Optiver Australia Pty Ltd v Tibra Trading Pty Ltd

Federal Court of Australia|2012-05-28|Before: Mr P, Emmett J, Rares J

The separate questions (in these orders referred to as the questions) ordered to be tried, pursuant to order 7 made on 22 October 2010 as varied by order 1 made on 26 October 2011, separately and before all other issues in the proceedings the subject of the hearing fixed by order 8 made on 15 July 2011 be referred to the Honourable Kevin Lindgren QC, as referee, pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) for inquiry and report in accordance with the Rules (the reference).
All orders and directions made before 28 May 2012 as to the conduct of the hearing fixed for 4 June 2012, be vacated to the extent that matters remain to be done under or in accordance with any such order or direction. BY CONSENT THE COURT ORDERS THAT:
The hearing of the reference: (a) shall commence on 4 June 2012 or as soon thereafter as the referee determines that suitable arrangements have been made for its conduct; (b) shall proceed, subject to the referee's availability, to the conclusion of hearing without any unreasonable interruption to its prompt conclusion (including with respect to counsel's availability) so that the referee can report as soon as he considers is reasonably possible; (c) shall be conducted on the basis that, subject to the referee determining that any different directions ought be made, as if (i) the directions and orders vacated by order 2 above had been made by the referee for the conduct of the inquiry under r 28.65(3) and continue, in the absence of a direction by the referee, to bind the parties as directions of the referee under r 28.65(3); (ii) a direction had been given that all lay evidence in chief be given orally except in respect of the 12 persons whose affidavits the applicants have filed and served deposing to their authorship of part of Optiver's computer programs or source codes; (d) be conducted in accordance with the rules of evidence so far as they are relevant. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 681 of 2009

AND: TIBRA TRADING PTY LTD AND OTHERS (ACCORDING TO THE SCHEDULE)

REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 On 24 May 2011 I directed the parties, for reasons that I gave then, to identify which of three courses ought be followed in order to determine the mode of trail of these proceedings: Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2012] FCA 558. On 15 July 2011, Emmett J set the proceedings down for hearing for eight weeks, commencing on 4 June 2012. The parties are now agreed that the hearing will take, as I indicated in my earlier reasons, longer than the eight weeks that has been set down. They both agree that, first, it will not conclude, and, secondly, they cannot agree a suitable and fair series of limitations for the taking of evidence and submissions so that it would so conclude, within the eight weeks set down.

Availability of Optiver's principal expert 2 At the hearing on 18 May 2012, Optiver indicated that Professor Zobel, one of its principal experts, would not be available from 20 July 2012 because of a medical condition that required surgery, and that accordingly, the expert evidence ought to conclude by then, so far as it concerned him. It appears that Optiver's solicitors had known about this constraint on Professor Zobel's availability for some weeks prior to its announcement during the course of that argument. In my view, it was unsatisfactory that they did not notify the Tibra parties of the potential of this problem, having regard to the significance of Professor Zobel's evidence and the need for him to give concurrent evidence, which I had directed on 21 March 2012 would occur at the conclusion of all the lay evidence. Section 37N of the Federal Court of Australia Act 1976 (Cth) imposes duties on both the parties and their lawyers, in the conduct of a civil proceeding before the Court, to conduct the proceeding, including negotiations for its settlement, in a way that is consistent with the overarching purpose set out in s 37M. Where one party knows that a witness will have constraints on his or her availability that would affect the conduct of a trial, it is incumbent on that party to give proper notice to the other parties and, if need be the Court, so that consideration can be given as to the consequences of that impact. 3 Today, Optiver has provided further detail of Professor Zobel's condition which, because of its personal nature, I have ordered be kept confidential. He said, and I accept, that it is his understanding that following the surgery he will have to undertake on 26 July 2012, he will require about one week in hospital followed by a further recovery period of three weeks. He will also need to spend about one week preparing for the operation. Allowing for all going well with his recovery, Professor Zobel, realistically, would not be able to give evidence before about 27 August 2012, were his concurrent evidence not able to be concluded prior to 20 July 2012. Both parties have agreed that the latter scenario is no longer realistic.

