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

Supreme Court of NSW|2001-03-12|Before: Einstein J

CITATION : Idoport Pty Ltd & Anor v National Australia Bank Limited & 8 Ors; Idoport Pty Ltd & Market Holdings Pty Ltd v Donald Robert Argus; Idoport Pty Ltd "JMG" v National Australia Bank Limited [18] [2001] NSWSC 142 FILE NUMBER(S) : SC 50113/98; 50026/99; 3991/00 HEARING DATE(S) : 5/03/01,6/03/01,7/03/01,8/03/01 JUDGMENT DATE : 12 March 2001

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

COUNSEL : JJ Garnsey QC, M Dicker (Plaintiffs) T Bathurst QC, H Insall (Defendants) SOLICITORS : Withnell Hetherington (Plaintiffs) Freehills (Defendants) CATCHWORDS : Practice and Procedure - Application for leave to amend - quick, just and cheap resolution of real issues. LEGISLATION CITED : Trade Practices Act Clough v Rogers (1974) 48 ALJR 481 Cropper v Smith (188 4) 2 6 CH D 700 CASES CITED : Dey v Victorian Railways Commissioners (1949) 78 CLR 62 General Steel Industries Inc. v Commissioner for Railways (New South Wales) 1964 112 CLR 125 Idoport Pty Ltd v National Australia Bank Ltd 7 December 2000 [2000] NSWSC 1141 State of Queensland v J L Holdings Pty Ltd (1996) 189 CLR 146 DECISION : First tranche of amendments sought generally allowed subject in some cases to clarification.

Page Paragraph The Notice of Motion………………………………………………. 1 1

Analysis of the draft fourth further amended statement of claim 2 7

Dealing with the application for leave to amend…………………. 6 12

Arguments based upon futility…………………………………….. 7 13 Difficulties of the Court at this stage in the proceedings determining complex questions of construction or of implied terms………………………………………………………………… 8 15

The Fiduciary Obligation Case amendments…………………….. 21 48

Equivalence and Similarity Case amendments…………………… 21 50

Dealing with the proposed amendment to paragraphs 9.9A, 9.9B and 18.6(i) - NAFM /Premium financial planners……………….. 23 58

Dealing with the proposed amendment to paragraphs 18.6 (iv) and 27.4A…………………………………………………………… 27 70

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION - COMMERCIAL LIST

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

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

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

The Notice of Motion 1 By notice of motion filed on 5 March 2001 the plaintiffs seek leave to file a Fourth Further Amended Statement of Claim ["the fourth statement of claim"). The notice of motion was furnished to the Court and to the defendants on 8 December 2000. Following a very substantial set of requests for particulars of the proposed amendments, particulars were furnished and the composite form of the particulars became MFI P114. Another version of the composite particulars which has proved extremely useful was prepared by the defendants in table form and became MFI D71. [The table format is from time to time referred to as 'the defendants landscape chart'] 2 The evidence in support of the notice of motion is comprised of an affidavit made by Mr Stuart Hetherington on 8 December 2000 which was also furnished to the court and served on that date. 3 The evidence in answer to the notice of motion is comprised of an affidavit by Mr Damian Lovell made on 2 March 2001 which is in turn supported by an exhibit which runs for 333 pages. Mr Lovell was also cross-examined on the affidavit. 4 No objection was taken to the amendments to paragraph 5, to the amendments to the particulars to paragraph 9.7, to the particulars to paragraph 10.1.1, or to the amendments to paragraphs 10.1.3, 10.3.3, 10.4, 10.5, 10.5.4, 10.6, 10.7, 11.1, 15.3, 17.1, 19, 22.3, 30, 35, 40, 46,49B, 49I, 50.1 - 50.13, 53A.1, 53A.2 and 53B. In consequence those amendments are allowed. 5 Mr Bathurst QC conveniently summarised the draft pleading into four sections. They are as follows: · the representational claim [paragraphs 9 to 11.9] · the contractual claim and the non contractual claim against the corporations [paragraphs 12 - 53B] · the claim against the directors in an entirely amended fashion [paragraphs 54 - 54 DL] · miscellaneous portions including a claim for damages and claims under the Trade Practices Act. 6 A convenient short summary of the original form of the precise amendments sought was prepared by Mr Lovell as follows:

Analysis of the draft fourth further amended statement of claim 7 The additional paragraphs of the draft fourth amended statement of claim when compared with the current Third Further Amended Statement of Claim are:

Paragraph Nature of Allegation 9.8 Representation that NAB/NMG would comply with the terms of the Consulting Agreement. 9.9A, Representation that NAB would cause NAFM to list its products and Premium financial planners to become active registered users of the AUSMAQ Service. 9.9B 10.8 Falsity of representation in paragraph 9.8. 10.9 Falsity of representation in paragraph 9.9. 12A Common commercial objectives and assumptions. 18.6 (i) Implied term that NAB and NMG would take all responsible steps to cause NAFM to list its products on the AUSMAQ Service and to cause the Premium dealers to become active registered users of the AUSMAQ Service. 18.6 (ii) Implied term that NMG would do everything technically possible to exploit fully the existing actual and potential functionality of the AUSMAQ service. [During argument the Plaintiffs withdrew the claim to this amendment] 18.6 (ii) Implied term that NMG would take all reasonable steps to exploit fully the existing actual and potential functionality of the AUSMAQ service. [During argument the Plaintiffs withdrew the claim to this amendment] 18.6 (iv) Implied term that NAB and/or NMG would not act as a competitor to the AUSMAQ Service. 27.4A Fiduciary obligation on NAB and NMG not to act or conduct itself as a competitor to AUSMAQ Systems or AUSMAQ Service. 30 Gateway service is a service of equivalent or similar functionality to the AUSMAQ Service "as it is or should be or should have been enhanced or modified or added to". 35 Remote Wealth is a service of equivalent or similar functionality to the AUSMAQ Service "as it is or should be or should have been enhanced or modified or added to". 40 Margin Lending is a service of equivalent or similar functionality to the AUSMAQ Service "as it is or should be or should have been enhanced or modified or added to". 46 FX, Auto Dealing Service is a service of equivalent or similar functionality to the AUSMAQ Service "as it is or should be or should have been enhanced or modified or added to". 49B Independence One is a service of equivalent or similar functionality to the AUSMAQ Service "as it is or should be or should have been enhanced or modified or added to". 49I Maple Leaf/Operation First Choice is a service of equivalent or similar functionality to the AUSMAQ Service "as it is or should be or should have been enhanced or modified or added to". 50.16/ 51.17/ Breach of implied obligation to cause NAFM to list products and Premium financial planners to become active registered users of AUSMAQ. 52.17 50.17/ 51.18/ Breach of implied obligation to do everything technically possible to exploit fully the existing actual and potential functionality of the AUSMAQ service. [no longer pressed] 52.18 50.18/ 51.19/ Breach of implied obligations to take all reasonable steps to exploit fully the existing actual and potential functionality of the AUSMAQ service. [no longer pressed] 52.19 50.19/ 51.20/ Breach of obligation not to act as competitors of AUSMAQ System and the AUSMAQ Service. 52.20 53A-53B Breaches of fiduciary obligation mirroring breaches of contract. 54A Mr Krasnostein's knowledge 54B Mr Cicutto's knowledge 54C Mr Barnes' knowledge 54D Mr Courtney's knowledge 54E Mr McKimm's knowledge 54F Mr Argus' knowledge 54G to 54N Liability of individual defendants regarding appointment of Crutchley 54O to 54T Liability of individual defendants regarding failure to properly consider and approve the 1997 recommended business plan 54U to 54Z Liability of individual defendants regarding failure to provide adequate finance and personnel and to proceed with development of the AUSMAQ service to August 1997 54AA to 54AR Liability of individual defendants regarding failure to place NAFM products and Premium dealer group on the AUSMAQ service 54AS to 54BE Liability of individual defendants regarding failure to take any steps to commercialise AUSMAQ globally 54BF to 54BL Liability of individual defendants regarding 2 August 1997 decision 54BM to 54BX Liability of individual defendants regarding change in AUSMAQ value proposition - Meikle/Clark business plan and JMG's later business plans 54BY to 54CC Liability of individual defendants regarding Argus' adoption of conduct of NAB 54CD to 54CN Liability of individual defendants regarding AUSMAQ strategic review 54CO to 54CU Liability of individual defendants regarding development of NAB services 54CV to 54DB Liability of individual defendants regarding NAFM and the Gateway service 54DC to 54DE Liability of individual defendants regarding failure to provide adequate finance 54DF to 54DG Liability of individual defendants regarding failure to cause NMG to obtain independent legal advice

