Strategic Publishing Group Pty Limited & Anor v John Fairfax Publications Pty Limited - [2003] NSWSC 1134 - NSWSC 2003 case summary — Zoe

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Strategic Publishing Group Pty Limited & Anor v John Fairfax Publications Pty Limited

[2003] NSWSC 1134

Supreme Court of NSW|2003-12-04|Before: Einstein J, Murray J, Rolfe J

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Court

Supreme Court of NSW

Decision date

2003-12-04

Before

Einstein J, Murray J, Rolfe J

Source

Original judgment source is linked above.

Judgment (71 paragraphs)

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CITATION : Strategic Publishing Group Pty Limited & Anor v John Fairfax Publications Pty Limited [2003] NSWSC 1134 HEARING DATE(S) : 1/12/03 JUDGMENT DATE : 4 December 2003

[2]

JURISDICTION: Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Application for permanent stay to be dismissed. Security for costs to be provided.

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CATCHWORDS : Practice and procedure - Contract - Agreement for referral of dispute to independent accountant - Defendant applicant seeks orders staying proceedings for the purpose of permitting the dispute to be referred to the independent expert-contractual construction - proper exercise of the discretion - Costs - application for security for costs Contracts Review Act 1980 (NSW) Fair Trading Act 1987 (NSW) Frustrated Contracts Act 1978 (NSW) LEGISLATION CITED : Insurance Contracts Act 1984 (Cth) Supreme Court Act 1970 (NSW) Supreme Court Rules 1970 (NSW) Trade Practices Act 1974 (Cth) Ashville Investments Ltd v Elmer Contractors Ltd [1989] QB 488 Ajzner v Cartonlux Pty Ltd [1972] VR 919 Aztec Mining Co Ltd v Leighton Contractors Pty Ltd (unreported, Murray J, Supreme Court of Western Australia, 23 February 1990). Badgin Nominees Pty Ltd v Oneida Ltd [1998] VSC 188 Carus-Wilson & Greene, Re (1887) 18 QBD 7 Channel Tunnel Group Limited v Balfour Beatty Construction Limited [1993] AC 334 Cott UK Ltd v F.E. Barber Ltd [1997] 3 All ER 540 Dawdy and Hartcup, Re (1885) 15 QBD 426 Dowell Australia Ltd v Triden Contractors Pty Ltd [1982] 1 NSWLR 508 Fletcher Construction Australia Ltd v MPN Group Pty Ltd (Supreme Court of New South Wales, 14 July 1997, Rolfe J, unreported). Fountain v Alexander (1982) 150 CLR 615 Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 CASES CITED : Government Insurance Office of New South Wales v Atkinson-Leighton Joint Venture (1979) 146 CLR 206 Heart Research Institute Ltd v Psiron Ltd [2002] NSWSC 646 Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (1997) 90 FCR 1 Himbelton Pty Limited v Kumagai (NSW) Pty Limited (1991) 29 NSWLR 44 Huddart Parker Ltd v The Ship Mill Hill (1950) 81 CLR 502 IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466 Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744 Inland Revenue Commissioners v Maple & Co (Paris) Ltd [1908] AC 22 New South Wales v Banabelle Electrical Pty Limited (2002) 54 NSWLR 503 Perlman v Perlman (1984) 155 CLR 474 Public Authorities Superannuation Board v Southern International Developments Corp Pty Ltd, NSWSC, 19 October 1987 (unreported), Savcor Pty Ltd v State of New South Wales (2001) 52 NSWLR 587 Timic v Hammock [2001] FCA 74 Triarno Pty Ltd v Triden Contractors Ltd (1992) 10 BCL 305 Strategic Publishing Group Pty Limited (First Plaintiff/Respondent) PARTIES : Dominion Corporate Holdings Limited (Second Plaintiff/Respondent) John Fairfax Publications Pty Limited (Defendant/Applicant) FILE NUMBER(S) : SC 50116/03 COUNSEL : Dr AS Bell (Plaintiffs/Respondents) Mr PM Wood (Defendant/Applicant) SOLICITORS : Gilbert + Tobin (Plaintiffs/Respondents) Freehills (Defendant/Applicant)

