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

Supreme Court of NSW|2001-06-13|Before: Einstein J, Mr J

CITATION : Idoport Pty Ltd & Anor v National Australia Bank Limited & 8 Ors.; Idoport Pty Ltd & Market Holdings Pty Ltd & Donald Robert Argus; Idoport Pty Ltd "JMG" v National Australia Bank Limited [26] [2001] NSWSC 487 FILE NUMBER(S) : SC 50113/98; 50026/99; 3991/00 HEARING DATE(S) : 08/06/2001 JUDGMENT DATE : 13 June 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 : Mr M Dicker (Plaintiffs) Mr J Halley, Ms Williams (Defendants) SOLICITORS : Withnell Hetherington (Plaintiffs) Freehills (Defendants) CATCHWORDS : Practice and Procedure - Discovery - Production and inspection of documents - Notice to Produce - Relevance of documents to a fact in issue - Entitlement to document in preparation for cross examination of relevant witnesses LEGISLATION CITED : Supreme Court Rules DECISION : Notice of motion to be dismissed. Costs reserved.

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 LIMITED

JUDGMENT - On Notice of Motion to set aside Notice to Produce addressed to Investors Buying Service Pty Ltd 1 By Notice to Produce dated 26 April 2001 the defendants seek production of certain categories of documents from Investors Buying Service Pty Ltd ["IBS"]. IBS is the fourth cross-defendant to the first cross-claim and the fourth cross-claimant to the second cross-claim in the proceedings 2 By Notice of Motion dated 11 May 2001 and filed on 15 May 2001 IBS seeks to set the Notice to Produce aside. The only basis relied upon is that the documents are said not to be relevant to any issue in the proceedings. No questions of prejudice or oppression in respect of the Notice to Produce are raised by IBS. 3 Part 23, Rule 3 of the Supreme Court Rules provided as follows:

"The Court may, on the application of a party or of its own motion, order that any party (party B) give discovery to any other party (party A) or parties (each of which is included in the expression "party A") of: (a) documents within a class or classes specified in the order; (b) one or more samples (selected in such manner as the Court may specify) of documents within such a class.
A class of documents shall not be specified in more general terms than the Court considers to be justified in the circumstances.