8 Mr Bathurst submitted that the amendments cover all areas and seek to add additional representations in the representational claim, additional implied terms in the contractual claim, additional fiduciary obligations and to thereby extend the claim against both NAB and NMG. He submitted that in relation to the directors claim, an entirely different approach had been adopted to the approach in the third amended statement of claim. The approach was firstly, in a series of paragraphs, 54A - 54F, to make certain allegations about knowledge which each of the defendants is said to have had from relevantly November 1996 up to January 1997, to then use that as a springboard for isolating a series of incidents in which the individual defendants, either by their actions or inactions, are said to have participated leading to allegations of involvement in breaches of fiduciary obligations and to inducing breaches of contract. The claim for damages and consequential loss were also referred to. During argument the parties agreed that convenience dictated that the amendments to paragraphs 54A and following should be addressed after a judgment on the amendments to the earlier paragraphs. 9 In his overview commencement of oral address, Mr Bathurst stated that in relation to the alleged additional representations, the defendants would be submitting that the additional representations cannot be implied from the matters referred to in the particulars and that for this reason those amendments should be disallowed. In relation to the contractual terms, the defendants would be submitting that as a matter of law, taking into account the particulars, those terms could not arguably be implied so that it would be futile to grant the amendment. Additionally in relation to a number of those alleged terms, the defendants would be submitting that on the evidence, the prejudice which would be occasioned to them having regard to the need to investigate the allegations, was simply such that an amendment at this particular point in time should not be allowed. 10 In relation to the alleged participation in breaches of fiduciary duty and by way of procurement of breach of contract, the defendants would be submitting that in at least portions of the pleading, none of the factual matters pleaded and particularised provided sufficient support to make those allegations arguable. Further and insofar as the allegations relate to inactivity, the submission would be that this could not at law amount to a procurement of breach of contract or to a participation in breach of fiduciary obligations. 11 In relation to this area the defendants would not be contending, except insofar as it spilled over into the particular contractual areas [being the new terms pleaded-the allegations that the defendants participated in breaches of contract and breach of fiduciary obligations concerning those new terms], that they were prejudiced by the amendment. Subject to that the defendants would be submitting that the individual defendants ought not be taxed by a futile claim.

Dealing with the application for leave to amend 12 It is unnecessary to set out in detail the principles which the court applies in dealing with an application for leave to amend. They have been referred to on a number of occasions in interlocutory judgments delivered in these proceedings. It suffices to repeat paragraphs 42 - 45 in the judgment delivered on 7 December 2000 [2000] NSWSC 1141:

Leave to amend "In State of Queensland v J L Holdings Pty Ltd (1996) 189 CLR 146 the High Court carefully analysed the development up to January 14 1997, of approaches taken to the exercise of the discretion to permit amendments to pleadings. Generally that judgment of the High Court, without purporting to be exhaustive, serves to set out the types of consideration which ought to direct the mind of the decision maker on such applications. However, the court accepted that the trial judge is afforded a large discretion in relation to the exercise and that it would be unwise and contrary to principle to seek to fetter that discretion with rigid rules. The special significance of the decision is to direct the mind of the decision maker to many of the considerations which may be taken into account in exercising the discretion and to emphasise, if it needed to be emphasised, that justice is the paramount consideration in determining such an application. J L Holdings dealt, of course, with the particular circumstances before the court and whilst the general statements to be found in the joint judgment of Dawson, Gaudron and McHugh JJ and in the judgment of Kirby J. assist a decision maker considerably, the obvious fact is that each and every case in which an application for leave to amend is pursued requires the court to deal with the special and peculiar matrix of circumstances which obtain at the material point in time in the litigation in respect of which such application is pursued. To my mind the following statements of principle affirmed in JL Holdings are fundamental and clearly and succinctly express the general approach to be taken: (a) "Now, I think it is a well established principle that the object of Courts is to decide the right of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights. Speaking for myself, and in conformity with what I have heard laid down by the under division of the Court of Appeal and by myself as a member of it, I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Court's do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment has a matter of favour or of grace" [Cropper v Smith (188 4) 2 6 CH D 700 per Bowen LJ at 710] (b) "As the defence, if established, would be a complete answer in the either action, the amendments sought should have been an amount unless it appeared that injustice would thereby have been an occasion to the respondent, there being nothing to suggest fraud or improper concealment of the defence on the part of the appellants. With the exception of the suggestion of prejudice arising in respect of the loss of the possible claim against the nominal defendant, the matters relied upon by the respondent in opposition to the amendments sought go at the most to delay and irregularity only, matters which are relevant to costs by do not constitute injustice to the respondent in the sense in which that expression is used" [Clough v Rogers (1974) 48 ALJR 481 at 482] A recent development in this State, which the Court is also entitled and indeed required to take closely into account, relates to Part 1 of the Supreme Court Rules as modified by Amendment No 337, which elucidates the overall objectives of practices and procedures as specified in the Rules. The overriding purpose of the Rules is to facilitate the "just, quick and cheap resolution of the real issues" in civil proceedings. The overriding purpose clause imposes an obligation on the Court to give effect to the overriding purpose when it exercises any of its powers."