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(ii) Mr Gordon had not, as at the Adjustment Date, met the Key Performance Indicators. 4 The SSA contained substantially identical terms in respect of Dominion: see clauses 1, 7.5, 7.7 and 7.8 of the SSA. 5 The Key Performance Indicators were: (a) unless otherwise agreed in writing by the Defendant, Mr Gordon prepares, and presents to the Defendant for approval, business plans in a form substantially similar to the business plans prepared by Strategic Publishing Group Pte Ltd prior to 9 December 1999 for the development of: (i) MIS UK; (ii) Business Online UK; (iii) Business Online Australia; (iv) Marketing Australia; (v) Marketing Asia; (vi) MIS China; and (vii) MIS Web as a business to business web site; ("Business Plan KPI") (b) during the period commencing on 7 January 2000 and ending on 7 July 2001, the staff quality and effectiveness of the SPG Business are maintained; ("SPG Business KPI") (c) the continued employment of Mr Gordon with the Defendant at 7 July 2001 or his employment had been terminated by the Defendant prior to 7 July 2001 other than in the circumstances set out in clause 9.3 of the Executive Service Agreement between Mr Gordon and the Defendant, which is dated 10 January 2000. 6 Both the SSA and ASA provided that: "[t]he parties acknowledge and agree that: … (c) any dispute between the parties in relation to the Key Performance Indicators [as defined] will be referred to the Independent Accountant [as defined] in accordance the procedure set out": a) in relation to the ASA, in paragraph 8(c) to 8(f) of schedule 11 of the ASA; and b) in relation to the SSA, in clause 7.11(c) to (f) of the SSA. 7 The term "Independent Accountant" meant: (a) in the ASA, a person appointed jointly by the first plaintiff and the defendant or if they do not agree on the person to be appointed within 7 days of either party requesting appointment, a chartered accountant appointed by the President of the Australian Institute of Chartered Accountants (Sydney branch) at the request of the first plaintiff or the Defendant;

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Interpreting the breadth of the dispute resolution clause · The relevant clause in the ASA and the SSA is as set out at paragraph 6 above. · In IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466, the Court of Appeal considered a clause which provided "[a]ny controversy or claim arising out of or related to [the relevant] Agreement or the breach thereof will be settled by arbitration." Kirby P regarded the words "or related to" as extending the meaning of "arising out of" (at 477). Clarke JA said (at 483), with whom Handley JA agreed generally: "The phrases "in relation to" or "related to" are of the widest import and should not, in the absence of compelling reasons to the contrary, be read down: Fountain v Alexander (1982) 150 CLR 615 at 629; Dowell Australia Ltd v Triden Contractors Pty Ltd [1982] 1 NSWLR 508 at 511 and Ashville Investments Ltd v Elmer Contractors Ltd [1989] QB 488. In its context I would, in the absence of contrary indications in the contract, understand the clause to be sufficiently wide to encompass claims that pre-contractual misrepresentations induced the complaining party to enter the contract." · Handley JA said at 487: "However that may be this clause contains, in addition, an agreement to refer controversies and claims "related to this Agreement or the breach thereof". These are wide words which should not be read down in the absence of some compelling reason for doing so: see Perlman v Perlman (1984) 155 CLR 474 at 489 and Inland Revenue Commissioners v Maple & Co (Paris) Ltd [1908] AC 22 at 26. These words can only have been added to include within the submission claims other than in contract such as claims in tort, in restitution, or in equity. I can see no basis for excluding claims arising under statutes which grant remedies enforceable in or confer powers on courts of general jurisdiction. For example, the Contracts Review Act 1980, the Frustrated Contracts Act 1978 or the Insurance Contracts Act 1984 (Cth). Once this position is reached there is no basis, in my opinion, for excluding claims arising under the Trade Practices Act 1974 (Cth)." · The claim in that case concerned claims under section 52 of the Trade Practices Act 1974 (Cth) ("Trade Practices Act") that a contract had been entered into based upon misrepresentations: at 470-471. · Barrett J has also noted that the meaning of "in any way related to" is wide: Savcor Pty Ltd v State of New South Wales (2001) 52 NSWLR 587 at 597-598. · In Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160, a claim that the purported termination of the contract was wrongful based on representations made during the course of the contract (involving representation, estoppel and misleading conduct in contravention of the Trade Practices Act) was held to be a dispute "arising out of" the contract. Gleeson CJ (with whom Meagher and Sheller JJA agreed) said that (at 166):