Optiver's change of stance 4 Reversing the stance that it took on 18 May 2012, Optiver now seeks an adjournment of the hearing until early 2013 so that it can take place for an indeterminate length before me, as one of my suggested options for the parties to consider. The Tibra parties oppose an adjournment and seek to have the proceedings referred to a referee so that they can commence to be heard next week. The Tibra parties point to the fact that a further delay of approximately eight months, before a hearing commencing in late January 2013, will occasion them prejudice first, from having these proceedings hanging over their heads for that further period and, secondly, because they have prepared to be ready for a hearing now. In contrast, Optiver points to the fact that, through no fault of its own, Professor Zobel must undergo significant surgery that will impact on the orderly conduct of any hearing commencing on 4 June 2012 whether before the Court or a referee. Optiver argues that it would be preferable to conduct the hearing in open Court, for reasons it previously advanced, next year when Professor Zobel's prognosis will be far clearer and the trial can then proceed in an orderly way to its conclusion. 5 The parties have explored the availability of the proposed referee, the Honourable Kevin Lindgren QC. It appears that he will be unavailable for about seven days towards the end of June and for a small number of days in August 2012. Optiver argues that it is not possible, at the moment, for it to assess whether it will call all 12 of the authors of the programs who were foreshadowed as witnesses earlier and that some forensic decision may be made as to how many of those persons will be called, depending on the course of cross-examination of such of those witnesses as it initially decides to call. Nonetheless, Optiver accepts that three of the principal witnesses of fact whom it proposes to call will be the subject of, in the case of two, substantive evidence-in-chief and for all three, substantial cross-examination. Likewise, the Tibra parties now say that they intend to call, among a total of 14 witnesses, about seven or eight lay witnesses who are parties and who are likely to be the subject of extensive cross-examination.

Consideration 6 In my view, it is likely that the lay evidence of the witnesses called by each of the parties will take between four to six weeks for each of the sides; i.e. a total of between eight and twelve weeks. I accept that this is a broad-brush view. Nonetheless, given the intensity of the issues between the parties taken with the significant and large factual landscape that divides them, I think that it will be necessary for the parties to conduct extensive cross-examination of the principal lay witnesses for the purposes of making out or defending the substantive factual issues between them. 7 There will be some significant argument, which I deferred, over objections to expert evidence and there are other experts whose evidence must be given, albeit neither party anticipates that they will take a considerable time. Neither party is able to say whether, if a reference were ordered to commence on 4 June 2012, arrangements could be put in place to enable that to occur immediately. However, it may take no more than about a week to arrange a hearing room and other facilities so that the reference could run smoothly. 8 The premise upon which I had given my reasons on 24 May 2012 was that both sides opposed a hearing taking place next year and each had urged on 18 May 2012 that I retain the hearing date fixed, albeit opting for the different modes of trial, in Optiver's case before a judge, and the Tibra parties, before a referee or a judge. I discussed the potential consequences for the conduct of any hearing arising from the parties' claims for confidentiality in my earlier reasons. 9 The objectives of case management are stated in s 37M of the Federal Court of Australia Act 1976 (Cth), which I set out in my earlier reasons. They include the efficient use of the judicial resources available for the purposes of the Court and the efficient disposal of the Court's overall caseload (s 37M(2)(b) and (c)). The utilisation of an alternate mode of trial in the Court that s 54A now provides is a matter that the Court is entitled to consider. That is particularly so where a trial by a judge is likely to take an indeterminate time in excess of the parties' earlier estimates and other considerations do not suggest that a reference will not be an appropriate means to achieve the objectives in s 37M. One reason, in an appropriate matter, to make an order for reference under s 54A could be that there is a real likelihood that the hearing time for the matter would remove a judge from being able to hear other matters in his or her docket for a considerable and indeterminate time beyond an earlier agreed, but superseded, shorter hearing fixed in the Court: see Aon Risk Services Australia Limited v Australia National University (2009) 239 CLR 175 at 217-218 [111]-[114] per Gummow, Hayne, Crennan, Kiefel and Bell JJ. 10 It is not appropriate to allow the hearing fixed for eight weeks from 4 June 2012 to run on to its conclusion beyond the time the parties asked the Court to fix. The choices that I offered in my reasons of 24 May 2012 were predicated on the basis that both parties wanted a hearing to begin on 4 June 2012 but could not guarantee that it would conclude in the allotted time. If they could not agree to limit their cases so that it would, they could consent to an immediate reference or a hearing in 2013. 11 The issue now presented involves balancing the interests of justice between keeping the parties to a hearing commencing at a time they had both prepared for and urged, the impact of Dr Zobel's recently advised circumstances, the impact of further delay for the Tibra parties and the desire of Optiver, now, to adjourn the hearing before a judge until next year. While I am conscious that there is no certainty in Dr Zobel's view that he will be sufficiently recovered by about 27 August 2012, at the moment I think I must act on the basis that that is accurate. Optiver has only itself to blame for not raising this as an issue much earlier than it did. As it accepts, Dr Zobel's circumstances provide reason why it wishes to have the hearing date vacated. Any lack of certainty as to Professor Zobel's prognosis not being based on medical evidence must redound on Optiver. 12 In my opinion it is not desirable, in the interests of justice, to adjourn the hearing date for which the parties had prepared or to accede to Optiver's recent change of course, over the Tibra parties' opposition. As I have indicated, it is likely that, although these things cannot be predicted with precision, by the time Dr Zobel anticipates he will be recovered from his operation in late August 2012, a referee will be able to take his evidence concurrently with other experts. It may be that that is an underestimate because the cross-examinations of the lay witnesses may take longer than my current estimate and there may be some delays during the course of the reference. 13 Nonetheless, it seems to me that it is more in the interests of justice to have the parties start at the scheduled time for hearing for which they have prepared now and run it through to its conclusion before a referee than it is to delay the proceedings further so that it can be heard by a judge early next year. I am confident that the referee will be able to manage the proceedings efficiently and that the parties will accept that they are bound by the mode of trial that the Court has selected in doing so, including their obligations under Pt VB of the Federal Court of Australia Act. 14 For these reasons I will order that the proceedings be referred to a referee. It is necessary to make directions for the conduct of the reference.