Arguments based upon futility 13 Mr Bathurst accepted the difficulty under which a defendant labours when seeking to have the Court shut out a plaintiff from submitting its case for determination. He cited General Steel Industries Inc. v Commissioner for Railways (New South Wales) 1964 112 CLR 125 where Barwick CJ at 129 cited from Dixon J. in Dey vs Victorian Railways Commissioners (1949) 78 CLR 62 at 91, who had said: "A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process". 14 Barwick CJ in General Steel at 130 continued: "Although I can agree with Latham CJ in the same case when he said that the defendants should be saved from the taxation of the continuance of useless and futile proceedings, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where document is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed " [emphasis of the defendants]

Difficulties of the Court at this stage in the proceedings determining complex questions of construction or of implied terms 15 It is quite clear that the Court at this stage in these proceedings should refrain unless absolutely necessary from embarking upon a close examination of issues critical to be determined in the final judgment. Notwithstanding the defendants submissions that this is a particularly clear case in which the proposed additional implied terms would never be implied for a number of reasons, in my view the Court should unless absolutely necessary, eschew the invitation to embark upon the route suggested by the defendants. The danger in embarking upon that route could conceivably even involve the possibility that the hearing would abort. Aspects of a trial judges reasons delivered on an application to amend pleadings which go so closely to issues still to be fully litigated may so aggrieve one or other party as to lead to an application that the judge recuse. The question of the principles which apply in relation to the implication of terms will be the subject of address and will be necessary to be treated within the final judgment. It is arguable that terms may be implied into a contract from a prior course of dealing; in circumstances where the principal terms of the agreement are settled but necessary subsidiary terms are absent and/or in circumstances where terms are implied to give efficacy to the particular contract. No evidence whatever is presently before the Court in relation to the circumstances in which the subject Consulting Agreement and Restructuring Agreement were entered into or by way of the matrix of fact against which the contracts are likely to be required to be construed and in relation to which questions of implied terms are likely to have to be decided. Over a period of months the plaintiff addressed in detail submitting that this matrix was of very great importance in these proceedings. 16 Hence bearing in mind the complexity of the issues in the proceedings and the stage which the proceedings have now reached, it does not seem to me that it is possible to accede to the defendants submissions that the Court is now in a position to hold that the proposed amendments to plead the implied terms must be rejected as futile because the proposed terms are said not to be necessary to give business efficacy to the Consulting Agreement; not to be capable of clear expression; not to be so obvious that they go without saying; and/or terms which the defendants submit cannot be said to be reasonable or equitable. 17 The simple fact is that the nature of the issues in the particular proceedings is such as to make it virtually impossible and certainly impracticable at this stage in the proceedings for the Court to venture into the uncertain waters of the careful examination (which would have to include the analytic dissembling and reassembling) of the Consulting Agreement which would be necessary in order for the defendants submissions to be successful. The proper approach to the Consulting Agreement is likely to determine many issues - as I understand both parties to accept. After nearly six months of openings from both parties in proceedings in which there is a claim of $50 billion made and which involves many causes of action and many issues and folders of particulars to pleadings and where the adducing of evidence has essentially not begun, to my mind it is entirely inappropriate to accept that the Court could or should now uphold the futility argument. 18 However, it does seem to me that where the defendants are able to genuinely show an inability to understand the case which is sought to be made because aspects of the proposed amended pleadings, notwithstanding the extensive particulars, remain opaque, the Court should refuse to permit the amendments until the plaintiffs with sufficient precision, have been able to explain the nature of the case which they press.

Prejudice 19 The evidence given by Mr Lovell in his affidavit included the following: 'Paragraphs 9.9A, 9.9B and 10.9 of draft 4FASOC [and paragraph 18.6 where first occurring]

"I have reviewed paragraphs 9.9 and 10.9 of draft 4FASOC and the amendments to 9.9 set out in the particulars provided by WH under cover of their letter to Freehills dated 8 February 2001.

If these amendments are permitted further evidence is likely to be adduced by the plaintiffs (see the affidavit of Mr Hetherington sworn 8 December 2000) and by the defendants.

In light of the state of the pleading and the particulars, the defendants would need to undertake investigations to determine what evidence may need to be adduced by the defendants to deal with those allegations, including as to: (a) any pre-contractual negotiations concerning NAFM listing its products and the Premium financial planners and other NAB planners becoming active registered users of the AUSMAQ Service; (b) the complete range of NAFM wholesale and retail products, their structure, composition, target market, management expense ratios and the regulatory requirements with which they comply both as at the date of the Consulting Agreement and at relevant times to date; (c) the legal structure within which NAFM operates; (d) the business and strategic approach of NAFM as at the date of the Consulting Agreement and at relevant times to date; (e) the issues involved in the process of NAFM developing "price competitive" new products or modifying existing products and seeking to have them listed on the AUSMAQ Service, including as to the structure, composition, target market, cost, pricing and competitiveness of, and regulatory issues involved in, such products; (f) the business and strategic approach of the Premium financial planners "and other financial planners" as at the date of the Consulting Agreement and at relevant times to date; (g) the issues involved in NAB taking "reasonable" steps to place all planners on the AUSMAQ Service, including as to the current and proposed business direction, client interests and support, target market, pricing, technical issues, cost, timing, training and regulatory issues; (h) the method and effect of planners encouraging fund managers to list appropriate products on the AUSMAQ Service; (i) evidence of the cost of providing Premium financial dealers and other dealers with separate modem connections and suitable personal computers to enable connection to the AUSMAQ Service until the AMI was funded and developed. The National Group has a number of substantial planning groups in addition to the Premium dealer group. I cannot at this stage, and in the absence of the plaintiffs' proposed evidence, assess with any precision the time and resources that would be involved in preparing evidence to deal with these allegations. I believe however that it would be substantial. Paragraph 18.6 (where fourth appearing) of draft 4FASOC I have reviewed paragraph 18.6 (where fourth appearing) of the draft 4FASOC, and the particulars to those paragraphs provided by WH under cover of their letters to Freehills dated 8, 13 and 21 February 2001. If leave is granted to the plaintiffs to amend the Statement of Claim by adding paragraph 18.6 (where fourth appearing), it would be necessary to undertake an investigation to determine whether additional evidence may need to be adduced to address those paragraphs. Those investigations may include, in relation to each of the four NAB services, consideration by a competition expert of: (a) the "market" in which that service competes; (b) whether AUSMAQ competes in the same market.