Subject to sub-rule (2), a class of documents may be specified: (a) by relevance to one or more facts in issue; (b) by description of the nature of the documents and the period within which they were brought into existence; (c) in such other manner as the Court considers appropriate in the circumstances." 4 Part 23 Rule 1(d) of the Rules provides: "a document or matter is to be taken to be relevant to a fact in issue if it could, or contains material which could, rationally affect the assessment of the probability of the existence of that fact (otherwise than by relating solely to the credibility of a witness), regardless of whether the document or matter would be admissible in evidence." 5 IBS relies upon an affidavit of Stephen D'Emilio dated 15 May 2001 and upon sections of the second statement of Mr Maconochie [MFI P105]. 6 The defendants rely upon an affidavit of Mr Graham Johnson of 28 May 2001, upon an affidavit by Mr Peter Olds made on 7 June 2001 and upon a further affidavit made by Mr Johnson on 4 June 2001. The defendants also rely upon the materials identified at transcript 0091.3 -.30. 7 Both parties to the motion relied upon written submissions which were supplemented orally. 8 A copy of the Notice to Produce is annexed to this judgment. 9 The short point of substance on which the fate of the Notice to Produce is dependent concerns the plaintiffs claim in the proceedings that NMG and NAB breached the Consulting Agreement in that they "failed to take reasonable steps to proceed with the development of the Ausmaq Service and the Ausmaq IP locally and the global commercialisation and development of the Ausmaq Service and the Ausmaq IP". 10 Further allegations on the plaintiffs pleaded case are that by reason of this and other alleged breaches of contract by NMG, NMG has lost custom, revenue and income which it would otherwise have gained. It is further alleged that JMG has lost the benefit of the Performance Bonus and buyout provisions of the Consulting Agreement, and the contractual opportunity to obtain profits from the commercialisation and exploitation of the Ausmaq Service in Australia, New Zealand and globally, as a result of these alleged breaches. Similar allegations are made in respect of NAB and the personal defendants. Equitable compensation is also claimed for any loss or damage occasioned to JMG. 11 A central issue on the plaintiffs case is the allegation that the defendants failed to take reasonable steps to commercialise Ausmaq. On this exercise the plaintiffs endeavour to show that the Ausmaq paradigm had some commercial value. 12 The particular point of substance that requires to be noted is the important issue going to the complexity, likely timescale for and potential expense of any developments which the plaintiffs claim should have been made to the Ausmaq System-these matters being centrally relevant to the reasonableness of the local and global commercialisation the subject of the plaintiffs pleaded case and being particularly relevant to the prospect of such developments being implemented within the timeframe now alleged by the plaintiffs to have been feasible. The statements relied upon by the plaintiffs off shore damages experts are based upon an assumption that each of the developments identified in the Global Commercialisation Document would have been completed by mid-1998 [see by way of example paragraph 7.2 of the letter of instruction from the defendants' solicitors to Mr Joslin dated 6 June 2000] 13 The plaintiffs have filed and seek to rely upon a series of statements in which witnesses put forward the proposition that their estimates of the time by which these developments would have been completed are based upon the past experiences during the original system development and are based upon known productivity using the same software development environment as was used during the original system development. Examples from the statements by Mr Martin are as follows: '(a) In his initial reply to Professor Thomas (exhibit P14), Mr Martin at paragraph 16 compares the complexity of the tasks proposed in the system development plan to the development of the Ausmaq System itself, "in about 1994". (b) In paragraph 21 of his reply to Professor Thomas (exhibit P14), Mr Martin claims that: "in each previous development done at Ausmaq a detailed plan was introduced before commencing development. It was normal practice at Ausmaq to produce a detailed functional specification document and sometimes an even more detailed technical specification document for each of the proposed projects". (c) In paragraph 59 of his reply to Professor Thomas, Mr Martin claims that the proposed developments were less complex and demanding than the original build of the System. (d) In paragraph 130 of his initial reply to Professor Thomas (exhibit P14) Mr Martin asserts that: "Ausmaq had created an 'effect team that can achieve sustained, acceptable productivity… and deliver a high quality product' during the original system development comprising key consultants.. This team had worked closely together for years in building the Ausmaq System, which from a technical systems perspective was more complex, more time-consuming and more difficult than the planned enhancements. In my opinion, there was no reason to assume that the same key consultants….. could not do so again, using the same external consultants….." (e) In paragraph 131 of his initial reply to Professor Thomas (exhibit P14) Mr Martin gives evidence that "Estimates were based on known productivity using the same software development environment as used during the original system development". (f) Mr Martin sets out the extent of scalability testing carried out on the system at paragraph 210 of his reply to Professor Commerce (exhibit P14). (g) In paragraph 76 of his second reply to Professor Thomas (exhibit P15) Mr Martin gives evidence as follows: "Mr Maconochie, Mr Nelson and I had worked closely with Star Systems in the initial Ausmaq build. The same team of Mr Maconochie, Mr Nelson, Star Systems and myself could continue to be used. I worked on the initial system development and I designed or estimated some of the enhancements. In my opinion, no person is in a better position than myself to state that the planned enhancements were not as large or as complex as the existing system….." (h) In paragraph 77 of his second reply to Professor Thomas (exhibit P15) Mr Martin claims: "The estimates were based on the known characteristics and performance of typical Progress programmers who had been used at Ausmaq, and of the typical performance of Star Systems' consultants who had been used at Ausmaq and of Mr Nelson and myself. The estimates were based on the intention to continue using the same Progress 4GL language, and the same Progress data base, and the same Solaris operating system, and the same development methodology and standards already successfully in use at Ausmaq and Star Systems. Some of the same Star Systems consultants who had worked at Ausmaq previously were still available,……My point is that nothing of substance in terms of system development had changed, and we intended to continue using the same development methodology and the same environment and the same key consultants as previously, and I expected to achieve about the same level of productivity as previously…".' 14 During argument reference was made to the 1994 Annual Report of Ausmaq Ltd where the following statement appears: "The Ausmaq System has been developed to foster a unified wholesale and retail marketplace, where the interests of the client investor are paramount . Initial development of the components which are now embodied in the design of the Ausmaq System were started in 1989. These components were refined and developed over the ensuing five years. The first production version of the Ausmaq System reflects the adaptation of these components to the current marketplace and more particularly, to the perceived developments of the investments and financial planning industries over the next 3-5 years". [emphasis added] 15 Against this background it is convenient to simply set out sections of the defendant's written submissions in support of the proposition that the Notice to Produce clearly seeks the production of documents falling for material purposes within the definition of relevance in terms of issues in the proceedings. These submissions serve to sketch in, sufficient of the background history and landscape for which the defendants contend and against which the Notice to Produce is to be weighed. Clearly not all of these submissions may ultimately find favour in terms of factual findings which of course must await the rollout of all the evidence and the adjudication by the court of many parameters of significance to factual findings. However for present purposes, the submissions make the point that the subject documents now sought cannot be said to be irrelevant to issues in the proceedings. These submissions were in the following terms: " Investors Buying Service (IBS)

