Idoport Pty Limited v National Australia Bank Limited & Ors, Idoport Pty Limited v Donald Robert Argus

Idoport Pty Limited v National Australia Bank Limited & Ors, Idoport Pty Limited v Donald Robert Argus - [2007] NSWSC 23 - NSWSC 2007 case summary — Zoe

[7]

Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1 Australian Development Corporation Pty Limited v White Constructions (ACT) Pty Limited (in Liquidation) & Ors [2002] NSWSC 280 Beach Petroleum NL & Claremont Petroleum NL v Johnson (1995) 57 FCR 119 Bountros v South Western Sydney Area Health Service [2005] NSWSC 564 Canvas Graphics Pty Ltd v Kodak (Australasia) Pty Ltd [1998] FCA 23; BC9800050 Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 Cornwall v Rowan (No 4) [2006] SASC 111 Davies v Ku-ring-gai Municipal Council [2003] NSWSC 1010 Donohoe v Britz (No 2) (1904) 1 CLR 662 Farrow Mortgage Services Pty Ltd (in liquidation) v Trewhitt & Ors (unreported, Supreme Court of Victoria, 2 November 1995, Hansen J, BC 9500155) Grogan v Thiess Contractors Pty Limited [2000] NSWSC 1101 Hadid v Lenfest Communications Inc [2000] FCA 628 Harris v Caladine (1991) 172 CLR 84 Harrison v Schipp (2002) 54 NSWLR 738 Hughes Brothers Pty Limited v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney [1999] NSWSC 1051 Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 427 CASES CITED : Kelly v Norris [2004] NSWCA 260 Leary v Leary [1987] 1 All ER 261; [1987] 1 WLR 72 Lolomania v Roads & Traffic Authority of New South Wales [2002] NSWSC 918 McWilliams Wines Pty Limited v Liaweena (NSW) Pty Limited (1993) 32 NSWLR 190 Murray v Shillingsworth [2006] NSWCA 367 Nicholas v The Queen (1998) 193 CLR 173 Nine Films and Television Pty Limited v Ninox Television Limited [2006] FCA 1046 Norris v Blake (1997) 41 NSWLR 49 Optus Networks Pty Limited v Leighton Contractors Pty Limited [2005] NSWSC 156 Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 Roads & Traffic Authority v Cremona (No 3) (2005) 140 LGERA 420 R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 Sherborne Estate (No 2); Re; Vanvalen v Neaves [2005] NSWSC 1003 Smoothpool v Pickering [2001] SASC 131 Societe Anonyme Pecheries Ostendaises v Merchants' Marine Insurance Company [1928] 1 KB 750] Sony Entertainment (Australia) Ltd v Smith (2005) 215 ALR 788; [2005] FCA 228; BC200500963 Sparnon & Ors v Apand Pty Ltd& Ors [1998] FCA 164 Wentworth v Wentworth (unreported, Supreme Court of New South Wales Court of Appeal, 21 February 1996, Priestley, Clarke JJA and Grove AJA)

[34]

"The unlimited discretion given by Ord. 62, r. 9 must be exercised in a judicial manner. How the powers are to be used varies widely from case to case and each case must be considered on its own merits. It is easy to envisage cases where a judge could be said to have acted unjudicially, e.g. by clutching a figure out of the air without having any indication as to the estimated costs; receiving such an estimate without the details being made available to the other side; or refusing a request to hear submissions on such a schedule if the party against whom the order is to be made makes, on reasonable grounds, an application to be heard."; iii. the requirement that the power to award a gross sum should be exercised judicially does not mean that it must be exercised in any scientific or formulaic manner.; At the heart of the judicial function is the responsibility to weigh up competing factors and considerations, many of which might conflict, to reach a determination. Acting judicially carries with it an obligation to apply the rules of natural justice, to act impartially and to apply the law to the facts. As Kitto J explained in The Queen v Trade Practices Commission; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 374: "Thus a judicial power involves, as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation so that an exercise of the power creates a new charter by reference to which that question is in the future to be decided as between those persons or classes of persons. In other words, the process to be followed must generally be an inquiry concerning the law as it is and the facts as they are, followed by an application of the law as determined to the facts as determined; and the end to be reached must be an act which, so long as it stands, entitles and obliges the persons between whom it intervenes, to observance of the rights and obligations that the application of law to facts has shown to exist."; iv. the scope and nature of judicial power was also addressed by Gaudron J in Harris v Caladine (1991) 172 CLR 84 at 150 in these terms: "Judicial power is usually defined in terms of its subject matter, but it is a power that, for complete definition, requires description of its dominant and essential characteristic, namely, that it is exercised in accordance with that process which is referred to as 'the judicial process'. Thus, in general terms, it is a power which cannot be exercised until the 'tribunal which has power … is called upon to take action' ( Huddart Parker ), which (subject to limited exceptions) proceeds by way of open and public inquiry, which involves the application of the rules of natural justice, and which is directed to ascertaining 'the law as it is and the facts as they are, followed by an application of the law as determined to the facts as determined': Tasmanian Breweries , per Kitto J." (references omitted);

