail [1999] NSWSC 1037; c) paragraph 14 of Bryson J's judgment in Maronis Holdings Ltd v Nippon Credit Australia Ltd [2000] NSWSC 397; ii. the intertwined issues of fact and law between questions of liability, causation and damages, such that determination of the separate question will have little effect on the field of litigious controversy. See in particular, paragraphs 7(5)(a), 10 and 11 of the 15 December 2000 Judgment; iii. the commonality of witnesses and issues of credit as between the separate issue and other issues in the case. See: a) paragraphs 7(5)(b) and 11 to 18 of the !5 December 2000 Judgment; and b) paragraphs 15 and 16 of Rolfe J's judgment in ABB v Freight Rail . iv. the proposal of the plaintiff that at the hearing on liability Mr Maconochie's evidence be taken as to both liability and damages does not alleviate the problem. As noted by the Court in the 15 December 2000 Judgment, there are other witnesses (such as Mr Hume) who are relevant to both liability and damages; v. the likelihood, if the court orders separate trials of the proceedings, of appeals causing a fragmentation of the proceedings. See:

a) paragraphs 7(5)(c) and 19 to 22 of the 15 December Judgment; and b) paragraph 17 of Rolfe J's judgment in ABB v Freight Rail.'

111 The summary in paragraphs 23 and 24 of the 15 December 2000 Judgment is still apposite: "The panacea which the suggested separate questions would achieve is clearly to my mind a recipe for disaster in these particular proceedings or highly likely to be such. Ultimately many of the circumstances described in paragraph 7(5)… including the circumstances where the separate determination of an issue would rarely be an appropriate procedure - make plain that the appropriate exercise of the court's discretion is to dismiss the notice of motion: there are intertwined issues of fact and law between the proposed separated initial question and the other questions [whether causation/damages or simply damages] such that the determination of the separate question will not have any substantial effect upon the width of the field of litigious controversy; there is a commonality of witnesses and issues of credit as between the suggested separate issue and other issues in the case which would necessitate a ruling on the credit of a number of common witnesses, thus precluding the court from again dealing with the matters going to the credit of such common witnesses [or at the least causing a high prospect of such preclusion]; there is a clear possibility and to my mind a real likelihood that the resolution of the separate issue will not finally determine the issue but will merely result in an appeal from that decision in relation to that separate issue, causing a multiplicity of proceedings, interruptions to the court and undesirable fragmentation of the proceedings." 112 Insofar as the orders sought in motion 53 are concerned there is no substance in any of the submissions that such orders should be made. The MLC proceedings are presently stayed. There is no substance in any of the submissions to the effect that the evidence now before the court justifies the making of the orders sought in paragraphs 5, 6, 7 or 8 of motion 53. A judgment was delivered on 5 October 2000 (revised 10 October 2000) ordering that the MLC Proceedings be heard and determined with the main proceedings (see [2000] NSWSC 945). Orders were made in conformity with the judgment. The plaintiff did not appeal. There is no material change of circumstances that the plaintiff can point to since the order was made on 5 October 2000. The reasons for judgment of 5 October 2000 remain as relevant today as they did when delivered. Further, the work carried out by the defendants in conformity with the orders made, as set out in the affidavit of Mr Damian Lovell of 20 November 2001 and filed in the MLC Proceedings, requires that the order not be varied or vacated. The only matter which requires to be currently attended to is to stand over the defendants' application to dismiss the MLC proceedings. Outside of an order to that effect, it is simply inappropriate to stand the proceedings themselves over. In the event that Idoport seeks leave to revive the proceedings, a positive application in that regard will require to be made prior to determination of the defendants' motion to dismiss the proceedings, for the obvious reason that once the proceedings are dismissed, the revival application would seem certainly doomed to failure. 113 Even had the MLC proceedings not been currently stayed, which they are, no case whatever has been made for the making of the orders sought in paragraph 7 of motion 53. Generally the very same considerations as dictate rejection of Idoport's application pursued in paragraph 5 of motion 52, remain pervasive in like fashion qua the MLC proceedings. 114 It remains to deal with motion 50. Clearly the existing discovery/notice to produce orders now required to be vacated and the whole issue of whether, and if so when the orders should be re-enlivened, stood over to the occasion early in the new term next year when the continuance or no of the final hearing will doubtless be determined. 115 Certainly the usual order which is likely to be made where a party seeks an adjournment of a final hearing will require that party to pay costs thrown away by the adjournment (see Ord v Ord [1923] 2 KB 432 at 439; Unilever Aust Ltd v Karounos [2001] FCA 162). The current circumstances are somewhat more complex for reasons generally given above. As the difficulties which the plaintiff currently has with respect to funding form the centrepiece of the matters which underpin the respective motions, it seems to me that the proper exercise of the discretion is presently to reserve costs for further consideration when the proceedings are again before the court in the new term next year. 116 As to the difference between the proceedings being before the Court at the beginning of term next year on the one hand or on 15 February 2002 on the other hand, I do not see that the plaintiff has made good a case for the additional two weeks. The fact is that the plaintiff has doubtless been aware of the funding difficulties from 31 October 2001. It is being given, as it seems to me, an entirely fair and reasonable period of time to accommodate its obvious desire to treat with its present funding crisis. The decision in favour of substantially acceding to the plaintiff's application has by no means been a foregone event and I have at times clearly contemplated simply permitting the defendants to go forward presently with their motion to dismiss the MLC proceedings. There are too many ongoing problems in relation to the fate of the proceedings which require to be properly clarified shortly for the Court to permit the current state of flux to continue to a point in time beyond the commencement of term next year. As McHugh J. made plain in Oshlack v Richmond River Council, (1998) 193 CLR 72 at 97, it is important that a party contemplating litigation, [or no doubt, as here, contemplating continuing the current mammoth final hearing], be under a sober realisation of the potential financial expense involved in that exercise. All relevant considerations having been taken into account, the proper administration of justice in relation to the proceedings makes clear that a continuation, beyond the commencement of next year, of the situation in which the future of the final hearing remains inchoate, is simply out of the question. 117 It seems to me that the justice of the situation requires: · that insofar as orders and directions currently in place require the defendants to carry out procedural steps of and related to the final hearing, the orders and directions be stayed until midnight on 1 December 2001; · that the main proceedings be re-listed for directions on the first day of the new term at noon; · that the defendants' application for orders dismissing the MLC proceedings be stood over for hearing on the first day of the new term at noon or on such later occasion as the circumstances which obtain on that day may dictate; · that each party be given general leave to make returnable on the first day of the new term at noon, such further or other motions as they seek to have heard in determining the fate of the proceedings. In particular the defendants have leave to make returnable on the first day of the new term at noon, any notice of motion seeking to dismiss the main proceedings for failure to prosecute and/or for any failure to provide security for costs. Likewise the plaintiff has leave to make returnable on the same day at the same time, any notice of motion seeking to have the stay orders listed. Such notices of motion together with affidavits in support are to be filed and served on or before 21 January 2002. Affidavits in answer are to be filed and served on or before 24 January 2002. Submissions should be exchanged and furnished to my associate by 5pm on 25 January 2002; · the costs of and occasioned in relation to the motions presently before the Court are appropriately to be reserved for determination on the first day of the new term at noon or on such later occasion as the circumstances which obtain on that day may dictate.

Short mi n utes of order 118 The parties are to bring in short minutes of order.

I certify that paragraphs 1 - 118 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 26 November 2001ex tempore and revised on 27 November 2001

                      Susan Piggott
                      Associate

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