IBS was initially registered on 12 September 1985 as "Catch 456 Pty Ltd". Its shareholders were and are Negubo Pty Ltd (shareholders and directors John and Mary Maconochie) and Sydney School of Arts (see paragraph 8(a) of the Olds Affidavit).

On 4 December 1985 the company changed its name to "The Investor's Buyer Service Pty Ltd" and then to IBS on 19 July 1998. In the interim, Mr Maconochie had become a director on 28 March 1998 (see paragraph 8(a) of the Olds Affidavit).

In the late 1980s and early 1990s IBS worked on or investigated the development of several electronic services, among them: (a) An electronic leasing service (see paragraphs 8(b) and 8(c) of the Olds Affidavit);

(b) An electronic tax return service (see paragraphs 8(d), 8(e) and 8(f) of the Olds Affidavit);

(c) A service for the electronic lodgement of forms with the ASC (see paragraphs 8(g), 8(h), 8(i) and 8(j) of the Olds Affidavit);

(d) A service for the electronic transmission of information from property and mortgage trust managers to the ASC (see paragraph 8(k) of the Olds Affidavit); and

(e) An electronic execution-only share dealing service (see paragraphs 8(l) and 8(m) of the Olds Affidavit)

In the same period, IBS also worked on the development of three of the forerunners to AUSMAQ: the EFMS service (see paragraph 21 of the Johnson Affidavit), the Registry of Record Service (see paragraph 8(n) of the Olds Affidavit) and the AUX (see paragraphs 40.2 to 40.3 of the Johnson Affidavit).

During the development of AUSMAQ, IBS, principally through Mr Maconochie and Mr Graham Nelson, provided consulting services to Market Holdings Pty Ltd (known as AUSMAQ System Pty Ltd for some of the relevant period). As such IBS performed services such as: (a) Design, specification and testing of the AUSMAQ and Instaclear systems (see paragraph 35 of the Johnson Affidavit);

(b) Proposals to and negotiation with various external parties regarding joint ventures with AUSMAQ or provision of services by AUSMAQ to these parties (see paragraph 40.6 of the Johnson Affidavit); and

(c) Communications with regulatory agencies in relation to AUSMAQ (see paragraph 8(o) of the Olds Affidavit). 14. The Plaintiffs rely on certain IBS documents in the proceedings but for the reasons explained in paragraphs 35 and 37 to 40 of the Johnson Affidavit, the Defendants believe that IBS may have in its possession, custody or control further documents relevant to issues in dispute in these proceedings.

At paragraph 5.3 of his second statement dated 20 November 1998, Mr Maconochie describes the Electronic Funds Marketing Service (EFMS) as one of the three forerunners of the AUSMAQ Service. In paragraph 5.3.1 he describes EFMS as "the first forerunner of the AUSMAQ Service". The development of EFMS by his company is set out in paragraphs 5.3.1-5.3.7 of his Second Statement.

EFMS served to "electronically deliver prospectuses to dealers and to deliver applications that had been completed by Customers to fund managers, together with the customers' money to be invested" (Maconochie 2, 5.3.3).

The documents sought in relation to EFMS fall into five specific categories: (a) Business requirements and specification documentation (documents requested at paragraphs 1-4);

(b) Contracts and agreements relating to the development of EFMS (documents requested at paragraphs 5-8);

(c) Communications relating to the conception, design and development of EFMS (documents requested at paragraphs 9, 10, 12 and 13);

(d) Communications relating to the termination of the EFMS project (documents requested at paragraph 11); and

(e) Testing documentation relating to EFMS (documents requested at paragraph 14).

The Australian Unit Exchange (AUX) was a forerunner to the AUSMAQ System developed by IBS between November 1990 and June 1991. The AUX was intended to provide a market system for the trading of unlisted property trusts, in order to increase liquidity in that market, but was capable of trading any product. The system would have allowed dealers to place orders on the system, which would have been electronically matched by volume and price, much like market style 2 would operate on the existing AUSMAQ System.