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"In my view, consistency with the essential character of a court and with the nature of judicial power necessitates that a court not be required or authorised to proceed in a manner that does not ensure equality before the law, impartiality and the appearance of impartiality, the right of a party to meet the case made against him or her, the independent determination of the matter in controversy by application of the law to facts determined in accordance with the rules and procedures which truly permit the facts to be ascertained and, in the case of criminal proceedings, the determination of guilt or innocence by means of a fair trial according to the law. It means, moreover, that a court cannot be required or authorised to proceed in any manner which involves an abuse of process, which would render its proceedings inefficacious, or which brings or tends to bring the administration of justice into disrepute." (1998) 193 CLR 173 at [74]. 11 In the result it is not an arbitrary exercise of power for the Court to weigh up competing factors and make a determination, even if, as is often the case, the task cannot be undertaken in a mathematical or precise manner. As the Court of Appeal found in Norris v Blake (by his Tutor Porter) [No 2] (1997) 41 NSWLR 49 mathematical weightings of potential outcomes in loss of chance cases might be unsustainable and reliance rather should be placed on more intuitive methods to determine loss: (1997) 41 NSWLR 49 at 71-73. Similarly, the courts are frequently required to estimate damages that are not capable of precise quantification and require a degree of approximation and even guesswork. [ Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83, 138 and 153; Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 at [37]-[38]] 12 The Court is no stranger to intuitive determinations, or determinations made without absolute precision, arrived at by acting judicially: cf Murray v Shillingsworth [2006] NSWCA 367 per Santow JA at [10]. It is misconceived to suggest that such determinations or approaches are arbitrary. The application of a discount 13 In adopting a broad-brush approach to gross sum awards the Courts have invariably applied a discount to the amounts claimed and in many cases a substantial such discount. The authorities treating with discount amounts include:

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xxi. The proceedings were prepared for hearing within a compressed timeframe, their final hearing commencing only some 22 months after the commencement of the Proceedings. This meant that the NAB Parties were required to undertake several streams of work concurrently at any one time and this necessitated the organisation of the NAB Parties' legal resources into teams with particular responsibilities relating to different aspects of the Proceedings. 23 In summary, these proceedings were far removed from an ordinary commercial case. The issues were wide ranging and complex. A substantial volume of evidence was filed by both parties. The issues continued to enlarge well after the final hearing commenced. Idoport's claim had the potential, if successful, to threaten the continuing business of Australia's largest financial institution and, Idoport asserted, the savings of its deposit holders. It follows that the objective importance of the matter to the NAB Parties was very high. Mr Walker SC is shown to have been entirely correct in his submission to the High Court that faced with such a claim, the Bank was plainly entitled to defend itself with all the energy and resources at its command. 24 Presently that last proposition put by Mr Walker requires to be tested in an environment where the above described authorities focus upon the requisite approach to estimating costs being logical, fair and reasonable, the fairness parameter [as with each of the other parameters], importantly requiring that the Court have sufficient confidence in arriving at an appropriate gross sum order on the materials available if and only if it is in a position to make a gross sum assessment. The desirability of the trial judge hearing the gross sum costs application 25 In Wentworth v Wentworth , unreported, NSWCA, 21 February 1996, BC9600215 at 35, Clarke JA [with whom Grove AJA agreed and with whom Priestley JA generally agreed] said that the exercise of the power to make a gross sum costs order "will almost universally be within the province of the trial judge". 26 Clarke JA added that "in general it will be a trial judge, who has seen and heard the case unfold, who will exercise these powers". Although his Honour, in the context in which he was writing, was contrasting the position of the trial judge to the position of the Court of Appeal, his reasoning applies equally to the position of another judge of the Supreme Court sitting alone exercising original jurisdiction. 27 One only example of parameters of the trial which received express recognition in the judgment delivered in late May 2001 [ Idoport v National Australia Bank [2001] NSWSC 427] is apparent from the following observations there made (23May 2001) at [5]:

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[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 $1½ million per month possibly excluding GST. In each case the defendants' stance by way of defending the proceedings was a logical and reasonable approach when one takes into account the nature of the plaintiffs' case and the way in which the case was pleaded, particularised and then sought to be proved by very extensive statements. I refer below to how it came about that the statements continued to be filed and served up to and after commencement of the final hearing, there being a number of reasons for this having taken place. [84] In the result, although there is no doubt but that the plaintiffs' sundry amendments to the statement of claim granted during the final hearing have added, and possibly in some real measure, to the amount of time which the final hearing will now take, the simple fact is that even without these amendments it would not have been reasonable to expect the parties to give any precise estimate of the final hearing time.

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[88] It is pertinent to add reference to another consideration of some significance. Whilst clearly the Court invited extended openings in order to assist the Court in following very precisely indeed what were the issues to be litigated (a course which to my mind proved and will in the long run prove to have been very beneficial and efficient) the fact is that the plaintiffs then took an exceptionally long time to propound the amendments in respect of which they then sought and obtained leave. Whilst it is true that the applications for leave to amend were strongly resisted, a considerable amount of time was expended on the interlocutory applications concerning the leave to amend. That hearing time only commenced after the plaintiffs had taken very real time in which to draft and on some occasions drafted on two or three times, the wording of the amendments which were ultimately pressed. The piecemeal/drip feed approach to whether or not to apply for leave to amend, the extended time taken in propounding the amendments and the time taken following argument in returning to the drawing board to redraft or modify the form of amended pleadings, represents another matter to be kept in mind as part of the matrix of adjectival information permissible to be taken into account. 36 In truth the solicitor client costs proposition is presently misconceived. As earlier made plain, the court is not hearing the present application in a situation in which solicitor/client costs were awarded. The nature of the exercise is informed by the precise costs order which was in fact made and there is never a question of any different costs order having been made, nor of the proper approach to the present applications being anything otherwise than by reference to the costs orders which were made. But as earlier indicated, a much broader brush than would be applied on taxation is to be taken on the instant applications. 37 The vantage point propositions do require a close scrutiny to be given to any suggested excesses or 'luxuriant behaviour' by the NAB Parties. But what constitutes 'an excess' and what is 'luxuriant behaviour' can only be discerned when the whole of the relevant context is taken into account. That again amounts to a question of close judgment in the unusual circumstances which obtained through the litigation. The operative landscape with respect to the inadequate materials contention 38 In so far as the suggested shortcomings of discovery of the computerised time recording and disbursement recording records of Freehills are concerned, a special consideration arises with respect to the inadequate materials contention. I refer here to the amended notice of motion filed on 8 February 2006 by the Idoport Parties which had inter alia sought access to these materials. 39 A detailed transcript was taken of the hearing on 2 June 2006 of this motion. No judgment was delivered as neither of the parties requested that reasons be given. It is strictly necessary to study the whole of the transcript in order to follow precisely what occurred. However a thumbnail sketch would relevantly include the following:

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vii. in due course the orders made were reduced to agreed short minutes of order [which although not expressly reserving leave to the Idoport Parties to renew/pursue like applications should they deem to do so after examining the sample materials provided to them, should certainly, in the light of the transcript [which several times reiterated the Court's intent to reserve leave to renew parameters of the motion at a subsequent occasion], be read as not foreclosing any such further applications and as positively indicating an acceptance that such further applications may be made: cf transcript Exhibit D9 at 14.32, 20.16, 28.16, 28.30, 31.31, 34.56, 35.10]. 40 There is no doubt in my mind but that the Idoport Parties were given to understand that following their having been given access to the particular records over the sample periods selected by the Court they would be entitled to renew/pursue their application for additional such periods. No such further application was ever made to the Court. 41 In those circumstances the proposition to the effect that the Idoport Parties had been denied access to these records which came forward from Mr Foster on the gross sum costs application seems to me to be a particularly shallow proposition. As a matter of the forensic tactics of the Idoport Parties, there is a real sense in which they seem to have determined to approbate and reprobate: they failed to further pursue in the courtroom a claim to have additional of the above described materials provided to them, and on the hearing of the gross sum costs application, they contend that an important consideration on the exercise of the discretion concerns the failure of the NAB Parties to furnish them computerised materials. 42 Nonetheless it is certainly the case that the general 'inadequate materials contentions' [which extend outside of the computerised records of Freehills], raise a question of judgment involving a close consideration of the type, nature and ambit of the precise materials which have been made available to the Idoport Parties on discovery. Hence notwithstanding the matters referred to in the previous paragraph, the convenient course adopted has been to deal with the inadequate materials contentions on their merits. Annexures to the final submissions of the respective parties 43 Both parties provided helpful aides to their final submissions in the form of a number of annexures. The convenient course is to mark the annexures for identification as follows:

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"Q. You took the affidavit material at face value universally, did you not? A. No, I wouldn't say universally, because where I could, as I have just said, for example with the scope and complexity, those sorts of things, also with the changing nature of the pleadings, rather than just rely on that I looked and compared the pleadings and the way they changed to each other. I read some of the experts' reports. I read the correspondence in a fair amount of detail, because as I said I was trying to develop an alternative methodology. So I would say really what I did, there was a hierarchy. Where I could I relied upon the primary documents. Where I was unable to do so I relied on the affidavit material." [transcript 314] 60 Ms Castle agreed that two classes of primary record to which she had no regard generally, were the time records and the solicitors' file notes (T314.47) nor did she ask for them (T314.53). 61 Ms Castle agreed that from the questions in the letter of instruction itself she was necessary restricted, in terms of the material to which she could have regard, to the contents of the affidavits set out and to the AUSMAQ assumptions and AUSMAQ guidelines (T312.08). The methodologies examined and rejected by Ms Castle 62 Before examining the methodologies considered by Ms Castle it is convenient to note her recognition that the calculation of party/party costs, whether in the context of a costs assessment or a gross sum award of costs, is not a science. As she readily accepted [in her Consolidated Report] the calculation of party/party costs using any of what she described as "the recognised methodologies" involved a combination of numeric calculations and qualitative judgments, the latter arrived at by simultaneously weighing up numerous relevant factors. She accepted that the calculation of party/party costs on any of the recognised methodologies could not be reduced to a formula and that this made the content and form of expert evidence given by a costs consultant different to the expert evidence given in some other areas of expertise. She also recognised that, to the extent that part of the so-called 'Ausmaq Methodology' was a qualitative one, different minds might, applying the same methodology and taking into account the same factors as she had, come to a different conclusion (Consolidated Report [206]) 63 Ms Castle had considered a number of methodologies for determination of the gross sum costs in the present proceedings. Her treatment with these methodologies was as follows:

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ii. as the trial judge presiding over the interlocutory and final hearings, I have been in a position to glean the approach taken by the NAB Parties in the courtroom. 81 Albeit that Ms Castle was obviously not in the same position as that of the Court in terms of being able to assess the reasonableness of the approach taken by the NAB Parties in their preparation of the case, the Court is in a considerably better position to make that assessment. Of course the Court is also not in a perfect position in this regard, but if it determines that, consistently with the principles earlier set out, it is in a position to make a gross sum costs order, it must do its best in all of the circumstances to estimate the amount of such order, in a logical, fair and reasonable fashion. 82 To my mind this integer concerning a deduction for an overly cautious and scrupulous approach gives to the Court a principled entitlement to discount the claims made, approaching the question in a logical fair and reasonable fashion. The matter is of course not one of a scientific precision nature. Nor is it a mathematical exercise [transcript 424.19]. It is by nature a 'broadbrush assessment' but nonetheless an assessment to be exercised judicially and to be exercised by the court being astute to prevent prejudice to the respondent by over estimating the cost and on the other hand, not to cause any injustice to the successful party by an arbitrary "failsafe" discount on the cost estimates submitted to the Court. 83 In truth a combination of the evidence before the Court and the experience of the Court through the interlocutory and final hearings bears out the fact that a 'Rolls Royce' approach was taken to every aspect of the preparation of the case. The Court's task is the judgmental one of: i. first determining whether it is possible to make a gross sum costs order on the evidence; ii. if so, of determining the precise gross costs sum. 84 Ms Castle herself in expressing her opinion that a reduction should be made to counsels fees, expressed the view that such a reduction should be a general one, achieved by the application of a percentage discount [Consolidated Report paragraph 520]. She proceeded [at 521] to note that the selection of a percentage discount was a qualitative exercise, taking into account a number of matters including:

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iv. the court timetable for the filing of evidence and in relation to the proceedings generally. 86 In her view each of the factors described in the previous paragraph had the effect of lessening the reduction which would, absent those factors, have been appropriate apropos counsels fees. 87 Mr Foster put to Ms Castle the proposition that it may have been possible for her to take a particular period of time [for example a six-month period] and to examine the work carried out during that period in order to extrapolate into basing a view as to the appropriate gross sum costs amount to be awarded for all of the work carried out over the whole of the period. 88 Ms Castle gave evidence that she had considered such a modus operandi but did not think that she would be able to choose a timeframe which properly represented [and was acceptable as representing] how the rest of the course of the proceedings played out in terms of costs [transcript 433.15]. On a number of other occasions Ms Castle gave evidence generally to the same effect, not only in relation to the extrapolation issue quarantining the exercise to the instant proceedings, but also in relation to an inability to extrapolate to draw particular analogies from other cases of which she was aware. The purport of her evidence was accordingly that the unusual circumstances of the proceedings presently in focus posed the difficulties of selecting a representative timeframe to use as a basis for a general extrapolation. 89 Ms Castle also accepted that she had not had the material to be in a position to so approach the instant question. The evidence given by Ms Vine-Hall 90 Ms Vine-Hall has also had very extensive experience principally as a director of DSA Legal Cost Consultants having over an extensive period of time been involved in the preparation of bills of cost, preparation of notices of objection, attendances on taxations, lecturing in the field of costing, and having been retained in and giving evidence in relation to hearings where costs related matters have required to be determined. In 1991 she was appointed to the Law Society of New South Wales Working Committee on costs and her extensive CV includes contributions she has made to a series of seminars conducted by the Law Book Company concerning the deregulation of costs and practice management and her appointment as a guest member of the Law Society 's GST Technical Team in relation to the application of GST to costing issues. 91 She regularly attends before taxing officers and has had vast experience in the legal cost consultancy field. 92 Ms Vine-Hall has never been involved in a lump sum application of this order (T490.04) nor had she ever prepared a bill of costs where the bottom line was something approach $60-odd million (T490.08). 93 She had been furnished with Ms Castle's affidavits and reports, had studied them and gave evidence suggesting difficulties with Ms Castle's methodology and conclusions. 94 Notwithstanding these differences her evidence was:

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Q. And you would agree that, as a general comment perhaps, the level of detail varies quite considerably from item to item? A. Yes." [transcript 507.08-24] 101 I am entirely satisfied that the particular difficulty in an attempt to extrapolate which exists in the present circumstances arises because of the problems in ever being able to identify a time period representative of the course of the whole of the proceedings. No such time period could be selected which could be extrapolated in a logical, fair and reasonable fashion to the balance of the proceedings. Throughout the period from mid-1999 until the dismissal of the Proceedings on 29 January 2002, the NAB Parties were undertaking multiple tasks, including the giving of discovery, the taking and filing of statements and the preparation for the cross-examination of witnesses. 102 The first Lovell affidavit demonstrates that throughout the period from mid-1999 until the dismissal of the Proceedings on 29 January 2002, the NAB Parties were undertaking multiple tasks, including the giving of discovery, the taking and filing of statements and the preparation for the cross-examination of witnesses [as is demonstrated by the detailed tables [MF1 NAB Final annexure 1]. 103 Although disagreeing with many parameters of the opinions of Ms Castle, Ms Vine-Hall did accept that determination of the rate which would be allowed by any assessor for the work undertaken on behalf of the NAB Parties in the proceedings "will possibly be somewhat subjective and may even be an arbitrary decision." [Affidavit 19 and December 2003 at 88]. 104 Ms Vine-Hall gave evidence that it was her experience that the larger the matter and the more persons working on it, the more potential there was for duplication and over supervision and the higher the risk that a larger percentage of the professional costs would not be recoverable on a party/party basis. She noticed the admission by Ms Castle that the team was resource heavy and that there was a "very high level of preparation and attention to detail". Ms Vine-Hall also noted that the total amount of photocopying was extraordinary and saw no reason why a large amount of the photocopying could not have been undertaken by commercial photocopying services at a lower rate than had been charged. She also noted that the recovery of experts' costs was by far and away the most complex issue in cost assessment, as costs assessors have no objective basis upon which to analyse the charges made by other professionals for their assistance in litigation. This last observation is of particular note in the instant context. 105 To my mind the efforts by Ms Vine-Hall to extrapolate from the assessment of costs exercise which had been carried out in the MLC proceedings to the costs issues presently in focus is of no real assistance in the current exercise. The decision of Costs Assessor Benjamin had gone to a costs review panel which had replaced his determination with another which seems to me to be relevantly devoid of sufficient clarity of reasoning processes to be regarded as a reliable indicator of even why the costs review panel had approached the manner as it had. But by far the more pervasive problem with the extrapolation exercise is simply the vast difference between the two matters which would require to be compared and of course the fact that the Court is presently treating with a gross sum costs application. 106 As the NAB Parties have contended, the work claimed for in respect of the MLC Proceedings [Supreme Court Proceedings No. 3991/00] was of a fundamentally different character to the scale, scope and complexity of the costs the subject of this gross sum costs application. The costs the subject of the claim in the MLC Proceedings were substantially concerned with discovery. At the time that the MLC Proceedings were dismissed, the NAB Parties had not yet filed a defence or served any witness statements, no subpoenas had been issued by either party and there had only been limited interlocutory applications. 107 On an overview basis and having read each of the affidavits of Ms Vine-Hall carefully and having followed her cross-examination, I formed the very distinct impression that she was considerably hampered by the simple fact that the forensic requirements of the particularly unusual litigation in focus were as a general matter, simply outside of her knowledge. Yes, she does have enormous experience in costs assessment and related matters. But no, this unusual litigation and the strains and pressures placed upon the NAB Parties in relation to the requirements of the many pleading changes made by the Idoport Parties and the changing nature of their tactical approach to statements, order of witnesses and the like, simply cannot be eschewed by an approach which seeks to extrapolate from the usual type, even of very complex litigation. 108 I was particularly struck by Ms Vine-Hall's criticisms of the amount of work undertaken on the statement prepared for Mr Simon Moore who had produced a very extensive statement indeed. Notwithstanding that Ms Vine-Hall had not read any of the plaintiffs statements [to which Mr Moore's statement was responding], her evidence under cross-examination was that she had not felt that she was in no position to criticise the work carried out in relation to Mr Moore and had not been inhibited by this factor. Nor had she made any attempt at all by way of analysis of any pleadings to try and work out what was the forensic purpose behind the putting on of the Moore Statement. (transcript [586.36]) 109 Part of her cross-examination included the following:

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viii. given the unique scale and complexity of these proceedings it would be very difficult for any assessor to determine 'reasonableness' in an assessment context. Unlike the trial Judge, the assessor would have no prior knowledge or understanding of the proceedings, and could not be expected to have sufficient experience to form a logical, fair and reasonable view about the reasonableness of the NAB Parties' costs. 119 Ultimately the evidence satisfies the Court that notwithstanding that there are difficulties occasioned by the limitations of the materials upon the basis of which to reach an assessment, it is in a position to determine a gross sum in a logical, fair and reasonable manner: as earlier indicated the inadequate materials contention has been determined on its merits. The contention is not of substance based as it is on the incorrect premise that the Idoport Parties are entitled to test the costs on an item by item or work product basis as would be appropriate on an assessment. Reference has already been made to the evidence before the Court that the Freehills computerised billing system showed that there were 92,300 odd individual time entries on the matter [transcript 256] and to the volume of document storage boxes. Dealing with the application 120 There is no doubt but that an extraordinarily large component to the claims made by the NAB Parties comprises work carried out concerning retention of experts and the marshalling of appropriate evidence from experts. The matter is witnessed by the fees charged by management consultants retained in this regard. Standing back from all of the detailed evidence before the Court in relation to the retainer of experts and the work carried out in assisting experts to prepare their reports and the like, I am entirely satisfied that this case stands out from the norm by reason of the magnitude of the task facing the NAB Parties on the expert evidence parameter. 121 A notable feature of the manner in which the matter was being litigated concerned a veritable war being waged by the parties in terms of the functionality of the subject products as well as the worldwide commercialisation prospects said to justify the loss of chance cases pursued by the Idoport Parties. 122 Both from the evidence called on this application [as well as from my own recollection of many of the interlocutory applications dealing with experts statements and dealing with the case management of the requirement to permit further expert statements to be filed] this unusual feature stands out. In that regard I am satisfied that the work carried out by the NAB Parties represented a fair approach as opposed to an unreasonable approach to a crucial issue. Yes the approach was a Rolls-Royce approach. But at the least and viewing the matter from their clients perspective , that approach was called for in this litigation. The nature of the expert evidence being corralled was complex in the extreme. It had to be obtained at relatively short notice from a variety of experts across the globe. Faced with those circumstances the legal advisers for the NAB Parties were perfectly entitled to proceed with extreme caution not only in and about the selection of appropriate experts but also in ensuring that the expert evidence was presented in a proper form .

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Model/Spreadsheet 146 During the hearing the Court had indicated that it could be assisted by a model if it could be made available. The NAB Parties prepared an Excel spreadsheet which purported to be such a model and allowed the Court to enter inputs to produce a gross sum cost. The suite of materials related to the model became MFI's D31.1.07(a) to (f) inclusive. 147 The Idoport Parties submitted that the spreadsheet was elaborate and sophisticated and that it presented the information to the Court in a way which slanted its utility substantially in favour of the NAB Parties and that it was built upon the proposition that most, if not all, of the NAB Parties evidence and submissions should be accepted by the Court. 148 The NAB Parties submitted that it comprises a very straightforward spreadsheet and is not in any way weighted for or against either party. It is put forward as an aide memoire. During the course of final oral submissions, the NAB Parties proceeded to give a demonstration of the model. 149 The Idoport Parties expressed their concern over the use of the model submitting that its use should be limited. Their submission was that to the extent that the model was actually used by the Court, an appropriate disclosure be made in the judgment. 150 In my view it is apparent from the NAB Parties' demonstration that its submission that the model is neutral is of substance. Indeed, the practical example of inserting a reduction percentage of 80% resulted in a total gross sum amount of approximately $13 million which is "significantly less than what the plaintiff is now suggesting in their annexure to their submissions as a reasonable end result" (T781.29) 151 Nevertheless the model does not provide any dimensionally differing assistance than the other charts and aids submitted previously by both parties to illustrate the possible range of gross sum costs to be awarded. As indicated previously, it is not for the Court to assume the role of a costs assessor and to descend into the details of the breakdown of different categories of costs.