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Referral to an expert would lead to a more efficient determination of the dispute · As Einstein J stated in Heart Research Institute Ltd v Psiron Ltd [2002] NSWSC 646 at [16]: "Expert Determination is a process where an independent Expert decides an issue or issues between the parties. The disputants agree beforehand whether or not they will be bound by the decisions of the Expert. Expert Determination provides an informal, speedy and effective way of resolving disputes, particularly disputes which are of a specific technical character or specialised kind." · Einstein J in Heart Research Institute v Psiron Ltd [2002] NSWSC 646 referred to the court's positive attitude to alternative dispute resolution clauses. In particular, he stated (at [24] to [25]): "Clearly the New South Wales Courts have responded positively to the benefits which Expert Determination can entail. In Public Authorities Superannuation Board v Southern International Developments Corp Pty Ltd, NSWSC, 19 October 1987 (unreported), Smart J stated that, in relation to Expert Determination:: "There are many reasons why they may take such a course. They may prefer to have a relatively informal process which they may think is likely to be cheaper and quicker and the decision of an independent consultant who is likely to be familiar with the problems...It is not for the Court to re-write their contract." (at 10) · His Honour was prepared to extend the matters which may be considered by Expert Determination to issues of liability and quantum. The arguments that the role of an Expert under such agreements should be limited to those "usually dealt with by experts, for example, questions of value, questions of the work to be done prior to practical completion, quality of work and, presumably, extensions of time" (at 7) were rejected." · Einstein J expounded the positive contribution that alternative dispute resolution clauses add to the development of case management in Australia (at [81] to [82]): "The positive perception of alternative dispute resolution in case law has accorded with the development of case management in Australian jurisprudence. In New South Wales, for example, the Courts are now guided by Pt1 r3(1) of the Supreme Court Rules 1970 (NSW) which provides that: "The overriding purpose of these rules, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in such proceedings." Indeed, the aims of case management, for example such as ensuring that the parties are on an equal footing; saving expense; dealing with cases in ways which are proportionate to the amount involved, the importance, the complexity, and the financial position of each party; ensuring that it is dealt with expeditiously and fairly; and allotting to it an appropriate share of the Court's resources, can seemingly be promulgated through a positive approach to alternative dispute resolution." (see also [83] to [86]) · It is consistent with the practice of this List, as recognised in Practice Note 100 (at paragraph 24), that alternative dispute resolution be encouraged. · The Supreme Court of New South Wales' Administrative Guideline entitled "Alternative Dispute Resolution - Mediation and Neutral Evaluation" states: " Benefits of ADR

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(b) the appropriate criteria to apply concerning the SPG Business KPI, in particular, how to determine whether Mr Gordon "maintained the effectiveness of the SPG Business". · In relation to questions of law raised in the pleadings as matters in dispute between the parties, the referral of the dispute to the Independent Accountant would either make those matters irrelevant or the Independent Accountant would be capable of resolving those matters. · The plaintiffs claim that a number of terms should be implied into the relevant agreements that would have compelled the Defendant to inform the Auditor of the matters particularised at paragraph 57 of the Summons. However, it would not be necessary for the Independent Accountant to determine whether those terms should be implied if the Independent Accountant decides to consider the information referred to at paragraph 57 of the Summons: see Gillard J in Badgin Nominees Pty Ltd v Oneida Ltd [1998] VSC 188 at [119]. That being the case, the Independent Accountant would need to determine whether the matters particularised at paragraph 57 of the Summons are true and relevant to the Independent Accountant's determination. The Independent Accountant may also wish to consider other factual matters, and his or her own expertise. In effect, whether those terms are to be implied becomes an irrelevant matter. Even if it were relevant, an expert is capable of determining that question (see Gillard J in Badgin Nominees Pty Ltd v Oneida Ltd [1998] VSC 188 at [133] to [134] and Barrett J in Savcor v State of New South Wales (2001) 52 NSWLR 587 at [44]). · In relation to the Trade Practices Act claims, numerous authorities have held that such claims are susceptible to being referred to expert determination: (see paragraphs ? to ? above.) In addition, an expert may grant the remedies under sections 82 and 87 of the Trade Practices Act: IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466, Savcor Pty Ltd v State of New South Wales (2001) 52 NSWLR 587 at [36] to [37]. In Savcor Pty Ltd v State of New South Wales (2001) 52 NSWLR 587, Barrett J, in considering an expert determination clause, rejected the submission that IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466 could be distinguished on the basis that that case concerned arbitration. As Barrett J stated at [36] to [37]: "The various statutory incidents of and adjuncts to the role of an arbitrator were not in any way the source of the conclusions in GIO v Atkinson-Leighton and IBM Australia. Nor was any underlying assumption that an arbitrator would preside over some form of quasi judicial inquiry. Those decisions turned wholly on what Mason J described in the former as "the real question", namely: "... whether there is to be implied in the parties' submission to arbitration a term that the arbitrator is to have authority to give the claimant such relief as would be available to him in a court of law having jurisdiction with respect to the subject matter." That is also "the real question" here in relation to expert determination. It is quite conceivable that parties will refer to an expert the question whether, in the circumstances in which they are placed, a court would make an order, pursuant to s72(1) and s72(5)(a) of the Fair Trading Act, declaring their contract void, and that they will agree to abide by the expert's decision on that question as if it were an order made by a court under those sections. If such an agreement may be made expressly, it may also arise by implication if the terms of the referral clause so warrant." · In Savcor Pty Ltd v State of New South Wales (2001) 52 NSWLR 587, Barrett J stated at [31]: "Determination of the dispute between the plaintiff and the first defendant will therefore involve a decision as to the content and quality of the representations made by the first defendant and its representatives in the process of contract negotiation and formation and a decision on the legal questions whether the head contract is void for mistake and, in the alternative, whether an order should be made declaring it void. Are these decisions which it is appropriate to leave to the process of expect (sic) determination provided for in the head contract?" · Barrett J did not refuse to refer the matter to an expert for these reasons: see [40], [48].