At paragraph 5.3 of his second statement, Mr Maconochie describes the AUX as one of the three forerunners of the AUSMAQ Service. Functionally, it bore the greatest similarity to AUSMAQ as it exists today. Indeed, it appears that the AUX was a prototype for AUSMAQ. In paragraph 5.3.11 of his second statement, Mr Maconochie says as much: "In about March 1991, I renamed the AUX proposal as the Australian Market Automated Quotation (AUSMAQ) System proposal".

The close relationship of the two systems is borne out by a letter from Mallesons Stephen Jaques to the Australian Securities Commission dated 4 October 1991 (see paragraph 8(p) of the Olds Affidavit) entitled "Proposed Australian Unit Exchange" which states: "Mr Maconochie has established a new company, Australian Market Automated Quotations (AUSMAQ) System Pty Limited to provide the System to Managers of unit trusts to enable them to operate markets in their unit trusts".

The "System" referred to in the letter is the AUX, which was renamed AUSMAQ.

The documents sought in relation to the AUX fall into three specific categories: (a) business requirements and specification documentation (documents requested at paragraphs 15-18);

(b) communications relating to the conception, design and development of the AUX (documents requested at paragraphs 19-21); and

The Notes to and Forming Part of the Financial Statements for AUSMAQ Limited for the year ended 30 June 1995 (see Annexure N to the Johnson Affidavit; CBASMQ.008.156) refer in the following terms to an agreement between IBS and AUSMAQ System Pty Limited: "Mr J M Maconochie is a director and ultimate shareholder of Investors Buying Service (IBS) Pty Limited which charged $643,229 under a contract with the Company's wholly owned subsidiary to provide consultative and management services."

The Notes to and Forming Part of the Financial Statements for AUSMAQ System Limited for the year ended 30 June 1996 (see Annexure O to the Johnson Affidavit; CBASMQ.044.267_0019) record: "Mr J M Maconochie is a director and ultimate shareholder of Investors Buying Service (IBS) Pty Limited which was paid $175,000 and accrued $35,000 under a contract with the Company to provide consultative services. In addition, an amount of $210,000 has been accrued, but has not been charged or paid.

Mr G F Nelson is a director and ultimate shareholder of Chipland Pty Ltd, a consultant to IBS, which was paid $111,073 and accrued $21,890 under a contract with IBS to provide consultative services to the Company. In addition, an amount of $132,963 has been accrued, but has not been charged or paid."

It is clear from AUSMAQ Limited's and AUSMAQ System Limited's financial statements that over the years 1995 and 1996 IBS performed substantial amounts of consultancy work for AUSMAQ System Limited , at significant cost, however it is unclear what the work was.

There are five specific categories of documents sought in relation to the AUSMAQ System: (a) Agreements to develop software (paragraphs 25 and 33-35);

(b) Tests, project reports, effort estimates and function point analyses (paragraphs 23 and 24);

(c) Proposals to develop the system and communications with various parties in relation to these proposals (paragraphs 26 - 28) ;

(d) Business requirements (paragraph 29); and (e) Functional and other specification documents (paragraphs 30 - 32).

AUSMAQ Proposed Offerings and Negotiations with Key Players

The documents sought by the Defendants in relation to AUSMAQ Proposed Offerings and Key Players fall into three specific categories: (a) Documents relating to proposed AUSMAQ portfolio management service offerings (paragraphs 36, 37 and 43);

(b) Documents relating to proposed AUSMAQ superannuation offerings (paragraphs 39, 40 and 43); and

The Defendants seek copies of documents held by IBS relating to the investment by AIDC in AUSMAQ Limited, including any proposals and/or presentations to AIDC.