[284]

iv. preparing for cross-examination of further witnesses to be called by Idoport. 160 I accept as of substance the contention that at the time the proceedings were stayed on 27 November 2001, the NAB Parties could not reasonably assume that the hearing would not resume in February 2002 or that the proceedings would necessarily be dismissed. A full blown case had been running in Court from July 2000 to late 2001. Teams of solicitors, counsel and experts had been retained and the reality required the NAB Parties to assume that the case may be in full continuance at short notice if the security for costs orders were complied with and to be careful to be in a position to do so. 161 As the NAB Parties have contended, even on 29 January 2002, Mr Maconochie sought to persuade the Court that there was a real possibility of Idoport securing the necessary funding to continue with the proceedings. Hence if the hearing had resumed, the NAB Parties would have needed to comply with orders for further discovery, proceed with cross-examination of Idoport's witnesses and to file (presumably, relatively quickly) further statements addressing the issues raised by the Fourth Further Amended Statement of Claim, which introduced substantial new allegations. 162 I accept that as a matter of practical reality, the NAB Parties could not require solicitors and counsel to cease work on the case entirely, and yet remain free from all other commitments and be ready to re-engage fully in the matter in February 2002, if required. It was reasonable for the NAB Parties to carry out the above-described work between the stay order and the dismissal. 163 I accept that for these reasons the principled exercise of the discretion should not deny the NAB Parties any part of the costs incurred after the stay of the proceedings. OAMPS settlement 164 It is appropriate for the Court, in exercising its discretion, to take into account the settlement reached between the NAB Parties and OAMPS Limited and its subsidiary Australian International Insurance Limited (together, OAMPS) in May 2005. The settlement related to:

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(e) In the event that the fees for banking services are less than the payment obligation OAMPS is required to pay the difference to the National Parties by 31 July 2009 (clause 4.1(c)). In the event that the payment obligation is exceeded there is no refund payable by the National Parties (clause 4.1 (f)). In other words, the $5 million is a fixed obligation. 171 The NAB Parties have contended that the sum of $5,000,000 does not represent the value of the banking services to them. No evidence was led to establish this fact. 172 In my view the total value of the consideration to be received by the NAB Parties under the terms of settlement is no more and no less than $7,950,000. OAMPS and AIIL have rendered themselves liable for the payment in one manner or another of this amount. 173 Accordingly the principled exercise of the Court's discretion is to reduce the gross sum determined by the Court by the whole of the sum of $7,950,000. It is in the circumstances, logical, fair and reasonable to give Idoport credit for the whole of the arrangement between the NAB Parties and OAMPS for the provision of banking services. Interest 174 Section 101 of the Civil Procedure Act 2005 (NSW) provides that the Court may order that interest is to be paid on any amount payable under an order for the payment of costs, either from the date on which the costs concerned were paid or such later date as the Court may order. [See CPA, s.101(4) and (5); formerly SCA, s.95(4).] 175 The power to award interest on costs is a wide power, consistent with the Court's general powers in relation to costs. [See CPA, s.98; formerly SCA, s.76. See Grogan v Thiess Contractors Pty Limited [2000] NSWSC 1101 at [10]; Australian Development Corporation Pty Limited v White Constructions (ACT) Pty Limited (in liquidation) & Ors [2002] NSWSC 280 at [9]-[16]; see also Davies v Ku-ring-gai Municipal Council [2003] NSWSC 1010 at [2]-[3]]. 176 The purpose of the power is to compensate the party entitled to costs for having been out of pocket as a result of paying legal costs over a period of time before being able to recover those costs from the other party. [See Hughes Brothers Pty Limited v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney [1999] NSWSC 1051 at [60]; Grogan v Thiess Contractors Pty Limited [2000] NSWSC 1101 at [12]; Australian Development Corporation Pty Limited v White Constructions (ACT) Pty Limited (in liquidation) [2002] NSWSC 280 at [17] and [29]; see also Davies v Ku-ring-gai Municipal Council [2003] NSWSC 1010 at [25]; Optus Networks Pty Limited v Leighton Contractors Pty Limited [2005] NSWSC 156 at [9]; see also McWilliams Wines Pty Limited v Liaweena (NSW) Pty Limited (1993) 32 NSWLR 190 at 192].

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(d) how the parties have conducted themselves during the litigation. [See Grogan v Thiess Contractors Pty Limited [2000] NSWSC 1101 at [10]-[12]; Australian Development Corporation Pty Limited v White Constructions (ACT) Pty Limited (in liquidation) [2002] NSWSC 280 at [28]; Lolomania v Roads & Traffic Authority (NSW) [2002] NSWSC 918 at [12] (citing Australian Development Corporation with approval) and at [18]; Davies v Ku-ring-gai Municipal Council [2003] NSWSC 1010 at [5]-[7]; Bountros v South Western Sydney Area Health Service [2005] NSWSC 564 at [7]-[9]; Roads & Traffic Authority v Cremona (No 3) (2005) 140 LGERA 420 at [24] and [34]; Optus Networks Pty Limited v Leighton Contractors Pty Limited [2005] NSWSC 156 at [9], [12]-[14] and [26]]. 178 I accept that the principled exercise of the relevant discretion is to order Idoport Parties to pay interest on the gross sum amount determined to be payable to the NAB Parties. 179 Between approximately September 1998 and January 2002, the NAB Parties paid some $75,000,000 in legal costs and disbursements to defend the proceedings. By the time of this determination of the NAB Parties' application for a specified gross sum for their costs, the NAB Parties will have been out of pocket for between approximately 5 and 8½ years except for amounts received from OAMPS in accordance with the settlement referred to above. 180 It is noteworthy that in the period of almost 5 years since the proceedings were dismissed, the Idoport Parties have declined to pay any part of the NAB Parties' costs, notwithstanding that some of the costs are not in dispute and despite requests by Freehills that the Idoport Parties identify and pay undisputed items. 181 In all of these circumstances, I accept as correct the submission by the NAB Parties that an appropriate exercise of the Court's discretion is to order that the Idoport Parties pay interest to compensate the NAB Parties for the delay in receiving their costs and that the restraint imposed by the barring order should include interest on those costs. 182 I note that although s.101 (5) of the Civil Procedure Act 2005 (NSW) provides that the Court may order interest on costs from the date or dates on which the costs concerned were paid, for simplicity of calculation, the NAB Parties seek an order that the Idoport Parties pay interest on the gross sum amount from 29 January 2002, being the date of dismissal of the proceedings and the last date in respect of which the NAB Parties seek to recover costs from the Idoport Parties. This seems to me to be an appropriate exercise of the Court's discretion. 183 It is true that the Idoport Parties complain that it was first notified of the NAB Parties' intention to seek an order for interest on costs on 11 May 2006. However and as the NAB Parties have contended, the Idoport Parties do not identify any prejudice that has resulted from the notice being provided at that stage. 184 There is no reason to assume that Idoport was unaware of the Court's power to order payment of interest on costs. Even if the Idoport Parties had been unaware of the power, there is no evidence to indicate that it would have conducted itself differently in relation to payment of the NAB Parties' costs if it had been aware of the potential for the Court to order the payment of interest on costs. 185 Irrespective of when the NAB Parties notified their application for interest, they could not take the claim for interest very far without a gross sum costs order. 186 For these reasons I accept that the timing of the NAB Parties' notification of the claim for interest is no reason to deny interest, or limit the period in respect of which interest is awarded. [See Grogan v Thiess Contractors Pty Limited [2000] NSWSC 1101 at [25]-[28]; Optus Networks Pty Limited v Leighton Contractors Pty Limited [2005] NSWSC 156 at [21]-[26]]. 187 As observed in Australian Development Corp Pty Limited v White Constructions (ACT) Pty Limited (in liquidation) :