Directions for the conduct of the reference 15 Opitver pointed out that there could be a potential issue as to the powers of the referee to give directions for the conduct of the reference under r 28.65(3) if an existing order dealt with the same subject matter. It contended that the Court could not authorise a person who was not a judge to exercise judicial power by, for example, varying an existing direction or order as to the giving of concurrent expert evidence or the time for making submissions. 16 So as to avoid the potential for such an issue to cause difficulties, I suggested to the parties the following possible means of ensuring that the referee could conduct the reference effectively. I suggested that all existing orders and directions as to the conduct of the trial be vacated and that the Court direct, under r 28.65(2), that the hearing of the reference be conducted on the basis of those orders and directions as if they had been made by the referee. It seemed to me appropriate that the referee be able to vary any such procedural regime in a similar way to the Court's ability to control its own interlocutory processes for the conduct of a trial or hearing. The parties agreed that the rules of evidence should apply on the reference. That was appropriate having regard to the issues and the capacity of the referee, as a former judge of the Court, to conduct the reference effectively. 17 The parties consented to the following orders being made (although, Optiver had opposed the order for reference): 2. All orders and directions made before 28 May 2012 as to the conduct of the hearing fixed for 4 June 2012, be vacated to the extent that matters remain to be done under or in accordance with any such order or direction. 3. The hearing of the reference: (a) shall commence on 4 June 2012 or as soon thereafter as the referee determines that suitable arrangements have been made for its conduct; (b) shall proceed, subject to the referee's availability, to the conclusion of hearing without any unreasonable interruption to its prompt conclusion (including with respect to counsel's availability) so that the referee can report as soon as he considers is reasonably possible; (c) shall be conducted on the basis that, subject to the referee determining that any different directions ought be made, as if (i) the directions and orders vacated by order 2 above had been made by the referee for the conduct of the inquiry under r 28.65(3) and continue, in the absence of a direction by the referee, to bind the parties as directions of the referee under r 28.65(3); (ii) a direction had been given that all lay evidence in chief be given orally except in respect of the 12 persons whose affidavits the applicants have filed and served deposing to their authorship of part of Optiver's computer programs or source codes; (d) be conducted in accordance with the rules of evidence so far as they are relevant. 18 It is important to appreciate that although a reference is a mode of trial, under s 54A the function of the referee is to inquire and report "in accordance with the Rules of Court". Significantly, s 54A(3) ensures that the Court retains effective supervision and control over the exercise of its functions by the referee, as the Court's officer: cf Harrington v Lowe (1996) 190 CLR 311 at 321 per Brennan CJ, Dawson, Toohey, Gaudron, McHugh and Gummow JJ applying what Dawson J had said in Harris v Caladine (1991) 172 CLR 84 at 122. 19 Because the parties consented to the above directions I suggested for the conduct of the reference, it was unnecessary for there to be any argument on the potential issue about the nature and extent of the Court's power to make an order or give a direction under r 28.65(3) that could permit the referee to vary or depart from an order or direction made prior to, or not in contemplation of, the reference. Thus, it is not necessary to decide whether, if the referee concluded that such a pre-existing order or direction was not apt for the conduct of the reference, the referee would have to report this to the Court so that it could consider varying or vacating the earlier or direction before proceeding further with the reference. 20 The form of the above consent directions should give the referee control over the procedural aspects of the reference without the need for him or the parties to consider whether the Court need revisit one of its earlier orders. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

Associate: Dated: 8 June 2012 SCHEDULE NSD 681 of 2009 TIBRA TRADING PTY LTD First Respondent TIBRA CAPITAL PTY LTD ACN 120 313 160 Second Respondent TIBRA INVESTMENT MANAGEMENT LTD ACN 124 402 160 Third Respondent TIBRA GLOBAL SERVICES PTY LTD ACN 120 338 445 Fourth Respondent DINESH BHANDARI Fifth Respondent GLENN WILLIAMSON Sixth Respondent TIMOTHY BERRY Seventh Respondent ANDREW KING Eighth Respondent KINSEY COTTON Ninth Respondent MARTIN NICKOLAS Tenth Respondent NICHOLAS BEGG Eleventh Respondent

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