Documents sought under paragraph 41 are relevant because of the regulatory advantages the Plaintiffs claim AUSMAQ has over competing services, and because of the lead time they claim AUSMAQ has over its competitors because of the regulatory exemptions it has obtained. This one of the reasons supporting the Plaintiffs' claim that AUSMAQ's "first mover advantage" would have enabled it to achieve enormous success in the period 1997-2003 (see below for Third FASOC, Composite Particulars and statement references)." 16 The defendants make the point that the plaintiffs are calling two witnesses with knowledge of the actual time, cost and complexity of developing the Ausmaq System, namely Mr Martin and Mr Maconochie. EFMS was apparently developed by Mr Maconochie's company, IBS, in conjunction with Syscorp, by whom Mr Martin was apparently employed as a consultant. The defendants' submission which is of substance is that if, as the 1994 Ausmaq Ltd Annual Report suggests, the development of EFMS formed part of the development of the Ausmaq System, the defendants are entitled to access to documents of the above described nature in order to properly prepare for cross-examination of relevant witnesses. 17 The defendants further submissions were in the following terms: " Proposed Offerings and Key Players

The damages claim is particularised, at paragraph 2 of the Plaintiffs' Amended Particulars of Damages and Equitable Compensation dated 21 June 1999, by reference to the Plaintiffs' damages statements, which include claims that the AUSMAQ Service could have earned revenue from: (a) Operating as a portfolio management service (see for example Maconochie 2 at 7.7, Maconochie 4 at 9.32, Maconochie reply to Turner at 35.1.2); and

(b) Offering a general superannuation service to investment advisers and their clients (see for example Maconochie 4 at 9.10.1, Maconochie reply to Turner at 42.8-42.11). 42. In order to test the validity of assumptions given to the Plaintiffs' expert witnesses as to the functionality that AUSMAQ proposed or was capable of offering, the Defendants are entitled to be given access to documents setting out the exact nature of what AUSMAQ was and had been offering to the market. The documents sought in paragraphs 36, 37, 39, 40 and 43 are documents of this kind.

Furthermore, it has been a feature of the Plaintiffs' damages evidence that although they claim damages for revenue they claim they would have received from AUSMAQ offering these services, their evidence is far from transparent as to the exact nature of the proposed offerings, and indeed the propositions have changed from time to time, particularly in offshore markets. Contemporaneous documents showing what was being, and equally relevantly had been, offered to the market in these areas are of added relevance in view of this.

The relevance of documents regarding proposed custodian and/or depositee services (paragraph 42 of the IBS Notice to Produce) relates to the Plaintiffs' claims that the exact terms of AUSMAQ's relationship to these entities is crucial to AUSMAQ's ability to derive revenue from acting as a settlement agent (see Fourth Statement of John Maconochie at 11.8-11.51). The Plaintiffs claim that the depositee agreement must be on the exact terms of the agreement between AUSMAQ and the AIDC (see Fourth Statement of John Maconochie at 11.14). Contemporaneous documents showing the terms of proposed depositee and custodian agreements between AUSMAQ and other parties are relevant to determining whether this is the case and thus whether the replacement of the AIDC as depositee on different terms actually harmed AUSMAQ's ability to earn revenue.

IBS documents relating to the investment by AIDC in AUSMAQ are relevant to AUSMAQ's commercial potential in that they may provide evidence of views held by directors of the plaintiff companies (including Mr Maconochie) and be admissible as admissions of Mr Maconochie's perception of the commercial and revenue potential of the AUSMAQ System, the manner in which it was proposed to commercialise the AUSMAQ System, and the countries in which it was proposed to commercialise it.

The documents requested would assist the Court in ascertaining: (a) The length of negotiations and discussions between AUSMAQ and regulatory authorities;

(b) The cost of such negotiations and discussions; and

(c) The content of any negotiations and discussions. 47. The first two points above would assist the Court in determining the exact extent of AUSMAQ's regulatory advantage (if any) over competitors who tried to replicate it.

The third point is relevant to the reasonableness of commercialising AUSMAQ because it provides evidence as to what approvals to operate AUSMAQ actually possessed. The Plaintiffs claim, amongst other things, that AUSMAQ had, or would obtain, approval to operate: (a) Parallel stock markets in competition with the ASX;

(b) Markets in derivative products known as Share Entitlements (SETs); and

The Defendants dispute the fact that approval had actually been gained to operate any of these markets. Documents which can establish whether or not this was the case are relevant to the likelihood of and timescale and expense for commercialising AUSMAQ in accordance with the Plaintiffs' claims.