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"...the true position is that the ordering of interest on costs will be appropriate (absent disentitling conduct) where the discretion is properly enlivened, namely, where the applicant has been relevantly out of pocket from having arranged to pay legal costs from time to time during the course of lengthy litigation in which the applicant ultimately succeeded and where the respondent may be presumed to have benefited from not having had to pay the costs at the time when they were paid to the applicants' legal representatives, hence having had the use of the money from that time." [[2002] NSWSC 280 at [28], cited with approval in Lolomanaia v Roads & Traffic Authority of New South Wales [2002] NSWSC 918 at [12] . 188 The Idoport Parties also point to the period of time that has elapsed since the costs order was made on 29 January 2002 and the determination of this gross sum application as a factor in favour of denying the NAB Parties interest, or only awarding interest in respect of a relatively short time period. 189 I accept that it is not shown to have been the fault of either party that this period of time has elapsed. 190 I further accept that it was entirely appropriate for the NAB Parties to await the outcome of the Idoport Parties' appeal from the dismissal of the Proceedings and its subsequent application for special leave to appeal to the High Court. 191 In any event, it is clear that it would have taken a substantial period of time for Mr Lovell and Mr Johnson to prepare their lengthy and detailed affidavits. Ms Castle was not provided with draft versions of these affidavits. She commenced work in preparing her substantial report after receiving Mr Lovell's first affidavit in December 2002. Ms Castle's first report was then completed and signed on 8 August 2003. 192 I accept that the time that has passed since the filing of the notices of motion seeking gross sum costs orders on 1 September 2003 has been occupied by the filing of evidence by both parties, including a further round of evidence filed by the Idoport Parties in July 2005, the Idoport Parties' application for determination of separate questions and the Idoport Parties' application for further discovery. The gross sum costs applications were listed for hearing in May 2006 for three weeks commencing on 27 November 2006. 193 In resisting the claim for interest, the Idoport Parties also assert that it should not be treated as though it was conducting a commercial operation. As the NAB Parties have submitted, there is no evidence about this and it may or may not be correct. However, the Idoport Parties may be presumed to have benefited, either directly or indirectly, from not having had to pay the NAB Parties' costs on 29 January 2002, or at any time since then. For example, the Idoport Parties may have avoided the need, until now, to borrow money that it will require to pay the costs determined by the Court. Alternatively, the Idoport Parties may have avoided, until now, becoming insolvent by reason of its liability to pay a specific sum determined by the Court. I accept that this benefit, together with the fact that the NAB Parties have undoubtedly been kept out of pocket since 29 January 2002, warrants the award of interest in this case. 194 Further there was nothing to prevent the Idoport Parties from paying some part of the NAB Parties' costs, thereby preventing interest from running, at least in relation to that part. The Idoport Parties have chosen not to take this course. As the NAB Parties have contended, this has been to the benefit of Idoport and to the detriment of the NAB Parties, who have been kept out of pocket. 195 The Idoport Parties' submissions that any amount of interest should not exceed interest on an amount equivalent to the Idoport Parties' own legal costs (allegedly $10,9000,000), even if the Court awards the NAB Parties a gross sum figure in excess of this amount, is not of substance. In any event, the amount of the Idoport Parties' costs are simply not known. Orders 196 The parties are to bring in short minutes of order to reflect the findings. At the same time costs may be argued.

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APPENDIX C - Idoport Pty Ltd National Australia Bank Limited Gross Sum Application "Ballpark" calculations of defendants' costs Professional costs - 840 days Vine-Hall "ballpark" Scenario 1 Scenario 2 Castle Partners $1,170,000.00 $5,880,000.00 $7,560,000.00 1 partner, 840 days, 4 hours per day at $350.00 per hour 2 partners, 10 hours per day at $350 per hour 2 partners, 10 hours per day at $450 per hour Senior solicitors $2,016,000.00 $5,040,000.00 $5,880,000.00 1 solicitor, 840 days, 8 hours per day at $300.00 per hour 2 solicitors, 10 hours per day at $300 per hour 2 solicitors, 10 hours per day at $350 per hour Junior solicitors $8,400,000.00 $16,800,000.00 $18,480,000.00 5 solicitors, 840 days, 8 hours per day at $250.00 per hour 8 solicitors, 10 hours per day at $250 per hour 8 solicitors, 10 hours per day at $275 per hour Paralegals $3,366,000.00 $6,720,000.00 $6,720,000.00 5 paralegals, 840 days, 8 hours per day at approximately $100 per hour 8 paralegals, 10 hours per day at $100 per hour As for Scenario 1 $34,440,000.00 $38,640,000.00 $27,211,790.16 Subtotal $14,952,000.00 Based on 840 days, rates specified by Vine-Hall 20/7/05 at [50]-[51] & increasing no. of resources & 10 hr days Resources, days & hours as for Scenario 1, but increase rates to higher end of range in Joint Report 24/10/06 at [20] Based on $723,736.25 reduction for rates, plus 15% reduction Based on Vine-Hall 20/7/05 at [50]-[51] Note: This is very close to total professional costs incurred of $34,978,147.15) Note: This exceeds total professional costs incurred Not based on 840 days. See Castle 20/10/06 at [360]-[380], Table H, [381]-[430], Table O