Again, it may also be necessary to consider, in conjunction with counsel, whether the matters revealed in those investigations, and in any evidence prepared, may need to be put in cross-examination to witnesses, including Mr Maconochie, Mr McMullan, Mr Bray and the sales and dealer witnesses. Paragraphs 54BM to 54BX of draft 4FASOC The 4FASOC appears to allege certain breaches post 1998. Notwithstanding the request for particulars dated 15 December 2000, very little information has been provided in response. This lack of specificity makes it impossible to predict with any certainty what evidence may be necessary to deal with the allegations. I deal with some examples below. Paragraph 54BT of the draft 4FASOC pleads, amongst other things, that NAB approved business plans prepared and submitted by NMG and AUSMAQ System for the years ended 30 September 1999 and 30 September 2000, and it is pleaded in paragraph 54BU that the JMG business plans for those years, and for the year ending 30 September 2001, were rejected. It is alleged that, by so acting, each of Mr Krasnostein, Mr McKimm and Mr Courtney procured breaches of contract, and participated in breaches of fiduciary duty. If leave is granted to the plaintiffs to amend the statement of claim by adding paragraphs 54BM to 54BX, and subject to some specificity in particularisation, the defendants would investigate whether it may be necessary to adduce additional evidence to address those allegations. Those investigations would, in my view, need to deal with, amongst other things, the following matters: (a) the business plan process for the 1998/1999, 1999/2000 and 2000/2001 financial years, including NMG's and AUSMAQ System's reasons for adopting the business plans which were adopted in preference to the JMG plans; (b) major business decisions made by AUSMAQ during those financial years, including technical, marketing, financial and strategic decisions; (c) major business initiatives undertaken during those financial years, including clients targeted, clients signed up, key staff engaged and IT initiatives pursued (d) the performance of the business during those financial years, including in relation to technical, marketing and financial issues (e) contact with JMG; (f) the performance of JMG; and (g) the conduct of JMG. Paragraph 54BH, if leave is granted, would also (again subject to some specificity in particularisation) necessitate consideration of various of the factors outlined above, including (e) to (g) above. As well as dealing with these matters by initially considering whether it may be necessary to obtain evidence from potentially a number of witnesses at AUSMAQ, it would be necessary to take instructions from at least Mr Krasnostein, Mr McKimm and Mr Courtney on these matters, particularly their reasons for making the business decisions they did in those financial years. It would also be necessary to consider whether expert evidence is required as to the operations of the business for the period 1999 to 2001. It would also be necessary in this area to consider, in conjunction with Counsel, whether the matters revealed in the investigations, and in any evidence prepared, may need to be put in cross examination to witnesses, including Mr Maconochie, Mr Hume, Mr McMullan, Mr Bray and the sales and dealer witnesses.' 20 Mr Lovell fairly conceded in cross-examination that in relation to a number of the areas referred to in paragraph 70 of his affidavit, very little investigation had yet been undertaken by him. He gave some evidence that it would be necessary to investigate the legal structure under which NAFM operated and operates but I do not see this as a particularly difficult exercise. He also gave evidence that before he swore to paragraph 70, he had not reviewed the statements filed for the plaintiffs and the defendants in relation to NAFM and Premium to ascertain what matters had or had not been dealt with in the evidence or proposed evidence. He had also not yet consulted experts in relation to what may or may not be required before he swore paragraphs 74 and 75 of his affidavit. He accepted that it may well be that not much evidence would be required but the burden of his answers in cross-examination was that the very process of investigation would take time. How much time was impossible to really say at the moment. 21 Mr Lovell gave evidence that at the moment there are four full-time partners of Freehill's engaged in the conduct of the matter and a further partner who has a general role but does not take part in day-to-day activities. Approximately 14 solicitors additional to the partners are engaged and there are some paralegals. There are three senior counsel and two junior counsel retained. It was not suggested that it would be impossible to divide resources to make the subject investigations and obtain the necessary evidence but the question was always one of priorities. He did give evidence that the question of a hiatus depended upon the extent to which the amendments were allowed. If the representational case amendments only were allowed he did not anticipate that it would be necessary to have a hiatus. Of course at the time he gave this evidence he had not yet seen Mr Maconochie's affidavit. As I understood his evidence it was generally that the cumulative effect of the Court allowing all of the amendments would cause particular difficulty in the sense that the defendants would need to have to have a time interval in which to stand back from the amendments and to assess how they should be approached. The problem involved as he put it, a thinking exercise. He gave some evidence in relation to what he would regard as desirable in terms of cross-examination and recall of witnesses for further cross-examination. Notwithstanding Mr Lovell's evidence about cross-examination and recall of witnesses, I was not persuaded by that cross-examination that for the Court to, as the reasons below spell out, allow limited amendments, would amount in the instant circumstances to sufficient prejudice to require the Court to refuse allowing the amendments. The question is one of accommodating such prejudice as may be demonstrated in a practicable manner. 22 The convenient course is to deal with the objections seriatim.

The Representational Case amendments 23 The objection to paragraph 9.8 is technical. The defendants proposition is that this paragraph does not make clear whether the representation was that NAB, NMG and Ausmaq System would comply with their own and each other's obligations under the agreement or merely their own. The objection is clearly of substance and the plaintiffs have agreed to amend the paragraph to clarify the issue. [see paragraph 2 of plaintiffs' submissions MFI P117]. On that basis the amendment is allowed. 24 The form of paragraph 9.8 as it appeared in the draft fourth statement of claim has now been replaced and the new form appears on pages 91-92 to the exhibit to Mr Lovell's affidavit. The pleaded form of representation sought to be pursued is as follows: "9.9A That if Mr Maconochie and Market Holdings entered into the transactions, that NAB would cause NAFM to list its products on the Ausmaq Service and that NAB would cause the Premium financial planners and other NAB financial planners, to become active registered users of the Ausmaq Service 9.9B That if Mr Maconochie and Market Holdings entered into the transactions, that NAB would cause NAFM to list its products on the Ausmaq Service and that NAB would take all reasonable steps to cause the Premium financial planners and other NAB financial planners, to become active registered users of the Ausmaq Service. 25 The substance of these amendments is also reflected in the contractual case proposed amendment to insert paragraph 18.6(i). 26 The Defendants assert that none of the particulars furnished when they are closely examined, can conceivably give rise to the implication. The plaintiffs now further rely upon so much of Mr Maconochie's Affidavit dated 8 March 2001 as furnishing a basis for the representation as implied and, as I understand it, as furnishing a basis for contractual term 18.6(i) to be implied. 27 The objection to paragraphs 10.8.2 and 10.8.3 is that the paragraphs are embarrassing and should be struck out. The submission is that no material facts are pleaded to demonstrate why at the time of the representations: · NAB did not by its relevant officers, have reasonable grounds to believe either that NAB , NMG and Ausmaq Systems would comply with the terms of the Consulting Agreement or to believe that NAB, NMG and Ausmaq Systems would take all reasonable steps to comply with those terms. · NAB did not by its relevant officers, have reasonable grounds to believe (and still do not have reasonable grounds to believe) that NAB, NMG and Ausmaq Systems would comply or would take all reasonable steps to comply with those terms. 28 The objection is that the particulars rely on the unsubstantiated assertion that the defendants construction of the Consulting Agreement was unreasonable without indicating any factual basis for establishing that it was adopted at the time or for that matter, why it was unreasonable. The defendants submit that it is not appropriate at this stage of the proceedings to simply assert that the relevant particulars are not required to be given. 29 I am not disposed to uphold this ground of objection as of substance or to reject the proposed amendment on these suggested bases. 30 The objection to paragraph 10.9 mirrors the objection to paragraph 9.9. The defendants further submit that this paragraph suffers from a further default in that there are no material facts pleaded to support the allegation that NAB did not have reasonable grounds for the belief which was alleged in each of some paragraphs 10.9.1, 10.9.2 and 10.9.3. Subject to any questions of prejudice to be referred to below, I would not be disposed to uphold this ground of objection as of substance or to reject the proposed amendment on this suggested basis. 31 I note that no specific objection is taken to paragraph 12A (and that the defendants do not however concede that the allegations in the paragraphs are material to any cause of action which is pleaded).