Furthermore, the Plaintiffs also claim damages in respect of revenue supposedly lost to NMG from AUSMAQ operating in the following markets:

There is no evidence that AUSMAQ had regulatory approval to transact in or operate markets for any of these products. Despite this, damages claimed in respect of them, US$4.9 billion, amount to roughly half the Plaintiffs' total damages claim for the Australian and New Zealand markets of US$10.8 billion (see Annexure 4 to the Second Statement of John Skelton dated 20 July 2000 and, Exhibit 54 to the Fifth Statement of John Maconochie dated 9 June 1999 and paragraph 9.10.2 of the Fourth Statement of John Maconochie dated 24 May 1999. Documents in the possession of IBS evidencing the nature of any regulatory approvals held by AUSMAQ or the state of any ongoing negotiations with regulators are relevant to the reasonableness of the Defendants commercialising AUSMAQ in any or all of these markets." 18 In circumstances where: (a) the plaintiffs seek damages of exceptionally high order in respect of the alleged failure by the defendants to globally commercialise the Ausmaq,

(b) it is apparently the case that no detailed plans were ever prepared for a global commercialisation of the nature or type now put forward by the plaintiffs as the basis for their claim for damages, (c) the sequence of evidence is as disclosed in Mr Halley's submissions transcribed at 10131-10135,

it seems clear that the Notice of Motion should be dismissed and production required of the documents sought on the Notice to Produce. 19 It is not possible at this stage in these proceedings on argument going to the Notice to Produce for the court to draw the line for which Mr Dicker contended. Mr Dicker's written submissions were inter alia: "13. IBS makes the following submissions in relation to each paragraph number in the schedule to the Notice to Produce served on IBS (see pages 7 - 11 of Mr D'Emilio's affidavit): (a) paragraphs 1 - 14 . Documents relating to EFMS and various agreements between IBS and Telecom Australia and other companies. There are no issues in dispute on the pleadings in relation to these documents. In paragraph 5.3.1 of his second statement Mr Maconochie does describe the EFMS Service as the "first forerunner of the Ausmaq Service". However paragraph 5.3.7 makes it clear that by late 1991 Mr Maconochie had "abandoned it [EFMS] altogether". EFMS is not referred to in the pleadings. It is also difficult to see how documents as old as those sought could be relevant to the issues in the proceedings. Similar comments can be made in relation to the agreements referred to in paragraphs 5, 6, 7, 8 and the letter in paragraph 12; (b) paragraphs 15 - 22 . These all relate to the Australian Unit Exchange Market Trading System ("AUX"). This appears to have been a "forerunner" of the Ausmaq Service. See paragraph 5.3 of Mr Maconochie's second statement. It appears that in about March 1991 Mr Maconochie renamed the AUX proposal as the Ausmaq proposal. See paragraph 5.3.11 of Mr Maconochie's second statement. Having regard to the date of the documents sought, the fact that AUX is not referred to in the pleadings and the AUX was renamed Ausmaq in about March 1991, it is difficult to see how the documents sought in paragraphs 15 -22 could or would be relevant. (c) paragraph 23. Whilst this seeks documents relating to Ausmaq it seems entirely unclear having regard to the issues in dispute in the proceedings and the dates pleaded in relation to those issues why the documents referred to in paragraph 23 which relate to the period 1 January 1991 to 31 December 1992 are relevant. For example, if an issue as to scalability or capacity of the Ausmaq System were relevant, why would documents as at the dates indicated in paragraph 23 be relevant as opposed to documents as at 1996; (d) paragraph 24. In relation to the documents sought in paragraph 24, similar submissions can be made although it is conceded that any documents as to the capacity of the Ausmaq System in 1996 would be relevant. That, however, is not how the paragraph is framed; (e) paragraph 25. It is submitted that such documents would not be relevant. The issue in the proceedings relates to the state of the Ausmaq System in 1996 and the proposals of the Plaintiffs as at that date, not at earlier dates. The time period sought would appear to be far too wide; (f) paragraph 26. See the comments in relation to paragraph 25; (g) paragraph 27. See the comments in relation to paragraph 25; (h) paragraph 28. See the comments in relation to paragraph 25; (i) paragraph 29-32. IBS submits that it is clear that some documents falling within these descriptions are relevant. However, the date specified would appear to relate to a period where there is no relevance. If a date substantially later than either 1 November 1990 (paragraph 29) or 1 January 1991 (paragraphs 30-32) was specified then IBS (depending on the terms of the altered paragraph) could not object to these paragraphs; (j) paragraphs 33-34. Any agreements falling within the descriptions in these paragraphs do not appear to be relevant to the proceedings; (k) paragraph 35 . This paragraph on its face has no link to the issues in the proceedings; (l) paragraph 36 . Whilst IBS is aware that the Court has ruled in favour of the relevance of documents in 1993 concerning Ausmaq in the context of the cross-examination of Mr Campbell, the wording of this paragraph would appear to be too wide for two reasons: (i) date, as the commencing date sought is 1 January 1992; and (ii) the description of a portfolio administration system as opposed to Ausmaq; (m) paragraph 37. IBS cannot see the relevance of this document, particularly for the period sought; (n) paragraph 38. IBS submits that the documents sought cover too wide a period. IBS is not aware of any issues in the proceedings going back to 1 January 1992; (o) paragraphs 39 - 40. It is unclear what the relevance of these documents is as they are not documents concerning Ausmaq Systems. Further, the date sought covers too early a period; (p) paragraph 41. Paragraph 41 appears to be too wide because of the date of commencing the period of 1 January 1989. The documents sought are also not limited to the Ausmaq System; (q) paragraph 42. First, this appears to be too wide as it is not limited to services relating to the Ausmaq Service. Secondly, the commencing date of 1 January 1992 appears to be too early to relate to any issues in dispute in the proceedings; (r) paragraph 43 . The description in the paragraph is too wide as it is unlimited in its subject matter. Further, the commencing date of 1 January 1992 is too early. 14. In essence, IBS submits that whilst some documents falling within a few of the above descriptions may be relevant, the descriptions themselves and the dates put forward are in all cases too wide in terms of description and date." 20 If one takes for example the documents called for in paragraph 24 of the Notice to Produce: 'Tests (including unit testing and system testing), project reports, effort estimates and function point analyses for Ausmaq in the period 1 January 1993 to 6 November 1996'