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Disbursements Vine-Hall "ballpark" Scenario 1 Scenario 2 Castle Counsel No suggested ballpark figure $5,228,452.00 $7,319,833.00 $8,790,315.00 Apply Vine-Hall's suggested 50% reduction to actual fees: see Vine-Hall 20/7/05 at [70]-[71] Apply Vine-Hall's suggested 30% reduction to actual fees: see Vine-Hall 19/12/03 at [133]-[139] Claimable costs ($10,456,904) less counsel's expenses ($115,357) less 15%: see Castle 20/10/06 at [513]-[524] Court filing fees No suggested ballpark figure $48,062.33 $48,062.33 $48,062.33 See Joint Report 24/10/06 at [30.1] See Joint Report 24/10/06 at [30.1] See Joint Report 24/10/06 at [30.1]; Castle 20/10/06 Table O Technology Court No suggested ballpark figure $227,272.50 $227,272.50 $227,272.50 See Joint Report 24/10/06 at [29.1] See Joint Report 24/10/06 at [29.1] See Joint Report 24/10/06 at [29.1] ; Castle 20/10/06 Table O Transcript No suggested ballpark figure $308,711.38 $308,711.38 $308,711.38 See Joint Report 24/10/06 at [29.1] See Joint Report 24/10/06 at [29.1] See Joint Report 24/10/06 at [29.1]; Castle 20/10/06 Table O

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Scenario A Castle / Description Amount Claimed Ausmaq Methodology 'Reasonable' Amount Concessions Explanation of Scenario A Scenario B[4] Reasonable Amount Deduct from $34,978,147.15 the following amounts: (a) $1,597,380.02 (Castle paras 262-8) (b) $643,160.00 (Castle 269-286) Total for Professional Costs: $34,978,147.15 $27,211,790.16 $15,156,935.00 (c) $1,700,000 (Costs after stay - see paras 268-275 of plaintiff's submissions. $9,094,163.00 (d) $723,736.35 (Castle's reduction based on rates) Total: $30,313,871 Reduce this amount by 50% (see paras 394 - 403 of the plaintiff's submissions and Castle's evidence at T 379-80, 438, 444, 467) Note that this does not take into account differing view on allowable rates (paras 288 - 298 of the plaintiff's submissions) or the other difficulties with the starting position (paras 183 - 202 and 245 - 267 of the plaintiff's submissions) Conduct Money $28,850.00 $17,650.00 $5,280.00 Scenario 1 of defendants' annexure 13 $5,280.00 Subpoena Fees $615,858.07 $615,858.07 $153,847.32 Scenario 1 of defendants' annexure 13 $153,847.32 eLaw $227,272.20 $227,272.20 $227,272.20 Joint Experts' Report $227,272.20 Transcript $308,711.38 $308,711.38 $308,711.38 Joint Experts' Report $308,711.38 Deduct from $10,850,852.33 the following amounts: (a) $200,560 (not claimed) Counsel's Fees $10,850,852.33 $8,789,191.05 $5,228,452.00 (b) $193,387 (excluded by costs orders) $4,337,071.00 Total: $10,456,904.82 Apply same percentage reduction as to solicitors (Castle T 455.5 - .16) Note that this does not take into account differing views on allowable rates (paras 433 - 438 of the plaintiff's submissions) or the other difficulties with the starting position Expert Statements $22,609,700.19 $22,609,700.19 $11,304,850.00 Treat the same as counsel's fees (Castle T 446.38 - .44) $6,782,910.00 Scenario 1 of defendants' annexure 13 Photocopying $4,204,785.31 $1,186,331.20 $447,156.85 Scenario 1 of defendants' annexure 13 $447,156.85 Colour Photocopying $32,536.00 $16,268.00 0.00 Not shown in defendants' annexure 13 0.00 Binding $91,577.00 $91,577.00 0.00 Not shown in defendants' annexure 13 0.00 Fares and Travelling $712,767.68 $480,514.54 $120,128.00 Scenario 1 of defendants' annexure 13 $120,128.00 Disbursements incurred by Freehills (Perth and Melbourne) $8,050.97 $4,025.49 0.00 Not shown in defendants' annexure 13 0.00 Court Fees $54,216.87 $48,062.33 $48,062.33 Joint Experts' Report $48,062.33 Rent (Macquarie Street) $53,090.26 $53,090.26 0.00 See paras 576 - 583 of plaintiff's submissions. 0.00 Not shown in defendants' annexure 13 Process Service $5,090.40 $5,090.40 0.00 Not shown in defendants' annexure 13 0.00 Search Fees $30,579.71 $30,579.71 0.00 Not shown in defendants' annexure 13 0.00 Facsimiles $154,692.18 $48,728.04 0.00 Not shown in defendants' annexure 13 0.00 Couriers $64,410.16 $57,969.14 0.00 Not shown in defendants' annexure 13 0.00 Telephone (Mobile and IDD) $26,471.14 $11,912.01 0.00 Not shown in defendants' annexure 13 0.00 Total for Disbursements $40,079,511.85 $34,498,536.37 $17,843,760.08 $12,430,439.08 Grand Total $75,057,659.00 $61,710,326.53 $33,000,695.08 $21,524,602.08

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Cases Cited (33)