The Contractual Case amendments 32 The major new implied terms sought to be pleaded and what are still pressed were referred to in argument under the following paragraph numbers: '18.6 (i) That NAB and NMG would take all reasonable steps to: (a) cause NAFM to list its financial products on the Ausmaq Service and

(b) cause Premium Financial Planners and other NAB Financial Planners to become active registered users of the Ausmaq Service

18.6 (iv) That NAB and/or NMG would not act or conduct itself or themselves as a competitor to either Ausmaq Systems or the Ausmaq Service.' 33 As Mr Bathurst pointed out, the endeavour to locate the particulars to paragraphs 18.6 (i) involves somewhat of a paper chase. One is first referred to a repeat of two of the particulars to paragraphs 18.1 - 18.5, that is to say, one is informed that paragraph 18.6 (i) is implied as a matter of necessary implication from the other terms of the consulting agreement and/or as a matter of fact, as implied in fact as necessary to enable the Consulting Agreement to operate according to its terms and being reasonable, by reason of (a) the nature and terms of the Consulting Agreement and Restructuring Agreement and related agreements referred to in the Restructuring agreement as required for completion and

(b) by reason of a number of facts and matters [earlier pleaded in the statement of claim and in respect to which earlier particulars are said to have been furnished]. 34 Reference to the landscape chart then shows that the plaintiffs claim that it is all of the wholesale and retail financial products offered by NAFM at the date of the Consulting Agreement and from time to time thereafter, that are "the products" which it is alleged NAB ought to have caused NAFM to list on the Ausmaq Service. 35 But reference to paragraph 9 on page 4 of the landscape chart suggests that the obligation extended further to cover the development by NAFM as soon as possible, of price competitive new products, or in the alternative, modifications to existing products and to promotion of those products. This becomes clear when one examines the plaintiffs particulars of the "efforts" and "steps" which the plaintiffs assert constituted the "reasonable efforts" and "reasonable steps" which NAB ought to have taken to cause NAFM to list its products on the Ausmaq Service. As Mr Bathurst submitted, the scheme of the particulars suggests that the implied term has an expanding effect. It is not only an implied obligation that NAFM would be caused to list its financial products but extends to obliging it to develop new products or modifications to existing products and to promote those products. 36 The defendants submit that the amendment to insert paragraph 18.6 (i) is futile because no such implied term could arguably exist. They point out that the term is pleaded as being implied as a matter of necessary implication and secondly as a matter of fact. They point out that the first basis of implication depends upon whether the term itself arises by necessary implication from the actual covenants contained in the Consulting Agreement, considered separately or as a whole. The submission is that it does not. The submission is that the agreement envisages that the Ausmaq Service will be developed by the working out of a Business Plan prepared by JMG but amended as NMG sees fit. That clause is said not to impose any obligation on NAB and not to impose any obligation upon NMG to adopt any particular business plan. The term is said not to arise as a matter of necessary implication from clause 4 and indeed to be contrary to that clause. 37 The defendants then travel through the other terms of the Consulting Agreement referred to in the particulars to paragraphs 18.6 (i) as not advancing the plaintiffs position. The defendants in submissions closely examine clauses 3, 5, 6, 7 and schedule 2, clauses 8 and 14, 9, 10, 11, 13, 12, 15 and 16 of the Consulting Agreement. 38 The defendants then submit that not only can the term not even arguably be implied as a matter of necessary implication from the express terms of the agreement, but that the term cannot be implied either as a matter of fact. Here the submission is that it is simply not necessary to give business efficacy to the Consulting Agreement as the agreement does not depend upon NAFM and the Premium dealers being brought onto the System. The submission is that the suggested implied term contradicts at least two express terms of the contract, namely clause 4, which gives the NMG the right to amend any business plan and clause 2, which expressly envisages that the System IP Rights may not be used. 39 The further submission is that the term is simply not capable of clear expression. This is said to be because there is no objective criterion by which the standard of reasonableness is to be judged. The defendants submit that this is particularly so in circumstances where the possibility existed that it could be in the commercial interests of JMG to have all NAFM products on the System and to have all NAFM products listed and/or Premium dealers active, but not in the interest of NAB, NAFM, the Premium Planners or their clients. The defendants note that the particulars extend the obligation to all NAFM products and to directing Premium Planners to make use of the System. The defendants further submit that the term cannot be said to be so obvious that it goes without saying nor can it be said to be reasonable or equitable because it would require NAB or NAFM to act adversely to their own interests or to the interests of the group as a whole 40 The defendants take the stance that for the purpose of the present application they need only to demonstrate unarguably that one of the five criteria for the implication of a term in fact has not been satisfied. In particular they submit, it is not enough for the plaintiffs to show that the term is reasonable or that in some way it provides protection for JMG. Rather it must, they submit, be demonstrated that it is necessary to give business efficacy to the agreement. The submission is that in the present case whatever arguments are available in support of the reasonableness of the implication, it is not one necessary to give business efficacy to the contract and is inconsistent with clause 4.1. Insofar as the plaintiffs apparently place reliance in support of the implication of the term on the alleged common objectives and assumptions referred to in paragraph 12A, the defendants submit that a term cannot be implied where it is not necessary to give business efficacy to the agreement even where there is some evidence to suggest that prior to the entry into the agreement the parties assumed that what is said to be the subject of the implied term, would have happened. 41 In relation to the term sought to be pleaded in paragraphs 18.6 (iv), the submission is that this paragraph has to be read in conjunction with the particulars supplied. The defendants submit that the particulars in paragraph 31 when incorporated with the meaning of "Ausmaq Service" for which the plaintiffs contend, mean the effect of the implied term is as follows: "NAB and NMG were bound not to engage in competition with Ausmaq Systems and the Ausmaq Service by establishing, developing and marketing and exploiting any service: (i) providing an automated securities trading system and related service being the Ausmaq Service as it was: (a) in fact as at 6 November 1996; (b) as it should be or should have been enhanced or modified