it is clearly inappropriate for the court to substitute October 1995 as the first date of reference, as Mr Dicker at transcript page 10097 suggested. 21 The proposition for which Mr Dicker contended that was that October 95 at least on Mr Campbell's evidence was said to have been the date when the Ausmaq service commenced in terms of opening its doors for trading purposes. But the earlier recitation of the way in which the plaintiffs put their case makes it clear that it is necessary and appropriate for production of documents which are well anterior to this date. The difficulty is to draw the line so as to endeavour to separate out a period of earlier activity on a relevance basis. Although Mr Dicker sought to provide an alternative as May 1993 being the apparent date of commencement of negotiations with Bleakleys and on Mr Dicker submissions at transcript 10097 also being a date "prior to Mr Martin even commencing his work on Ausmaq", I cannot accept any such arbitrary cut-off date for relevant purposes. In fact Mr Halley at transcript 10130 referred the court to Mr Martin's relevant work taking place from as early as 1991. 22 In so far as the plaintiffs in effect submitted that the notice to produce, for example in paragraph 41, amounted to an illegitimate fishing expedition, the defendants drew the court's attention to the document appearing at page 181 and following of the annexures to the affidavit by Mr Olds of 7 June 2001. That document is entitled "Submission of Views by Ausmaq for the ASC's Review of NCSC Policy Statement 151". The document asserts copyright as held as at 1993 by IBS. At page 3 [page 183 of the annexures] the document advises the reader that for further information the reader should call Mr Maconochie or Mr Chessell. 23 The document includes the following: "This paper sets out Ausmaq's views on the proper scope of the stock market provisions of the Corporations Law, the appropriate regulatory framework that should apply to declarations as an exempt market and matters relevant to a review by the Commission of NCSC Policy Statement 151. Ausmaq's views are embodied in its current application and the issues relating to that application have previously been addressed in detail by Ausmaq, the Commission and others. This paper has been prepared as a general supplement in response to the Commission's request for an expression of views as part of its comprehensive review of NCSC Policy Statement 151. The views expressed in this paper are also applicable to traded risk products and the market in them. We note that these products are being covered separately under a review of PS 152" 24 The document includes on page 10 [page 190 of the annexures] reference to proposals to trade specific securities including a treatment of debt securities, equity securities and risk securities. 25 In those circumstances there is substance in the defendants submission that the important issue going to communications and discussions with the regulators provides a proper basis for paragraph 41 the of the Notice to Produce. 26 Nor, for the reasons earlier stated, are the plaintiffs' other submissions as to suggested lack of relevance of substance. 27 The appropriate course is to dismiss the Notice of Motion. Costs are reserved for submission.

I certify that paragraphs 1 - 27 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 13 June 2001

  Susan Piggott
  Associate
  13 June 2001

Last Modified: 06/13/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

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Judgment (67 paragraphs)

Cited By (1)