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No uncertainty in the procedure to be followed · There is no uncertainty as to the procedure to be followed here - that procedure is to be set by the Independent Accountant: see clause 8(c) of schedule 11 of the ASA at page 70 of exhibit "GAM1"; clause 7.11(c) of the SSA at page 111 of exhibit "GAM1"; Triarno Pty Ltd v Triden Contractors Ltd (1992) 10 BCL 305 at 307 per Cole J; Fletcher Construction Australia Ltd v MPN Group Pty Ltd (Unreported, NSW Sup Ct, 14 July 1997 per Rolfe J). Dealing with the referral to an independent expert issue 15 In my view the submissions of the plaintiffs on this issue are of substance. They are generally adopted in what follows. The matter to which the instant dispute relates 16 One commences by focusing upon the matter which the instant dispute in fact relates to. As the plaintiffs have submitted: · The plaintiffs sue for both breach of contract and in respect of contravention of the Trade Practices Act. · It is alleged that various express and implied terms of the relevant contracts were breached by Fairfax and that those breaches deprived Strategic of the opportunity of obtaining the valuable retention amounts under the ASA and SSA. The dispute does not relate to the question of whether Strategic satisfied the Key Performance Indicators. Rather, it is about whether Fairfax breached its contractual and statutory obligations to Strategic in the manner alleged in the Summons. · Underpinning these alleged breaches is a set of facts which in truth have nothing to do with the satisfaction or otherwise of Key Performance Indicators or the ascertainment or adjustment of amounts due by one party to the other or any dispute in relation to the calculation of such amounts. Rather they have to do with how the parties dealt with each other over a particular time period, and in particular, whether or not certain representations were made or conduct took place. · As a result of Fairfax having filed its defence in these proceedings, it is possible to appreciate the true nature of the areas of factual dispute in this case. In particular, Fairfax denies the following allegations [the references are to paragraphs of the Summons]: 23. In or about February 2000 Mr Gordon was instructed by Mr Gill of Fairfax to hire two new Business Development Managers to assist in the preparation of the business plans specified in the First KPI (the Business Plans). Particulars Various conversations between Michael Gill and Alistair Gordon in or about February 2000. 24. The two people employed by Mr Gordon to assist in the preparation of the Business Plans were Daphne Chung and David Penman (the Team). 25. It was agreed that the Business Plans were to be developed by the Team working with each of the Group Publishers for each suite of magazines within the SPG Business (as defined); namely, Justin Randles for the Marketing titles, Peter Roberts for the BusinessOnline titles, and Grant Heinrich for the MIS titles. Particulars Various conversations between Michael Gill and Alistair Gordon in or about February 2000.