(ii) having equivalent and similar functionality to (i) above" 42 The defendants then submit that such a provision cannot be implied from the express terms of the contract. The submission is that the express terms show that the parties themselves had given consideration to the need for restraints (clause 12 of the Consulting Agreement is referred to). The submission is that in those circumstances there is no basis to suggest that as a matter of necessary implication, a restraint should be imposed on the other parties to the contract. 43 To the extent that it is sought to imply such a term in fact, the submission is that it is inconsistent with the express terms. The submission is that the agreement expressly envisages other subsidiaries and related companies or other entities of NAB being established to use the Ausmaq System IP and provides for payment of Performance Bonuses in respect of such use. The submission is that such entities would or at least could, be competing with the Ausmaq System. 44 The defendants then submit that this clause is not necessary to give business efficacy to the agreement. The agreement itself is said to make provision for payment if other entities of NAB use the System IP Rights for the purpose of commercialisation of the System. The submission is that the fact that there is a dispute as to the extent of these rights does not mean that it is necessary to imply a term of the nature suggested to give the contract business efficacy. Even where a contract provides that a party is required to use its best endeavours to develop a product or business, courts, on the defendants submissions, are reluctant to imply a non-competition clause. 45 The defendants then submit that the term is not so obvious that it goes without saying. The submission is that the words "act or conduct itself" are inherently ambiguous. The submission is that it is evident from the particulars that they mean more than merely non-compete. The submission is that at the very least, it seems to be suggested by the plaintiffs that the term prohibits NAB from engaging in activities not only that Ausmaq was engaged in but which Ausmaq is alleged to have had the potential to engage in. The submission is that although the implied term does not specify the period of the restraint, it presumably lasts either until termination of the Service Provisions in accordance with clause 8, the duration of the restraints on JMG in clause 12.1 whichever of those is applicable or the duration of the Consulting Agreement which can continue in existence indefinitely or at least until JMG is bought out. 46 The further submission is that the term is incapable of clear expression. The submission is that quite apart from the difficulties in ascertaining its duration, its ambit of operation appears to be quite uncertain. Particulars of the breaches of the term are referred to as set out in paragraph 32 of the particulars. The submission is that having regard to subparagraphs 5 and 6, it is apparently contended that direct dealing by NAFM and Premium Dealers with fund managers amounts to competing by NAB. The defendants submit that this does not appear with any degree of clarity from the clause. 47 The submission is that notwithstanding the fact that NMG acquired all the shares in Ausmaq System and that the payments under the Consulting Agreement were for services rendered under that agreement, the parties evidently considered it reasonable that JMG obtain some recompense for the use of the System IP Rights by other operating entities. The submission is that it is not reasonable to impose a further restraint on NMG or NAB, particularly a restraint as vague and wide as the one pleaded.

The Fiduciary Obligation Case amendments 48 Paragraph 27.4A is also objected to as being futile. The subject matter is clearly related to that treated with in contractual terms by paragraph 18.6 (iv). The contract is said to be a commercial agreement negotiated by parties at arms length. The submission is that the parties dealt expressly with the question of rights of entities other than Ausmaq System to use the System IP Rights. The submission is that just as there is in these circumstances, no basis for the implication of a term, so there is no basis to impose a particular fiduciary obligation to overcome what is now seen to be a deficiency in the contract. 49 Mr Bathurst did concede that a reference to the history of the proceedings the defendants did not contend on the amendment issue, that the existence of any fiduciary obligations was unarguable. The contention was however that if paragraph 18.6 (iv) was disallowed then the amendment to paragraphs 27.4A should be disallowed

Equivalence and Similarity Case Amendments 50 Paragraphs 30.2 is also objected to for a number of reasons. It is said to be vexatious and embarrassing for the plaintiffs to plead as alternatives, that the Gateway Service was or should have been a service with equivalent and similar functionality to the Ausmaq System particularly when no material facts are said to be pleaded to support either proposition. The plaintiffs are said to have declined to particularise how the Ausmaq System should have been enhanced, modified or added to, to become a service of similar or equivalent functionality to the Gateway Service. 51 The defendants further take the point that paragraph 30.2 is embarrassing as the pleading does not assert that the defendants or any of them had a contractual obligation to develop the Ausmaq system so that it became a service of equivalent and similar functionality to the Gateway Service. The defendants have stated that they assume that reliance is placed on one of the implied terms in paragraph 18.6. The submission is that if this is in fact the case, the pleading is futile for there is no arguable basis for the implication of such terms. 52 Finally in relation to paragraph 30.2, the defendants submit that even if there was a contractual obligation to enhance the Ausmaq Service so that it was a service of equivalent and similar functionality to the Gateway Service, it does not follow that the plaintiffs are entitled to claim a Performance Bonus based on the financial performance of the Gateway Service. Rather, so the defendants submit, its claim would be a claim for a liquidated damages for the breach by the defendants of a contractual obligation to enhance the Ausmaq System 53 The same objections are made to paragraphs 35.2, 40.2, 46.2, 49B(2), 49I(2) as are made to paragraph 30.2.

Individual Breaches 54 The defendants submit that paragraph 50.16 is dependent on the existence of paragraph 18.6 (i). If leave to add that paragraph is refused the defendants submit that leave to add paragraph 50.16 should also be refused. 55 The defendants then submit that paragraph 50.19 is dependent on the existence of paragraph 18.6 (iv). If leave to add that paragraph is refused the defendants submit that leave to add paragraph 50.19 should also be refused. 56 The defendants further submit that leave should also be refused to the addition of paragraph 50.19 because no material facts are said to be pleaded to support the assertion that NAB or NMG had acted or conduct themselves as a competitor of Ausmaq Systems and the Ausmaq Service. The defendants point out that the plaintiffs have suggested that this difficulty has been overcome by the provision of particulars (see page 20 of the particulars schedule). The defendants however submit that the particulars only highlight the obscure nature of the clause it being suggested at least implicitly so the defendants submit, that every action which the plaintiffs assert to be a breach of other terms of the agreement, amounted to a breach of this provision. The submission is that the particulars highlight the vexatious nature of the paragraph which should be struck out. 57 The defendants submit that the proposed amendments to paragraphs 51.17, 51.20 and 52.17 should not be allowed for the same reasons that the additional paragraphs 50.16 and 50.19 should not be allowed.

Dealing with the proposed amendment to paragraphs 9.9A, 9.9B and 18.6(i) - NAFM /Premium financial planners 58 An immediate threshold problem is raised for the court's consideration on this particular application for leave to amend. This concerns the manner in which the plaintiffs case has been pleaded and particularised to date and the manner in which the plaintiffs sought to open the case. The plaintiffs supplied very extensive particulars to the defendants prior to the hearing commencing on several occasions. During the course of the plaintiffs extensive opening there were many occasions when questions arose as to whether a particular matter being opened on had been pleaded and if so where. From time to time this type of question was raised by Mr Bathurst during the plaintiffs opening. From time to time this type of question was raised by the court during that opening. On a number of occasions the plaintiffs sought to respond to these questions by producing explanatory documents which usually sought to identify precisely where in the then current version of the statement of claim and the then current consolidated particulars, such an allegation had been made. On a number of occasions the plaintiffs sought in such explanatory documents to submit that if, contrary to their assertion that the matter had already been pleaded or particularised, they proved to be incorrect, then the plaintiffs wished to pursue that form of allegation and the explanatory document went about setting out how the allegation was to be put. From time to time the plaintiffs referred to the possibility that if necessary they would regularise the position by further pleading in order to remove all question marks in relation to whether, and if so where, a matter had been pleaded. 59 The threshold question to which I have referred falls precisely into this area. The plaintiffs contend that the existing particulars already identify a contractual implied term for which the plaintiffs contended generally in the terms of that pursued in paragraph 18.6 (i). The defendants contend to the contrary. The only way in which one can work through which contention is correct is to laboriously travel back into the sundry references to NAFM and to Premium Financial Planners by reference back to the third further amended statement of claim. This, say the defendants, requires one to travel the route of moving from paragraph 50.9 of the pleading where an allegation (which later in the pleading is put as having constituted breaches of the Consulting Agreement, as a particular of breaches/inducement to breach the Consulting Agreement and in terms of breaches of fiduciary obligation) is made that NAB has since on or about January 1997, failed to implement and review the 1997 Business Plan for NMG in accordance with the Consulting Agreement (and in the alternative the allegation is made that NAB has procured or induced NMG to likewise fail to so implement and review that Business Plan). 60 The next step say the defendants, in following the route is to go to the particulars to paragraph 50.9 which appear in paragraph 50.9.10 and following under the heading "Premium/NAFM products". The next suggested step in following the route is to go to the 1997 business Plan itself and to the references to NAFM, to the NAFM Group, to NAFM Premium and to Premium Financial Services. 61 The burden of Mr Bathurst's submissions as I understood them, was that this paper chase although it did raise questions involving NAFM /Premium Financial Services in relation to inter alia breaches of the Consulting Agreement, simply did not put anything like the absolute obligation now sought to be alleged by the paragraph 18.6 (i) implied term. 62 The plaintiffs seek to negate this proposition. In this regard the plaintiffs seek to revert to paragraph 50.10 of the existing form of the statement of claim which with the same general prefatory averment to that which appears in the existing paragraph 50.9, puts the breach of obligation in terms of failure to take reasonable steps to proceed with the development of the Ausmaq Service and the Ausmaq IP locally and the global commercialisation and the development of the Ausmaq Service and the Ausmaq IP. The plaintiffs then pursue this route by seeking to rely upon the particulars to paragraph 50.10 to be found on pages 129 - 130 of the composite particulars. The plaintiffs also seek to refer back to MFI P25 where during the course of their opening they sought to expand the earlier particulars. The plaintiffs then seek to take the court through further references within the 1997 business Plan. 63 This is an area where clarification is plainly needed. It is clearly an area where both parties addressed, at least in relation to the detailed facts concerning NAFM and Premium Financial Planners, at great length. During the opening by leading counsel for both parties, extensive sections covered aspects to do with NAFM and Premium Financial Planners. As I understand the current debate Mr Bathurst submits that to the extent that the defendants had opened, it was because factual materials relating to NAFM and Premium Financial Planners were relevant to other forms of breach of contractual and other obligations put by the plaintiffs, but not in the absolute terms now sought to be addressed in paragraph 18.6 (i). 64 In the circumstances in my view the exercise by the court of its discretion to allow the plaintiffs leave to amend to include the proposed paragraphs 9.9A and 9.9B and 18.6 (i) should be in favour of allowing those amendments. Both for the reasons earlier given in relation to the difficulties of the court at this stage of the proceedings launching into an examination of the intricate contractual documents in terms of construction and implication, and also by reason of the documents referred to in Mr Maconochie's new affidavit and a number of the documents which Mr Dicker took the court to in the course of his address, in my view the court could not presently and should not hold that the representations sought to be pleaded and the implied term sought to be pleaded are simply unarguable. I reject the contention that there are no material facts sufficiently pleaded or particularised to support the subject allegations. 65 It is entirely inappropriate to leave in abeyance the question of whether or not the plaintiffs are entitled within the ambit of the existing pleadings and particulars to make this allegation. 66 And as to prejudice, NAFM is of course a party to the proceedings. A number of statements have been put on by both parties dealing with NAFM and Premium Financial Planners. The real question is whether or not there is a prejudice to the defendants in now permitting the position to be clarified and in endeavouring to accommodate such prejudice as may be shown. 67 The relevance of the new contractual term sought to be implied in paragraph 18.6 (i) in terms of issues appears to the more importantly on causation and damages. Certainly as to liability the defendants will require to make such investigations of relevant witnesses as they see fit. Questions as to what were reasonable steps which could have been taken do arise and questions arise as to if there may be an absolute contractual obligation, an inquiry as to whether or not the defendants wish to put on evidence to the effect that some products or dealers were totally unsuitable for the proposed exercise of putting all NAFM products onto the Ausmaq Service and/or were totally unsuitable in terms of the proposition sought to be advanced in paragraphs 18.6 (i) (b). 68 Mr Maconochie's further statement to the extent now pressed requires to be investigated by the defendants. 69 To my mind these matters of investigation and the filing of further evidence can take place and be accommodated within the ambit of the period of time which the proceedings are likely to take. The evidence as to the need for a hiatus remains inchoate. I am content to allow the defendants a reasonable period in which to carry out further investigations at this stage but am not persuaded that it is appropriate to now direct any hiatus. I had a very clear impression from the submissions of the parties that the strength of the defendants submissions in support of a hiatus being a necessary precondition for allowing the amendments related to the types of difficulty which the defendants indicated they would labour under if the amendments to paragraphs 18.6 (ii) and (iii) were to be pressed. And whilst the amendments to paragraph 18.6 (i) and to paragraphs 9.9A and 9.9B may clearly raise issues of the type to which Mr Lovell referred, I do not see that the current state of evidence on the application now mandates a hiatus in the ongoing proceedings. To my mind and whilst it is always unfortunate should this occur, any witnesses who have to be cross-examined may be later recalled for further cross-examination if this becomes necessary and the defendants will have a proper opportunity to put on any evidence they wish to put on in relation to the amended pleadings. I will simply leave open the entitlement of the defendants to seek on an informed basis, for such accommodation as may be shown to be clearly necessary.