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In or about January 2000 the business plan for Marketing Australia , which was prepared in accordance with the First KPI, was submitted to Fairfax by Mr Randles and Tom Iggulden, the launch editor for approval in accordance with the First KPI. Particulars Meeting in or about January 2000 in Mr Gill's Sydney office. 30. In or about July 2000 Mr Gordon and Mr Davison were made responsible for, in addition to their existing responsibilities as outlined in paragraph 29 above, the launch of the following magazines: Business Online Australia , Business Online New Zealand, Strategic Research in the United Kingdom and Asset magazine in Australia (the Launches). Particulars 1. Various meetings between Michael Gill, Alistair Gordon and Ken Davison during July 2000. 2. The budgets for 2000/2001 for the Strategic Publishing Group Division of Fairfax which make allowance for the Launches. 31. On or about 20 July 2000 the business plan for Business Online Australia , which was prepared in accordance with the Template and the First KPI, was submitted to Fairfax for approval in accordance with the First KPI . Particulars The business plan was submitted by Peter Roberts during a conference held in Sydney on or about 20 July 2000 which was attended by 40 Fairfax executives including Michael Gill and Jeff Harvie. 32. In or about September 2000, the business plan for Marketing Asia, which was prepared in accordance with the Template and the First KPI, was submitted to Fairfax for approval in accordance with the First KPI. Particulars Meeting in Singapore in or about September 2000 between Alistair Gordon, Daphne Chung, Kenneth Phua, Jeff Harvie and Michael Gill . 35. On or about 3 October 2000 Mr Gill informed Mr Gordon that: (a) all work on the development of the Business Plans was to cease; Particulars Telephone conversation between Michael Gill and Alistair Gordon or about 3 October 2000. · In addition to these denials, the Fairfax defence is seen to raise a number of other factual issues which it is to be expected will be highly contentious: see, for example, paragraph 36 of the defence and paragraph 43. It is as I accept, scarcely to be assumed that the parties intended that an accountant would be the person who would determine such factual disputes. An accountant's training lies in completely different areas. · So also, as I accept, is it fair to say that difficult questions of construction and legal principle are likely to be involved. Fairfax has, for example, denied the existence of the two implied terms relied upon by Strategic. Construction of the expert determination clause 17 The substantial question for determination on the defendant's motion involves a decision as to construction of this clause. Here again the plaintiffs' submissions are adopted as of substance. 18 As the plaintiffs have submitted, in every case in which a stay of proceedings is sought, the critical task is to analyse the language of the clause - whether it be a jurisdiction, arbitration, ADR or expert determination clause - in the light of the contract as a whole in accordance with the objective theory of contract to discern the parties' proper intentions. 19 I accept as correct the plaintiffs' submissions that the clause invoked in the present case is different in kind from most of those clauses in issue in the cases referred to in the Fairfax submissions. It is not a jurisdiction clause; it is not an arbitration clause (cf. IBM, Francis Travel, The Mill Hill); nor is it an ADR clause (cf. The Heart Research Institute, Hooper Baillie, Savcor). 20 I further accept as correct the proposition that the nature of the clause as an 'expert determination clause', bears upon its proper construction: Badgin Nominees Pty Limited v Oneida Limited [1998] VSC 188, Cott UK Ltd v F.E. Barber Ltd [1997] 3 All ER 540. In the former case, Gillard J. [52-54] said:

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"The distinction between arbitration and expert valuation was considered by Lord Esher MR in two cases at the end of the last century. In Re Dawdy and Hartcup (1885) 15 QBD 426 at 430 his Lordship said - "It has been held that if a man is, on account of his skill in such matters, appointed to make a valuation, in such manner that in making it he may, in accordance with the appointment, decide solely by the use of his eyes, his knowledge and his skill, he is not acting judicially: he is using the skill of a valuer, not of a judge. In the same way, if two persons are appointed for a similar purpose, they are not arbitrators but only valuers. They have to determine the matter by using solely their own eyes and knowledge and skill." In the later case his Lordship said - "If it appears, from the terms of the agreement by which a matter is submitted to a person's decision, that the intention of the parties was that he should hold an enquiry in the nature of a judicial enquiry, and hear the respective cases of the parties, and decide upon evidence laid before him, then the case is one of arbitration. The intention in such cases is that there shall be a judicial enquiry worked out in a judicial manner . On the other hand there are cases in which a person is appointed to ascertain some matter for the purpose of preventing differences from arising, not of settling them when they have arisen, and where the case is not one of arbitration but of mere valuation. There may be cases of an intermediate kind where, though a person is appointed to settle disputes that have arisen, still it is not intended that he shall be bound to hear evidence and arguments ." [cf Re Carus v Wilson and Greene (1887) 18 QBD 7 at 9. Gillard J also referred to Ajzner v Cartonlux Pty Ltd [1972] VR 919 especially at pp.927-931]. 21 Further and as the plaintiffs also submitted, the clause invoked in the present case is also different in form from most of those clauses in issue in the cases referred to in the Fairfax submissions: · It is limited in its scope by reference to a particular subject matter, namely Key Performance Indicators. · It may be compared, for example, to the familiar language of the arbitration clauses in IBM and Francis Travel which referred to disputes arising out of or in relation to this agreement i.e. no attempt was made by the parties to limit the subject matter or scope of the submission other than by reference to the agreement as opposed to a concept to be found within the agreement. · This is only accentuated in the present case by reason of the presence of a jurisdiction clause by which the parties expressly contemplate litigation in the Supreme Court of New South Wales, a key textual indicator that they did not contemplate that all disputes would come before the Independent Accountant. 22 Other textual indications militating against a finding that the parties objectively intended a dispute of the kind disclosed by the pleadings would be resolved by the Independent Accountant are, as I accept: · the profession of the expert (an accountant); and · the references in the clauses extracted above to disputes as to the amounts and balance payable. 23 Further such textual indications sought to be relied upon were: · the time frame (14 days) within which all disputes were to be settled, a matter which gives insight into the nature of the disputes likely to fall to be resolved by the accountant; and · the finality of the procedure in a context where millions of dollars hang upon whether or not Fairfax has breached its obligations under the ASA and the SSA and under the TPA - it is not lightly to be assumed that the parties intended that so serious a financial consequence would be resolved once and for all within 14 days with no rights of appeal etc. 24 The defendant submitted that upon the proper construction of the subject agreements, the references in clause 7.11 (a) and (b): · as to subclause (a), to either party having an entitlement to refer the disagreement to an independent accountant with a request that the independent accountant make a decision on that matter within 14 days; and · as to subclause (b), to the obligation of the purchaser to pay to the vendor that portion of the research business retention or the retention which was not in dispute,

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are insofar as the bracket of 'retention' provisions [dealt with by clauses 7.5, 7.5A, and 7.6-7.10] are concerned, seen to be inapplicable to disputes between the parties in relation to the key performance indicators . 25 The close submissions advanced by the defendant in this regard sought to distinguish between on the one hand, the above described bracket of the retention provisions and on the other hand, the bracket of retention amount provisions dealing with obligations in relation to the 'research business target' [dealt with by clauses 7.1, 7.1A and 7.2-7.4] ["the research business target bracket"]. 26 The particular significance of this close examination was for the reason that clause 7.6 includes an acknowledgement [clause 7.6 (c)] that any dispute between the parties in relation to the key performance indicators would be referred to the independent accountant in accordance with the procedures set out in clause 7.11 (c) to (f). 27 To my mind the matter is effectively foreclosed by the fact that clause 7.11 in terms deals with any disagreement by the vendor with any amount contained either in the Certificate or in the Retention Certificate. If the parties cannot agree on that amount within seven days of the 'adjustment date' either party may refer the disagreement about the disputed amount to an independent accountant with a request that the independent accountant make a decision on that matter within 14 days. 28 The document has to be construed in its entirety and the reference in clause 7.6 (c) to a dispute of the type described, being required to be referred to the independent accountant "in accordance with the particular procedure" simply differentiates for relevant purposes, aspects of what the draughtsman regarded as the operative "procedure". Clause 7.11 (a) is clearly engaged where the parties cannot agree on an amount to be contained in the 'retention certificate'. 29 The analysis does throw up a question as to what work if any, on the plaintiffs' submissions, would be left for clause 7.6 (c). Dr Bell responded by positing for example, the possibility that the auditor during the course of carrying on his or her work had indicated that he or she, in the task of the certification under way, was to announce a particular mode of measuring staff quality and effectiveness of the particular business required to be maintained. In the event that one of the parties did not agree with this approach as a fair working definition it seems to me, as Dr Bell submitted, a clause 7.6(c) situation would have occurred. A dispute would be seen to have arisen "in relation to key performance indicators" so that the view of the auditor could be referred to an independent accountant for an assessment in accordance with clause 7.6 (c). 30 Ultimately this construction is by no means determinative of the motion presently before the court. And even if the 14 day reference could not be seen in terms to apply to clause 7.6 (c), it remains a clear indicator that the parties intended generally that the independent accountant would deal expeditiously with accounting type issues. 31 In addition, the very fact that the Independent Accountant was appointed as an expert and expressly not as an arbitrator gives a strong insight into the role and types of disputes that he or she was intended to perform: cf Re Dawdy and Hartcup; re Carus v Wilson and Greene; Ajzner v Cartonlux. 32 Mr Wood submitted as follows:

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36 It may be observed that the point of principle flowing from IBM and Francis Travel is not raised here, viz. whether or not an arbitrator may entertain a TPA claim. The clause here invoked is not an arbitration clause nor anything like it. The parties plainly did not intend that an accountant would resolve a TPA claim upon which millions of dollars potentially turn, whether within 14 days or at all. The dispute is outside the clause in whole or at least in part 37 The Court's holding is that on a proper understanding of the parties' dispute (now clarified by the defence) and on a proper construction of the expert determination clause, that dispute does not or, alternatively does not as to its entirety, fall within the scope of the expert determination clause. 38 The claim properly characterised and understood, is not one "relating to Key Performance Indicators". 39 The objective intention of the parties, as gleaned from the terms of their agreement, was that the types of dispute which were set forth in the dispute resolution clause were those capable of being appropriately resolved in a very short space of time by an independent accountant who was not to act as an arbitrator. The disputes in the present case are simply not of that character. 40 Putting the matter in another way, looking at the matter objectively, the intent of the parties was not that claims of the kind made in the Summons including claims under the TPA would be resolved by an accountant in accordance with the procedure set down in clause 7.11 or at all. Discretion 41 I note the plaintiffs' submission that the Court has no power to refer any parts of the dispute falling outside the scope of the clause to the independent accountant, the submission being that power in this regard ultimately derives from the parties' agreement, on its proper construction. 42 Even if the Court has this power [as to which it is unnecessary to express a view] and even if it be correct to say that some aspects of the dispute fall within the expert determination clause whilst others do not, it would be inappropriate to exercise that power as to part of the proceedings for the reason that the proceedings would then be inappropriately fragmented. Security for costs 43 There is no issue but that it is appropriate for an order for security for costs to be made. The only question concerns the precise regime and importantly the amount which the proper exercise of the discretion should require be paid by the plaintiffs. 44 The principles which obtain are not in issue. They were set out in Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744 (at [744] et seq and are presently adopted. 45 The formal position is that: · The defendants have made an open offer to accept an amount of $400,000 as security for costs by way of bank guarantee upon the basis that the amount is to relate only to the period up to one month prior to trial and that the defendant be at liberty to apply for further security in relation to the period up to one month prior to trial at any time; · The plaintiffs have made an open offer to provide security for costs by way of bank guarantee in the amount of $200,000 which amount is offered in relation to work carried out in the period leading up to the commencement of the trial. 46 The defendant in overview written submissions identifies its current estimate of its costs (including trial) as $1,413,250. Mr McClellan who is a partner at Freehills has made two affidavits which are relied upon in support of this estimate. He has been cross-examined in relation to certain of the assumptions said to underpin this estimate. Standing back from all of the detail it must be said that the estimate appears to be particularly excessive. The difficulty of course concerns the detail and the cross-examination threw up a real issue between the parties as to which matters would be likely to be litigated and for what reasons and to what extent and as to how would it be appropriate for the defendant to conduct itself in preparing for the litigation. 47 Ms Platford, a partner at Gilbert + Tobin solicitors for the plaintiffs has sworn an affidavit in these proceedings dated 27 October 2003. In paragraphs 8 to 33 of her affidavit, Ms Platford challenges the estimates put forward by Mr McClellan. Ms Platford asserts that some of the estimates are excessive, both as to time and as to cost. In general terms the reasons put forward by Ms Platford to support her assertions include concern about duplication of tasks, unreasonable estimations of size of tasks to be carried out and a comparison of the costs and tasks undertaken in the preparation of the plaintiffs' case. Ms Platford's affidavit travels through an analysis of each of the seven items identified by Mr McClellan in his affidavit of 7 November 2003. This analysis is dealt with in greater detail in what follows. 48 It should be noted that in her affidavit of 27 October 2003, Ms Vine-Hall made the following observation:

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                                                                          Susan Piggott                                                                                             Susan Piggott
                                                                          Associate                                                                                                 Associate
                                                                          4 December 2003                                                                                           4 December 2003

Strategic Publishing Group Pty Limited & Anor v John Fairfax Publications Pty Limited

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Judgment (71 paragraphs)

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