Dealing with the proposed amendment to paragraphs 18.6 (iv) and 27.4A 70 Insofar as the existence of any fiduciary obligation along lines sought to be pleaded in paragraph 27.4A is concerned, I already indicated that the defendants do not submit that the existence of such a fiduciary obligation is unarguable. The defendants case in relation to the fiduciary obligation was said to depend upon the court's ruling in relation to the 18.6 (iv) amendment. 71 For the reasons earlier given it does not seem to me appropriate that the court now embark upon the detailed examination of the underlying contractual documents, by way of construction and parameters relevant to the suggested implication, which examination would be necessary in order to determine the defendants submission that the term sought to be implied as propounded in paragraph 18.6 (iv) could never be implied. The matter should be considered as part of the final judgment after full argument and in the light of all relevant evidence. Additionally the defendants have now indicated that provided the plaintiffs no longer press as particulars to paragraph 50.19 (being the factual allegation to support breach), certain of the bullet point sub-paragraphs to be found on pages 19 - 21 of MFI D71, the defendants as I understand it, did not suggest prejudice in terms of paragraphs 18.6 (iv) being allowed to be propounded. If one regards the bullet points as notionally numbered, the defendants have no difficulty with the plaintiffs pressing bullet points numbered 1, 2, 3, 5, 6, 8, or 12. As to bullet point numbered 4, the defendants problem was that this reverted back to the claim to amend paragraph 18.6 (i) and should thus not be permitted. I have already dealt with that paragraph so that this bullet point will require to remain in the particulars. 72 As to bullet point numbered 10, the defendants problem was in two parts. The first part was again that the reference to NAFM reverted back to the claim to amend paragraph 18.6 (i) and should thus not be permitted. As I have said, I have already dealt with this aspect. However the second part is of more significance and affect the whole of the plaintiffs entitlement to press bullet point 10. The second part of the defendants objection goes to an important matter which relates to the lack of transparent reasoning in identifying in paragraph 30 (2), what, as a matter of an alleged legal obligation, is the obligation for which the defendants contend to support the allegation that there was a binding obligation on any of the defendants to enhance, modify or add to the Ausmaq Service in the terms stipulated for in the last two or so lines of paragraph 30 (2). As the transcript will record Mr Bathurst took the court carefully through the steps which the plaintiffs previously sought to take and now seek to take, in moving from paragraphs 29 to paragraph 33.3. The defendants assert that they are entitled to require the plaintiffs to identify exactly where the contractual obligation is. The plaintiffs are obliged to identify with precision whether they assert that there was an obligation to enhance Ausmaq so that it became Gateway, if that is what is claimed, or alternatively to identify with precision whether they assert that there was an obligation, once the Gateway Service was envisaged, to use Ausmaq to supply it, if that is what be claimed. The claim is apparently put outside of the existing reference in paragraph 33.12 to a breach of clause 7 of the Consulting Agreement. To my mind this certainly requires to be clarified and I direct the plaintiffs make the position clear before being content to allow so much of paragraph 30 as includes within sub-paragraph (2) the words following the reference to the date 6 November 1996. Outside of this aspect, the balance of the claimed amendment to paragraph 30 is apparently not opposed and therefore ought be allowed. 73 Once this issue of a further form of words by way of clarification in the pleading is worked through and depending upon it, it may well be that the inclusion of the ninth bullet point on page 20 of the landscape particulars MFI D71 will not be opposed by the defendants.

The state of the proceedings 74 The state which the proceedings have now reached is that following conclusion of the application for leave to amend, the question of the expertise which the plaintiffs second witness, Mr Martin, may have been shown to have demonstrated within the meaning of section 79 of the Evidence Act is to be argued. Mr Martin's evidence has already been taken in relation to the matters to be relied upon by the plaintiffs in suggesting relevant expertise. Subject to a discovery housekeeping matter (which the court may direct be heard on a Friday), the first of the plaintiffs witnesses, Mr Campbell is available to give evidence and is to be cross-examined. He is to be followed by Mr Martin. The plaintiffs have then already identified a list of witnesses to follow and essentially their case will be presented. 75 I earlier referred to Part 1 of the Supreme Court Rules as modified by Amendment No 337. I particularly take into account the overriding purpose of the Rules being to facilitate the just, quick and cheap resolution of the real issues in civil proceedings. I am very clearly of the view that as a matter of case management, the appropriate course is to permit the evidence of the witnesses to proceed whilst the defendants take such instructions and steps as they may see as necessary to deal with the further amendments. There must surely be a number of occasions when such solicitors and counsel retained by the defendants as may be appropriate for the exercise, are able to meet to put into place the necessary plans to deal with any of the new issues seen as now arising. The plaintiffs case is to continue at least until September or October of this year. And whilst I accept Mr Lovell's evidence of the need to take care in ensuring that proper investigations are put in place to treat with any of the new issues, the resources which Mr Lovell indicated are being utilised by the defendants including 19 solicitors [constituted by a partner with a general role, four full time partners and 14 employed solicitors], three senior counsel and two junior counsel, suggests to me that the court requires to take very special care indeed before acceding to any form of hiatus otherwise than upon a very informed basis. That basis has not yet been established on the evidence before me on this application. The position may alter. It may not. The Court will continue to case manage the ongoing hearing with an open view to protecting both parties against unfair prejudice - but the state of the Court's list and the current readiness of the plaintiffs to begin the presentation of their evidentiary case are important factors also to be taken into account. Presently the hearing must proceed, it being some seven calendar months since it began. 76 I have taken into account my knowledge of the issues and sub-issues in my assessment of the extent to which the new issues overlap with or are related to existing issues. 77 The extent of any prejudice may of course require re-consideration or re-evaluation when the balance of the submissions on the remaining amendments have been taken.

I certify that paragraphs 1 - 77 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 12 March 2001

      Susan Piggott
      Associate

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Judgment (43 paragraphs)

Cases Cited (4)